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ANNUAL REPORT
2020-21
Estia Health_AR 2020-21_4pg COVER_230921.indd 1
23/09/2021 11:24:16 AM
Contents
Chairman and CEO’s Message
Sector Trends
Key Highlights
Our Executive Team
Our Approach to Measuring Progress and Impact
Our Strategy
Our Approach to Sustainability
Progress Snapshot
Tax Transparency Report
Corporate Governance Statement
Our Board
Annual Financial Report
Additional Information
Directory of Estia Health Homes
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Thank you to all the residents and employees who feature in this report.
2020-21 Annual Report | Estia Health 3
Chairman and CEO message
Chairman and CEO’s Message
This has been a challenging year for Estia Health, with the publishing of the Final
Report of the Royal Commission into Aged Care Quality and Safety and the ongoing
impact of the COVID-19 pandemic.
COVID-19 has affected all in the community and we are pleased to report that the
Company’s leadership, balance sheet strength, strong culture and focus on clinical
governance and quality enabled Estia Health to meet the many challenges we have
faced.
The COVID-19 pandemic significantly impacted the
residential aged care sector, especially in Victoria.
Outbreaks in 11 of our Victorian homes resulted in many
of our residents and employees contracting the virus
and very sadly 36 residents passed away with COVID-19.
We have built on the preparations undertaken at
the beginning of the pandemic in early 2020, with
a focus on frequent communication with residents
and employees, strengthening of education to upskill
our people in infection prevention and control and
drawing on expert partners when required.
Good governance and providing the resources required
to meet the exceptional circumstances have been
important in meeting the challenges presented by the
pandemic. A COVID-19 Board Sub-committee met
regularly throughout the period to provide oversight
of the actions needed to manage our response.
In the year $24.3 million of direct incremental costs
associated with the pandemic were committed across
our workforce, infection prevention and control (IPC),
personal protective equipment (PPE), cleaning,
waste disposal and employees and family welfare and
support. $20.1 million of these incremental costs were
incurred in the first half year with $4.2 million incurred
in the second half year.
Although our workforce and operations were
significantly challenged during the year, the depth and
skills of our leadership team enabled the Company to
manage the emergency in Victoria while maintaining
close to normal operations in other states. This was
also made possible by the more than 7,500 strong
Estia Health team, who delivered compassionate and
high-quality care to residents and support for their
families in sometimes very difficult circumstances.
Despite these events, Estia Health returned to profit
this year and reinstated the payment of a dividend.
Directors declared a fully franked final and total
dividend of 2.3 cents a share for the year. The class
action was settled without admission of liability.
Performance for the year to June 2021
Our net profit after tax was $6.0 million (FY20: $116.9
million loss) on 4.4 per cent higher revenue of $665.4
million and after $12.4 million in class action settlement
costs. Revenue was supported by grants of $21.4
million provided to cover the COVID-19 costs during
the pandemic and temporary government funding.
Average occupancy for mature homes across the whole
Estia Health portfolio was 91.2 per cent, with occupancy
for mature homes in Victoria averaging 85.9% and
outside of Victoria averaging 94.0% over the year.
We achieved net Refundable Accommodation
Deposit (RAD) inflows of $30.6 million, including
$5.9 million from our new home in Blakehurst which
opened in February 2021, bringing RAD balances to
$863.9 million at 30 June 2021.
Estia Health is in a strong financial position with net
bank debt of $81.1 million at year end and total debt
facilities of $330.0 million with a maturity date of
4 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Dr. Gary H Weiss AM
Chairman
Ian Thorley
Chief Executive Officer
15 November 2022 and $210.9 million undrawn at
30 June 2021.
improve asset quality. Subject to appropriate funding,
ACAR reform provides conditions that could see a
restructuring of the sector.
Royal Commission and reform
The Royal Commission into Aged Care Quality and
Safety (the Royal Commission) handed down its Final
Report in February 2021, containing 148 recommendations.
The complex nature of the challenges facing the sector
was demonstrated by the breadth of the Final Report.
The Australian Government accepted 126 of these
recommendations and has commenced the design and
consultation process. The 2021 Federal Budget
included a headline $17.7 billion funding increase over
four years for the sector.
While we are broadly supportive of the Government’s
response to the Royal Commission, further detail is
required to fully assess the financial and operational
impact that this will have on the sector and individual
providers. It is also important that the pricing and
funding arrangements announced in the Budget
structurally address the margin compression that
has been a feature of the aged care sector, so as
to enable efficient providers of quality aged care
services to meet community expectations while
achieving an adequate rate of return.
At this stage many of the reform changes are subject
to design and consultation with the sector. There
are considerable new regulatory, governance and
prudential requirements but we do not expect these
will have a significant additional burden on Estia
Health given the reporting and governance standards
required of an ASX listed company.
The most significant impact of the Government
response to date is the move to more competitive
markets with the abolition of the Aged Care
Approvals Round (ACAR) licensing system and
with that, the current restrictions on supply. The
publication of performance standards will also
enhance consumer choice and ultimately improve
care standards, increase the range of services and
Growth
In the year we continued our prudent approach to
growth, investing $49.0 million, increasing capacity
with the opening of one new home, closing our small
Keilor Downs home in Victoria and continuing the
refurbishment program.
Our new Blakehurst home opened in February
2021, replacing the original 42-place home which
was demolished in 2018. Following a $41.2 million
project capital investment, this home has seen strong
occupancy growth in the short period since opening.
This home also includes our first Wellness Centre and
provides reablement services to residents and the
broader community.
We will be commencing construction of two new
homes at Aberglasslyn and St Ives, both in New South
Wales in FY22. This is consistent with our approach
of continually improving our portfolio, retiring smaller,
older homes and bringing on new homes to meet the
future needs and expectations of the community. The
homes we have commissioned in the last three years
have performed strongly.
Sustainability
Our sustainability initiatives are value-creating
and intrinsic to the achievement of our business
objectives. We recognise that the long-term viability
and profitability of our organisation depends on the
wellbeing of our people, supporting and integrating
within our local communities and the continued
health of the natural environments we rely upon.
Materiality assessments have validated our
prioritisation of social and governance matters,
particularly resident care and human capital as being
the highest risks for the company.
2020-21 Annual Report | Estia Health 5
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Chairman and CEO message
Our carbon reduction investment which commenced
three years ago has resulted in energy efficient
projects being introduced into 94 per cent of
homes. Our plastic reduction program that resulted
in the removal of 240,000 plastic items last year
will continue in FY22 with the removal of single use
plastic eating and drinking items. This should see a
further nine tonnes of waste diverted from land fill.
The microfibre cleaning system currently being rolled
out supports the efficient use of water, improved
infection prevention and control outcomes and
reduced manual handling incidents.
Clinical governance
The changing regulatory environment has required
investment in additional resources and systems. This
included the implementation of the Serious Incident
Response Scheme (SIRS) in FY21, the review of
psychotropic drug management and use of restraints
- all adopted in line with recommendations of the
Royal Commission and now being implemented.
The COVID-19 response has seen the appointment of
infection prevention and control roles into all homes
and the development of a partnership with HICMR,
a national infection control group who undertakes
education and independent auditing of our infection
control practices.
Our clinical governance program is also
independently chaired to ensure a high level of review
over our clinical outcomes and performance.
During the year 95 accreditation visits were made
to 60 homes. All homes have remained fully
accredited during the period, although 10 homes
received a report of unmet outcomes during FY21.
Of the expected outcomes examined in these visits,
we achieved 96.5 per cent of outcomes fully met
and continually examine how we can fully meet
requirements on all occasions.
In FY22 we intend to implement electronic medication
management and prescribing systems, and this will
further support our quality use of medicines and
provide information to analyse the use of drugs and
monitor prescribing practices.
People at the heart of Estia Health
The ageing of the Australian population over the next
20 years will provide support for growth in residential
aged care. The 85 years and over cohort which will
double in the next 20 years to 1 million people by
2040 will create ongoing demand for residential
services.
Being a people organisation, our ongoing success will
continue to rely upon our more than 7,500 employees
and the work that they do every day to meet our
core purpose to ‘enrich and celebrate life together’.
We have a number of multi-year workforce initiatives
6 Estia Health | 2020-21 Annual Report
to ensure Estia can compete for talent, including
opportunities for career development through
programs provided by EstiaAcademy which has been
significantly enhanced to grow our own management
ready leaders. Our e-learning capabilities have seen
significant development over the past 12 months
in response to the pandemic. We have provided
extensive opportunities for practical work experience
to introduce students to the careers available in the
aged care sector. Our diversity and gender equality
programs have seen the reduction in gender pay gaps
and this is an ongoing and important area of focus.
With central services employees working from home
for extended periods and extra demands required
of our home-based employees, we launched a
new wellbeing program EstiaWell, to support our
employees mental health and overall wellbeing.
Estia believes that the vaccination of our employees is
the first line of defence to meet the ongoing challenges
presented by COVID-19. We have supported our team
members by conducting an in-reach employee
vaccination program throughout all our homes, together
with education-led communication initiatives. Estia
believes this was the most effective way of supporting
our people to overcome misinformation and hesitancy
about the vaccines and to ensure we meet the
Government’s requirement of 100% aged care
workforce receiving at least their first vaccination dose
by 17 September 2021.
On behalf of the Estia Health Executive Team and
Board we would like to thank our employees for
their extraordinary effort and dedication during an
incredibly challenging year.
We also wish to acknowledge and sincerely thank our
residents and their families for their understanding.
This has been a very difficult time for them all – we
thank you for your support as we navigate this
pandemic together.
We also thank our shareholders for their continued
support.
We look forward to continuing to play a critical role in
delivering safe, high-quality and sustainable aged care
services for all Australians.
Yours sincerely,
Dr. Gary H Weiss AM
Chairman
Ian Thorley
Chief Executive Officer
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot 2020-21 Annual Report | Estia Health 7
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Sector Trends
Sector Trends
1. Residential aged care – an essential
2. Impact of the Royal Commission
service
The aged care sector accounts for 1.2% of Australia’s
GDP, provides services to more than 1.3 million older
Australians and employs more than 366,000 people1.
The structural ageing of the Australian population
over the next 20 years will support underlying growth
in aged care services. The 85 years and over cohort
will increase from just under 500,000 people in 2020
to just over a million people by 2040.
As people live longer, with more complex and chronic
conditions, they require a higher acuity of care that
prevents them from living independently at home.
Residential aged care is needs-based and enables
complex high-quality care to be efficiently delivered by an
array of nurses, carers and other healthcare professionals.
This complements the broader healthcare sector and
supports those that can no longer care for their family
or loved one with the available home care services.
Estia Health’s response:
• Our Workforce Strategy is focused on culture,
career progression and a compelling value
proposition for our people, to ensure we attract
and retain dedicated healthcare workers in a
competitive market
• Differentiated services and products competitively
priced and relevant to the needs of each local
community
• Strong local professional health and education
partnerships to support the diverse and changing needs
of older people and develop the required workforce
through upskilling and practical clinical education
• Strong clinical governance and investment in training
to support more complex needs for the aged
The Final Report2 into the Royal Commission
into Aged Care Quality and Safety (the Royal
Commission) was published in February 2021. 148
recommendations were made to significantly reform
the aged care sector and the government responded
in the 2021–22 Federal Budget with a proposed $17.7
billion increase in funding over the next four years3.
126 of the recommendations were broadly accepted
by the government and are likely to lead to greater
costs, compliance and administrative requirements.
Reforms are grouped into five key areas: governance
and prudential regulation, quality and safety,
workforce, funding and financing, transparency and
competitive markets.
With the introduction of greater transparency for
consumers and with the removal of restrictive supply
practices associated with ACAR, success in the sector
will depend on a provider’s ability to compete and
provide better quality service and value for money.
Estia Health’s scale and capability as well as a strong
balance sheet, delivers a competitive advantage and
enables us to work towards achieving our vision to
provide ‘trusted aged care that is accessible to all’.
Estia Health’s competitive advantage includes:
• A diversified portfolio
• Delivering occupancy ahead of market averages
and peers
• Strong balance sheet
• Leadership depth and capability
1 https://www.health.gov.au/resources/publications/ninth-report-on-
the-funding-and-financing-of-the-aged-care-industry-july-2021
2 https://agedcare.royalcommission.gov.au/publications/final-report
3 https://budget.gov.au/index.htm
8 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot 3. Customer choice and expectations
4. Workforce trends
Recognising the importance of customer experience,
the government introduced eight Aged Care Quality
Standards in 2019, with Standard One focused on the
fundamentals of resident dignity and choice. The aim
was to ensure residential aged care providers help
customers make informed choices, understand their
options and be as independent as possible to live the
life they want.
Research4 we conducted in FY20 and FY21
demonstrates customers have increasingly higher
expectations of quality services and are focused on
reablement, maintaining function and enjoyment of
life. The government’s proposed star rating system
will provide transparency for consumers, empowering
them to make informed choices on services, clinical
care and price.
Residential aged care providers will have greater
opportunity to offer differentiated services and
products that are competitively priced and relevant to
the needs and expectations of the local community.
Estia Health’s response:
• Continuous culture of improvement with a person-
centred care model
• Continued evolution of organisational culture,
values, principles and behaviours, centred around
the resident
• Regular surveying, measuring satisfaction of overall
customer experience
• Highly developed sales and marketing expertise
with strong links to local communities
4 Customer Research conducted for Estia Health, Instinct and Reason
2019 and 2020
In 2018, The Aged Care Workforce Taskforce released
A Matter of Care – Australia’s Aged Care Workforce
Strategy5 setting out 14 actions for the aged care
sector to grow and sustain their workforce to ensure
they can provide services to meet care needs, now
and into the future. The government supported
the Strategy with $2.6 million included in the 2019-
20 Federal Budget6 to establish the Aged Care
Workforce Industry Council (Workforce Industry
Council) and implement the Strategy. In the 2020-
21 Federal Budget7, a further $10.3 million was
committed to support the Workforce Industry Council
reforms.
The pausing of skilled migration and the growth in
demands of the broader healthcare sector means the
competition for talent is intensifying and workforce is
now the sector’s greatest challenge. The further focus
on the National Disability Insurance Scheme (NDIS)
and the additional 80,000 home care packages over
the next two years will also contribute to workforce
challenges for the aged care sector.
Our Workforce Strategy includes:
• Continued employee engagement and growth of
our organisation’s culture, including development of
a strong employee value proposition
• EstiaAcademy, to provide learning and development
opportunities for all employees and promote a
culture of continuous learning
• Maintenance of a limited casual workforce (7.5%)
with a focus on retaining long-term, skilled
employees
• EstiaWell, focussing on the safety and particularly
the psychological wellbeing of employees
5 https://www.health.gov.au/resources/publications/a-matter-of-care-
australias-aged-care-workforce-strategy
6 https://archive.budget.gov.au/2019-20/
7 https://budget.gov.au/index.htm
2020-21 Annual Report | Estia Health 9
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Key Highlights
Key Highlights
Financial performance
OpErATIOnAl plACES
AvErAGE OCCupAnCy¹
OpErATIOnAl rEvEnuE²
6,182
6,102
6,289
93.6%
93.2%
$586.0m
$593.5m
$604.0m
91.2%
FY19
FY20
FY21
FY19
FY20
FY21
FY19
FY20
FY21
prOfIT AfTEr TAx
Before Class Action and
Impairment Expense
$41.6m
EArnInGS pEr SHArE
DIvIDEnDS pEr SHArE
15.8¢
15.8¢
2.3¢
$25.2m
$16.0m
(44.8¢)
5.4¢
2.3¢
FY19
FY20
FY21
FY19
FY20
FY21
FY19
FY20
FY21
Health and safety
Employees
Gender diversity
lTIfr3
FY21
11.9
FY20
4.9
FY19
7.6
EMplOyEE TurnOvEr
BOArD AnD ExECuTIvE
pOSITIOn COMpOSITIOn
22.6%
Sector average 29%4
53% Male
1 Mature homes only
2 Excludes AASB 16 imputed DAP
3 Lost Time To Injury Frequency Rate (LTIFR) 12 month rolling average
4 Table 2.9 page 23 - https://www.health.gov.au/sites/default/files/documents/2021/09/2020-aged-care-workforce-census.pdf
47% Female
10 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Network of homes
69 operational homes
6,224 places5,6
5,176 (91%) single rooms
90 average places per home
62 freehold sites
Over 7,500 employees
Care delivered to
more than 8,000 older
Australians annually
QLD
8 homes
851 places
NSW
18 homes
1,975 places
VIC
26 homes
2,047 places
SA
17 homes
1,351 places
Compliance
Sustainability
97%
97% expected
ACQSC outcomes
fully met
20%
20% electricity
generated from
Estia Health
renewable energy
initiatives
Professional development
Consumer Experience Report (CER)
EMplOyEES TrAInED ACrOSS MulTIplE
prOfESSIOnAl DEvElOpMEnT prOGrAMS
8,242 CEr SurvEyS COnDuCTED
FY21
FY20
2,825
FY19
4,959
14,884
TrAInInG DElIvErED (HOurS)
FY21
11,859
7,989 hours for IPC leads
3,870 remaining IPC and PPE related training
for all other employees
93.7%
Average 93.7%
satisfaction rating
across the network7
5 Total operational places at 20 August 2021
6 As at 24 August 2021, 56 homes with 5,256 beds qualify for the
significant refurbishment higher accommodation supplement
7 Satisfaction defined as percentage of responses that report
experience as “most of the time” or “always”
2020-21 Annual Report | Estia Health 11
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Executive Team
Our Executive Team
With extensive experience from residential aged care, healthcare and other industries,
our Executive team strives to ensure we consistently provide high-quality residential
care to everyone who chooses to be part of the Estia Health family. As a team, they
are responsible for setting and leading our Corporate and Sustainability Strategy
and working to ensure Estia Health is Australia’s most trusted residential aged care
provider, providing access to residential aged care to all who need it.
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.
Ian’s executive experience in Australia and
internationally includes CEO and COO roles in aged
care, hospitals 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.
Sean Bilton
Chief Operating Officer and Deputy Chief Executive
Officer
Appointed as Chief Operating Officer and Deputy
Chief Executive Officer in October 2018, Sean brings
a breadth of experience from more than a decade as
a senior executive in the aged care sector across a
diverse range of roles.
Sean is responsible for leading Estia Health’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 throughout their journey in aged care.
Steve lemlin
Chief Financial Officer
Steve holds 30 years’ experience in senior financial and
operational leadership roles across a range of professional
services businesses in Europe and Australasia.
Joining in February 2017 as Chief Financial Officer,
Steve is responsible for corporate finance and investor
12 Estia Health | 2020-21 Annual Report
relations and also leads the broader finance team in
supporting our homes to deliver the best experience
for our residents through accurate and timely
management information.
lisa Keogh
Chief People Officer
Lisa joined in September 2020, bringing with her more
than 20 years’ experience in leading People and Culture
teams both in Australia and overseas.
As Chief People Officer, Lisa leads a dedicated team,
working to attract and develop the best available
talent in the sector, maintaining a safe workplace and
a motivated workforce capable of delivering excellent
care and service for our residents and their families.
leanne laidler
Chief Quality and Risk Officer
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.
Leanne is responsible for leading 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.
Damian Hiser
Chief Customer Officer
Damian is a senior healthcare executive, with over
30 years’ experience in the private healthcare sector
in Australia and overseas and the last 10 years in
aged care in Australia. 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.
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Clockwise from left: Sean Bilton, Damian Hiser, Lisa Keogh, Mark Brandon OAM, Fiona Caldwell, Rita Sheridan,
Steve Lemlin, Leanne Laidler and Ian Thorley.
He leads a team in the areas of hospitality and
lifestyle, marketing and communications and client
services in building Estia Health’s brand as one of the
most respected and preferred aged care providers in
the local communities in which it operates.
fiona Caldwell
Chief Information Officer
With over 25 years’ experience in various IT strategic
and operational leadership capacities, Fiona brings
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 Health’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 Health.
Mark Brandon, OAM
Chief Policy and Regulatory 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.
As Chief Policy and Regulatory Officer, Mark’s remit
includes key stakeholder relationship management
and oversight of regulatory compliance.
rita Sheridan
Chief Development and Property Officer
Rita’s career spans capital development in the
aged care and accommodation sectors, residential
construction and commercial interior design.
Appointed to the role in March 2018, Rita leads capital
development and property maintenance programs.
Rita 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.
Full biographies available at www.estiahealth.com.
au/who-is-estia-health/our-executive-team
2020-21 Annual Report | Estia Health 13
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Our Approach
Our Approach to Measuring
Progress and Impact
Through our network of 69 homes, Estia Health
cares for over 8,000 older Australians each year. This
comes at an important time in people’s lives, when
they cannot live independently, requiring a level
of support beyond what can be provided by their
families, loved ones or home care services.
Our singular focus is to put resident care at the centre
of all our actions. This is made possible through
the dedication of our more than 7,500 employees
and healthcare partners working with residents and
families to deliver on our purpose, ‘to enrich and
celebrate life together’.
Underpinning our purpose and vision is a culture of a
‘family where everyone belongs’, expressed through
everyday actions by our team in their varied and
valued roles.
Our Corporate Strategy is expressed in five strategic
pillars: Care, Customer, People, Community and
Growth, underpinned by a Sustainability Strategy that
is value-creating and intrinsic to the achievement of
those pillars.
Setting the scene
In FY20 we introduced our vision, purpose, strategic
priorities and sustainability goals. This year, our
approach to reporting includes addressing key trends
influencing the aged care sector and the impact on
Estia Health including our residents, their families
and our people, and the communities in which we
operate. We will demonstrate the importance of
residential aged care as an essential social support
for Australians and our role in the provision of those
services.
The challenges of the COVID-19 pandemic over the
past 18 months have had a significant impact on the
Australian economy and particularly the healthcare
system. We have met those challenges and have
emerged as a more agile and adaptive organisation,
continually evolving with changing community needs
and the regulatory environment.
In FY21 we report on our progress in working to
achieving our strategic pillar goals and priorities and
present progress against other relevant indicators.
A summary of these can be found on page 56.
Value Creation – financial and non-financial
e
r
a
C
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e
m
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s
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p
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P
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i
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G
Strategic
imperatives
What
we do
Pillars of value
Business capabilities
(Organisational structure, Roles & Responsibilities,
Standard Operating Model, Business Processes & Systems)
Risk and governance
(Quality Standards, Compliance Requirements, Ethics, Risk Appetite)
Culture
How – The Estia Health brand,
values/behaviours that wraps
around everything
14 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot 2020-21 Annual Report | Estia Health 15
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Our Strategy
Our Strategy
Our Strategy –
Care
Goal: To be considered as the number one quality provider of residential aged
care services in Australia.
Success factors - 2024 target
2021 progress
95 assessment visits conducted in FY21 across 60
homes. Ten homes received unmet outcomes during
FY21, four are still being resolved within the agreed
timeframes (as at 20 August 2021). Of the expected
outcomes examined in these visits, we achieved a
97% of fully met outcomes and continually focus
on how we can fully meet requirements on all
occasions. (FY20 result: 42 assessment conducted
across 31 homes. Nine assessed as non-compliant,
four of which were resolved during FY20)
Opportunities for continued collaboration to
support resident care, included trialling new
government services including Wellbeing SA’s My
Home Hospital, a service that brings hospital-level
care to people in their homes and residential aged
care homes
External complaints to ACQSC improved to be
28% below industry benchmark for most recently
published period January – March 2021
(FY20 result: January – March 2020 4.8% above
industry benchmark)
Work continued in streamlining our procedures,
guidelines and forms to provide clearer guidance
to our teams and reduce the time required to
complete and review paperwork. COVID-19 required
both new and amended procedures, guidelines and
forms to be developed, with a significant number of
documents being streamlined, updated or removed.
100% met outcomes from the Aged Care Quality
and Safety Commission assessment visits
Government recognition of our support and
partnerships with Primary Health Networks (PHNs)
Reduce complaints by 50% year on year to
the Aged Care Quality and Safety Commission
(ACQSC)
Reduce procedures, guidelines and forms by at
least 50% to streamline clinical care processes
16 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Highlights from the year
100% homes fully accredited*
External benchmarking of
National Quality Indicators
undertaken to support
continuous improvement
Registered nurses employed
24/7 in all homes^
100% of homes completed
COVID-19 outbreak simulations
COVID-19 resident vaccination
program to ensure all residents
had access to the vaccine
* As assessed by the Aged Care Quality and Safety Commission
(ACQSC)
^ Meets the standard recommended by the Aged Care Royal
Commission ahead of required date 1 July 2022
2020-21 Annual Report | Estia Health 17
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Our Strategy – Care (Continued)
Keeping people safe
COVID-19 continues to have a notable impact on our
homes. The knowledge we have gained of the virus
over the past 18 months has enabled us to adapt
to the changing community transmission rates and
put in place new systems and resources to ensure
residents are safe and receiving high-quality care
under significantly changed circumstances.
To protect our residents and employees our approach
included:
• Expert partnerships: we partnered with HICMR, a
national IPC company, to independently audit IPC
practices across our homes to identify opportunities
to continually improve and meet the highest
standards as we learnt more about COVID-19. These
audits will continue during FY22 as the pandemic
continues to evolve.
• Training: as part of our mandatory training
program, all our home-based employees completed
enhanced IPC training. To oversee IPC practices at
each home, we trained specialised ‘IPC Champions’
(Enrolled and Registered Nurses) in recognising
COVID-19 symptoms, outbreak management, the
principles of IPC as well as employee wellbeing.
This IPC Champion role and training was introduced
ahead of the Commonwealth Government’s
program that mandated IPC Leads in every
residential aged care home. That requirement has
seen the introduction of these roles, with each
individual needing to complete 100 hours of online
education.
The important role of residential
aged care
Residential aged care supports older Australians
whose complex care needs impede their ability to
live independently. Of the 8,000 residents we care
for annually, 85%1 have a diagnosis of dementia or a
serious chronic condition that requires active clinical
care and management.
Residential aged care is needs-based and an essential
part of Australia’s healthcare continuum. We work in
partnership with GPs, local Primary Health Networks,
allied health professionals, community nurses and
specialists, to coordinate individual care requirements
for our residents.
Investing in care capability
• Simulations: to learn from the outbreaks that
occurred in our Victorian homes, COVID-19 outbreak
simulations were conducted in all Estia Health
homes. This four-hour practical exercise enhanced
employees’ understanding and preparedness for a
potential COVID-19 outbreak. Refreshers have also
been completed throughout the year.
We continue to strengthen clinical support with
increased investment in our national Quality and
Risk team. New roles have been established and new
audit tools have been developed to monitor care and
assess opportunities for continuous improvement.
We are improving the clinical expertise of our teams
though additional training and education resources.
• vaccinations: COVID-19 vaccination is the first
line of defence in protecting our residents
and employees. We conducted onsite resident
vaccination clinics between February and June.
All residents have been given the opportunity to
receive both doses of the Pfizer vaccine through
onsite clinics. To achieve our 100% employee
vaccination target, all employees have been given
the opportunity to receive both doses of the Pfizer
vaccine through onsite clinics.
We are also further simplifying care systems and
processes to improve consistency and reliability
across our network, utilising progressive technology.
Our digital care systems will be enhanced with the
progressive introduction of an electronic medication
management system in FY22, providing greater
accuracy and transparency over medication
management and prescribing practices.
1 Source: analysis of ABS 2018 disability, ageing and carers survey,
ACFI annual report FY20, ACFI GEN data aged care snapshot, AIHW
Dementia in Australia 2012, Estia Health anonymised resident data
LEK research and analysis
18 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Our person-centred approach
Our person-centred approach and strong clinical
governance drives all aspects of resident care. During
FY21 the importance of delivering a true person-
centred approach was never clearer. Our teams
demonstrated Estia Health’s purpose to ‘enrich and
celebrate life together’, support residents’ individual
needs in continually challenging circumstances,
especially during the outbreaks in Victoria in late
2020. Our teams worked with families to create
personalised care packages for residents struggling
with isolation during restricted visitor access and
delivered special food hampers to residents in
hospital, so they had food they enjoyed eating.
Strengthened governance and
continued compliance
We continued to strengthen our governance systems
and processes with the introduction of the Clinical
Development Steering Committee. The purpose is
to improve the clinical skills related to delivering
clinical policy and procedures, for better resident care
outcomes.
In FY20, the appointment of a Professor of Primary
Care as the independent Chair of the Clinical
Governance Committee was a critical step in
further enhancing clinical governance. In line with
recommendations from the Royal Commission,
independent clinical governance structures provide an
important framework to improve resident outcomes.
In line with the introduction of the Aged Care Quality
and Safety Commission’s Serious Incident Response
Scheme (SIRS) in April 2021, extensive education and
training was delivered to enhance our established
incident management policy and processes. Estia
Health’s Quality and Risk team monitor compliance
with the new system, ensuring alleged or suspected
instances of abuse or neglect are recorded and
managed appropriately to support the delivery of
safe, quality care to our residents.
2020-21 Annual Report | Estia Health 19
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Estia Health | 2021
Estia Health | 2021
Estia Health | 2021
Estia Health | 2021
Estia Health | 2021
Person-centred care – a weekend to remember
Resident care extends far beyond meeting daily
needs and includes opportunities to celebrate
residents’ past interests and hobbies, with
enriching activities that support overall wellbeing.
All homes offer daily lifestyle activities that align
with resident interests and hobbies. At our Hope
Valley home in South Australia, the team saw the
opportunity to collaborate on a particularly special
project following a suggestion from a resident,
who missed weekend breaks away and camping
trips she had done all her life.
The home’s team presented a range of options
for a weekend away and the response was
overwhelmingly positive, with six residents
confirming they would like to go on the weekend.
Having voted for their preferred location, a Cockle
Beach House on the Yorke Peninsula, the team
began planning the logistics for the weekend.
The team included members of the lifestyle
team, a Registered Nurse and a volunteer, who
worked together to plan a weekend away that
was safe and accessible for the residents, in a
secluded and peaceful location. Residents enjoyed
cooked breakfasts, beautiful dinners, a campfire
on the beach and trips out to see local sites and
attractions.
Resident Lynn, who had the original idea, was
asked how she had found the weekend away.
She said, ‘it has been fantastic’. Vanessa from the
lifestyle team, said of the planning and preparation
‘it was worth it to see the smiles on everyone’s
faces’. One resident who attended the weekend
was living in the home on a short-term respite stay,
but based on future weekend away opportunities,
chose to stay permanently.
The home was one of the winners of Estia
Health’s inaugural Family Code Award in 2021 for
the weekend away project, recognising the team’s
commitment and innovation in designing an
experience for residents. Since the initial weekend
away, three additional weekend trips have now
been completed, visiting different locations,
aligned with different residents’ preferences.
This has given 18 residents the opportunity for
this unique experience and other Estia Health
homes are now utilising the Hope Valley team’s
planning as a framework to arrange their own
weekends away.
20 Estia Health | 2020-21 Annual Report
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Our Strategy –
Customer
Goal: To be the most customer-centric residential aged care provider in
the sector.
Success factors - 2024 target
2021 progress
Estia Health Consumer Experience Report (CER)
scores greater than 93% satisfaction rating*
FY21: 93.7% satisfaction rating (FY20: 93.0%)
Net Promoter Score (NPS)** of 50 or more for
likelihood of residents and families to recommend
Estia Health
FY21: +51 Net Promoter Score: (FY20: +49)
Customer experience driving occupancy rates
higher than peers
FY21: average occupancy 91.2% (FY20: 93.2%)
Pre COVID-19 average occupancy 93.6%,
consistently above sector and peers
31.6% of short-term respite residents moved into a
home permanently (FY20: 37.5%)
“I wanted to take the time to thank you personally for everything that you and the staff have done in
helping our family in regard to the care of my father.
It was a very difficult time, however the people at Estia Health gave us much needed comfort and
support.
Our hearts are broken now with the death of both our parents. But we will remember them for being
the wonderful people they were.
The way in which our father was treated by the wonderful staff in his final days, afforded him much
needed dignity in his time of need. We are thankful that he was given a peaceful experience of death.
Our family is very grateful for the care he was given. I wanted to extend a personal thank you for all
that the team has done for our family.
We will miss our father dearly. Words cannot describe our gratitude for all the team has done.”
- relative of Estia Health figtree resident
* Satisfaction defined as percentage of responses that report experience as “most of the time” or “always”
** Net Promoter Score (NPS) measures the loyalty of a company’s customer base with a score from -100 to +100, which is calculated from
people responses to the question “How likely are you to recommend this organisation to a friend or family member?”
22 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Highlights from the year
100% of homes passed their
regulatory food safety audit
100% of chefs participated in
educational masterclass series
Policy that 100% fruit, vegetables,
red meat and chicken served is
Australian grown
97% of residents maintained
or gained weight within three
months of moving into an Estia
Health home^
^ Review of resident weights completed in March and July 2021
following Masterclass series on fortification. Metric is reviewed
every three to four months.
2020-21 Annual Report | Estia Health 23
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Our Strategy – Customer (Continued)
Understanding our customers
Increased access and communications
Community expectations of residential aged care
continue to evolve and we regularly conduct
customer research to understand these expectations.
In FY20 and FY21 we engaged with potential and
existing customers to understand their experience
when looking at residential aged care options
for themselves or a family member. The research
provided insight into their choice and decision-
making process along the various stages of the
aged care journey. This has now been used in the
development of a customer value proposition and to
support the positioning of our brand within the sector
and our local communities.
The research demonstrated that gathering
recommendations from family and friends is the
most common way to find out information about
aged care, followed by internet searches and then
guidance by health care professionals. A focus in FY21
has been the development of a customer relationship
management (CRM) system and redeveloping our
website to provide a more consistent customer
experience.
In the past year, with the challenges of the pandemic
impacting all aspects of people’s ability to access
healthcare, we have strengthened the support
we offer our residents and families, increasing the
number of client relations managers and client
services officers across our network of homes.
The team have been critical to the customer
experience, being agile in their approach, providing
virtual access to information, regular communications
updates and supporting continued care partnerships
between our teams, residents and their families. We
have truly demonstrated our principles of always
approachable, taking responsibility and creating
happiness while living our ‘One Family’ approach in
challenging situations.
Customer experience
We monitor residents’ and their families’ satisfaction
in each of our homes via our Consumer Experience
Report (CER) survey, with our objective to survey
residents and families at least twice a year. This has
24 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot provided opportunities for improvement and allowed
us to conduct deeper analysis of results according to
a resident’s needs, such as those with a mobility or
cognitive impairment.
Over the past two years, resident and family
satisfaction levels across our network of homes
increased from 93.0% in FY20 to 93.7% in FY21.1
Improving services
In line with our increased understanding of COVID-19,
our cleaning protocols were reviewed to ensure
they aligned with our updated IPC policies. In FY21
we introduced a microfibre cleaning system, which
utilises enhanced technology to improve infection
prevention and control, reduce potential manual
handling injuries and reduce water usage by an
estimated 1.9 megalitres.
Managing a resident’s weight and nutritional needs
is a vital aspect of caring for residents and one
of the three key clinical indicators measured by
the Aged Care Quality and Safety Commission
(ACQSC).2 Often if people have been living alone,
they may be experiencing nutritional deficiency
when moving into a residential aged care home and
require a weight management program. Our ongoing
chef masterclass series in FY21 focused on natural
fortification of foods, rather than using supplements
to give residents nutritional support. Following the
masterclass program, a review of resident weights in
March 2021 and again in July 2021, showed that 97%
of residents had maintained or gained weight. This
metric is reviewed every three to four months.
1 Source: Estia Health’s CER survey response data from CarePage
business analytics, 30 June 2021
2 External sector benchmarking of ACQSC using MOA portal and
database – measure against 600 other residential aged care homes,
using three quality indicators1 (pressure injuries, use of physical
restraint, unplanned weight loss)
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Making every bite count – nutritious meals to support resident wellbeing
This year we continued to conduct in-person
masterclasses which all Estia Health chefs
attended. Training was delivered by our food
partners including dieticians and nutritionists.
Topics included innovation in textured modified
diets in line with the International Dysphagia Diet
Standardisation Initiative (IDDSI) framework to
support residents with swallowing or dysphagia
caused by conditions and diseases like dementia,
Parkinson’s or following a stroke. Training on
food fortification provided an understanding
of how to build nutrient-rich meals rather than
adding supplements to support resident weight
management.
Helping Chris find his purpose
Our chefs play a critical role in a resident’s life with
food such an important aspect of daily enjoyment
in addition to good nutrition.
Kunnal, Chef at Estia Health Epping in northern
Sydney, saw the opportunity that food played in
one of his resident’s lives.
Resident Chris is a retired chef and business owner.
For over 40 years, he ran multiple fish and chip
shops across Sydney and supplied home-made
hamburgers to shops in the area. Sadly, when
Chris’ wife passed away, he stepped back from the
home’s activities. However, during a conversation,
Chris shared his passion for food and life as a chef.
Our team looked at opportunities to rekindle his
passion for food and find purpose again.
The home hosted a Chef’s Table in the kitchen and
invited Chris as a guest – cooking fish and chips and
serving these fresh from the fryer onto the plate.
Chris loved the experience and since then has
helped with food preparation and most recently
took part in a barbeque excursion, where he
enjoyed preparing, barbequing, carving and serving
a beautiful piece of lamb to his fellow residents.
His most recent activity was introducing his
famous home-made hamburgers to the home.
Wearing his very own Estia Health chef’s jacket,
Chris made and cooked the patties. The burgers
were assembled with a sizzling hot beef pattie
from the small portable charcoal barbeque,
caramelized onions, a slice of smoked cheese,
topped with his secret burger sauce, salad,
tomato and onion inside a fresh bun. The burgers
were served to all the residents, who thoroughly
enjoyed them.
read Doreen’s story on page 37 and Kevin’s
story on page 44.
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Our Strategy –
People
Goal: To be the aged care employer of choice, attracting and retaining skilled
and engaged employees.
Success factors - 2024 target
2021 progress
Zero preventable lost time injuries
70% uptake of employee wellbeing programs
LTIFR: 11.9* (FY20: 4.9)
Impacted by COVID-19 – there is a continued focus
on frequency, severity and cost of claims
• Launch of EstiaWell in November 2020, a
dedicated wellbeing program
• 4.48% of Estia Health employees utilising EAP
services (FY20: 3.9%) reflective of COVID-19
environment and additional support required
• New EAP partnership with REACH program
delivered by qualified and registered
psychologists. Available to all employees, their
families and residents and their families as part of
EstiaPlus services
50% of leadership roles recruited internally
28.5% of advertised** leadership roles recruited
internally
15% or less employee turnover
60% of employees completing engagement surveys
Current turnover at 22.6%, sector average attrition
is 29%1 (FY20: 18.3%)
Continued focus on decasualisation of our
workforce. 7.5% of total hours worked as by casual
employees (FY20: 8.0%)
FY20 completed biannual employee engagement
survey. FY22 will launch first pulse-based employee
engagement survey to allow regular measurement
of employee engagement and satisfaction levels
* LTIFR refers to Lost Time Injury Frequency Rate being the rolling average of the number of lost time injury claims per 1 million hours worked.
** Leadership roles include central services positions that report to an executive and/or have people leadership responsibility, as well as
Executive Directors and Care Directors, does not include non-advertised roles
1 The Aged Care Workforce Census 2020, Table 2.9 page 23
28 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Highlights from the year
Health and safety:
• COVID-19 vaccination program
targeting 100% of employees receive
their first dose by 17 September
• Launched EstiaWell, our dedicated
wellbeing program to support
employees to focus on their health
and wellbeing
Supporting and upskilling
our people:
• 14,884 professional development
programs completed (10,429 in FY20)
• 70 infection prevention and control
leads in our homes, completing
- 11,859 hours of training
- 9,127 hours of training completed
in clinical development,
understanding dementia and
behaviour management
Diversity and inclusion:
• 47% of Board and Executive
Leadership team positions held
by women
• 120 leaders completed diversity
and inclusion training
Career pathways:
• 1661 vocational student placements
across 97% of homes
• Secured 130 nurse graduate places
as part of government’s Aged Care
Transition to Practice Program
2020-21 Annual Report | Estia Health 29
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Our Strategy – People (Continued)
A continued culture of safety
Embracing health and wellbeing
Ensuring our homes and offices are safe places
for our employees to work is a major priority with
continued and evolving strategies in place to manage
risks, including the impact of COVID-19. During the
second wave of the pandemic in Victoria, a number of
our employees contracted COVID-19 which contributed
to our FY21 LTIFR being higher than FY20.
At the commencement of the pandemic we initiated
a new category of leave (quarantine leave) to ensure
that our employees could confidently take leave if
they were showing signs of illness that might indicate
an exposure to COVID-19. This was in addition to our
employees Enterprise Bargaining Agreement (EBA)
entitlements. During the pandemic, approximately
9,800 work weeks of sick and/or quarantine leave
were taken by employees, including leave supported
by the government.
For homes that experienced COVID-19 outbreaks,
we employed onsite counsellors and psychologists
to provide in-person on-the-ground support for
our teams and residents and ensured that regular
communications provided clear, up-to-date
information for residents, families and our employees.
To support our culture of injury prevention, we have
actively encouraged increased reporting of potential
hazards, near misses and mandatory work, health and
safety training of all employees.
We have adaptable and flexible working models for
our central services teams who have been required
to work remotely throughout the pandemic. We also
actively review the welfare of our employees who
have been working remotely for extended periods.
We launched EstiaWell in November 2020, our
dedicated wellbeing program to support employees
to focus on their health and wellbeing. EstiaWell
includes a calendar of activities and initiatives
offering a broad range of wellbeing services. In FY22
we will continue to embed engagement programs
and benefits, with a particular focus on employee
mental health and will review targets to reflect this
important area of focus. We will replace our target
of a reduction in unplanned leave days, originally
included within our Sustainability Framework,
with targets more reflective of employee mental
wellbeing.
Attracting and retaining high-quality
talent
Availability of a skilled workforce continues to be one
of the most significant challenges for the health and
aged care sectors. It demands a strategic approach
from residential aged care providers, government and
other stakeholders to establish programs which will
ensure sufficiently skilled and dedicated people are
committed to build their careers in caring for some of
Australia’s most vulnerable people.
Our workforce strategy includes:
• Attraction: in FY21 we commenced a project to
develop and define Estia Health’s unique employee
value proposition. This will be utilised across all
aspects of the employee journey to support our
positive brand reputation and focus on attracting
and retaining a highly engaged workforce.
• retention: over the last year we enhanced
EstiaAcademy, to provide learning and development
opportunities for all employees and promote a
culture of continuous learning. Our casual workforce
strategy is designed to provide full and rewarding
jobs, retaining a stable and long-term skilled
workforce.
EstiaAcademy has three priorities:
1. foundational focus: supporting the onboarding
of employees to be work ready, with mandatory
training for residential aged care as well as ongoing
mandatory training for all existing employees. We
have also established relationships with registered
training organisations (RTOs) and developed
systems for the management of student and
trainee placements in our homes.
30 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot 2. Talent and leadership: supporting emerging and
existing leaders to fulfil career aspirations through
our Emerging Leaders Program and the Executive
Director and Care Director Leadership Essentials
Program. There is formal succession planning
across all levels of the organisation, with ‘Ready
Now’ plans in place for Executive Leadership roles.
3. performance and capability: ongoing training and
education for all roles, with development programs
for carers, cleaners and clinical team members.
Engaging with expert clinical partnerships to
deliver specific education programs, including
wound management, pressure injuries and complex
behaviour training.
Embracing diversity
One of our core principles is embracing diversity and
we actively celebrate the breadth and diversity of
people across our organisation.
We are committed to addressing the representation
of women across all leadership and Board
appointments. In 2017, the Board established an
objective of achieving 30% female representation on
the Board. In 2018 this objective was expanded to a
gender diversity target for both the Board and the
Executive team of at least 30% of each gender. In
FY21, gender diversity figures saw 47% of Board and
Executive Leadership roles held by women.
We have reported against a set of standardised
gender equality indicators provided by the Workplace
Gender Equality Agency (WGEA). This report can be
found on our website at estiahealth.com.au under the
Investor/Corporate Governance section.*
In addition to gender, Estia Health’s Diversity Policy
promotes equality in relation to ethnicity, faith,
disability, age and educational experience. In FY21, 120
* https://investors.estiahealth.com.au/investor-
centre/?page=corporate-governance
of our leaders completed a two month inclusion and
diversity leadership program, with further education
planned for FY22.
Survey insights - employee
engagement
In FY20 and FY21 we undertook research
to better understand key stakeholders and
support the development of the Estia Health
brand, including our customer and employee
value propositions and to inform our ongoing
communications, recruitment and marketing
strategies.
In FY21, 893 employees across a broad range
of roles were surveyed on their motivations for
working in residential aged care and for Estia
Health specifically.
Results indicated the following levels of
satisfaction:
• 68% of those surveyed stated they are satisfied
with working in the aged care industry, 29%
neutral.
• The overall experience with working at Estia
Health was positive. 55% stated they were
highly satisfied with their work while 40%
provided a passive rating – neither satisfied nor
dissatisfied.
• When considering Estia Health as a good place
to work, employees rated most favourably the
following criteria: 85% stating the connection
with residents, 82% stating facilities are clean
and hygienic and having a good quality of care,
while 81% rated Estia Health as a safe place to
work.
Source: Brand positioning & customer segmentation research,
Instinct & Reason, December 2020.
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Embracing diversity
In FY21, we launched a 12-month national calendar of awareness days, with initiatives to engage
employees across the organisation. All homes and central office teams took part in a number of events,
with the top four events celebrated including: International Nurses Day (66 homes), International
Women’s Day (56 homes), RU OK Day (50 homes) and Harmony Week (49 homes).
Embracing diversity –
Pride Month
During Pride Month, members of the
Executive and Senior Leadership team
led an all Central Services meeting
and shared their own experiences
of embracing diversity during their
careers and the importance of bringing
awareness to the issue, while embedding
it into everyday action as a core part of
Estia Health’s culture.
‘Estia Health is a great place to be. The staff and the residents are all friendly and supportive
to everyone. I had an awesome experience on my two weeks’ placement. The nurses were so
helpful and patient teaching us things I didn’t know. Thank you, Estia Health.’
- nursing student
A career in caring
Jenny has been the Executive Director at Estia Health
Merrylands for the past 12 years and has had a long, fulfilling
and experienced career in aged care. She started as an
Assistant in Nursing (AIN) in 1993, where she began working
weekends to gain experience while studying full-time for her
Bachelor of Nursing degree.
Graduating in 1994, Jenny spent a number of years as a
Registered Nurse, before being given the opportunity for
further training to become a Staff Training Officer. After
this role, she was promoted to the role of Quality Systems
Manager, responsible for auditing and implementing policies
and procedures.
In 2001 while pregnant with her first son, Jenny was promoted
to the Assistant Director of Nursing role. After her son’s
birth, Jenny returned to full-time work after just four months,
continuing in the role until the birth of her second son. With a
young family at home, Jenny took six months maternity leave
before returning to work part-time where she was promoted
to Care Director, responsible for overseeing all clinical care
delivered in the home and leading a team of nurses and carers.
Five years later, she commenced a job-share with the
Executive Director, which she continued until both her children
started school, when she then took on the role full-time.
Jenny spoke of her long and fulfilling career in aged care ‘I
love my role, but more importantly I love meeting so many
wonderful residents and their families and helping in any way
possible. I love that many of my team have shared a lot of
my personal journey here, as well as meeting new employees
along the way. I look forward to many more years to come’.
32 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot 2020-21 Annual Report | Estia Health 33
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Our Strategy
Our Strategy –
Community
Goal: To have a positive social impact in the communities in which we operate.
Success factors – 2024 target
2021 progress
All homes have active community engagement
plans identifying local social and environmental
initiatives
100% of homes have community connections and
partnerships*
Defining the causes that align with Estia Health and
measure impact using the Social Impact Framework
All homes surveyed to identify the community
causes they support to integrate into Social Impact
Framework
Volunteer programs with high satisfaction levels
93% of homes have volunteers supporting residents
with a range of activities
Ongoing COVID-19 restrictions have impacted some
community-based activities and the re-launch of
the National Volunteer Program
‘I am so appreciative of how you have been incredibly easy to work with and so supportive in me
being able to support carers and their loved ones well. You have made me look very good at my job!
I have been able to speak to carers with confidence knowing that you will guide the carers with ease
and clarity so well. This is an incredibly valued asset to my work!
It is a challenging time to be a carer of an aged frail person and anything I can do to assure a carer
that they can take a break to recuperate is going to be based on establishing trust and assurance.
Thank you again.’
- Community-based support network representative
* Community partnerships include health networks and local community groups or organisations and education training relationships.
34 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Highlights from the year
119,416 days of short-
term respite care provided
(FY20: 105,923)
31.6% of short-term respite
residents chose to move
permanently
93% of homes are supported
by volunteers
97% of homes offer nursing and
vocational student placements
2020-21 Annual Report | Estia Health 35
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Our Strategy
Our Strategy – Community (Continued)
Growing our community networks
Currently operating 69 residential aged care homes
across four states gives Estia Health reach into many
communities. To achieve our goal of having a positive
social impact we seek to develop meaningful local
relationships to support those of our communities
who require residential aged care services.
We define our ‘communities’ to include:
• Health networks: hospitals, local Primary Health
Networks (PHNs), residents’ GPs, community
nurses, local allied health services and community
partners. Our relationships with local healthcare
partners give us the ability to provide residents
with comprehensive care within our homes to
avoid unnecessary hospitalisation. Our homes
also participate in local research projects and
partnerships, including the advancement of
dementia care and palliative care. Many of our
Queensland homes are participating in the
Specialist Palliative Care in Aged Care (SPACE)
Project, a government funded project to improve
access to specialist palliative care for residents with
complex end-of-life needs
• resident networks: connections with local RSLs,
cultural associations, sports teams, churches and
other places of worship ensures residents can
continue their hobbies, support their teams and
practise their religion – all contributing to residents
feeling a sense of purpose and belonging
• Employees: as the majority of our employees
live locally to their Estia Health home they are
advocates for their community. We ask our
employees for their insights on how to strengthen
community relationships
• Training providers: we work closely with TAFEs,
RTOs and universities to provide students practical
learning experience and exposure to the rewarding
careers that are available in residential aged care. In
FY21, 1,661 vocational student placements in care,
nursing, allied health, physiotherapy and hospitality
roles, gained hands on practical experience in our
homes
• Suppliers and other partners: in the past year,
the strength of our supplier relationships has been
critical, finding solutions to the ongoing COVID-19
challenges to ensure we continued to deliver high-
quality essential care and services for our residents
Providing access to care when needed
Residential aged care is a critical part of the
healthcare continuum providing an increasing range
of sub-acute services to meet the complex care needs
of our ageing population. It is also vital to enable our
ageing population to live independently in their own
homes by providing regular periods of short-term
36 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot respite care when their carers need support with
the demands of being a full-time informal carer of a
family member or friend, which often results in carer’s
fatigue.
This year, we provided 119,416 days of short-term
respite care, with 31.6% residents choosing to move
into the home permanently. Our short-term respite
program ensures residents receive nutritious, freshly
cooked meals, social and engaging lifestyle activities
and access to 24/7 nursing care.
Community connections
In FY21, notwithstanding COVID-19 restrictions, our
homes supported our residents to maintain their local
community connections. We surveyed our 69 homes
to assess their community connections and identified:
• The dominant affiliations are with churches,
other places of worship, cultural clubs and
associations, RSLs, Lions Clubs and Probus
groups and associations unique to each home’s
local communities. Four homes have established
relationships with Carer’s Australia, the national
peak body representing unpaid and informal carers.
• 93% of our homes have volunteers, offering
support across a range of activities including pet
visits, book clubs, gardening and art, one-on-one
companionship including supporting specific
cultural connections.
• 64% of homes have intergenerational programs
ranging from children visiting from day care centres
and local schools through to university students.
Programs involve arts and crafts, entertainment and
performances, pen-pal programs and one-on-one
mentorship programs.
Supporting community causes
Each of our homes have their own unique identity,
reflecting their local community, residents and
employees. 67% of our homes supported charities
through fundraising activities with causes chosen
by the residents and employees. Cancer Council’s
Biggest Morning Tea events were hosted by nearly
60% of our homes, as were other community causes,
including bushfire charities and Dementia Australia
fundraising events.
We continue to progress our Corporate and
Sustainability Strategies, with a focus to identify and
support social causes where we can have the most
positive impact. In FY22 we will progress our Social
Impact Framework to define these social causes and
our commitments in supporting them.
When a short stay becomes a
permanent move
Doreen spent many years living in Melbourne,
supported by her son who was her full-time
carer. Doreen felt it was time for a tree change
– so they moved to Wodonga. Shortly after the
move, she came to our Wodonga home for a
two-week short-term respite stay to give her son
a break.
During her stay, she enjoyed getting involved in
daily activities including arts and crafts, exercise
classes, bingo, going for walks and having time
to relax.
Doreen said ‘I came here on respite and I stayed
about a fortnight and I enjoyed it so much. I
relaxed, there was nothing tense about the
place, the staff were marvelous, they look after
you so well. The food to me is home cooked
food… you’re never hungry and if you are hungry,
you ask for something else. We are really well
looked after.’
After her two-week stay, Doreen and her son
decided she would greatly benefit from staying
in the home permanently. ‘I loved it so much that
I knew this was the place I was going to come to
when I was ready. I went home, got ready and
I haven’t regretted it. I never will, because it’s a
place like home.’
read Chris’ story on page 26 and Kevin’s story
on page 44.
2020-21 Annual Report | Estia Health 37
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Enriching
activities
for all
Our Strategy
Celebrating special
milestones
93
special interest
groups*
*Includes book club,
gardening clubs, art
clubs and men’s club
46
communities
supported
with charity
fundraising
events
90+
resident
cultural
backgrounds
• Information sourced from annual home survey
38 Estia Health | 2020-21 Annual Report
88 Centenarians
and older in our
homes
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot 2020-21 Annual Report | Estia Health 39
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Our Strategy
Our Strategy –
Growth
Goal: To optimise shareholder returns by disciplined capital investment to
provide access to trusted aged care services.
Success factors - 2024 target
2021 progress
$27.2m invested
• Significant refurbishments of nine homes and 787
resident places with approved amenity ($3.4m)
• Nurse call and close circuit television (CCTV)
enhancements ($5.0m)
• Asset life-cycle replacements, improvements and
sustainability initiatives ($16.8m)
• Information technology (IT) and systems
improvements ($2.0m)
Greenfield developments - $0.7m invested
• Mt Barker, SA - Development Approval (DA)
advanced
Brownfield development - $21.1m invested
• Opened a new home in Blakehurst, NSW
• Advanced expansion of Burton, SA
• Advanced second stage DA for Toorak Gardens, SA
Opening of Estia Health’s first Wellness Centre -
offering residents and the community access to
specialist reablement services
94% of homes have at least one renewable energy
initiative (solar, LED lighting). Investigating further
energy initiatives and agreements to achieve
renewable energy targets and carbon emissions
reductions
Enhancement of homes through significant and
strategic refurbishments
Expansion through new or brownfield
developments and acquisitions
Service development including access to allied
health services
Environmentally friendly programs to improve
climate resilience and reduce dependence on non-
renewable energy sources as per our Sustainability
Strategy
40 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Highlights from the year
$49.0m investment in
greenfield, brownfield and
refurbishment projects
(FY20: $80.6m)
9 homes significantly refurbished
in period. (FY20: 13)
61 homes have completed CCTV
enhancements (eight in progress
but delayed due to COVID-19
access restrictions)
1st Estia Health onsite Wellness
Centre opened
2020-21 Annual Report | Estia Health 41
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Our Strategy
Our Strategy – Growth (Continued)
Responsible growth and enhancement
Infection Prevention and Control
During FY21 we actively managed the portfolio
with the opening of Blakehurst in southern Sydney
and undertook refurbishment in nine homes,
notwithstanding the restricted access caused by the
COVID-19 pandemic. We also closed our Keilor Downs
home having assessed all redevelopment options for
this small home. During this period, project design
and approvals were advanced pending greater clarity
of both the impact of COVID-19 on the economy and
the underlying investment returns for residential aged
care developments. In FY22 we will be commencing
two new homes in New South Wales.
The impact of COVID-19 has focused attention to
ways of improving the design of residential aged care
homes. In FY21 we conducted a review of air filtration
systems and sought advice from infection prevention
and control experts to update a new services brief for
minimum requirements for future developments.
Temporary ‘Safe Visit Rooms’ were set up in each
home during the COVID-19 pandemic. Individual
rooms were identified and adapted to be used to
support safe and ongoing connection between
families and residents during the peak period of
COVID-19 community transmission.
We also undertook a review of design principles to
incorporate some of the small group living concepts
brought before the Royal Commission. We have
evolved designs to provide more intimate dining
and communal areas and achieve a more home-like
environment in our homes. Other design innovation
projects included the design and wayfinding for
people living with dementia or other cognitive
impairments.
The recommendation of the Royal Commission to
abolish the ACAR licencing system removes supply
constraints and provides opportunity for investment
in areas that have been previously restricted. This
reform signals a change in government policy to
more open and competitive markets that will drive
improved quality and innovative services. We are
supportive of this and other reforms, which will
lead to greater consumer choice and potentially a
restructure of the sector to favour companies that
have strong balance sheets and scale of operation.
42 Estia Health | 2020-21 Annual Report
Safety enhancements
61 of our homes have had CCTV upgrades in common
areas. The program would have been completed in
FY21 however this was impacted due to COVID-19
access restrictions. Other systems and technology
upgrades included the completion of the next tranche
of 19 homes having call-bell systems upgraded to
contemporary technology.
Service innovation
In FY21, in partnership with Concentric Rehabilitation,
we opened our first allied health reablement and
rehabilitation Wellness Centre, as part of our new
home in Blakehurst, which has been positively received
by residents and the local healthcare community.
We will look to expand this reablement care model
into other homes across our network in FY22.
Climate risk
This year we continued assessing the physical risk of
climate change to our portfolio and commenced a
climate exposure and vulnerability assessment of all
homes and development sites. This is the first step
in our roadmap in meeting the recommendations
from the Taskforce for Climate-Related Financial
Disclosures (TCFD).
From this assessment an organisation-wide climate
resilience tool has been developed, which will be
used for a deeper assessment of assets with a higher
physical risk of longer-term climate change and
development of adaptation plans for these assets,
if required. The climate resilience tool will also be
used in assessment of potential new sites for further
growth and outputs from the tool will be integrated
into the latest upgrade to Estia Health’s emergency
management processes, assessing fire, flood and
other risks.
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Looking ahead
The structural ageing of the Australian population
over the next 20 years will support underlying growth
in aged care services. The 85 years and over cohort
will increase from just under 500,000 people in 2020
to just over a million people by 2040.1
While increased home care funding announced in the
May 2021 Federal Budget for 80,000 new places over
the next two years will address the current waiting
list, it is unlikely to dramatically reduce the potential
demand for residential aged care, particularly at the
higher levels of complex care. We intend to evaluate
the home care opportunity and how it might be
profitably and effectively delivered alongside our
residential aged care services.
We believe that residential aged care remains a
fundamental component of the healthcare continuum
and the opening up of protected markets will provide
investment opportunities for those providers who
can meet the quality standards and increased range
of services and innovation that will be demanded by
informed customers.
Development
Completed 2021
nature of
Development
Total new
places
net Additional
places
land Held
Development
Approval
licenses
Secured
Completion
/ Target
Blakehurst, NSW
Brownfield
105
105
In progress
Burton, SA
future
Expansion
St Ives, NSW
Greenfield
Aberglasslyn, NSW
Greenfield
Mt Barker, SA
Greenfield
Toorak Gardens, SA
Brownfield
24
118
118
118
118
24
118
118
88
82
Total - future development
472
406
CHECK
CHECK
CHECK
CHECK
CHECK
CHECK
CHECK
CHECK
CHECK
CHECK
Feb-21
Sep-22
CHECK
CHECK
CHECK
CHECK
Planning Approval
Partial
Planning Approval
Partial
Artist’s impressions – Above: Estia Health Toorak Gardens in SA | Below L to R: Estia Health Aberglasslyn in NSW and Estia Health Mt Barker in SA
1 https://www.health.gov.au/resources/publications/ninth-report-on-
the-funding-and-financing-of-the-aged-care-industry-july-2021
2020-21 Annual Report | Estia Health 43
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Case study
Meeting community expectations – Estia Health Blakehurst
Our Strategy
Opened in February 2021, our Blakehurst home is an example of asset recycling to create contemporary
resident services and achieve acceptable financial returns.
The older style small 42 place home was replaced with a contemporary development for 105 residents
which reached 63.8% occupancy within four months of opening, reflecting the organisation’s ability to
match new developments to the needs of local communities.
Reablement will be one of the essential elements in meeting the changing needs of residential aged care
services. Our Blakehurst home is the first of our 69 homes to offer tailored reablement and rehabilitation
as an additional service for the home’s residents and the local community delivered at an onsite Wellness
Centre. Services are also available to short-term respite residents coming to the home, as opposed to
seeking rehabilitation in hospital.
Kevin’s goal
Before Kevin moved in to our Blakehurst home,
he had experienced several falls and was using
a walker to get about, which meant he had lost
some of his confidence and independence.
Kevin’s goal was to regain his fitness and not need
his walker. Kevin decided to move into the home
because of the Wellness Centre and available
equipment. His immediate focus was to reduce his
risk of falls by regaining his balance, along with
managing his knee pain so that he could easily use
the stairs when visiting his friends.
After Kevin moved in, he started coming to the
gym every day, using the exercise bike and pulley
equipment, attending weekly physio classes and
seeing a member of the physiotherapy team. He is
now able to walk independently without his walker,
although still has it by his side for extra support.
44 Estia Health | 2020-21 Annual Report
‘My goal is to regain fitness which includes the
muscles in my back, so I will be able to walk without
a walker. I go on the rowing machine, on the leg
press, I ride the bike, and I use the rowing pullies.
My balance and walking have improved, and I now
try and walk without my four-wheel walker.’
read Chris’ story on page 26 and Doreen’s story
on page 37.
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot 2020-21 Annual Report | Estia Health 45
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Sustainability
Our Approach to Sustainability
We recognise the long-term viability and profitability
of our organisation depends on the wellbeing of
our people, supporting and integrating within our
local communities and the continued health of the
natural environments we rely upon. Our 2020-2024
Sustainability Strategy provides focus areas and
associated targets to help us mitigate any negative
impacts, as well as maximise any potential positive
value that could result from the way we do business.
In FY21 we continued to progress key projects and
initiatives to move towards achieving the priority
targets set within our Sustainability Framework across
the three core areas of our Strategy: supporting our
people, enhancing our community and respecting our
environment. (see diagram on following page)
Our approach to sustainability is a dynamic process.
The impacts of the COVID-19 pandemic since the
inception of our Sustainability Strategy have changed
key elements of how we operate and will likely
continue to do so for some time. The increase in use
of disposable Personal Protective Equipment (PPE),
for example, impacts on our waste diversion from
landfill. We will continue to monitor the external
environment and adjust our Sustainability Strategy
and targets, so they remain appropriate and relevant
to the three core elements of our Strategy.
Supporting our people
The competition for talent, attracting and retaining
a skilled workforce, remains one of the greatest
challenges facing the aged care sector. Our workforce
strategy based on culture, career progression and
a compelling value proposition aims to differentiate
us from others in the sector. Therefore, the goals we
have established are integrated and reported against
within the strategic people pillar. See page 28.
Enhancing our community
Our residential aged care homes provide vital social
infrastructure to their local communities. Our homes’
connections with local health networks allow us to
provide quality care to our residents and support
those that require access to residential aged care
services. Equally, our homes also provide vocational
education opportunities for their local community.
The role of our community relationships helps our
residents feel a sense of connection and belonging.
Therefore, the goals we have established are
integrated and reported against within the strategic
community pillar. See page 34.
Respecting our environment
We recognise that protecting our environment is
a critical issue and key responsibility to ensure the
future sustainability of our organisation and the
protection of the environment for future generations.
To support this, we have a responsibility to reduce
unnecessary waste and minimise our consumption
of finite resources to work towards reducing our
contribution to climate change.
46 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Our Sustainability Framework
HOW WE WILL ENRICH & CELEBRATE LIFE TOGETHER BY 2024
H E A L T H &
S A F E T Y
DIVERSITY &
INCLUSION
Lost Time Injury
Frequency Rate
(LTIFR) = 3.0
Zero gender
pay gap for
equivalent roles
CIA L
IMPA C T
SO
Designed,
implemented
and annually
report against
a Social Impact
Framework
Y
T
I
N
U
M
M
O
C
N
O
I
T
C
E
N
N
O
C
100% of
homes have
an active
and bespoke
community
engagement
plan
R
U
G O
NIT Y
IN
U
C
M
N
M
A
O
H
C
N
E
100% of
assets have been
assessed for
vulnerability
to climate
change
R
C
E
L
S
I
I
M
L
I
A
E
T
N
E
C
E
W
E
L
L
B
E
I
N
G
5% reduction
in unplanned
personal
leave days
p.a.
S
O
U
U
P
R
P
O
P
E
R
T
O
I
N
G
P
L
E
50% of
recruitment
to leadership
roles is
internal
D
E
T
V
E
R
A
I
N
I
N
G
&
L
O
P
M
E
N
T
100% of ‘high
risk’ suppliers
have completed
an additional
screening for
modern
slavery risk
N
I
A
H
LY C
P
P
U
S
O
U
RESPE C T I N G
R ENVI R O N M E
T
N
50% of
generated waste
is diverted
from landfill
W
A
S
TE
20% reduction
in operational
emissions intensity
(scope 1 & 2)
ENERGY &
CARBON
Reduced
average water
consumption
intensity
by 20%
R
E
T
W A
Highlights from the year
Climate resilience:
• Commenced assessment of all Estia Health homes for climate exposure and vulnerability
Energy and carbon:
• Scope 1 and 2 emissions intensity dropped by 6% between FY19 and FY21
Supply chain:
• Identified high risk suppliers were screened in the FY20 and FY21 reporting periods
• Engagement process underway with identified high risk suppliers
2020-21 Annual Report | Estia Health 47
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Sustainability
Our approach to sustainability (Continued)
Respecting our environment - progress against target
focus
areas
Supply
chain
Water
Success factors -
2024 target
100% of high-risk
suppliers have completed
an additional screening
for modern slavery risk
fy21 progress
Identified high risk suppliers were screened in the FY20 and FY21
reporting periods
Engagement process underway with identified high risk suppliers
Reduced average
water consumption
intensity* by 20%
In FY21 actual water usage was available, building on the FY19
spend based analysis** and allowing a baseline to be established to
measure progress against
FY21 initiatives towards reducing water consumption included a
microfibre cleaning rollout to reduce water usage by an estimated
1.9 megalitres
Energy
and
carbon
20% reduction in
operational emissions
intensity
(Scope 1 and 2)
Our FY21 environmental footprint review showed scope 1 and 2
emissions intensity dropped by 6% between FY19 and FY21
Driven by a decrease in diesel and natural gas consumption, as well
as improvements in the emissions intensity of the electricity grid
We also acknowledge the potential impact of COVID-19 on
emissions from operations. As such, we will monitor emissions
closely over the coming year and re-assess targets
Waste
50% of generated
waste is diverted from
landfill
Despite a significant increase in personal protective equipment (PPE)***
disposal due to the COVID-19 pandemic response, overall diversion of
waste from landfill increased from 16% in FY19 to 17.6% in FY21
We continued to reduce our use of disposable plastic items, with
the removal of disposable utensils and plastic pill cups, diverting
approximately nine tonnes of waste from landfill
We established a waste reduction working group to plan waste
audits – these were paused due to COVID-19 access restrictions
Commenced assessment of all Estia Health homes and
development for climate exposure and vulnerability
A climate resilience tool developed from this assessment will allow
deeper investigation of homes in areas of higher risk to long-term
climate change and future adaptation planning
Climate
resilience
Undertake climate
vulnerability and
exposure assessment
on all assets
Measuring our progress
In FY19 we conducted an environmental baseline study which was an important step in understanding our
organisation’s environmental impact and this allowed us to define our priorities and focus areas identified within
our Sustainability Strategy.
This year we reviewed our environmental footprint again to assess our progress against the targets and review
the performance of our assets and operations to inform any future updates to the Sustainability Strategy.
To ensure continued accuracy and ability for regular reporting, we will be introducing an Integrated Data
Management System (IDMS) in FY22, enabling the efficient management of assets and ongoing measurement
of environmental and social initiatives.
* Water consumption intensity calculated per occupied bed day
** FY19 data included water spend only, FY21 advanced to include KL consumption
***includes PPE being disposed in landfill
48 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Renewable energy and portfolio efficiency
We have completed renewable energy and energy efficiency projects across our portfolio of homes,
which included solar panel installation, LED lighting and upgrades to smart water meters.
During FY21, we generated 6,221MWh of solar energy, which equates to 20% of our overall electricity
consumption across our homes and corporate offices. This year we began investigating offsite renewable
energy procurement opportunities including the feasibility of Power Purchase Agreements (PPAs) to
increase the overall use of renewable energy and support progress towards our emissions reduction targets.
In FY21 we took part in the National Australian Built Environment Rating System (NABERS) Accelerate
pilot program, providing baseline data to support the development of a rating system of environmental
performance specifically for aged care and retirement living buildings. The NABERS ratings program for
residential aged care launched in August 2021.
Assessing the climate resilience of our portfolio
The 2009 Black Saturday bushfires and a decade later the 2019 bushfires, highlighted the importance
of understanding and mitigating the risks of extreme weather events on our portfolio. In response we
commenced climate vulnerability and exposure assessment on all assets and development sites to
develop a climate resilience tool. The climate resilience tool will be used for deeper investigation of sites
with a higher longer-term physical risk of climate change impact to assist future adaptation planning.
This is the first step in our roadmap to meeting recommendations of the Taskforce on Climate-Related
Financial Disclosures (TCFD) and in FY22 we will begin scenario planning to identify key transition risk to
the organisation.
Sample of the tool which details climate vulnerability and exposure of every Estia Health home.
2020-21 Annual Report | Estia Health 49
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Assessing supply chain risk
Our roadmap to addressing modern slavery risk in our supply chain incorporates ongoing engagement
with suppliers. In FY21 we published our first Modern Slavery Statement for the period FY20, with
67 suppliers identified in high-risk categories screened to measure risk level. As part of our ongoing
engagement, six of these suppliers took part in a Modern Slavery education workshop with Estia Health
property and procurement teams. In FY21 we also surveyed all new suppliers for our FY21 Modern Slavery
Statement in high-risk categories and 100% completed the screening process. The suppliers identified
through the FY20 and FY21 screening have been integrated into our modern slavery roadmap and action
plan to manage ongoing risk.
Estia Tier 1 Suppliers | Sectors of Operation:
Healthcare Services
Wholesale & Trade
Construction
Manufacturing
5
4
15
9
IT Services & Software
3
Accommodation & Food Service Activities
Agriculture, Forestry & Fishing
2
2
Domestic Work
Personal Services
1
1
Estia Tier 1 Suppliers | Country of Operation:
Sample of tier 1 suppliers for Estia Health: sector and countries of operation – both identified as risk factors.
50 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
2020-21 Annual Report | Estia Health 51
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Our Approach to TCFD
Recommendations
This report represents Estia Health’s adoption of the recommendations of the Taskforce on Climate-Related
Financial Disclosures (TCFD).
Estia Health acknowledges the risks that climate change presents to the organisation and broader community
and supports the need for action to limit global temperature rise to no more than 2 degrees above pre-industrial
levels. Notwithstanding these climate change priorities, Estia Health’s first priority is the safety of its residents
and employees and we are mindful of COVID-19 and pandemic matters in any climate change measures that we
seek to implement and work towards.
Climate risks are classified into two categories:
• physical risk
- Direct: following an acute event, events or longer-term shifts in the climate that may impact the operability
or remaining life of assets, cause damage to assets, or;
- Indirect: such as supply chain disruption
• Transition risk
- Resulting from a move to a low carbon economy, which may result in regulatory, policy, legal, technological
or market changes
Roadmap to Climate-Related Financial Disclosures (TCFD roadmap)
phase 1 (fy21)
phase 2 (fy22-23)
phase 3 (fy24+)
e
c
n
a
n
r
e
v
o
G
y
g
e
t
a
r
t
S
• Integrate climate risk into
Executive Sustainability
and Executive Risk
Management Committee
standing agendas
(complete)
• Integration of climate risk into all
relevant corporate governance
documentation
• Quarterly reporting of climate risk
and TCFD roadmap progress to
Board Risk Management Committee
• Climate-related risk disclosure
aligned to TCFD recommendations
(including scenario analysis)
• Climate-related risk
disclosure aligned to
TCFD recommendations
including financial
exposure
• Publish Sustainability
Strategy with climate
change targets (complete)
• Commence assessment
of physical risk through
exposure and vulnerability
assessment and
development of climate
resilience modelling tool
• Commence emissions,
waste and water
reduction tactics in line
with commitments in
Sustainability Strategy
• Detailed assessment of transition
risk including scenario analysis
against high and low emissions
scenarios
• Develop strategy for
mitigation of transition
risks, based on scenario
planning
• Implementation of climate
change adaptation plans
across all identified higher
risk physical assets.
• Deeper investigation of physical
risk and development of adaptation
plans for higher risk assets
• Portfolio-level approach for
regularly reviewing climate change
risk as an ongoing process
• Implement Integrated Data
Management System (IDMS) and
use for advanced monitoring of
performance at an asset level
52 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot phase 1 (fy21)
phase 2 (fy22-23)
phase 3 (fy24+)
t • Climate resilience
n
e
m
e
g
a
n
a
m
k
s
i
r
assessment approach and
investment approved and
integrated to Executive
Sustainability Committee
and Executive Risk
Management Committee
responsibilities (complete)
• Bi-annual climate-related risk
reporting to Executive Sustainability
Committee and Board Risk
Management Committee
• Integration of financial risks
associated with climate change into
risk management framework
d
n
a
s
c
i
r
t
e
M
s
t
e
g
r
a
t
• Establish emission
• Review FY22 performance against
• Review targets and
reduction targets that
relate to energy, water,
waste (complete)
targets
• Ongoing quarterly review of
progress against emissions
reduction targets
improve where possible,
noting Estia Health’s
priority to manage through
COVID-19 and pandemic
events
Approach to TCFD recommendations
TCfD
recommendation
Our approach
e
c
n
a
n
r
e
v
o
G
Describe the
Board’s oversight
of climate-
related risks and
opportunities
Estia Health’s Board and Board Risk Management Committee is responsible for
providing oversight of climate-related risk management. The Risk Management
Committee is a committee of the Board established in accordance with the
Company’s constitution and is authorised by the Board to assist it in fulfilling its
statutory and regulatory responsibilities.
The Risk Management Committee’s Charter* details its responsibility for: economic,
environmental (including climate risk), social sustainability and governance risks.
The Committee meets as frequently as required to undertake its role effectively,
however specifically regarding climate change risk:
• Climate change risk is to be a regular agenda item at the Board Risk
Management Committee. This will include the findings of scenario modelling
and analysis of physical and transition risk.
• The Board will regularly assess progress against targets and commitments
made in Estia Health’s 2020-2024 Sustainability Strategy
For more information on Estia Health’s governance structure and Risk
Management Committee read the Corporate Governance Statement**
Describe
management’s
role in assessing
and managing
climate-related
risks and
opportunities
Assessing and managing climate-related risk is included in Estia Health’s
Sustainability Strategy. This is overseen by Estia Health’s Executive Sustainability
Committee, which represents the main management function for the integration
of climate risk into actions.
Climate risk is a standard agenda item at quarterly Sustainability Committee
meetings.
Existing tools to manage and monitor progress against climate risk actions include:
• Measurement of carbon footprint against baseline, using an IDMS from FY22
onwards
• Energy supplier contract updates
• Emergency management plans
• Critical Incident Management team (CIMT) and systems to respond to
emergency issues, including climate related impacts/events
Areas of underperformance are escalated to the Executive Risk Management
Committee and Board Risk Management Committee
* https://investors.estiahealth.com.au/investor-centre/?page=corporate-governance
** https://investors.estiahealth.com.au/investor-centre/
2020-21 Annual Report | Estia Health 53
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes
Our Approach to TCFD Recommendations (Continued)
Sustainability
TCfD
recommendation
Impacts of
climate-
related risks
(opportunities
and threats)
on the
organisation’s
businesses,
strategy and
financial planning
resilience of the
organisation’s
strategy, taking
into account
different climate
scenarios,
including
2-degree
scenario
processes for
identifying
and assessing
climate-related
risks
y
g
e
t
a
r
t
S
t
n
e
m
e
g
a
n
a
m
k
s
i
r
Our approach
Estia Health supports the need for action to limit global temperature rise to no
more than 2-degrees above pre-industrial levels and is committed to understanding
climate change risks and continually improving our climate change strategy.
The key areas of focus for Estia Health in relation to TCFD recommendations for
physical and transition risk include:
physical risk (fy22-23):
• Estia Health will progressively review and assess the climate change resilience
of all homes. Actions and responses to the assessment will be initiated on a
prioritised basis to preserve the safety of our residents and employees and to
also maximise the preservation of asset values and earnings streams
Transition risk (fy22-24):
• A detailed review, including scenario planning of transition risk to identify those
most relevant to the organisation to allow mitigation plans to be developed
• Reducing Estia Health’s reliance on grid-based fossil fuel energy and identifying
further opportunities to mitigate this risk with renewable energy initiatives
beyond those already implemented at 65 operating homes
Estia Health will undertake quantitative scenario analysis in Phase 2 of the TCFD
roadmap, based on a low emissions scenario and high emissions scenario, which
will include consideration of a 2-degree scenario. This is an important step to fully
understand the impact of climate change to Estia Health.
Phase 3 will seek to demonstrate the financial exposure of the organisation under
these two scenarios.
This work will influence future decisions and planning, as well as acting as an
education piece for Estia Health management.
Estia Health’s Board Risk Management Committee has responsibility to oversee
the organisation’s climate-related risk management identification and strategy,
with guidance, input and action from the Executive Sustainability Committee and
Executive Risk Management Committee.
In FY19, Estia Health undertook a materiality assessment, which was
benchmarked to the Global Reporting Initiative (GRI) Standards. From a survey
of over 2,000 internal and external stakeholders, it identified resilience to climate
change as a material issue.
Estia Health will repeat this materiality assessment in Phase 2 of our TCFD
roadmap with the aim of updating and improving relevant data for use in risk-
based decisions.
54 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
TCfD
recommendation
Our approach
processes for
managing
climate-related
risks
)
d
e
u
n
i
t
n
o
c
(
t
n
e
m
e
g
a
n
a
m
k
s
i
r
s
t
e
g
r
a
t
d
n
a
s
c
i
r
t
e
M
How processes
for identifying,
assessing,
and managing
climate-
related risks
are integrated
into the
organisation’s
overall risk
management
Metrics used by
the organisation
to assess climate-
related risks and
opportunities
in line with its
strategy and risk
management
process
Responding to climate-related risk is a focus within the ‘respecting our
environment’ segment of Estia Health’s Sustainability Strategy and includes both
physical and transition risks and opportunities.
physical risk:
• The climate resilience modelling tool developed in FY21 will be used for a
deeper assessment of homes in the portfolio that have been identified at higher
risk to the physical impacts of climate change. From this assessment climate
risk adaptation plans will be developed as required. Ongoing, these homes will
be monitored through the use of an IDMS
• A sustainable procurement strategy will be developed, which will consider
supply chain instability and risk
Transition risk:
• Estia Health’s Sustainability Strategy addresses several aspects of climate risk,
including initiatives aimed at achieving a carbon emissions reduction
• Emissions reduction initiatives will include a move to using more renewable
energy, in addition to the renewable energy initiatives already introduced across
94% of homes in our portfolio
Additional actions related to transition risk will be updated in line with a scenario
modelling and analysis in Phase 2 of Estia Health’s TCFD roadmap.
The Board’s role is to set the risk appetite for the organisation, to oversee the risk
management framework and satisfy itself that the framework is sound.
The Board, Board Risk Management Committee and Executive Sustainability
Committee collaborate to assess the influence of climate change on Estia Health’s
operations and categorises risk to determine the acceptable threshold or risk
tolerance for each identified risk. The business strategy can then be set with
these risk parameters.
In Phase 2 of Estia Health’s TCFD roadmap an updated materiality assessment
will be completed and reflected in the business strategy and risk matrix.
Estia Health’s Sustainability Strategy details targets in the areas of climate
resilience, waste, energy, carbon and water. A baseline review was conducted
in FY19 to measure the metrics of water usage (ML), fuel consumption (kms),
greenhouse gas emissions (CO2), energy usage (MWh) and waste production
(tonnes) against per operating bed day*.
FY21 performance against this baseline will be reviewed and all updated data will
be input into an IDMS for ongoing measurement.
Estia Health will regularly measure performance against these targets, with the
objective to review and re-assess targets, being mindful of our priority to have
a safe environment for our residents and employees, notably as we manage
through COVID-19 and pandemic events.
*per operating bed day allows for metrics to be allocated as usage against number of residents living in our homes.
2020-21 Annual Report | Estia Health 55
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes
progress Snapshot
Progress Snapshot
The following Progress Snapshot provides a summary of FY21 progress across Estia
Health Strategic Pillars and Sustainability Strategy.
Success factors -
2024 target
FY21 progress
CArE
100% met outcomes from
the Aged Care Quality
and Safety Commission
assessment visits
95 assessment visits conducted in FY21 across 60 homes. Ten homes received
unmet outcomes during FY21, four are still being resolved within the agreed
timeframes (as at 20 August 2021). Of the expected outcomes examined
in these visits, we achieved a 97% of fully met outcomes and continually
examine how we can fully meet requirements on all occasions. (FY20 result:
42 assessment conducted across 31 homes. Nine assessed as non-compliant,
four of which resolved during FY20)
Government recognition
of our support and
partnerships with Primary
Health Networks (PHNs)
Opportunities for continued collaboration to support resident care, included
trailing new government services including Wellbeing SA’s My Home Hospital,
a service that brings hospital-level care to people in their homes and
residential aged care homes
Reduce complaints by 50%
year on year to the Aged
Care Quality and Safety
Commission (ACQSC)
Reduce procedures,
guidelines and forms by
at least 50% to streamline
clinical care processes
CuSTOMEr
Estia Health Consumer
Experience Report (CER)
scores greater than 93%
satisfaction rating*
Net Promoter Score (NPS)**
of 50 or more for likelihood
of residents and families to
recommend Estia Health
External complaints to ACQSC improved to be 28% below industry
benchmark for most recently published period January – March 2021
(FY20 result: January – March 2020 4.8% above industry benchmark)
Work continued in streamlining our procedures, guidelines and forms to
provide clearer guidance to our teams and reduce the time required to
complete and review paperwork. COVID-19 required both new and amended
procedures, guidelines and forms to be developed, with a significant number
of documents being streamlined, updated or removed.
FY21: 93.7% satisfaction rating (FY20: 93.0%)
FY21: +51 Net Promoter Score: (FY20: +49)
Customer experience
driving occupancy rates
higher than peers
FY21: average occupancy 91.2% (FY20: 93.2%)
Pre COVID-19 average occupancy 93.6%, consistently above sector and peers
31.6 % of short-term residents moved into a home permanently (FY20: 37.5%)
* Satisfaction defined as percentage of responses that report experience as “most of the time” or “always”
** Net Promoter Score (NPS) measures the loyalty of a company’s customer base with a score from -100 to +100, which is calculated from
people responses to the question “How likely are you to recommend this organisation to a friend or family member?”
56 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
Success factors -
2024 target
FY21 progress
pEOplE
Zero preventable lost time
injuries
LTIFR: 11.9* (FY20: 4.9)
Impacted by COVID-19 – there is a continued focus on frequency, severity and
cost of claims
70% uptake of employee
wellbeing programs
• Launch of EstiaWell in November 2020, Estia Health’s first dedicated
wellbeing program
• 4.48% of Estia Health employees utilising EAP services (FY20: 3.9%)
Reflective of COVID-19 environment and additional support required
• New EAP partner with REACH program delivered by qualified and
registered psychologists. Available to all employees, their families and
residents and their families as part of EstiaPlus services
28.5% of advertised** leadership roles recruited internally
Current turnover at 22.6%, sector average attrition is 29%1 (FY20: 18.3%)
Continued focus on decasualisation of our workforce. 7.5% of total hours
worked as by casual employees (FY20: 8.0%)
50% of leadership roles
recruited internally
15% or less employee
turnover
60% of employees
completing engagement
surveys
FY20 completed biannual employee engagement survey. FY22 will launch first
pulse-based employee engagement survey to allow regular measurement of
employee engagement and satisfaction levels
COMMunITy
All homes have active
community engagement
plans identifying local
social and environmental
initiatives
Defining the causes that
align with Estia Health and
measure impact using the
Social Impact Framework
Volunteer programs with
high satisfaction levels
100% of homes have community connections and partnerships^
All homes surveyed to identify the community causes they support to
integrate into Social Impact Framework
93% of homes have volunteers supporting residents with a range of activities
Ongoing COVID-19 restrictions have impacted some community-based
activities and the re-launch of the National Volunteer Program
* LTIFR refers to Lost Time Injury Frequency Rate being the rolling average of the number of lost time injury claims per 1 million hours worked.
** Leadership roles include central services positions that report to an executive and/or have people leadership responsibility, as well as
Executive Directors and Care Directors, does not include non-advertised roles
1 The Aged Care Workforce Census 2020, Table 2.9 page 23
^ Community partnerships include health networks and local community groups or organisations and education training relationships.
2020-21 Annual Report | Estia Health 57
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progress Snapshot
Progress Snapshot (Continued)
Success factors -
2024 target
FY21 progress
GrOWTH
Enhancement of homes
through significant and
strategic refurbishments
$27.2m invested
• Significant refurbishments of nine homes and 787 resident places with
approved amenity ($3.4m)
• Nurse call and close circuit television (CCTV) enhancements ($5.0m)
• Asset life-cycle replacements, improvements and sustainability initiatives
($16.8m)
• Information technology (IT) and systems improvements ($2.0m)
Expansion through new or
brownfield developments
and acquisitions
Greenfield developments - $0.7m invested
• Mt Barker, SA - Development Approval (DA) advanced
Brownfield development - $21.1m invested
• Opened a new home in Blakehurst, NSW
• Advanced expansion of Burton, SA
• Advanced second stage DA for Toorak Garden, SA
Pilot of Estia Health’s first Wellness Centre - offering residents and the
community access to specialist reablement services
94% of homes have at least one renewable energy initiative (solar, LED
lighting). Reviewing further energy initiatives and agreements to achieve
renewable energy targets and carbon emissions reductions.
Service development
including access to allied
health services
Environmentally friendly
programs to improve
climate resilience and
reduce dependence on
non-renewable energy
sources as per our
Sustainability Strategy
58 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
Focus
areas
Success factors -
2024 target
FY21 progress
SuSTAInABIlITy
Supply
chain
Water
100% of high-risk suppliers
have completed an additional
screening for modern slavery
risk
Identified high risk suppliers were screened in the FY20 and
FY21 reporting periods
Engagement process underway with identified high risk
suppliers
Reduced average water
consumption intensity* by
20%
In FY21 actual water usage was available, building on the
FY19 spend based analysis** and allowing a baseline to be
established to measure progress against
Energy
and
carbon
20% reduction in
operational emissions
intensity
(Scope 1 and 2)
Waste
50% of generated waste is
diverted from landfill
Climate
resilience
Undertake climate
vulnerability and exposure
assessment on all assets
FY21 initiatives towards reducing water consumption
included a microfibre cleaning rollout to reduce water usage
by an estimated 1.9 megalitres
Our FY21 environmental footprint review showed scope 1 and 2
emissions intensity dropped by 6% between FY19 and FY21
Driven by a decrease in diesel and natural gas consumption,
as well as improvements in the emissions intensity of the
electricity grid
We also acknowledge the potential impact of COVID-19
on emissions from operations. As such, we will monitor
emissions closely over the coming year and re-assess targets
Despite a significant increase in personal protective equipment
(PPE)*** disposal due to the COVID-19 pandemic response,
overall diversion of waste from landfill increased from 16% in
FY19 to 17.6% in FY21
We continued to reduce our use of disposable plastic items,
with the removal of disposable utensils and plastic pill cups,
diverting approximately nine tonnes of waste from landfill
We established a waste reduction working group to plan
waste audits – these were paused due to COVID-19 access
restrictions
Commenced assessment of all Estia Health homes and
development for climate exposure and vulnerability
A climate resilience tool developed from this assessment will
allow deeper investigation of homes in areas of higher risk to
long-term climate change and future adaptation planning
* Water consumption intensity calculated per occupied bed day
** FY19 data included water spend only, FY21 advanced to include KL consumption
***includes PPE being disposed in landfill
2020-21 Annual Report | Estia Health 59
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes 60 Estia Health | 2020-21 Annual Report
Tax
Transparency
Report
For the year ended 30 June 2021
Estia Health Limited
ABN 37 160 986 201
Chief Financial Officer’s Introduction
Tax Governance and Strategy
Tax Reconciliations and Contributions
Income Tax Expense Reconciliation
Reconciliation of Income Tax Expense
to Current Tax Liability
Explanation of Material Temporary
and Non-Temporary Differences
Summary of Tax Contributions
62
63
63
64
64
65
2020-21 Annual Report | Estia Health 61
Chief Financial Officer’s
Introduction
Estia Health Limited (the “Group”) is one of Australia’s
largest residential aged care providers caring for
over 8,000 residents across 69 homes in New South
Wales, Queensland, Victoria and South Australia.
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;
• Deliver earnings growth through sustained high
occupancy rates across all homes, opening new
homes, the enhancement of current homes and
acquisitions; and
• Develop additional earnings from related services
within the continuum of Aged Care.
The Group is committed to having governance
policies and practices that maintain a low tax risk
environment to support the execution of the Group’s
strategy.
In creating a low tax risk environment, the Group:
• Maintains a framework that ensures 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 relevant tax legislation; and
• Maintains constructive working relationships with
the Australian Taxation Office (“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 73 to 173 of this Annual
Report.
The Group is a tax resident of Australia and does
not currently operate in foreign jurisdictions, nor
has it entered into any international related party
transactions or structures.
We are pleased to disclose our approach to managing
our tax and the taxes we have contributed in
Australia.
Steve lemlin
Chief Financial Officer
62 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
Tax Transparency report
TAX GOVERNANCE AND STRATEGY
The Group’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 the Group’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 the Group’s tax
team with recommendations referred to the Audit Committee for approval.
The Group’s approach to Tax Risk Management is to treat tax related matters responsibly in line with the
relevant tax laws. The Group has a commitment to transparency, to providing full and timely disclosures and to
act with integrity in all its tax related matters.
Where there is uncertainty around a tax position in relation to a transaction or a category of transactions, the
Group will take into consideration the potential impact on shareholder value, its market reputation and the
impact of possible penalties imposed by the ATO and other relevant authorities. Tax positions are taken only
when it could be concluded in the circumstances, having regard to relevant authorities, that what is argued
for is more likely to be correct than incorrect, as defined in the Taxation Administration Act 1953. Tax matters
that are considered to be high risk are to be reported to the Board’s Audit Committee for consideration. Where
appropriate, the Group engages with its external advisers to receive tax advice.
The Group seeks to have professional working relationships with the ATO and other relevant tax authorities.
The Group adopts structures and positions that align to its business outcomes and values and are not driven by
tax outcomes.
TAX RECONCILIATIONS & CONTRIBUTIONS
INCOME TAX EXPENSE RECONCILIATION
A full reconciliation of the Group’s accounting profit for the period to its income tax expense is included in Note B7
on page 125 of this Annual Report. The Group’s accounting profit has been determined in accordance with Australian
Accounting Standards (the “Standards”). From this accounting profit, the Group applies Australian tax legislation to
determine its taxable income or loss for the period, by deducting allowable deductions from assessable income.
For the period, the Group has determined that it has taxable income to which it applied the Australian statutory
income tax rate of 30% (2020: 30%) to calculate its tax expense.
Accounting profit / (loss) before income tax
Add: Goodwill impairment expense
2021
2020
$’000
$’000
9,064
(108,845)
-
136,059
Accounting profit before impairment and income tax expense
9,064
27,214
At the Australian statutory income tax rate of 30% (2020: 30%)
2,719
8,164
Adjustments in respect of income tax of previous year
Permanent differences
Utilisation of unrecognised tax losses
Income tax expense in the consolidated income statement
Effective tax rate
79
280
(13)
61
15
(176)
3,065
8,064
33.8%
29.6%
The Group’s Effective Tax Rate (“ETR”) for the current period is calculated as its income tax expense divided
by accounting profit before impairment and income tax expense. The calculated ETR for the period of 33.8%
deviates from the Australian statutory income tax rate of 30% due to differences between accounting profit and
taxable income as explained above.
For the year ended 30 June 2020, goodwill impairment expense of $136,059,000 was excluded from the above
calculation as it was not an allowable tax deduction according to the relevant tax legislation.
2020-21 Annual Report | Estia Health 63
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes TAX RECONCILIATIONS & CONTRIBUTIONS (Continued)
RECONCILIATION OF INCOME TAX EXPENSE TO CURRENT TAX PAYABLE
Income tax expense in the consolidated income statement
Add / (subtract):
Net timing differences
(Under) / Over provision in prior years
Current tax expenses included in income tax expense
Add / (subtract):
Tax payments to tax authorities
Net opening balance
net current tax payable
2021
$’000
3,065
(1,831)
(512)
722
2020
$’000
8,064
8,090
294
16,448
(6,064)
(9,336)
6,504
1,162
(608)
6,504
EXPLANATION 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 on page 125 of this Annual Report.
Temporary differences result from differing recognition criteria between the tax and accounting treatment of
certain transactions which result in transactions being recognised in different periods for tax and accounting
periods.
The FY21 temporary difference of $1,831,000 is represented as follows:
• In the current period, the Group completed the sale of its land in Mona Vale and recorded a pre-tax profit on
sale of $7,792,000. A taxable temporary difference arose as the profit was treated as taxable in the previous
financial year when the Group entered into the contract of sale, however, the accounting profit was not
recognised in the same financial year. This triggered the recording of a deferred tax asset on the Group’s
balance sheet. The sale has now completed, and the temporary difference reversed in the current period.
• During the year, the Group recognised an impairment loss on land of $821,000. Under tax legislation, this
represents an unrealised capital loss which, when realised, can be utilised against future realised capital gains.
As a result, the tax deductibility of this expense was deferred, with a deferred tax asset recognised on the
Group’s balance sheet.
• The remaining balance is represented by movements in accrued expenses, payroll-related liabilities such as
annual leave and differences in tax and accounting depreciation rates of buildings.
64 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Tax Transparency report
TAX RECONCILIATIONS & CONTRIBUTIONS (Continued)
SUMMARY OF TAX CONTRIBUTIONS
Taxes paid by type
Payroll tax 1,2
Income tax 1
Fringe benefits tax
Council rates
Land tax
Stamp duties
Total taxes paid
Taxes collected and remitted by type
Employee PAYG withholding 1
GST (collected and remitted)
GST (paid but reclaimed)
Total taxes collected and remitted, net
The above taxes were remitted to the following Australia revenue
authorities:
Australian Federal Government
State Governments
Local Governments
Total tax contributions, net
2021
$’000
3,065
(1,831)
(512)
722
2020
$’000
8,064
8,090
294
16,448
(6,064)
(9,336)
6,504
(608)
90,880
1,774
51,138
214
(14,892)
(15,671)
77,762
35,681
83,932
24,967
2,088
45,158
17,643
2,006
110,987
64,807
1 During the financial year ended 30 June 2020, the Group participated in the various tax relief measures offered by the Australia Federal and
State Goverments and elected to defer the payment of corporate tax instalments, PAYG remittances and state based payroll taxes totalled
$22,285,000. These deferred tax liabilities were settled in full in the current year.
2 Included in the current year was payroll tax of $445,000 borne by the Group in relation to the Government funded COVID-19 aged care
retention bonuses, which were remitted to the Group and distributed to the employees on behalf of the Government during the financial year.
2020-21 Annual Report | Estia Health 65
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Corporate Governance
Statement
Estia Health’s Corporate Governance Statement for
2021 (Statement) outlines our principal corporate
governance practices in place during the financial
year ended 30 June 2021. Copies of all governance
documents referred to in this Statement can be
found at investors.estiahealth.com.au1
2020-21 Areas of Governance focus
Key areas of governance focus and activities
undertaken by the Board, its Committees and
management during 2020-21 included:
• Strategic and financial performance
Our governance policies and practices have been
consistent with the 4th edition of the ASX Corporate
Governance Council’s Corporate Governance
Principles and Recommendations (ASx Governance
principles) throughout the year. These policies and
practices are reflected in this Statement as well as
our Appendix 4G. The Statement is current as at 23
August 2021 and has been approved by the Estia
Health Board on that date.
Our Corporate Governance Statement and Appendix
4G are available on the Estia Health website at
investors.estiahealth.com.au1
The Board and management team maintain
high standards of corporate governance as
part of our commitment to create value for our
stakeholders through effective strategic planning,
risk management, transparency and corporate
responsibility.
We regularly review our governance practices in light
of the growth in the Company and relevant emerging
corporate governance developments.
1 https://investors.estiahealth.com.au/investor-
centre/?page=corporate-governance
66 Estia Health | 2020-21 Annual Report
- A Board and Executive team strategy session
was held with a focus on reviewing the growth
opportunities of the core residential service
and broader aged care adjacencies. The major
operational pillars supporting this strategy were
considered
- The Board reviews the financial performance
of the business every month and approves an
annual budget
• COVID-19 response
- Established a COVID-19 Committee comprised
of the Chair of the Board, and the Chairs of each
of the Risk Management Committee and Audit
Committee
- Established a COVID-19 Critical Incident
Management Team (CIMT) to oversee the
response to the pandemic. All aspects of
infection prevention and control (IPC) for
resident and employee safety protocols for
homes and offices. Implemented a regular weekly
communication cadence to update employees on
pandemic response changes, impacts to homes
and colleagues. Established an internal online
portal to continuously update employees on the
changes to policies and procedures related to the
company’s response to the pandemic. Regular
coordinated communications were issued to
residents and their representatives during this time
• Our people
- Established a People Committee to consider
strategic actions and provide oversight of critical
operational issues, with regard to the current and
future supply and demand of a skilled workforce
- Established the Work Health and Safety Committee
to provide guidance and oversight on strategies to
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Corporate Governance
support the health and wellness of the workforce
and including the safety of residents
• Social and environment
- Integrated environmental, social and governance
issues into Estia Health’s Corporate Strategy with
resident care and human capital identified as the
short-term material non-financial risks
- Made further progress on integrated reporting
and increased our disclosure and transparency
on key sustainability issues
- Reviewed opportunities to positively impact
environmental issues and commenced roll out
of various high value projects, including the
development of a climate resilience tool to assess
the physical risk of the portfolio as an initial step
in meeting the Taskforce for Climate-Related
Financial Disclosure recommendations
• Governance
- Reviewed and updated relevant governance
policies, charters, and practices to reflect the
4th Edition of the ASX Corporate Governance
Council’s Corporate Governance Principles and
Recommendations
- Approved internal audit program was developed
by management, and oversight is provided by the
Risk Management Committee
- Continued oversight as management responded to
COVID-19 and the impact of increased expectations
and actions from regulators across the sector
- Engaged and meeting with key regulators
- Met with shareholders and proxy advisors as part
of Estia Health’s ongoing engagement to discuss
matters relating to our business performance,
governance and remuneration
- Introduced legislated Modern Slavery Statement
• Risk
- Established a Clinical Governance Committee
- Reviewed cybersecurity risks and appropriate
mitigation plans
- Oversight of home accreditation outcomes,
with a focus on Aged Care Quality Standards,
particularly Standard 8
- Reviewed WHS and people-associated risk plans
for further improvements
Board committees
Our Board has delegated specific authority to six
Board Committees, which assist the Board by
examining various issues and making recommendations.
A description of each Committee and its responsibilities
are set out in our Statement.
In FY21 there were 63 formal Board and Board
Committee meetings. Between formal meetings
management provided the Board with material
business and other updates as well as information
in response to requests from Board meetings. In
addition, Board members have informal conversations
with employees, which are important in assessing the
culture within Estia Health and visits to homes are
scheduled throughout the year and Director’s attend
the annual management conference. Due to COVID-19
restrictions, the home visits were paused and the
Board transitioned to enabling virtual attendance
at all Board and Board Committee meetings and
meetings with management.
Our Board has established the following standing
Committees, which assist with the execution of its
responsibilities. The composition and effectiveness of
the Committees are reviewed on an annual basis:
• Audit Committee;
• Risk Management Committee;
• Nomination and Remuneration Committee; and
• Property and Investment Committee
Each of these Committees operate in accordance with
specific charters approved by our Board, which sets
out its composition, functions and responsibilities.
In addition, our Board may establish ad-hoc
committees or delegate authority to existing
committees to oversee specific activities. During
FY20, the Board established two additional
committees, both of which remain in existence at the
date of our Statement:
• Royal Commission and Regulatory Committee; and
• COVID-19 Committee
Also during the year the Board established a Class
Action Committee for the sole purpose of assisting
the Board with matters concerning the class action
against the Company. As this matter has now been
resolved, this committee is no longer required.
Details of the number of committee meetings held
during the year and individual directors’ attendance
at these meetings can be found in the 2021 Directors’
Report.
Responsibilities of management
Our CEO/MD oversees the day-to-day management
of the business and, with the support of senior
management, reports to the Board on the exercise
of his delegated authority. Our CEO/MD has been
delegated (as) the authority to manage the Company
in accordance with the strategy, plans and policies
approved by the Board. The delegations are reviewed
by the Board from time to time.
Our CEO/MD, 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 advisors.
2020-21 Annual Report | Estia Health 67
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Our Board
Estia Health’s Board comprises a majority of Independent Non-executive Directors
who, together with the Managing Director, have an appropriate balance of skills,
knowledge, experience, independence and diversity. They each bring a wealth of
experience to the Board’s deliberations to enable the maximum benefit for our
shareholders, residents, suppliers, employees, government regulators and members
of the community in which Estia Health operates.
Dr. Gary H 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 Cromwell Property Group
Limited and Ardent Leisure Group Limited, Executive
Director of Ariadne Australia Limited, and a Director of
Thorney Opportunities Limited and Hearts and Minds
Investments 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 Coats Group plc from May
2004 to April 2012, Chairman of Clearview Wealth
Ltd from 2013 to May 2016, Chairman of Ridley
Corporation from June 2015 to June 2020, Executive
Director of Guinness Peat Group plc from 1990 to
April 2011 and has held directorships of numerous
companies, including The Straits Trading Co Limited,
Tag Pacific Limited, Pro-Pac Packaging Limited,
Premier Investments Ltd, Westfield Group, Tower
Australia Limited, 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.
Gary was awarded a Member of the Order of Australia
(AM) in recognition of his significant services to
business and to the community.
Committees: Nomination and Remuneration
Committee, Audit Committee, Property and
Investment Committee, Royal Commission and
Regulatory Committee (Chair), COVID-19 Committee.
Listed Company Directorships (including those
in the last three years): Ariadne Australia Limited,
Ardent Leisure Group Limited (Chair), Thorney
68 Estia Health | 2020-21 Annual Report
Opportunities Ltd, Hearts and Minds Investments
Limited, Cromwell Property Group (Chair), Straits
Trading Co. Ltd (resigned 30 September 2020),
Ridley Corporation Limited (resigned 26 August
2020), Premier Investments Limited (28 July 2018).
Ian Thorley
Chief Executive Officer and Managing Director
MCom (UNSW), GAICD
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.
Ian’s executive experience includes CEO and COO
roles in large aged care groups, acute private hospital
groups and diagnostic services in Australia and
internationally. 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 and health logistics businesses
throughout Australia.
Ian is a Graduate of the Australian Institute of
Company Directors (GAICD) and holds a Bachelor
of Health Administration and a Master of Commerce
from the University of NSW.
norah Barlow, OnZM
Non-executive Director
BCA, ACA, ONZM
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 healthcare
sector. Norah also holds extensive experience as the
highly-respected former CEO and former Director of
Summerset Group, an NZX and ASX-listed company
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Our Board
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 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, Evolve Education Group Limited,
and chair of the Audit Committee for Methven
Limited. Norah stepped down as CEO of Estia Health
in November 2018 and remains on the board as a
Non-executive Director. Norah is currently Chief
Executive of Heritage Lifecare Limited.
Committees: Property and Investment Committee.
Listed Company Directorships (including those in
the last three years): Evolve Education Group Limited
(resigned 18 September 2019).
Karen penrose
Non-executive Director
B.Com (UNSW), FAICD and CPA
Karen is an experienced Company Director who has
served as a full-time Non-executive Director since
2014 on the boards of ASX listed companies across
the financial services, aged care, healthcare, resources
and infrastructure sectors.
Karen's executive career was in leadership and CFO
roles, mainly in financial services. Karen worked with
CBA and HSBC for over 20 years. She is passionate
about consumer outcomes and financial management
and is well-versed in operating in a rapidly changing
regulatory environment.
Karen is a Director and Chair of the Audit Committee
of Bank of Queensland, Ramsay Health Care and
Vicinity Centres. She is also Director of Marshall
Investments Pty Ltd and Rugby Australia Limited.
Karen was formally a director of Future Generation
Global Investment Company Limited, AWE Limited
and Spark Infrastructure Group Limited.
Karen is a member of Chief Executive Women.
Committees: Audit Committee (Chair),
Risk Management Committee, Royal Commission
& Regulatory Committee, COVID-19 Committee.
Listed Company Directorships (including those in
the last three years): Bank of Queensland Limited,
Vicinity Centres, Ramsay Health Care, Spark
Infrastructure Group (resigned May 2020), Future
Generation Investment Company Limited (resigned
October 2018).
paul foster
Non-executive Director
B.Comm, MA, MAICD
Paul holds a Bachelor of Commerce (with Merit) 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 of
investment experience in the infrastructure, private
2020-21 Annual Report | Estia Health 69
Dr. Gary H Weiss AMIan ThorleyNorah Barlow ONZMHelen KurincicPaul FosterThe Hon. Warwick L Smith AOKaren PenroseTax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes Helen Kurincic
Non-executive Director
MBA, Grad Dip Wom Stud, PBC Crit Care, Cert Nsg,
FAICD FGIA
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 McMillan Shakespeare Limited, and a
Non-executive Director of HBF Health Limited and
Victorian Clinical Genetics Service.
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 government
policy reform across various areas of the healthcare
sector.
Committees: Risk Management Committee (Chair),
Nomination and Remuneration Committee, COVID-19
Committee (Chair).
Listed Company Directorships (including those in
the last three years): Integral Diagnostics Ltd (Chair),
McMillan Shakespeare Limited (Chair), Sirtex Medical
Limited (resigned 19 September 2018).
lEAnnE rAlpH
Company Secretary
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.
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. He is also a Non-executive
Director of WINconnect Pty Ltd, PEP Services Pty Ltd
and PEP Advisory Services Pty Ltd.
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. Paul was
head of AMP Capital's Infrastructure investment
business in Australia and New Zealand until 2015.
Before AMP Capital, he was an investment professional
at Macquarie Group and Perpetual Investments.
Committees: Nomination and Remuneration
Committee (Chair), Risk Management Committee,
Property and Investment Committee.
The Honourable Warwick l. Smith, AO
Non-executive Director
AO LLB
Warwick is a Non-executive Director of Seven Group
Holdings (SGH), a leading Australian diversified
operating and investment group with market-leading
businesses with investments in a range of industrial
services, oil and gas, and media businesses.
Warwick is also Chairman, Advisory Board of
Australian Capital Equity, which has significant
investment interests through its major shareholding
in SGH. He is Chairman of Ord Minnett, a leading
private wealth management group. In addition, he is
also a Director of SGSP (Australia) Pty Ltd, Jemena
Northern Gas Pipeline Pty Ltd and Wollar Solar
Finance Pty Ltd.
Warwick was formerly Chairman of E*TRADE,
Senior Managing Director of the Australia New
Zealand Banking Group Limited (ANZ), Chairman,
ANZ Thailand and Director, ANZ Greater China and
Chairman, ANZ New South Wales and Australian
Capital Territory.
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 Australia's first Telecommunications
Ombudsman and has received a Centenary Medal
and twice been awarded an Order of Australia.
Committees: Property and Investment Committee
(Chair), Audit Committee, Royal Commission &
Regulatory Committee.
Listed Company Directorships (including those in
the last three years): Seven Group Holdings Limited,
Magnis Energy Technologies Limited (resigned January
2020), Coates Hire Limited (resigned January 2019).
70 Estia Health | 2020-21 Annual Report
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Tax Transparency Report
Corporate Governance
Our Board
Annual Financial Report
Additional Information
Directory of Estia Health Homes
2020-21 Annual Report | Estia Health 71
72 Estia Health | 2020-21 Annual Report
Annual
Financial
Report
For the year ended 30 June 2021
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
Disclaimer
Additional information
74
75
111
112
113
114
115
116
119
131
145
159
165
166
175
176
2020-21 Annual Report | Estia Health 73
Corporate information
ABN 37 160 986 201
DIrECTOrS
Dr. Gary H Weiss AM
Chairman
Ian Thorley
Managing Director and CEO
Norah Barlow ONZM
Non-executive Director
Paul Foster
Nomination and Remuneration Committee Chair
rEGISTErED OffICE
Level 9, 227 Elizabeth Street
Sydney NSW 2000
prInCIpAl plACE Of BuSInESS
Level 9, 227 Elizabeth Street
Sydney NSW 2000
SOlICITOrS
Minter Ellison
Governor Macquarie Tower
1 Farrer Place
Sydney NSW 2000
Hon. Warwick L Smith AO
Property and Investment Committee Chair
BAnKErS
Helen Kurincic
Risk Management Committee Chair
Karen Penrose
Audit Committee Chair
COMpAny SECrETAry
Leanne Ralph
Westpac Banking Corporation
275 Kent Street
Sydney NSW 2000
Commonwealth Bank of Australia
201 Sussex Street
Sydney NSW 2000
Australia and New Zealand Bank
242 Pitt Street
Sydney NSW 2000
AuDITOrS
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000
Your Directors submit their report on Estia Health Limited ("the Company") and its controlled entities ("Estia" or
the "Group") for the year ended 30 June 2021.
DIRECTORS' REPORT
DIRECTORS
The names and qualifications of the Group’s Directors who held 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
(https://investors.estiahealth.com.au/investor-centre).
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 Bachelor of Health Administration and a Masters 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 the University of NSW, CPA and FAICD.
74 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
4
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Annual financial report
DIRECTORS' REPORT
Your Directors submit their report on Estia Health Limited ("the Company") and its controlled entities ("Estia" or
the "Group") for the year ended 30 June 2021.
DIRECTORS
The names and qualifications of the Group’s Directors who held 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
(https://investors.estiahealth.com.au/investor-centre).
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 Bachelor of Health Administration and a Masters 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 the University of NSW, CPA and FAICD.
Estia Health Annual Financial Report 2020 - 2021
4
2020-21 Annual Report | Estia Health 75
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes DIRECTORS' REPORT
DIRECTORS' HOLDINGS
Director
Dr. Gary H Weiss AM
Ian Thorley
Norah Barlow ONZM
Paul Foster
Hon. Warwick L Smith AO
Helen Kurincic
Karen Penrose
COMPANY SECRETARY
LEANNE RALPH
Directors.
Number of ordinary shares
78,312
138,001
129,474
24,000
182,000
50,000
32,333
DIRECTORS' REPORT
COMMITTEE MEMBERSHIP
During the financial year, the Group had the following committees:
As at the date of this report, the interest of the directors in the ordinary shares of Estia Health Limited were:
Membership
Audit
Committee
Nomination &
Remuneration
Committee
Risk
Management
Committee
Property &
Investment
Committee
Royal
Commission
& Regulatory
Committee
Chair
Member
Member
Member
Helen Kurincic Warwick Smith Gary Weiss
Karen Penrose Paul Foster
Gary Weiss
Gary Weiss
Paul Foster
Gary Weiss
Warwick Smith Helen Kurincic Karen Penrose Paul Foster
Warwick Smith Gary Weiss
Karen Penrose Karen Penrose
Norah Barlow
COVID-19
Committee
Helen Kurincic
* Norah Barlow was appointed to the Property and Investment Committee on 1 July 2020.
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:
Board
Meetings
Audit
Committee
Nomination
&
Remuneration
Committee
Risk
Management
Committee
Property &
Investment
Committee
COVID-19
Committee
No. of meetings eligible to
attend:
Dr. Gary H Weiss AM
Ian Thorley
Norah Barlow ONZM
Paul Foster
Hon. Warwick L Smith AO
Helen Kurincic
Karen Penrose
19
Attended
6
Attended
6
Attended
8
Attended
3
Attended
18
Attended
The Group’s strategy is to:
19
19
19
19
19
19
19
6
-
-
-
6
-
6
6
-
-
6
-
6
-
3
3
3
3
18
18
16
8
8
8
The Royal Commission and Regulatory Committee held no meetings during the period.
During the year the board established a Class Action Committee comprising Hon. Warwick L Smith AO (Chair),
Ms Helen Kurincic, Ms Karen Penrose, Mr Ian Thorley, and Mr Steve Lemlin, for the sole purpose of assisting
the Board with matters concerning the class action against the Company. This committee met three times during
the period.
All directors have a standing invitation to attend Committee meetings and regularly attend meetings of
Committees, particularly the COVID-19 Risk sub-committee. Such attendance is not reflected in the above
tables.
The board may establish other sub-committees, from time to time, as and when required.
Leanne was 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
PRINCIPAL ACTIVITIES AND STRATEGY
The principal activities of the Group during the year ended 30 June 2021 continued to be the provision of
services in residential aged care homes in Australia as an Approved Provider under the Aged Care Act.
•
•
•
•
be a market leader in owning and developing high quality residential aged care homes in Australia.
provide residents with the highest standards of aged care services in an innovative, supportive and caring
environment.
deliver earnings growth through sustained high occupancy rates across all homes, opening new homes, the
enhancement of current homes, and acquisitions; and
develop additional earnings from related services within the continuum of Aged Care
THE MARKET IN WHICH ESTIA OPERATES
The Aged Care Funding Authority (“ACFA”) in its 2021 Report disclosed 217,145 operational places in the sector
at 30 June 2020, an increase of 1.8% from the prior year. Services were provided to 244,363 residents (an
increase of 0.7% compared to the prior year) with total revenues of $18.5 billion of which $13.4 billion was
provided by the Australian Government. The Government’s May 2021 response to the Royal Commission
Report into Aged Care is expected to provide $17.7 billion additional funding to the aged care sector over the
next four years, out of which $8.7 billion is expected to be invested towards improving Residential Aged Care
services.
Currently, 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 ("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 Government’s response to the Royal Commission proposed multiple reforms to the Residential
Aged Care sector including changes to ACAT assessment and the issuing of bed licences, which will likely
change the financial and operational environment in which Estia operates as referenced further in this report.
The ageing of the Australian population and in particular the ageing of the “baby boomers” is generally expected
to see a marked increase in Australia’s aged population. The 85 years and over cohort will increase from under
500,000 people in 2020 to over one million people by 2040. This is expected to increase the number of
Australians likely to need aged care, including residential aged care in coming years.
76 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
5
Estia Health Annual Financial Report 2020 - 2021
6
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
COMMITTEE MEMBERSHIP
Audit
Remuneration
Management
Membership
Committee
Committee
Committee
Nomination &
Risk
Property &
Investment
Committee
Royal
Commission
& Regulatory
COVID-19
Committee
Committee
Chair
Member
Member
Member
Karen Penrose Paul Foster
Helen Kurincic Warwick Smith Gary Weiss
Helen Kurincic
Gary Weiss
Gary Weiss
Paul Foster
Gary Weiss
Warwick Smith Gary Weiss
Warwick Smith Helen Kurincic Karen Penrose Paul Foster
Karen Penrose Karen Penrose
Norah Barlow
* Norah Barlow was appointed to the Property and Investment Committee on 1 July 2020.
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:
Nomination
Risk
Property &
Board
Audit
Remuneration
Management
Investment
COVID-19
Meetings
Committee
Committee
Committee
Committee
Committee
No. of meetings eligible to
attend:
Dr. Gary H Weiss AM
Ian Thorley
Norah Barlow ONZM
Paul Foster
Hon. Warwick L Smith AO
Helen Kurincic
Karen Penrose
19
19
19
19
19
19
19
19
6
6
-
-
-
6
-
6
8
8
8
8
3
3
3
3
3
18
18
18
16
&
6
6
-
-
6
-
6
-
The Royal Commission and Regulatory Committee held no meetings during the period.
During the year the board established a Class Action Committee comprising Hon. Warwick L Smith AO (Chair),
Ms Helen Kurincic, Ms Karen Penrose, Mr Ian Thorley, and Mr Steve Lemlin, for the sole purpose of assisting
the Board with matters concerning the class action against the Company. This committee met three times during
the period.
tables.
All directors have a standing invitation to attend Committee meetings and regularly attend meetings of
Committees, particularly the COVID-19 Risk sub-committee. Such attendance is not reflected in the above
The board may establish other sub-committees, from time to time, as and when required.
During the financial year, the Group had the following committees:
As at the date of this report, the interest of the directors in the ordinary shares of Estia Health Limited were:
Annual financial report
DIRECTORS' REPORT
DIRECTORS' HOLDINGS
Director
Dr. Gary H Weiss AM
Ian Thorley
Norah Barlow ONZM
Paul Foster
Hon. Warwick L Smith AO
Helen Kurincic
Karen Penrose
COMPANY SECRETARY
LEANNE RALPH
Number of ordinary shares
78,312
138,001
129,474
24,000
182,000
50,000
32,333
Leanne was 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.
PRINCIPAL ACTIVITIES AND STRATEGY
The principal activities of the Group during the year ended 30 June 2021 continued to be the provision of
services in residential aged care homes in Australia as an Approved Provider under the Aged Care Act.
Attended
Attended
Attended
Attended
Attended
Attended
The Group’s strategy is to:
•
•
•
•
be a market leader in owning and developing high quality residential aged care homes in Australia.
provide residents with the highest standards of aged care services in an innovative, supportive and caring
environment.
deliver earnings growth through sustained high occupancy rates across all homes, opening new homes, the
enhancement of current homes, and acquisitions; and
develop additional earnings from related services within the continuum of Aged Care
THE MARKET IN WHICH ESTIA OPERATES
The Aged Care Funding Authority (“ACFA”) in its 2021 Report disclosed 217,145 operational places in the sector
at 30 June 2020, an increase of 1.8% from the prior year. Services were provided to 244,363 residents (an
increase of 0.7% compared to the prior year) with total revenues of $18.5 billion of which $13.4 billion was
provided by the Australian Government. The Government’s May 2021 response to the Royal Commission
Report into Aged Care is expected to provide $17.7 billion additional funding to the aged care sector over the
next four years, out of which $8.7 billion is expected to be invested towards improving Residential Aged Care
services.
Currently, 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 ("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 Government’s response to the Royal Commission proposed multiple reforms to the Residential
Aged Care sector including changes to ACAT assessment and the issuing of bed licences, which will likely
change the financial and operational environment in which Estia operates as referenced further in this report.
The ageing of the Australian population and in particular the ageing of the “baby boomers” is generally expected
to see a marked increase in Australia’s aged population. The 85 years and over cohort will increase from under
500,000 people in 2020 to over one million people by 2040. This is expected to increase the number of
Australians likely to need aged care, including residential aged care in coming years.
Estia Health Annual Financial Report 2020 - 2021
5
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 77
6
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes DIRECTORS' REPORT
DIRECTORS' REPORT
THE MARKET IN WHICH ESTIA OPERATES (CONTINUED)
The Group’s growth strategy is to provide services to meet this growing demographic demand.
THE GROUP’S PORTFOLIO
The Group delivers services across 69 homes in New South Wales, Queensland, South Australia and Victoria,
of which 62 are freehold sites. As at 30 June 2021, these homes had 6,289 operational bed licences, and the
Group holds a further 159 off-line and provisional licences pending activation through future developments.
The Group employs in excess of 7,500 employees as nurses, care workers, catering staff, support and
administration staff and management.
CARE AND SERVICES
Quality of care and services to residents is the foremost priority for the Group. The Group is committed to
delivering the highest quality care to people who choose to trust in Estia at an important time in their lives.
The Group provides permanent care in a safe and supportive environment for people who are no longer able to
live at their own home. Short-term respite and rehabilitation care is also provided for older Australians who
normally live at their home, but temporarily require a higher level of support and care following a hospital stay,
an accident or medical event, or to allow their normal carers to take a break.
Each Estia home is managed by an Executive Director who leads a team of clinical staff, nurses, personal care
assistants, lifestyle and allied health co-ordinators, chefs, cleaning, laundry and maintenance staff. During
periods of lockdowns or restricted access associated with COVID-19, additional resident liaison staff are
engaged as appropriate to assist families in keeping in touch with their loved ones, remotely or in person. In
each home, Registered Nurses are rostered on all shifts, 24 hours a day, every day.
Clinical Care and Quality standards, protocols, policies and procedures are established centrally under the
direction of the Clinical Governance Committee, chaired by an independent expert, Professor Simon Wilcock.
The application of these policies and procedures at a home level is managed by each home Executive Director
supported by regional and local educators and support teams.
When new residents are welcomed into an Estia home, their individual needs are assessed in order to develop
tailored clinical care plans. The inclusion of families in the process assists in the identification of meaningful
ways to assist residents to feel comfortable and supported in their new home beyond clinical care.
Food and nutrition form a critical part of the care and well-being of Estia’s residents. Home menus are reviewed
by nutritionists and food is prepared fresh on-site every day by Estia chefs. Wherever possible, food is sourced
from Australian producers with a focus on fresh high-quality ingredients. All Estia chefs attend in-house master
class workshops as part of their development and the Group’s commitment to delivering nutritious, quality meals
for all residents.
Lifestyle co-ordinators liaise with physiotherapists and other allied health support services to design and deliver
a wide range of activities to support the mental, social and welfare needs of residents. Cultural and community
engagement is further fostered with relationships with outside organisations including local schools.
Quality of care is monitored by uniform clinical quality indicators, which are measured and reviewed by the
Quality Improvement Committee. Internal audit reviews of quality of care are regularly undertaken by the
Group’s quality team and key clinical performance data is assessed against industry benchmarks by
independent consultants.
Regular surveying of resident and family satisfaction levels is conducted using the same criteria originally
adopted by the Aged Care Quality and Safety Commission’s ("ACQSC") Consumer Experience Reports ("CER")
during inspection visits to homes. The Group achieved an overall average 93.7% (2020: 93.0%) satisfaction
rating across the questions during the year to 30 June 2021, based on the percentage of responses that
reported experience as "most of the time" or "always".
REGULATORY ENVIRONMENT, REFORM AND THE ROYAL COMMISSION INTO AGED CARE
The Residential Aged Care sector is highly regulated within the provisions of the Aged Care Act and the Aged
Care Quality and Safety Commission Act 2018. The ACQSC approves providers and monitors the quality of care
and services delivered. The Department of Health currently issues bed licences on a strictly controlled basis,
governs the services which are delivered and levels of funding and revenue. As such Government policy settings
have a major impact on the financial performance of providers.
Prior to the Royal Commission into Aged Care Quality and Safety (the “Royal Commission”), there had been
multiple significant reviews and reports commissioned by Government into the operation of the sector since the
publication of the Aged Care Roadmap in 2016. Most of the recommendations were not implemented.
The Royal Commission was called by the Prime Minister in September 2018 and handed down its final report in
February 2021 containing 148 specific recommendations. The Government provided a formal response
statement in late May 2021 and announced increased funding measures in the May 2021 Budget.
ROYAL COMMISSION
As one of the large Approved Providers, the Group along with many providers was required by the Royal
Commission to provide two data sets of information in relation to the quality of care and staff hours worked at its
homes. The Group complied by the requested date for each submission and was not asked to appear before the
Royal Commission following those submissions nor in relation to any matters relating to its operations. Estia was
not referenced in the final report in relation to any performance matters.
The Group CEO Mr Ian Thorley was invited to make a submission to the Royal Commission in relation to the
future funding, financing and sustainability of the sector and appeared before the Commission on 21 September
2020. Mr Thorley presented the Group’s views on necessary sector reform to create a sustainable and high
quality sector where funding and financing arrangements would support the financial viability of efficient
providers and enable investment returns sufficient to attract the capital required to meet the increase in expected
The Royal Commission’s 148 recommendations are wide-ranging and can be categorised into the following
demand and quality.
areas:
Governance and prudential regulation
•
•
•
Quality and safety
• Workforce
Funding and financing
Many of the recommendations, if adopted by the Government, will lead to greater cost and administrative
burdens on providers and create increased hurdles and potential barriers to entry for new entrants.
The Royal Commission recognised that legislated funding to the sector had been insufficient to support the level
of services and quality expected by the community and would need to be significantly increased in future to meet
those expectations and the Royal Commission’s own recommendations. The Commissioners recommended
some immediate steps be taken and a longer-term review and re-positioning of pricing and funding be
undertaken to ensure the financial sustainability of the sector.
GOVERNMENT RESPONSE TO THE ROYAL COMMISSION
Many of the responses will require legislative approvals following detailed assessment, research and
consultation which is expected to take place over the next 2-3 years including the passing of a new Aged Care
Selected key matters which the Government has indicated will form part of its proposed legislative change
Act.
include:
78 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
7
Estia Health Annual Financial Report 2020 - 2021
8
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
DIRECTORS' REPORT
Annual financial report
THE MARKET IN WHICH ESTIA OPERATES (CONTINUED)
The Group’s growth strategy is to provide services to meet this growing demographic demand.
THE GROUP’S PORTFOLIO
The Group delivers services across 69 homes in New South Wales, Queensland, South Australia and Victoria,
of which 62 are freehold sites. As at 30 June 2021, these homes had 6,289 operational bed licences, and the
Group holds a further 159 off-line and provisional licences pending activation through future developments.
The Group employs in excess of 7,500 employees as nurses, care workers, catering staff, support and
administration staff and management.
CARE AND SERVICES
Quality of care and services to residents is the foremost priority for the Group. The Group is committed to
delivering the highest quality care to people who choose to trust in Estia at an important time in their lives.
The Group provides permanent care in a safe and supportive environment for people who are no longer able to
live at their own home. Short-term respite and rehabilitation care is also provided for older Australians who
normally live at their home, but temporarily require a higher level of support and care following a hospital stay,
an accident or medical event, or to allow their normal carers to take a break.
Each Estia home is managed by an Executive Director who leads a team of clinical staff, nurses, personal care
assistants, lifestyle and allied health co-ordinators, chefs, cleaning, laundry and maintenance staff. During
periods of lockdowns or restricted access associated with COVID-19, additional resident liaison staff are
engaged as appropriate to assist families in keeping in touch with their loved ones, remotely or in person. In
each home, Registered Nurses are rostered on all shifts, 24 hours a day, every day.
Clinical Care and Quality standards, protocols, policies and procedures are established centrally under the
direction of the Clinical Governance Committee, chaired by an independent expert, Professor Simon Wilcock.
The application of these policies and procedures at a home level is managed by each home Executive Director
supported by regional and local educators and support teams.
When new residents are welcomed into an Estia home, their individual needs are assessed in order to develop
tailored clinical care plans. The inclusion of families in the process assists in the identification of meaningful
ways to assist residents to feel comfortable and supported in their new home beyond clinical care.
Food and nutrition form a critical part of the care and well-being of Estia’s residents. Home menus are reviewed
by nutritionists and food is prepared fresh on-site every day by Estia chefs. Wherever possible, food is sourced
from Australian producers with a focus on fresh high-quality ingredients. All Estia chefs attend in-house master
class workshops as part of their development and the Group’s commitment to delivering nutritious, quality meals
for all residents.
Lifestyle co-ordinators liaise with physiotherapists and other allied health support services to design and deliver
a wide range of activities to support the mental, social and welfare needs of residents. Cultural and community
engagement is further fostered with relationships with outside organisations including local schools.
Quality of care is monitored by uniform clinical quality indicators, which are measured and reviewed by the
Quality Improvement Committee. Internal audit reviews of quality of care are regularly undertaken by the
Group’s quality team and key clinical performance data is assessed against industry benchmarks by
independent consultants.
Regular surveying of resident and family satisfaction levels is conducted using the same criteria originally
adopted by the Aged Care Quality and Safety Commission’s ("ACQSC") Consumer Experience Reports ("CER")
during inspection visits to homes. The Group achieved an overall average 93.7% (2020: 93.0%) satisfaction
rating across the questions during the year to 30 June 2021, based on the percentage of responses that
reported experience as "most of the time" or "always".
REGULATORY ENVIRONMENT, REFORM AND THE ROYAL COMMISSION INTO AGED CARE
The Residential Aged Care sector is highly regulated within the provisions of the Aged Care Act and the Aged
Care Quality and Safety Commission Act 2018. The ACQSC approves providers and monitors the quality of care
and services delivered. The Department of Health currently issues bed licences on a strictly controlled basis,
governs the services which are delivered and levels of funding and revenue. As such Government policy settings
have a major impact on the financial performance of providers.
Prior to the Royal Commission into Aged Care Quality and Safety (the “Royal Commission”), there had been
multiple significant reviews and reports commissioned by Government into the operation of the sector since the
publication of the Aged Care Roadmap in 2016. Most of the recommendations were not implemented.
The Royal Commission was called by the Prime Minister in September 2018 and handed down its final report in
February 2021 containing 148 specific recommendations. The Government provided a formal response
statement in late May 2021 and announced increased funding measures in the May 2021 Budget.
ROYAL COMMISSION
As one of the large Approved Providers, the Group along with many providers was required by the Royal
Commission to provide two data sets of information in relation to the quality of care and staff hours worked at its
homes. The Group complied by the requested date for each submission and was not asked to appear before the
Royal Commission following those submissions nor in relation to any matters relating to its operations. Estia was
not referenced in the final report in relation to any performance matters.
The Group CEO Mr Ian Thorley was invited to make a submission to the Royal Commission in relation to the
future funding, financing and sustainability of the sector and appeared before the Commission on 21 September
2020. Mr Thorley presented the Group’s views on necessary sector reform to create a sustainable and high
quality sector where funding and financing arrangements would support the financial viability of efficient
providers and enable investment returns sufficient to attract the capital required to meet the increase in expected
demand and quality.
The Royal Commission’s 148 recommendations are wide-ranging and can be categorised into the following
areas:
•
•
Governance and prudential regulation
Quality and safety
• Workforce
•
Funding and financing
Many of the recommendations, if adopted by the Government, will lead to greater cost and administrative
burdens on providers and create increased hurdles and potential barriers to entry for new entrants.
The Royal Commission recognised that legislated funding to the sector had been insufficient to support the level
of services and quality expected by the community and would need to be significantly increased in future to meet
those expectations and the Royal Commission’s own recommendations. The Commissioners recommended
some immediate steps be taken and a longer-term review and re-positioning of pricing and funding be
undertaken to ensure the financial sustainability of the sector.
GOVERNMENT RESPONSE TO THE ROYAL COMMISSION
Many of the responses will require legislative approvals following detailed assessment, research and
consultation which is expected to take place over the next 2-3 years including the passing of a new Aged Care
Act.
Selected key matters which the Government has indicated will form part of its proposed legislative change
include:
Estia Health Annual Financial Report 2020 - 2021
7
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 79
8
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes DIRECTORS' REPORT
DIRECTORS' REPORT
GOVERNMENT RESPONSE TO THE ROYAL COMMISSION (CONTINUED)
GOVERNMENT RESPONSE TO THE ROYAL COMMISSION (CONTINUED)
•
•
•
•
•
•
•
Short-term financial relief by way of an of $10 per day increase in the daily fee supplements from 1 July
2021. If this had been applied to the Group’s occupied bed days in FY21 this would have equated to an
additional $20.6 million of revenue.
Mandated minimum care hours from October 2023, with a commitment to increase funding to cover
increased costs.
A wide range of regulatory, supervisory, prudential, reporting and governance improvements which will be
introduced over the next 18-24 months.
The replacement of Aged Care Funding Instrument (ACFI) with a case-mix model (referred to as AN-ACC)
by October 2022.
Confirmation that an independent pricing authority will provide pricing recommendations to Government.
An increase of 80,000 new home care packages over the next two years.
Establishment of working groups or other bodies to undertake research or planning and propose detailed
solutions in a range of areas, many of which are likely to have a material impact on financial outcomes but
will not be known for some time including:
• abolition of Aged Care Approval Round (ACAR) or allocated bed licences by 2024,
• alternative capital funding sources to potentially replace Refundable Accommodation Deposits (RADs) from
2025
licences.
• increased user-pay amended means or asset testing and any increase in resident co-contributions.
The Government Response has not yet defined:
•
•
•
•
•
•
•
to what extent future input cost inflation will be supported by legislated revenue rate increases in order to
address sector margin compression,
a level of appropriate returns to cover the provision of capital or delivery of services,
how the costs associated with the delivery of increased minimum staff care hours will impact funding at a
home level,
how workforce planning and remuneration levels will operate to ensure a sufficient supply of skilled workers
is available to the sector to meet increased needs,
detail on any future regulatory requirements subsequent to the proposed abolition of bed licences in 2024
nor any transitional arrangements, including necessary legislative processes,
information on alternative capital funding solutions for the potential replacement of RADs by 2025,
future arrangements in relation to user co-contribution to ensure that proposed changes can be sustainably
financed by the Commonwealth Budget.
The Government response to the Royal Commission recommendations is widely expected to lead to higher
costs and increased regulatory requirements upon operators. Most of the more substantive changes are still
subject to considerable design, development, consultation and then implementation risk, all of which will need to
be successfully completed before the full impact to consumers and operators can be known.
Securing a sufficient, well trained workforce will need ongoing and priority attention by Government, training
institutions and providers.
Under current arrangements, the announced reforms will also add significantly to the cost of future aged care
services for Government, and therefore future taxpayers, raising concerns about the sustainability of future aged
care services which remain to be resolved.
The Group will continue to advocate for its residents and appropriate sector reform and legislated changes to
deliver 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.
BED LICENCES
The Government has announced its intention to abolish the ACAR and associated supply restrictions on bed
licences which will take effect from June 2024. This is a positive move which will increase consumer choice,
competition and is line with the strong recommendations of the peak consumer body, Council on the Ageing
(COTA) and the Group’s own recommendations to the Royal Commission. The Directors believe this will be
beneficial to the Group which will no longer be restricted by the allocation process in the scope or geography of
its development and expansion. These proposed changes will require enacting in legislation as part of the
proposed new Aged Care Act for which the Government has indicated a target date for enacting of 2023. Until
such time, Approved Providers may only secure Government subsidies and fees if they hold appropriate
The Group’s balance sheet at 30 June 2021 included a value of $221.3 million relating to bed licences, and an
associated deferred tax liability of $64.6 million. The majority of this was established under fair value accounting
rules on the purchase of homes and providers from 2014 to 2016, when there existed an open market value for
bed licences, varying over time and regions from $25,000 up $100,000 per bed licence. $2.7 million related to
licences acquired on market during 2018-2019.
The Directors believe this reform will be positive for the Group’s growth prospects. As referenced in note C6
Goodwill and Intangibles of the Financial Statements, the value in use assessment of the Group’s total assets,
including intangibles and bed licence, exceeds the reported net book value. Given this fact and the uncertainty at
this time as to whether the legislation will be enacted, in what form and with what associated transitional
arrangements, the Directors have determined that the carrying value of these bed licences in the financial
statements continues to be appropriate at the date of this report. It is possible that as further information
becomes available as this process progresses that the reported value of these licences may be impaired either
progressively or in total immediately. Any such impairment would be a non-cash item without adverse impact on
solvency, liquidity or banking covenants.
COVID-19
As a result of the pandemic, all of the Group's homes were impacted at one time or another during the year to
varying degrees by the need for visitor restrictions, increased Infection Protection and Control (“IPC”) protocols,
increased Personal Protective Equipment (“PPE”) consumption, and higher cleaning and waste disposal cost.
As has been well-documented, the State of Victoria was severely impacted by the “second wave’ of COVID-19
from early July 2020, with major restrictions including a lockdown which did not ease until November 2020. Of
the Group’s 27 homes in Victoria, 11 experienced at least one infection in a resident or staff member and, sadly,
36 residents who had contracted COVID 19 died during this “second wave”. No homes outside of Victoria
experienced any infections during the period.
The Group responded rapidly and comprehensively to the outbreak in Victoria by working with the relevant
Government agencies in managing its response at a home level in accordance with guidelines and its COVID-19
Response Plans. Measures taken included: restriction of visitors to homes, testing and isolation of new
admissions, use of full PPE, increased dedicated IPC personnel, and family or resident liaison staff. In addition,
the Group adopted the Victorian industry voluntary code restricting staff to working at one site. The Group
provided and continues to provide paid Quarantine Leave for staff who are symptomatic or awaiting test results.
80 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
9
Estia Health Annual Financial Report 2020 - 2021
10
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
DIRECTORS' REPORT
Annual financial report
GOVERNMENT RESPONSE TO THE ROYAL COMMISSION (CONTINUED)
GOVERNMENT RESPONSE TO THE ROYAL COMMISSION (CONTINUED)
Short-term financial relief by way of an of $10 per day increase in the daily fee supplements from 1 July
2021. If this had been applied to the Group’s occupied bed days in FY21 this would have equated to an
Securing a sufficient, well trained workforce will need ongoing and priority attention by Government, training
institutions and providers.
Under current arrangements, the announced reforms will also add significantly to the cost of future aged care
services for Government, and therefore future taxpayers, raising concerns about the sustainability of future aged
care services which remain to be resolved.
The Group will continue to advocate for its residents and appropriate sector reform and legislated changes to
deliver 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.
BED LICENCES
The Government has announced its intention to abolish the ACAR and associated supply restrictions on bed
licences which will take effect from June 2024. This is a positive move which will increase consumer choice,
competition and is line with the strong recommendations of the peak consumer body, Council on the Ageing
(COTA) and the Group’s own recommendations to the Royal Commission. The Directors believe this will be
beneficial to the Group which will no longer be restricted by the allocation process in the scope or geography of
its development and expansion. These proposed changes will require enacting in legislation as part of the
proposed new Aged Care Act for which the Government has indicated a target date for enacting of 2023. Until
such time, Approved Providers may only secure Government subsidies and fees if they hold appropriate
licences.
The Group’s balance sheet at 30 June 2021 included a value of $221.3 million relating to bed licences, and an
associated deferred tax liability of $64.6 million. The majority of this was established under fair value accounting
rules on the purchase of homes and providers from 2014 to 2016, when there existed an open market value for
bed licences, varying over time and regions from $25,000 up $100,000 per bed licence. $2.7 million related to
licences acquired on market during 2018-2019.
The Directors believe this reform will be positive for the Group’s growth prospects. As referenced in note C6
Goodwill and Intangibles of the Financial Statements, the value in use assessment of the Group’s total assets,
including intangibles and bed licence, exceeds the reported net book value. Given this fact and the uncertainty at
this time as to whether the legislation will be enacted, in what form and with what associated transitional
arrangements, the Directors have determined that the carrying value of these bed licences in the financial
statements continues to be appropriate at the date of this report. It is possible that as further information
becomes available as this process progresses that the reported value of these licences may be impaired either
progressively or in total immediately. Any such impairment would be a non-cash item without adverse impact on
solvency, liquidity or banking covenants.
COVID-19
As a result of the pandemic, all of the Group's homes were impacted at one time or another during the year to
varying degrees by the need for visitor restrictions, increased Infection Protection and Control (“IPC”) protocols,
increased Personal Protective Equipment (“PPE”) consumption, and higher cleaning and waste disposal cost.
As has been well-documented, the State of Victoria was severely impacted by the “second wave’ of COVID-19
from early July 2020, with major restrictions including a lockdown which did not ease until November 2020. Of
the Group’s 27 homes in Victoria, 11 experienced at least one infection in a resident or staff member and, sadly,
36 residents who had contracted COVID 19 died during this “second wave”. No homes outside of Victoria
experienced any infections during the period.
The Group responded rapidly and comprehensively to the outbreak in Victoria by working with the relevant
Government agencies in managing its response at a home level in accordance with guidelines and its COVID-19
Response Plans. Measures taken included: restriction of visitors to homes, testing and isolation of new
admissions, use of full PPE, increased dedicated IPC personnel, and family or resident liaison staff. In addition,
the Group adopted the Victorian industry voluntary code restricting staff to working at one site. The Group
provided and continues to provide paid Quarantine Leave for staff who are symptomatic or awaiting test results.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
additional $20.6 million of revenue.
Mandated minimum care hours from October 2023, with a commitment to increase funding to cover
increased costs.
by October 2022.
A wide range of regulatory, supervisory, prudential, reporting and governance improvements which will be
introduced over the next 18-24 months.
The replacement of Aged Care Funding Instrument (ACFI) with a case-mix model (referred to as AN-ACC)
Confirmation that an independent pricing authority will provide pricing recommendations to Government.
An increase of 80,000 new home care packages over the next two years.
Establishment of working groups or other bodies to undertake research or planning and propose detailed
solutions in a range of areas, many of which are likely to have a material impact on financial outcomes but
will not be known for some time including:
• abolition of Aged Care Approval Round (ACAR) or allocated bed licences by 2024,
• alternative capital funding sources to potentially replace Refundable Accommodation Deposits (RADs) from
2025
• increased user-pay amended means or asset testing and any increase in resident co-contributions.
The Government Response has not yet defined:
to what extent future input cost inflation will be supported by legislated revenue rate increases in order to
address sector margin compression,
a level of appropriate returns to cover the provision of capital or delivery of services,
how the costs associated with the delivery of increased minimum staff care hours will impact funding at a
home level,
how workforce planning and remuneration levels will operate to ensure a sufficient supply of skilled workers
is available to the sector to meet increased needs,
detail on any future regulatory requirements subsequent to the proposed abolition of bed licences in 2024
nor any transitional arrangements, including necessary legislative processes,
information on alternative capital funding solutions for the potential replacement of RADs by 2025,
future arrangements in relation to user co-contribution to ensure that proposed changes can be sustainably
financed by the Commonwealth Budget.
The Government response to the Royal Commission recommendations is widely expected to lead to higher
costs and increased regulatory requirements upon operators. Most of the more substantive changes are still
subject to considerable design, development, consultation and then implementation risk, all of which will need to
be successfully completed before the full impact to consumers and operators can be known.
Estia Health Annual Financial Report 2020 - 2021
9
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 81
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Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes DIRECTORS' REPORT
COVID-19 (CONTINUED)
In July 2020 the Group was issued with Notices to Agree (“Notices”) from the Aged Care Quality and Safety
Commission ("ACQSC") in relation to the COVID-19 outbreaks at Heidelberg West and Ardeer respectively.
These Notices required Estia to agree to undertake specified actions. All matters identified by the ACQSC have
been addressed to the satisfaction of ACQSC and no further action is required from Estia.
During September and October 2020, the outbreaks were progressively resolved and the last of Estia’s homes
with a COVID-19 infection was declared free of COVID-19 on 10 November 2020.
Subsequent to November 2020, there were periodic outbreaks and lockdowns in all States during the year. The
Group’s homes responded in line with health guidelines, including temporary closing to visitors. No Estia homes
experienced infections in residents or staff between November 2020 and 30 June 2021.
The financial impacts arising from the pandemic are explained later in this Report.
It is evident that the impacts of COVID-19 on the community will continue to be experienced for the foreseeable
future and the impact on the aged care sector which cares for some of the most vulnerable members of the
community will likely continue to be significant. As local infections and “clusters” emerge in local communities it
is likely that regular lockdowns, restrictions to visitor access and increased PPE usage will continue to be part of
the normal operating mode of residential aged care homes. The Group regularly reviews its COVID-19
Response Plans and established a program of outbreak simulations to enhance the skills and preparedness of
managers and staff to respond to a variety of COVID-19 related events or situations.
The Group continues to work closely with each State’s Public Health Unit, the Commonwealth Department of
Health and the ACQSC to manage and monitor residents’ and staff health, safety and well-being.
All residents were offered COVID-19 vaccines at their Estia home in the period from April to June.
The Federal Government announced that it expected the States to issue public health orders before 17
September 2021 to make vaccinations mandatory for all residential aged care workers. It is anticipated that all
States will have issued relevant public health Directions by that date.
The Group has undertaken awareness programs, requested all staff are vaccinated in advance of any legislation
and established an in-reach program offering vaccinations at each home to all staff and residents which
commenced in July.
As of 20 August 2021, 82.4% of the Group’s residents and 82.1% of employees had been partially or fully
vaccinated against COVID-19.
ACCREDITATION AND COMPLIANCE
The ACQSC undertakes regular assessment inspections at all homes in the sector. During the year 95
accreditation visits were made to 60 of the Group’s homes. All homes have at all times remained fully accredited
and no Estia home has been sanctioned during the period or subsequently. 10 homes received a report of
unmet outcomes during the period, of which 6 were fully resolved within any required time frames. At the date of
this Report, 4 homes have remaining unmet outcomes, which the group continues to work with ACQSC to
resolve in expected time frames.
DIRECTORS' REPORT
OPERATING AND FINANCIAL REVIEW
REVIEW OF FINANCIAL PERFORMANCE
The financial performance of the Group was materially impacted by COVID-19. The pandemic increased costs,
reduced occupancy and revenue, the effects of which were partially offset by additional Government funding.
The financial performance has been presented in the section below, which is different to prior years, to provide a
better understanding for shareholders of the financial impact of COVID-19 and other non-recurring items during
this volatile and unprecedented period.
In addition to the impact of COVID-19, input cost inflation, primarily resulting from employment Enterprise
Agreements, continued to run ahead of Government funding rate increases leading to continued margin
compression as resident care and service levels were maintained. Margin erosion across the sector was a key
finding of the Royal Commission.
Government Revenue - Excluding Temporary Funding and Grants
Government Temporary Funding and Grants
Resident and Other Revenue
Total Operating Revenues & Grants
Employee Benefit Expense
Non Wage Expenses
COVID-19 Incremental Expense
EBITDA - Mature Homes
Royal Commission Expenses
Net loss or (gain) from Homes in Ramp-Up
Depreciation and Amortisation Expenses
Other Income - Asset Disposals
Net Finance Costs
Operating Profit Before Income Tax, Class Action & Impairment Expense
Income Tax expense (Pre Class Action & Impairment Expenses)
Profit for the Period (Pre Class Action & Impairment Expenses)
Class Action Settlement Expenses
Impairment Expenses
Income Tax Benefit on Class Action & Impairment Expenses
Profit (Loss) for the Period
2021
$'000
443,218
21,426
147,406
612,050
430,648
94,639
24,309
62,454
105
625
42,263
(9,487)
6,496
22,452
6,493
15,959
12,409
980
(3,428)
5,998
2020
$'000
426,188
7,382
146,310
579,880
404,272
90,287
2,538
82,783
101
(491)
39,119
(214)
8,491
35,777
10,599
25,178
-
144,622
(2,535)
(116,909)
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 or 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 records. These
financial records have been used for the preparation of the financial report, which has been subject to an audit by the external
auditors.
82 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
11
Estia Health Annual Financial Report 2020 - 2021
12
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
COVID-19 (CONTINUED)
In July 2020 the Group was issued with Notices to Agree (“Notices”) from the Aged Care Quality and Safety
Commission ("ACQSC") in relation to the COVID-19 outbreaks at Heidelberg West and Ardeer respectively.
These Notices required Estia to agree to undertake specified actions. All matters identified by the ACQSC have
been addressed to the satisfaction of ACQSC and no further action is required from Estia.
During September and October 2020, the outbreaks were progressively resolved and the last of Estia’s homes
with a COVID-19 infection was declared free of COVID-19 on 10 November 2020.
Subsequent to November 2020, there were periodic outbreaks and lockdowns in all States during the year. The
Group’s homes responded in line with health guidelines, including temporary closing to visitors. No Estia homes
experienced infections in residents or staff between November 2020 and 30 June 2021.
The financial impacts arising from the pandemic are explained later in this Report.
It is evident that the impacts of COVID-19 on the community will continue to be experienced for the foreseeable
future and the impact on the aged care sector which cares for some of the most vulnerable members of the
community will likely continue to be significant. As local infections and “clusters” emerge in local communities it
is likely that regular lockdowns, restrictions to visitor access and increased PPE usage will continue to be part of
the normal operating mode of residential aged care homes. The Group regularly reviews its COVID-19
Response Plans and established a program of outbreak simulations to enhance the skills and preparedness of
managers and staff to respond to a variety of COVID-19 related events or situations.
The Group continues to work closely with each State’s Public Health Unit, the Commonwealth Department of
Health and the ACQSC to manage and monitor residents’ and staff health, safety and well-being.
All residents were offered COVID-19 vaccines at their Estia home in the period from April to June.
The Federal Government announced that it expected the States to issue public health orders before 17
September 2021 to make vaccinations mandatory for all residential aged care workers. It is anticipated that all
States will have issued relevant public health Directions by that date.
The Group has undertaken awareness programs, requested all staff are vaccinated in advance of any legislation
and established an in-reach program offering vaccinations at each home to all staff and residents which
As of 20 August 2021, 82.4% of the Group’s residents and 82.1% of employees had been partially or fully
commenced in July.
vaccinated against COVID-19.
ACCREDITATION AND COMPLIANCE
The ACQSC undertakes regular assessment inspections at all homes in the sector. During the year 95
accreditation visits were made to 60 of the Group’s homes. All homes have at all times remained fully accredited
and no Estia home has been sanctioned during the period or subsequently. 10 homes received a report of
unmet outcomes during the period, of which 6 were fully resolved within any required time frames. At the date of
this Report, 4 homes have remaining unmet outcomes, which the group continues to work with ACQSC to
resolve in expected time frames.
Annual financial report
DIRECTORS' REPORT
OPERATING AND FINANCIAL REVIEW
REVIEW OF FINANCIAL PERFORMANCE
The financial performance of the Group was materially impacted by COVID-19. The pandemic increased costs,
reduced occupancy and revenue, the effects of which were partially offset by additional Government funding.
The financial performance has been presented in the section below, which is different to prior years, to provide a
better understanding for shareholders of the financial impact of COVID-19 and other non-recurring items during
this volatile and unprecedented period.
In addition to the impact of COVID-19, input cost inflation, primarily resulting from employment Enterprise
Agreements, continued to run ahead of Government funding rate increases leading to continued margin
compression as resident care and service levels were maintained. Margin erosion across the sector was a key
finding of the Royal Commission.
Government Revenue - Excluding Temporary Funding and Grants
Government Temporary Funding and Grants
Resident and Other Revenue
Total Operating Revenues & Grants
Employee Benefit Expense
Non Wage Expenses
COVID-19 Incremental Expense
EBITDA - Mature Homes
Royal Commission Expenses
Net loss or (gain) from Homes in Ramp-Up
Depreciation and Amortisation Expenses
Other Income - Asset Disposals
Net Finance Costs
Operating Profit Before Income Tax, Class Action & Impairment Expense
Income Tax expense (Pre Class Action & Impairment Expenses)
Profit for the Period (Pre Class Action & Impairment Expenses)
Class Action Settlement Expenses
Impairment Expenses
Income Tax Benefit on Class Action & Impairment Expenses
2021
$'000
443,218
21,426
147,406
612,050
430,648
94,639
24,309
62,454
105
625
42,263
(9,487)
6,496
22,452
6,493
15,959
12,409
980
(3,428)
2020
$'000
426,188
7,382
146,310
579,880
404,272
90,287
2,538
82,783
101
(491)
39,119
(214)
8,491
35,777
10,599
25,178
-
144,622
(2,535)
Profit (Loss) for the Period
5,998
(116,909)
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 or 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 records. These
financial records have been used for the preparation of the financial report, which has been subject to an audit by the external
auditors.
Estia Health Annual Financial Report 2020 - 2021
11
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 83
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DIRECTORS' REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
Occupancy
Occupancy rates across the Group’s portfolio of homes have been affected by the pandemic to greatly varying
degrees depending on the location. In particular, the extent of the outbreak, long lockdowns, and restrictions in
Victoria in the period had a far greater impact than in other homes which is shown in the table below:
.
Victorian Homes
Other States
Total Group
Spot at
20/08/21
Average
H2FY21
Average
H1FY21
Average
2021
Average
2020
88.9%
94.8%
92.8%
86.8%
94.5%
91.8%
85.1%
93.5%
90.6%
85.9%
94.0%
91.2%
90.7%
94.5%
93.2%
Total occupied bed days in FY21 were 2,062,958 (FY20: 2,076,808)
Revenues & Grants
In addition to the impact of occupancy declines, revenues in the period were impacted by the Group’s decision to
cease resident billings at several homes during COVID-19 outbreaks in Victoria and to cease Additional Services
billings at all homes in Victoria for 3 months as a result of limitations on the ability to deliver those services
during the State-wide lock down. All homes in Victoria returned to full billing from 1 November 2020.
Income in the period was supported by temporary Government funding and grants of $21.4 million, as shown
below:
Underline
Temporary Funding Increases
Grants to Reimburse Outbreak Related Costs
Grants Provided as Personal Protective Equipment
Total Government Temporary Funding and Grants
Government Revenue - Excluding Temporary Funding and Grants
Government Revenue -Temporary Funding
Government Grants
Resident and Other Revenue
Total Operating Revenue & Grants
Less: Government Grants
Imputed DAP Revenue on RAD or Bond Balances (AASB 16 impact)
Operating Revenue From New Homes in Ramp-Up
Total Revenue
Operational Costs
2021
$'000
11,826
7,369
2,231
21,426
2021
$'000
443,218
11,826
9,600
147,406
612,050
(9,600)
42,316
1,539
646,305
2020
$'000
426,188
7,382
-
146,310
579,880
-
43,407
13,621
636,908
Operating costs were significantly impacted by the Group’s response to COVID-19 during the period. The impact
varied by region and period depending on the degree to which homes were directly impacted by outbreaks.
Costs were higher during the first half year when the second wave in Victoria reached its peak and reduced
progressively during the remainder of the year. The Group has incurred total incremental costs as a result of the
COVID-19 pandemic of approximately $24.3 million in the period.
Incremental COVID-19 related staff costs in the period of $11.2 million arose from multiple sources, totalling $7.1
million in the 27 Victorian homes, $4.1 million in the 43 homes in other States and included:
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
Quarantine and Pandemic leave
•
•
•
•
•
Increased agency, wages supplement and “surge” workforce costs
Costs of Resident Liaison Staff assisting with family communications and engagement
Additional Infection Prevention Control staff assisting with active training, monitoring and assistance
Costs associated with additional support staff transferred from Queensland and New South Wales.
Incremental COVID-19 related non-staff costs in the period were $13.1 million, totalling $6.6 million in Victoria
and $6.5 million in other States. These costs were primarily in relation to Personal Protective Equipment (PPE),
cleaning and waste disposal with most of the costs in Victoria relating to the major outbreaks at four homes.
Employee Benefit Expense
COVID-19 Incremental Expense *
Employee Benefits Expense From New Homes in Ramp-Up
Total Employee Benefit Expense
Non Wage Costs
COVID-19 Incremental Expense *
Non-Wage Costs From New Home Ramp-Up
Total Non-Wage Expenses **
2021
$'000
430,648
11,198
1,575
443,421
94,639
13,111
5,489
113,239
2020
$'000
404,272
931
10,797
416,000
90,287
1,607
2,333
94,227
* Presented on a combined basis as COVID-19 incremental expenses in the earlier table.
** Non-wage costs comprise Administration, Occupancy and Resident Expenses
Class Action Settlement
On 15 February the Company reached an agreement to settle the shareholder class action commenced against
it in July 2019 in the Federal Court of Australia, relating to market disclosures made between August 2015 and
October 2016. The settlement was approved by the Federal Court on 7 May 2021, without admission of liability
on May 7 2021 and a total settlement sum of $38.4 million being paid in the period. The Company contributed
$12.35 million to this settlement, with the balance being contributed by the Company’s insurers. The Directors
determined that the agreement to settle the class action was a commercial decision made in the best interests of
the Company and its shareholders.
REVIEW OF FINANCIAL POSITION AND CASH FLOWS
The Group’s balance sheet has $615.7 million of equity supporting $1,864.7 of total assets.
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. At 30 June 2021, the Group had net bank debt of $81.1
million and net assets of $615.7 million.
The balance of RADs (including the probate liability) at the end of the period was $863.9 million, compared to
$836.3 million at 30 June 2020. During this period RADs received from current residents increased from
$736.4million to $761.1 million with probate liability increasing from $99.9 million to $102.8 million. It is noted
that the Government has indicated in its response to the Royal Commission Final Report that it proposes to
review the role of RADs with a view to establishing potential alternative sources of capital.
The Group remains in compliance with the covenants applying to its $330 million syndicated financing facility,
which next matures in November 2022. (FY23 year).
There has been no significant change in the Group’s financial position after 30 June 2021.
84 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
13
Estia Health Annual Financial Report 2020 - 2021
14
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
DIRECTORS' REPORT
Annual financial report
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
Occupancy
Occupancy rates across the Group’s portfolio of homes have been affected by the pandemic to greatly varying
degrees depending on the location. In particular, the extent of the outbreak, long lockdowns, and restrictions in
Victoria in the period had a far greater impact than in other homes which is shown in the table below:
.
Victorian Homes
Other States
Total Group
Revenues & Grants
Total occupied bed days in FY21 were 2,062,958 (FY20: 2,076,808)
Spot at
20/08/21
Average
H2FY21
Average
H1FY21
Average
2021
Average
2020
88.9%
94.8%
92.8%
86.8%
94.5%
91.8%
85.1%
93.5%
90.6%
85.9%
94.0%
91.2%
90.7%
94.5%
93.2%
In addition to the impact of occupancy declines, revenues in the period were impacted by the Group’s decision to
cease resident billings at several homes during COVID-19 outbreaks in Victoria and to cease Additional Services
billings at all homes in Victoria for 3 months as a result of limitations on the ability to deliver those services
during the State-wide lock down. All homes in Victoria returned to full billing from 1 November 2020.
Income in the period was supported by temporary Government funding and grants of $21.4 million, as shown
below:
Underline
Temporary Funding Increases
Grants to Reimburse Outbreak Related Costs
Grants Provided as Personal Protective Equipment
Total Government Temporary Funding and Grants
Government Revenue - Excluding Temporary Funding and Grants
Government Revenue -Temporary Funding
Government Grants
Resident and Other Revenue
Total Operating Revenue & Grants
Less: Government Grants
Total Revenue
Operational Costs
Imputed DAP Revenue on RAD or Bond Balances (AASB 16 impact)
Operating Revenue From New Homes in Ramp-Up
2021
$'000
11,826
7,369
2,231
21,426
2021
$'000
443,218
11,826
9,600
147,406
612,050
(9,600)
42,316
1,539
2020
$'000
426,188
7,382
146,310
579,880
-
-
43,407
13,621
646,305
636,908
Operating costs were significantly impacted by the Group’s response to COVID-19 during the period. The impact
varied by region and period depending on the degree to which homes were directly impacted by outbreaks.
Costs were higher during the first half year when the second wave in Victoria reached its peak and reduced
progressively during the remainder of the year. The Group has incurred total incremental costs as a result of the
COVID-19 pandemic of approximately $24.3 million in the period.
Incremental COVID-19 related staff costs in the period of $11.2 million arose from multiple sources, totalling $7.1
million in the 27 Victorian homes, $4.1 million in the 43 homes in other States and included:
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
•
•
•
•
•
Quarantine and Pandemic leave
Increased agency, wages supplement and “surge” workforce costs
Costs of Resident Liaison Staff assisting with family communications and engagement
Additional Infection Prevention Control staff assisting with active training, monitoring and assistance
Costs associated with additional support staff transferred from Queensland and New South Wales.
Incremental COVID-19 related non-staff costs in the period were $13.1 million, totalling $6.6 million in Victoria
and $6.5 million in other States. These costs were primarily in relation to Personal Protective Equipment (PPE),
cleaning and waste disposal with most of the costs in Victoria relating to the major outbreaks at four homes.
Employee Benefit Expense
COVID-19 Incremental Expense *
Employee Benefits Expense From New Homes in Ramp-Up
Total Employee Benefit Expense
Non Wage Costs
COVID-19 Incremental Expense *
Non-Wage Costs From New Home Ramp-Up
Total Non-Wage Expenses **
2021
$'000
430,648
11,198
1,575
443,421
94,639
13,111
5,489
113,239
2020
$'000
404,272
931
10,797
416,000
90,287
1,607
2,333
94,227
* Presented on a combined basis as COVID-19 incremental expenses in the earlier table.
** Non-wage costs comprise Administration, Occupancy and Resident Expenses
Class Action Settlement
On 15 February the Company reached an agreement to settle the shareholder class action commenced against
it in July 2019 in the Federal Court of Australia, relating to market disclosures made between August 2015 and
October 2016. The settlement was approved by the Federal Court on 7 May 2021, without admission of liability
on May 7 2021 and a total settlement sum of $38.4 million being paid in the period. The Company contributed
$12.35 million to this settlement, with the balance being contributed by the Company’s insurers. The Directors
determined that the agreement to settle the class action was a commercial decision made in the best interests of
the Company and its shareholders.
REVIEW OF FINANCIAL POSITION AND CASH FLOWS
The Group’s balance sheet has $615.7 million of equity supporting $1,864.7 of total assets.
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. At 30 June 2021, the Group had net bank debt of $81.1
million and net assets of $615.7 million.
The balance of RADs (including the probate liability) at the end of the period was $863.9 million, compared to
$836.3 million at 30 June 2020. During this period RADs received from current residents increased from
$736.4million to $761.1 million with probate liability increasing from $99.9 million to $102.8 million. It is noted
that the Government has indicated in its response to the Royal Commission Final Report that it proposes to
review the role of RADs with a view to establishing potential alternative sources of capital.
The Group remains in compliance with the covenants applying to its $330 million syndicated financing facility,
which next matures in November 2022. (FY23 year).
There has been no significant change in the Group’s financial position after 30 June 2021.
Estia Health Annual Financial Report 2020 - 2021
13
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 85
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Estia remains committed to the provision of residential aged care services, which the Directors consider will
continue to form an essential part of the continuum of aged care. This is particularly the case at the higher levels
of complex care, including needs which home care cannot currently fulfill. The Directors consider that the
Group’s balance sheet, scale, systems, leadership and management sees the Group well-placed to continue to
be a leading provider in a reformed residential aged care sector.
As referenced in detail in this report, the impacts of COVID-19 on the community will continue to be experienced
for the foreseeable future and the impact on the aged care sector which cares for some of the most vulnerable
members of the community will likely continue to be significant. The pandemic situation remains volatile and
unpredictable and the potential financial impact of future outbreaks in the community or Estia homes remains
At the date of this report, there are varying degrees of restrictions or lockdowns in the States in which the Group
operates. It is possible that these circumstances will have a depressing impact on future occupancy levels
should restrictions remain in place.
As referenced earlier in this report, the Government’s response to the Royal Commission’s recommendations,
once enacted into legislation, are widely expected to lead to greater cost, compliance, and administrative
requirements on operators. Most of the more substantive changes are still the subject of significant design,
development, and consultation prior to implementation. Importantly, most are subject to Government legislation
which has not been drafted at the date of this Report. As a result, there remains significant uncertainty over the
detail of what will be enacted and the financial and operational impacts for the sector which will persist for some
time to come.
As a result, the Group will continue to exercise caution over the deployment of capital until such time as there is
greater visibility and certainty of future returns
The Group continues to advocate for appropriate sector reform and legislated changes which will result in 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.
DIRECTORS' REPORT
DIRECTORS' REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
DEVELOPMENTS, ACQUISITIONS AND DIVESTMENTS
New Developments and Capital Investment
As previously reported, major capital projects were paused during the period pending a clearer investment
outlook. As a result, total capital investment in the period was $49.0 million (2020: $80.6 million), of which $18.5
million was invested in the completion of the 105-bed new home at Blakehurst (NSW), which opened on 22
February 2021 at a total cost of $41.2 million. As of 20 August 2021, occupancy at Blakehurst was 71.4%, and
RAD receipts were $9.7 million.
During the period the Group continued its investment in a number a refurbishment and asset life-cycle
improvement outcomes as follows:
uncertain.
•
•
•
•
The significant refurbishments of 9 homes with 787 beds ($3.4m)
Upgrades and enhancements to the nurse call and CCTV systems ($5.0m)
Asset life-cycle replacements, improvements and sustainability initiatives ($16.8m) and
IT and systems improvements ($2.0m).
Acquisitions
There were no business acquisitions completed during the period, though the Group continues to identify and
carefully consider single home or portfolio acquisition opportunities within existing geographic networks against
the Group’s investment criteria.
Divestments
During the period, the Group completed the sale of three surplus land sites at Mona Vale (NSW), Wollongong
(NSW) and Grovedale (VIC) which resulted in a combined pre-tax profit on sale of $9.4 million.
In June 2021 the decision was taken to close the Group’s 46 bed home at Keilor Downs in Victoria as it will not
meet emerging community expectations for residential aged care homes in coming years. The home closed on
2nd August 2021, and all residents were assisted in finding new homes with Estia or other local providers.
Employees have been supported either with continued employment at other Estia homes, or redundancy
packages with appropriate support. Costs associated with the closure of $0.3 million were provided for in the
period ended 30 June 2021.
DIVIDENDS
No dividends were declared or paid during the year. On 24 August 2021 the Directors resolved to pay a final
dividend for the year of 2.3 cents per share ($6.0 million) (2020: nil). The record date for the final dividend will be
30 August 2021, with payment being made 17 September 2021. Shares will trade excluding entitlement to the
dividend on 31 August 2021. This dividend represents a payout ratio of 100% of total comprehensive profit for
the year.
The Directors have elected to suspend the Dividend Reinvestment Program at this time.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than those explained in this report relating to COVID-19, there were no significant changes in the state of
affairs of the Group during the financial year ended 30 June 2021.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
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.
86 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
DIRECTORS' REPORT
Annual financial report
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Estia remains committed to the provision of residential aged care services, which the Directors consider will
continue to form an essential part of the continuum of aged care. This is particularly the case at the higher levels
of complex care, including needs which home care cannot currently fulfill. The Directors consider that the
Group’s balance sheet, scale, systems, leadership and management sees the Group well-placed to continue to
be a leading provider in a reformed residential aged care sector.
As referenced in detail in this report, the impacts of COVID-19 on the community will continue to be experienced
for the foreseeable future and the impact on the aged care sector which cares for some of the most vulnerable
members of the community will likely continue to be significant. The pandemic situation remains volatile and
unpredictable and the potential financial impact of future outbreaks in the community or Estia homes remains
uncertain.
At the date of this report, there are varying degrees of restrictions or lockdowns in the States in which the Group
operates. It is possible that these circumstances will have a depressing impact on future occupancy levels
should restrictions remain in place.
As referenced earlier in this report, the Government’s response to the Royal Commission’s recommendations,
once enacted into legislation, are widely expected to lead to greater cost, compliance, and administrative
requirements on operators. Most of the more substantive changes are still the subject of significant design,
development, and consultation prior to implementation. Importantly, most are subject to Government legislation
which has not been drafted at the date of this Report. As a result, there remains significant uncertainty over the
detail of what will be enacted and the financial and operational impacts for the sector which will persist for some
time to come.
As a result, the Group will continue to exercise caution over the deployment of capital until such time as there is
greater visibility and certainty of future returns
The Group continues to advocate for appropriate sector reform and legislated changes which will result in 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.
OPERATING AND FINANCIAL REVIEW (CONTINUED)
DEVELOPMENTS, ACQUISITIONS AND DIVESTMENTS
New Developments and Capital Investment
As previously reported, major capital projects were paused during the period pending a clearer investment
outlook. As a result, total capital investment in the period was $49.0 million (2020: $80.6 million), of which $18.5
million was invested in the completion of the 105-bed new home at Blakehurst (NSW), which opened on 22
February 2021 at a total cost of $41.2 million. As of 20 August 2021, occupancy at Blakehurst was 71.4%, and
RAD receipts were $9.7 million.
improvement outcomes as follows:
During the period the Group continued its investment in a number a refurbishment and asset life-cycle
The significant refurbishments of 9 homes with 787 beds ($3.4m)
Upgrades and enhancements to the nurse call and CCTV systems ($5.0m)
Asset life-cycle replacements, improvements and sustainability initiatives ($16.8m) and
•
•
•
•
There were no business acquisitions completed during the period, though the Group continues to identify and
carefully consider single home or portfolio acquisition opportunities within existing geographic networks against
IT and systems improvements ($2.0m).
Acquisitions
the Group’s investment criteria.
Divestments
During the period, the Group completed the sale of three surplus land sites at Mona Vale (NSW), Wollongong
(NSW) and Grovedale (VIC) which resulted in a combined pre-tax profit on sale of $9.4 million.
In June 2021 the decision was taken to close the Group’s 46 bed home at Keilor Downs in Victoria as it will not
meet emerging community expectations for residential aged care homes in coming years. The home closed on
2nd August 2021, and all residents were assisted in finding new homes with Estia or other local providers.
Employees have been supported either with continued employment at other Estia homes, or redundancy
packages with appropriate support. Costs associated with the closure of $0.3 million were provided for in the
period ended 30 June 2021.
DIVIDENDS
the year.
No dividends were declared or paid during the year. On 24 August 2021 the Directors resolved to pay a final
dividend for the year of 2.3 cents per share ($6.0 million) (2020: nil). The record date for the final dividend will be
30 August 2021, with payment being made 17 September 2021. Shares will trade excluding entitlement to the
dividend on 31 August 2021. This dividend represents a payout ratio of 100% of total comprehensive profit for
The Directors have elected to suspend the Dividend Reinvestment Program at this time.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than those explained in this report relating to COVID-19, there were no significant changes in the state of
affairs of the Group during the financial year ended 30 June 2021.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
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.
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KEY BUSINESS RISKS
The following business risks are considered to be some of the key risks to the Group’s performance and growth.
CHANGES TO REGULATORY OR FUNDING FRAMEWORK
Risk
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 the Aged Care Act 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.
Impact
In February 2021 the Royal Commission into Aged Care handed down its final report.
As referenced earlier in this Report, the Government’s response to the Royal Commission’s
recommendations once enacted into legislation are widely expected to lead to greater cost,
compliance and administrative requirements on operators. Most of the more substantive changes
are still the subject design, development, and consultation prior to implementation. Importantly,
most are subject to Government legislation which has not been drafted at the date of this Report.
As a result, there remains significant uncertainty over the detail of what will be enacted and of the
financial and operational impacts for the sector which will persist for some time to come.
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. Additional accreditation and other requirements, including
changes in relation to accommodation and infection control emanating from COVID-19 may also
result.
Risk
Strategy
Ageing demographics point to increasing demand for aged care services. Estia is committed to the
provision of residential aged care services which will continue to form an essential part of the
continuum of aged care. This is particularly the case at the higher levels of complex care including
needs which home care cannot fulfill.
With more than 95% of these services provided by private providers, whether “Not For Profit” or
“For Profit”, the Directors believe that future regulatory and funding changes will need to ensure a
strong and financially sustainable sector in order to meet community expectations of caring for the
elderly. The Group monitors and assesses changes to the regulatory and funding environment with
a view to adapting and changing its operations in order to continue to provide high quality services
to residents and generate appropriate returns on capital provided by shareholders. This process of
continual review is undertaken with short, medium and long-term planning cycles. The Group seeks
to proactively engage with Government and the sector to advocate for a regulatory and funding
environment which supports a strong and financially sustainable sector.
The Group will continue to exercise caution over the deployment of capital until there is greater
visibility and certainty of future returns resulting from the upcoming Government reviews and
reforms.
DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
WORKFORCE
Risk
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 recruit and retain 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
the National Disability and Insurance Scheme ("NDIS"), hospitals, other residential aged care homes
and home care services, for appropriately skilled staff and a general industry shortage of staff in key
areas, such as nurses and other skilled staff may lead to upward pressure on wages and salaries.
The ageing global population will create increasing demand for staff providing care services which
may impact Australia’s ability to secure sufficient inbound migration to support its need for an
increased workforce. The closure of international borders as a result of the COVID-19 pandemic is
further reducing the pool of potential carer staff from inward migration.
The Royal Commission reported an estimated need for more than 130,000 additional, full-time
equivalent workers by 2050 - a 70% increase on current levels which will create further competitive
pressures on recruiting and retaining staff at all levels.
The impact of COVID-19, the Royal Commission findings and increasingly regulatory activities has
resulted in adverse media and community views about the sector which may reduce the
attractiveness of the sector to potential and existing employees.
Impact
The relative attractiveness to potential employees of the sector may make it more difficult to recruit
and retain quality staff which could result in reduced quality of services provided, capacity or
capability.
Increasing labour costs and labour shortages may arise as a result which may adversely affect the
Group’s business, financial performance and future prospects. This may result in increased costs,
which the Group is unable to recover from residents’ fees or Government funding fees. Staff
shortages may result in increased overtime or use of agency staff, which typically results in higher
staffing costs to the Group. At greater levels of staff shortages the Group may have to reduce the
capacity of homes it operates in order to maintain service levels including delivering future minimum
care staff hours per resident.
Risk
Strategy
Key initiatives are in place to help mitigate the challenges of attracting and retaining workforce and
positioning Estia Health as an employer of choice, these include:
• Review and benchmarking of remuneration and benefits packages, increasing the number of staff
on Enterprise Agreements
• Building a differentiated employee value proposition
• Diversifying recruitment and sourcing strategies to enable access to a broader network of
potential employees.
• Developing effective career pathway and training and development programs
• Developing support programs, retention strategies, and non-financial benefits to increase the
relative attractiveness of the Group as an employer.
88 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot The following business risks are considered to be some of the key risks to the Group’s performance and growth.
WORKFORCE
Annual financial report
DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
Risk
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 recruit and retain 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
the National Disability and Insurance Scheme ("NDIS"), hospitals, other residential aged care homes
and home care services, for appropriately skilled staff and a general industry shortage of staff in key
areas, such as nurses and other skilled staff may lead to upward pressure on wages and salaries.
The ageing global population will create increasing demand for staff providing care services which
may impact Australia’s ability to secure sufficient inbound migration to support its need for an
increased workforce. The closure of international borders as a result of the COVID-19 pandemic is
further reducing the pool of potential carer staff from inward migration.
The Royal Commission reported an estimated need for more than 130,000 additional, full-time
equivalent workers by 2050 - a 70% increase on current levels which will create further competitive
pressures on recruiting and retaining staff at all levels.
The impact of COVID-19, the Royal Commission findings and increasingly regulatory activities has
resulted in adverse media and community views about the sector which may reduce the
attractiveness of the sector to potential and existing employees.
Impact
The relative attractiveness to potential employees of the sector may make it more difficult to recruit
and retain quality staff which could result in reduced quality of services provided, capacity or
capability.
Increasing labour costs and labour shortages may arise as a result which may adversely affect the
Group’s business, financial performance and future prospects. This may result in increased costs,
which the Group is unable to recover from residents’ fees or Government funding fees. Staff
shortages may result in increased overtime or use of agency staff, which typically results in higher
staffing costs to the Group. At greater levels of staff shortages the Group may have to reduce the
capacity of homes it operates in order to maintain service levels including delivering future minimum
care staff hours per resident.
Risk
Strategy
Key initiatives are in place to help mitigate the challenges of attracting and retaining workforce and
positioning Estia Health as an employer of choice, these include:
• Review and benchmarking of remuneration and benefits packages, increasing the number of staff
on Enterprise Agreements
• Building a differentiated employee value proposition
• Diversifying recruitment and sourcing strategies to enable access to a broader network of
potential employees.
• Developing effective career pathway and training and development programs
• Developing support programs, retention strategies, and non-financial benefits to increase the
relative attractiveness of the Group as an employer.
DIRECTORS' REPORT
KEY BUSINESS RISKS
CHANGES TO REGULATORY OR FUNDING FRAMEWORK
Risk
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 the Aged Care Act 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.
Impact
In February 2021 the Royal Commission into Aged Care handed down its final report.
As referenced earlier in this Report, the Government’s response to the Royal Commission’s
recommendations once enacted into legislation are widely expected to lead to greater cost,
compliance and administrative requirements on operators. Most of the more substantive changes
are still the subject design, development, and consultation prior to implementation. Importantly,
most are subject to Government legislation which has not been drafted at the date of this Report.
As a result, there remains significant uncertainty over the detail of what will be enacted and of the
financial and operational impacts for the sector which will persist for some time to come.
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. Additional accreditation and other requirements, including
changes in relation to accommodation and infection control emanating from COVID-19 may also
result.
Risk
Strategy
Ageing demographics point to increasing demand for aged care services. Estia is committed to the
provision of residential aged care services which will continue to form an essential part of the
continuum of aged care. This is particularly the case at the higher levels of complex care including
needs which home care cannot fulfill.
With more than 95% of these services provided by private providers, whether “Not For Profit” or
“For Profit”, the Directors believe that future regulatory and funding changes will need to ensure a
strong and financially sustainable sector in order to meet community expectations of caring for the
elderly. The Group monitors and assesses changes to the regulatory and funding environment with
a view to adapting and changing its operations in order to continue to provide high quality services
to residents and generate appropriate returns on capital provided by shareholders. This process of
continual review is undertaken with short, medium and long-term planning cycles. The Group seeks
to proactively engage with Government and the sector to advocate for a regulatory and funding
environment which supports a strong and financially sustainable sector.
The Group will continue to exercise caution over the deployment of capital until there is greater
visibility and certainty of future returns resulting from the upcoming Government reviews and
reforms.
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 89
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DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
RAD BALANCES
KEY BUSINESS RISKS (CONTINUED)
OCCUPANCY LEVELS MAY FALL (CONTINUED)
Risk
Non-supported residents may choose to pay for accommodation by a RAD or a Daily
Accommodation Payment, known as a DAP. Approved Providers, such as Estia can set a RAD price
subject to Aged Care Pricing Commissioner approval if in excess of $500,000 but cannot determine
whether a resident pays a RAD or a DAP. The Group has $863 million of funding provided in the
form of RADs from residents, most of which have been deployed in accordance with the Aged Care
Act in the acquisition, building or redevelopment of residential aged care facilities and assets which
are illiquid.
RADs are repayable within legislated timeframes after the departure of a resident. Overall RAD
balances are maintained by the replacement of outgoing RADs with commensurate incoming RADs
from new residents. Falls in occupancy (which may arise for many reasons), changes in
accommodation payment preferences by new residents, or legislated changes may lead to declining
RAD balances which will require replacing with alternative funding sources.
The Royal Commission recommended the replacement of the $32bn of residential aged care RADs
by 2025, however, proposed no alternative source of financing. ACFA recommended, in its report to
Government in March 2021, that no change be made. The Government, in its response to the Royal
Commission, indicated it is assessing the recommendation and has provided no indication of timing
or of potential alternative sources of financing.
Impact
If a large number of departing RAD payers are subsequently replaced by non-RAD paying residents,
or not replaced at all, the Group may need to draw down higher levels of bank or other debt, be
required to reduce capital investment, reduce dividend payments or seek additional capital. Extreme
events resulting in very large net outflows may cause severe liquidity or solvency issues.
In the event that the Government replaces the RAD scheme, the Group would need to replace RAD
balances with alternative funding sources consistent with any transitional arrangements.
Risk
Strategy
The Group regularly monitors and analyses RAD movements and trends across its portfolio of 69
homes. In accordance with the Aged Care Act, the Group maintains a formal liquidity policy intended
to keep sufficient cash or credit facilities reserved to refund RADs as and when they fall due, should
outgoing RADs not be replaced by an equivalent amount of incoming RADs from new residents. Of
the Group’s bank debt facility of $330 million, $211 million was undrawn at 30 June 2021.
The Group will monitor and contribute to any consultancy process in relation to the Government's
review of RADs.
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
• Pandemic or epidemic with local, regional or national impact
• Shortage of skilled workers may necessitate capacity restrictions
Impact
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.
Risk
Strategy
The Group operates a centrally led occupancy team supported by regional and home specific
customer service officers dedicated to securing new residents across the Group’s 69 homes.
Occupancy is pro-actively monitored and managed by this team including ongoing market and
competitor analysis, and monitoring of customer satisfaction and needs. The Group’s services and
home offerings are established, marketed and promoted to meet the needs of the local community,
and staff actively engage with referrers, hospitals, health clinics and GPs within the locale of each
home.
The geographic and demographic spread of the Group’s homes mitigates against factors which may
impact one area, region, state or a specific demographic cohort of the aged population.
FAILURE TO MEET CLINICAL CARE STANDARDS
Risk
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 agencies or providers do not provide the service, or the quality of service expected.
Impact
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. Serious failures may result in
adverse reports by the ACQSC, sanctions or in extreme circumstances, may lead to the 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.
Risk
Strategy
The Group maintains a documented system of clinical governance to promote and support the
health, safety and quality of care provision to residents, with the objective of ensuring compliance
with the applicable legislation and departmental policies.
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 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.
The Group has a Clinical Governance Committee to provide clinical oversight and evaluation of
clinical improvement strategy and performance, which is independently chaired by Professor Simon
Willcock, Professor and Discipline Head of General Practice at Sydney University and Director of
Primary Care services at Macquarie University Hospital.
ESTIA'S REPUTATION MAY BE DAMAGED
Risk
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. The
Group may also suffer from adverse media coverage and community sentiment towards the sector,
particularly during events such as the recent Royal Commission and impact of COVID-19 in Victoria
in 2020.
90 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
RAD BALANCES
KEY BUSINESS RISKS (CONTINUED)
OCCUPANCY LEVELS MAY FALL (CONTINUED)
Annual financial report
Risk
Non-supported residents may choose to pay for accommodation by a RAD or a Daily
Accommodation Payment, known as a DAP. Approved Providers, such as Estia can set a RAD price
subject to Aged Care Pricing Commissioner approval if in excess of $500,000 but cannot determine
whether a resident pays a RAD or a DAP. The Group has $863 million of funding provided in the
form of RADs from residents, most of which have been deployed in accordance with the Aged Care
Act in the acquisition, building or redevelopment of residential aged care facilities and assets which
are illiquid.
RADs are repayable within legislated timeframes after the departure of a resident. Overall RAD
balances are maintained by the replacement of outgoing RADs with commensurate incoming RADs
from new residents. Falls in occupancy (which may arise for many reasons), changes in
accommodation payment preferences by new residents, or legislated changes may lead to declining
RAD balances which will require replacing with alternative funding sources.
The Royal Commission recommended the replacement of the $32bn of residential aged care RADs
by 2025, however, proposed no alternative source of financing. ACFA recommended, in its report to
Government in March 2021, that no change be made. The Government, in its response to the Royal
Commission, indicated it is assessing the recommendation and has provided no indication of timing
or of potential alternative sources of financing.
Impact
If a large number of departing RAD payers are subsequently replaced by non-RAD paying residents,
or not replaced at all, the Group may need to draw down higher levels of bank or other debt, be
required to reduce capital investment, reduce dividend payments or seek additional capital. Extreme
events resulting in very large net outflows may cause severe liquidity or solvency issues.
In the event that the Government replaces the RAD scheme, the Group would need to replace RAD
balances with alternative funding sources consistent with any transitional arrangements.
Risk
Strategy
The Group regularly monitors and analyses RAD movements and trends across its portfolio of 69
homes. In accordance with the Aged Care Act, the Group maintains a formal liquidity policy intended
to keep sufficient cash or credit facilities reserved to refund RADs as and when they fall due, should
outgoing RADs not be replaced by an equivalent amount of incoming RADs from new residents. Of
the Group’s bank debt facility of $330 million, $211 million was undrawn at 30 June 2021.
The Group will monitor and contribute to any consultancy process in relation to the Government's
Risk
The Group's occupancy levels may fall below expectations as a result of numerous factors, including
review of RADs.
OCCUPANCY LEVELS MAY FALL
but not limited to:
• Increased competition
• Changing consumer trends
• Declining referrals from hospitals and other sources
• Growth of home care services
• Pandemic or epidemic with local, regional or national impact
• Shortage of skilled workers may necessitate capacity restrictions
Impact
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.
Risk
Strategy
The Group operates a centrally led occupancy team supported by regional and home specific
customer service officers dedicated to securing new residents across the Group’s 69 homes.
Occupancy is pro-actively monitored and managed by this team including ongoing market and
competitor analysis, and monitoring of customer satisfaction and needs. The Group’s services and
home offerings are established, marketed and promoted to meet the needs of the local community,
and staff actively engage with referrers, hospitals, health clinics and GPs within the locale of each
home.
The geographic and demographic spread of the Group’s homes mitigates against factors which may
impact one area, region, state or a specific demographic cohort of the aged population.
FAILURE TO MEET CLINICAL CARE STANDARDS
Risk
Impact
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 agencies or providers do not provide the service, or the quality of service expected.
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. Serious failures may result in
adverse reports by the ACQSC, sanctions or in extreme circumstances, may lead to the 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.
Risk
Strategy
The Group maintains a documented system of clinical governance to promote and support the
health, safety and quality of care provision to residents, with the objective of ensuring compliance
with the applicable legislation and departmental policies.
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 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.
The Group has a Clinical Governance Committee to provide clinical oversight and evaluation of
clinical improvement strategy and performance, which is independently chaired by Professor Simon
Willcock, Professor and Discipline Head of General Practice at Sydney University and Director of
Primary Care services at Macquarie University Hospital.
ESTIA'S REPUTATION MAY BE DAMAGED
Risk
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. The
Group may also suffer from adverse media coverage and community sentiment towards the sector,
particularly during events such as the recent Royal Commission and impact of COVID-19 in Victoria
in 2020.
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DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
ESTIA'S REPUTATION MAY BE DAMAGED (CONTINUED)
KEY BUSINESS RISKS (CONTINUED)
INABILITY TO RECRUIT AND RETAIN KEY PERSONNEL
Impact
Any such damage to the Group’s or sector’s reputation could result in existing residents moving out
of Estia’s 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.
Reputational damage, particularly associated with quality of care, may also adversely impact the
willingness of lenders to continue providing funding, the ability to hire and retain staff, and increased
regulatory supervision or action.
Risk
Strategy
The Group’s Risk and Quality Management Framework monitors, analyses and reports of clinical
and care outcomes across the Group’s 69 homes. Customer Experience Reports are undertaken to
provide detailed feedback on resident and family experience. Complaints management procedures
escalate matters to the Chief Customer Officer as part of the quality and risk policy in order to
ensure appropriate action is taken to remedy failings and protect the Group’s reputation.
Central staff monitor and assess press, media, social media to identify areas where the Company’s
reputation may be reported in a way which may be reputationally damaging.
INFORMATION TECHNOLOGY SECURITY AND CYBERSECURITY
Risk
Impact
Risk
Strategy
Like most large businesses, the Group stores large quantities of data in electronic format,
communicates data in electronic format and is heavily reliant on information technology (“IT”) in the
operation of its business. Criminal activity is increasingly being observed and perpetrated against
many businesses with the intent of theft, blackmail, fraud, ransom or causing malicious damage.
Cybersecurity and IT security threats are constantly evolving and increasingly sophisticated in
targeting IT infrastructure.
Systems breaches could result in disruption, theft, misuse, ransom, fraud or blackmail of the Group,
its residents or staff. Rectification can be lengthy, expensive and in some cases cause irretrievable
damage both financial and reputational.
The Group has a framework of access security controls, security monitoring, business continuity
management, disaster recovery processes and off-site back-up facilities, including training of staff in
relation to privacy and data security. The strength and effectiveness of this framework are regularly
assessed, including by external experts with a view to continuous testing and improvement.
Reporting and management of IT and cybersecurity risk is part of the Board Risk Committee
Charter.
GROWTH MAY BE CONSTRAINED BY ABILITY TO SECURE BED LICENCES
Risk
Approved Providers may only provide funded places to residents to the extent of bed licences 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 licences 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 licences they would like to secure.
Impact
Estia may not be able to secure bed licences to allow it to grow the capacity as quickly as it might do
if such a constraint did not exist
Risk
Strategy
The Group applies for licenses in ACAR rounds, will consider acquiring licences where they are
available for sale or transfer, and will consider applying to move licences within its portfolio of homes
to maximise occupancy and development opportunities. The Group will not commit future significant
development funds unless licences are substantially secured for a development.
The Government has announced the intention to abolish the current restrictive and anti-competitive
licensing regime from 1 July 2024 which may result in this constraint on growth being removed.
Risk
The Group may experience an inability to recruit and retain personnel to key leadership and
management positions at home or executive level. This may be exacerbated if executives choose to
leave the sector due to the multiple challenges faced and or negative media sentiment in response
to the Aged Care Royal Commission and the impact of COVID-19. The decision may be triggered by
opportunities that have greater financial reward or other benefits.
Impact
The loss of key personnel at a home or executive level can affect occupancy, standards of clinical
care and operational efficiency and effectiveness. Replacement of key personnel is expensive,
time-consuming and can be disruptive and destabilising to the business, possibly resulting in poorer
clinical or financial performance.
Risk
Strategy
The Group’s People and Culture team seeks to identify, retain and develop key employees
supported by succession planning strategies and tactics. Employee engagement surveys are
undertaken regularly to evaluate culture and engagement. Communication strategies that celebrate
the resident life experience, recognise team initiatives, milestones and achievements are key
elements to ensure employees are recognised. Benchmarking of remuneration and benefits
packages are undertaken with the aim of ensuring the Group’s offerings remain competitive both
within the aged care sector and associated health services.
PANDEMIC OR EPIDEMIC
Group.
Risk
A pandemic or epidemic, such as COVID-19 may have a local, regional or national impact on the
Impact
Local impact may result in resident and staff infection at an Estia home, which may cause a home
lock down, staff shortages and occupancy reduction. Cost increases may result from increased
infection control activity including PPE costs, cleaning costs, and additional support staff. Revenue
losses may result from occupancy reductions, and from the cessation of Additional Services billing.
Reputational damage resulting from the manner in which an outbreak was managed may be longer
lasting and may continue to impact occupancy and the ability to retain staff in the future.
Regional impact may result in reduced occupancy arising from community concerns about safety or
local authority restrictions on access to homes even if an Estia home does not experience an
outbreak. Staff shortages may result from illness, quarantining or movement restrictions. Staff
shortages may also arise if multiple homes in a region experience outbreaks and require additional
or “surge” staffing which may make it difficult for the Group to secure staff for its own homes.
National impact may result in supply chain disruption, restrictions on population movement, and
wider economic, health and social impacts which may be longer lasting.
Risk
Strategy
Local risk mitigation is managed by the adoption of consistent and comprehensive infection control
procedures including staff training. Procedures are in place for close monitoring of all resident and
staff health for signs of infection and all times but especially during high levels of community
infection, whether local, regional or national.
Mitigant
In the event of an outbreak, policies and procedures are in place designed to rapidly isolate and test
residents and staff, and introduce the wearing of appropriate PPE. Established processes are in
place to escalate incidents to management. In the event of an outbreak during a pandemic, it is
standard procedure to establish a Critical Incident Management Team to oversee home level
response. Surge staffing plans have been designed to provide additional skilled resource from a
variety of sources at short notice, and homes have access to regional PPE stock.
92 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
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Estia Health Annual Financial Report 2020 - 2021
22
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
ESTIA'S REPUTATION MAY BE DAMAGED (CONTINUED)
KEY BUSINESS RISKS (CONTINUED)
INABILITY TO RECRUIT AND RETAIN KEY PERSONNEL
Annual financial report
Impact
Any such damage to the Group’s or sector’s reputation could result in existing residents moving out
of Estia’s 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.
Reputational damage, particularly associated with quality of care, may also adversely impact the
willingness of lenders to continue providing funding, the ability to hire and retain staff, and increased
regulatory supervision or action.
Risk
Strategy
The Group’s Risk and Quality Management Framework monitors, analyses and reports of clinical
and care outcomes across the Group’s 69 homes. Customer Experience Reports are undertaken to
provide detailed feedback on resident and family experience. Complaints management procedures
escalate matters to the Chief Customer Officer as part of the quality and risk policy in order to
ensure appropriate action is taken to remedy failings and protect the Group’s reputation.
Central staff monitor and assess press, media, social media to identify areas where the Company’s
reputation may be reported in a way which may be reputationally damaging.
INFORMATION TECHNOLOGY SECURITY AND CYBERSECURITY
Risk
Like most large businesses, the Group stores large quantities of data in electronic format,
communicates data in electronic format and is heavily reliant on information technology (“IT”) in the
operation of its business. Criminal activity is increasingly being observed and perpetrated against
many businesses with the intent of theft, blackmail, fraud, ransom or causing malicious damage.
Cybersecurity and IT security threats are constantly evolving and increasingly sophisticated in
targeting IT infrastructure.
Impact
Systems breaches could result in disruption, theft, misuse, ransom, fraud or blackmail of the Group,
its residents or staff. Rectification can be lengthy, expensive and in some cases cause irretrievable
damage both financial and reputational.
Risk
Strategy
The Group has a framework of access security controls, security monitoring, business continuity
management, disaster recovery processes and off-site back-up facilities, including training of staff in
relation to privacy and data security. The strength and effectiveness of this framework are regularly
assessed, including by external experts with a view to continuous testing and improvement.
Reporting and management of IT and cybersecurity risk is part of the Board Risk Committee
Charter.
GROWTH MAY BE CONSTRAINED BY ABILITY TO SECURE BED LICENCES
Risk
Approved Providers may only provide funded places to residents to the extent of bed licences 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 licences 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 licences they would like to secure.
Impact
Estia may not be able to secure bed licences to allow it to grow the capacity as quickly as it might do
if such a constraint did not exist
Risk
Strategy
The Group applies for licenses in ACAR rounds, will consider acquiring licences where they are
available for sale or transfer, and will consider applying to move licences within its portfolio of homes
to maximise occupancy and development opportunities. The Group will not commit future significant
development funds unless licences are substantially secured for a development.
The Government has announced the intention to abolish the current restrictive and anti-competitive
licensing regime from 1 July 2024 which may result in this constraint on growth being removed.
Risk
Impact
Risk
Strategy
The Group may experience an inability to recruit and retain personnel to key leadership and
management positions at home or executive level. This may be exacerbated if executives choose to
leave the sector due to the multiple challenges faced and or negative media sentiment in response
to the Aged Care Royal Commission and the impact of COVID-19. The decision may be triggered by
opportunities that have greater financial reward or other benefits.
The loss of key personnel at a home or executive level can affect occupancy, standards of clinical
care and operational efficiency and effectiveness. Replacement of key personnel is expensive,
time-consuming and can be disruptive and destabilising to the business, possibly resulting in poorer
clinical or financial performance.
The Group’s People and Culture team seeks to identify, retain and develop key employees
supported by succession planning strategies and tactics. Employee engagement surveys are
undertaken regularly to evaluate culture and engagement. Communication strategies that celebrate
the resident life experience, recognise team initiatives, milestones and achievements are key
elements to ensure employees are recognised. Benchmarking of remuneration and benefits
packages are undertaken with the aim of ensuring the Group’s offerings remain competitive both
within the aged care sector and associated health services.
PANDEMIC OR EPIDEMIC
Risk
Impact
A pandemic or epidemic, such as COVID-19 may have a local, regional or national impact on the
Group.
Local impact may result in resident and staff infection at an Estia home, which may cause a home
lock down, staff shortages and occupancy reduction. Cost increases may result from increased
infection control activity including PPE costs, cleaning costs, and additional support staff. Revenue
losses may result from occupancy reductions, and from the cessation of Additional Services billing.
Reputational damage resulting from the manner in which an outbreak was managed may be longer
lasting and may continue to impact occupancy and the ability to retain staff in the future.
Regional impact may result in reduced occupancy arising from community concerns about safety or
local authority restrictions on access to homes even if an Estia home does not experience an
outbreak. Staff shortages may result from illness, quarantining or movement restrictions. Staff
shortages may also arise if multiple homes in a region experience outbreaks and require additional
or “surge” staffing which may make it difficult for the Group to secure staff for its own homes.
National impact may result in supply chain disruption, restrictions on population movement, and
wider economic, health and social impacts which may be longer lasting.
Risk
Strategy
Local risk mitigation is managed by the adoption of consistent and comprehensive infection control
procedures including staff training. Procedures are in place for close monitoring of all resident and
staff health for signs of infection and all times but especially during high levels of community
infection, whether local, regional or national.
Mitigant
In the event of an outbreak, policies and procedures are in place designed to rapidly isolate and test
residents and staff, and introduce the wearing of appropriate PPE. Established processes are in
place to escalate incidents to management. In the event of an outbreak during a pandemic, it is
standard procedure to establish a Critical Incident Management Team to oversee home level
response. Surge staffing plans have been designed to provide additional skilled resource from a
variety of sources at short notice, and homes have access to regional PPE stock.
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 93
22
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DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
PANDEMIC OR EPIDEMIC (CONTINUED)
KEY BUSINESS RISKS (CONTINUED)
COVID-19 (CONTINUED)
Risk
Strategy
Mitigant
Mitigant
COVID-19
Risk
The extent of the financial impact associated from infection at a single home, or more than one
home are mitigated by the fact that the Group’s earnings are generated from 70 homes with a
geographic dispersion in Australia. The Group maintains bank credit facilities well in excess of its
normal day to day operational needs with the intention of maintaining solvency and liquidity during
abnormal events such as infection outbreaks which may impact home profitability and RAD
balances. No single home in the Group contributes more than 5% of Group operational cashflow,
and most are below 3%.
Regional risk mitigation is managed by the relevant Regional Managers supported by central clinical
and quality teams in adopting the Group’s pandemic response guidelines. Central and regional
management lead liaison with local and state authorities to ensure compliance with legislation and
guidelines and to secure relevant information pertaining to the extent of infection in the area.
National risk mitigation is managed with Group-wide response guidelines and the declaration of a
pandemic is a trigger for the establishment of the national Critical Incident Management Team
(“CIMT”) which will then lead the emerging national response. The CIMT comprises Executive Team
members supported by internal and external technical experts and resource as required. Depending
on the extent of the impact of the pandemic, key Executives may be seconded full-time to the CIMT
and their operational roles backfilled.
On 18 March 2020 the World Health Organisation declared coronavirus caused by the COVID-19
virus a global pandemic.
Until high levels of community vaccination has been achieved, the highly contagious nature of the
virus, and the frequent high severity of the illness on the sick, elderly, and frail, presents an ongoing
risk to the community and to the elderly in particular.
Residents of residential aged care homes are generally frail, suffer from co-morbidities, dementia,
are reliant on day-to-day personal and clinical care, and are approaching the end of their lives.
These residents are the most vulnerable to the serious effects of COVID-19 infection.
Impact
The potential impact of the COVID-19 pandemic on the business include but are not restricted to:
• reduced occupancy as a result of families electing not to admit to, or to remove their loved ones
from aged care
• reduced occupancy as a result of homes being closed to new admissions during either community
or home outbreaks
• reduced occupancy as a result of reputational damage associated with outbreaks and
consequences of outbreaks at Estia homes or the aged care sector as a whole
• a reduced ability to secure sufficient suitably trained staff to work in homes
• change in work practices to limit casual workers to one employer and/or place of work
• potential legal claims by staff, residents, resident families, or visitors who may have become
exposed to the virus which may be linked to an Estia home and any resultant liabilities
• increased costs of responding to and managing community and home outbreaks which include
PPE, staff costs, medical and surgical supplies, cleaning and advisory support services
• increased costs associated with changes to the operations and physical design of residential aged
care homes which may result from legislative or other reviews
Risk
Strategy
The Group has responded to the pandemic with the establishment of a Board COVID-19 Committee
to provide governance oversight of the response to the pandemic. The Group has revised protocols
and procedures in line with Australian Health Protection Principle Committee (AHPPC) guidelines
and State Directions with the objective of minimising the risk of introducing COVID-19 infection into
a home and infection spreads in the event of a resident or staff member testing positive for
COVID-19.
Specific matters include:
• Entry and access protocols and procedures for staff, residents and visitors
• Infection Prevention Control processes, protocols, training, monitoring, and expertise including
PPE usage and training
• COVID-19 response plans at each home
• Work Health Safety requirements for all the Group’s homes and premises
• Business continuity plans continue to be revised
• Staff quarantine leave, rostering and single-home work requirements
• PPE supply chains, stock levels and logistics
• Insurance programs
available
• Applying for all applicable COVID-19 Government subsidy and grant assistance programs
• Establishment of an in-house vaccination program for residents and staff.
The Federal Government has announced that it expects the States to pass legislation before
September 2021 to make vaccinations mandatory for all residential aged care workers. Each of the
States has been consulting and passing legislation to this effect in July and August with the
intention of reaching a consistent national position by September. The Group has undertaken
awareness programs, requested all staff are vaccinated in advance of any legislative and
established an in-reach program offering free vaccinations at each home to all staff and residents
which commenced in July 2021.
CLIMATE RISK
Risk
Scientific consensus is indicating that climate change is increasingly likely to result in an increase in
global temperatures of 2°C or more relative to the pre-industrial period. Such a change in the global
climate will likely have wide-ranging impacts on society and businesses.
Impact
The current understanding of the potential financial risks posed by climate change to companies,
investors, and the financial system as a whole is still at an early stage. The Task Force on Climate
Related Financial Disclosures has identified climate related risks as falling into two major categories:
(1) risks related to the transition to a lower-carbon economy and (2) risks related to the physical
impacts of climate change.
Impact
Transition Risks
Transitioning to a lower-carbon economy may entail extensive policy, legal, technology, market, and
reputational risks resulting from changes to address mitigation and adaptation requirements related
to climate change. Depending on the nature, speed, and focus of these changes, transition risks may
pose varying levels of financial and reputational risk to organisations. These effects may also result
in second and third order effects on their supply and distribution chains.
94 Estia Health | 2020-21 Annual Report
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23
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24
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot DIRECTORS' REPORT
DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
PANDEMIC OR EPIDEMIC (CONTINUED)
KEY BUSINESS RISKS (CONTINUED)
COVID-19 (CONTINUED)
Annual financial report
Risk
Strategy
The extent of the financial impact associated from infection at a single home, or more than one
home are mitigated by the fact that the Group’s earnings are generated from 70 homes with a
geographic dispersion in Australia. The Group maintains bank credit facilities well in excess of its
normal day to day operational needs with the intention of maintaining solvency and liquidity during
abnormal events such as infection outbreaks which may impact home profitability and RAD
balances. No single home in the Group contributes more than 5% of Group operational cashflow,
and most are below 3%.
Mitigant
Regional risk mitigation is managed by the relevant Regional Managers supported by central clinical
and quality teams in adopting the Group’s pandemic response guidelines. Central and regional
management lead liaison with local and state authorities to ensure compliance with legislation and
guidelines and to secure relevant information pertaining to the extent of infection in the area.
Mitigant
National risk mitigation is managed with Group-wide response guidelines and the declaration of a
pandemic is a trigger for the establishment of the national Critical Incident Management Team
(“CIMT”) which will then lead the emerging national response. The CIMT comprises Executive Team
members supported by internal and external technical experts and resource as required. Depending
on the extent of the impact of the pandemic, key Executives may be seconded full-time to the CIMT
and their operational roles backfilled.
COVID-19
Risk
On 18 March 2020 the World Health Organisation declared coronavirus caused by the COVID-19
virus a global pandemic.
Until high levels of community vaccination has been achieved, the highly contagious nature of the
virus, and the frequent high severity of the illness on the sick, elderly, and frail, presents an ongoing
risk to the community and to the elderly in particular.
Residents of residential aged care homes are generally frail, suffer from co-morbidities, dementia,
are reliant on day-to-day personal and clinical care, and are approaching the end of their lives.
These residents are the most vulnerable to the serious effects of COVID-19 infection.
Impact
The potential impact of the COVID-19 pandemic on the business include but are not restricted to:
• reduced occupancy as a result of families electing not to admit to, or to remove their loved ones
from aged care
or home outbreaks
• reduced occupancy as a result of homes being closed to new admissions during either community
• reduced occupancy as a result of reputational damage associated with outbreaks and
consequences of outbreaks at Estia homes or the aged care sector as a whole
• a reduced ability to secure sufficient suitably trained staff to work in homes
• change in work practices to limit casual workers to one employer and/or place of work
• potential legal claims by staff, residents, resident families, or visitors who may have become
exposed to the virus which may be linked to an Estia home and any resultant liabilities
• increased costs of responding to and managing community and home outbreaks which include
PPE, staff costs, medical and surgical supplies, cleaning and advisory support services
• increased costs associated with changes to the operations and physical design of residential aged
care homes which may result from legislative or other reviews
Risk
Strategy
The Group has responded to the pandemic with the establishment of a Board COVID-19 Committee
to provide governance oversight of the response to the pandemic. The Group has revised protocols
and procedures in line with Australian Health Protection Principle Committee (AHPPC) guidelines
and State Directions with the objective of minimising the risk of introducing COVID-19 infection into
a home and infection spreads in the event of a resident or staff member testing positive for
COVID-19.
Specific matters include:
• Entry and access protocols and procedures for staff, residents and visitors
• Infection Prevention Control processes, protocols, training, monitoring, and expertise including
PPE usage and training
• COVID-19 response plans at each home
• Work Health Safety requirements for all the Group’s homes and premises
• Business continuity plans continue to be revised
• Staff quarantine leave, rostering and single-home work requirements
• PPE supply chains, stock levels and logistics
• Insurance programs
• Applying for all applicable COVID-19 Government subsidy and grant assistance programs
available
• Establishment of an in-house vaccination program for residents and staff.
The Federal Government has announced that it expects the States to pass legislation before
September 2021 to make vaccinations mandatory for all residential aged care workers. Each of the
States has been consulting and passing legislation to this effect in July and August with the
intention of reaching a consistent national position by September. The Group has undertaken
awareness programs, requested all staff are vaccinated in advance of any legislative and
established an in-reach program offering free vaccinations at each home to all staff and residents
which commenced in July 2021.
CLIMATE RISK
Risk
Impact
Impact
Scientific consensus is indicating that climate change is increasingly likely to result in an increase in
global temperatures of 2°C or more relative to the pre-industrial period. Such a change in the global
climate will likely have wide-ranging impacts on society and businesses.
The current understanding of the potential financial risks posed by climate change to companies,
investors, and the financial system as a whole is still at an early stage. The Task Force on Climate
Related Financial Disclosures has identified climate related risks as falling into two major categories:
(1) risks related to the transition to a lower-carbon economy and (2) risks related to the physical
impacts of climate change.
Transition Risks
Transitioning to a lower-carbon economy may entail extensive policy, legal, technology, market, and
reputational risks resulting from changes to address mitigation and adaptation requirements related
to climate change. Depending on the nature, speed, and focus of these changes, transition risks may
pose varying levels of financial and reputational risk to organisations. These effects may also result
in second and third order effects on their supply and distribution chains.
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 95
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KEY BUSINESS RISKS (CONTINUED)
CLIMATE RISK (CONTINUED)
Impact
Physical Risks
Physical risks resulting from climate change can be event driven (acute) or longer-term shifts
(chronic) in climate patterns. Physical risks may have financial implications for organisations, such
as direct damage to assets. Financial performance may also be affected by changes in water
availability, sourcing, and quality; food security; and extreme temperature changes affecting
organisations’ premises, operations, supply chain, transport needs, and employee safety. Acute
physical risks refer to those that are event-driven, including increased severity of extreme weather
events, such as bush fires, cyclones, hurricanes, or floods. Chronic physical risks refer to
longer-term shifts in climate patterns (e.g., sustained higher temperatures) that may cause sea level
rise or chronic heat waves.
Risk
Strategy
The Group has established a Sustainability Committee, which reports to the Board Risk
Sub-Committee, which has responsibility for monitoring and providing advice to management and
the board on activities which should be undertaken to mitigate the Group’s exposure to climate
change derived risks, both transition and physical risks. The Committee engages external
consultants to conduct assessments and mitigation plans where appropriate, including climate
change impact assessments for each home in the Group’s portfolio including vulnerability to acute
and chronic climate change conditions or events. New homes and potential acquisitions are
assessed for climate change resilience as part of due diligence.
ENVIRONMENTAL REGULATION AND PERFORMANCE
DIRECTORS' REPORT
INDEMNIFICATION OF AUDITORS
financial year.
NON-AUDIT SERVICES
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 Australia during or since the
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, which represents 11% of the total fees received by the firm.
Tax compliance services
Total Non-audit Services
ROUNDING
$
93,000
93,000
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 or
Directors’ Reports) Instrument 2016/191. Estia Health Limited is an entity to which the class order applies.
The Group is not subject to significant environmental legislation under either Commonwealth or State legislation.
This report is made on 24 August 2021 in accordance with a resolution of Directors.
Dr. Gary H Weiss AM
Chairman
PERFORMANCE RIGHTS
UNISSUED SHARES
As at the date of this report, there were 3,220,383 unissued ordinary shares under performance rights (2020:
1,526,515).
SHARES ISSUED AS A RESULT OF THE VESTING OF PERFORMANCE RIGHTS
A total of 23,055 performance rights were exercised during the year ended 30 June 2021 (2020: 13,693) and
were issued as shares on 5 November 2020. During the year ended 30 June 2021, 2,268,751 rights were
granted (2020: 994,018) and 551,828 rights were forfeited (2020: 990,206).
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
In accordance with provisions in its constitution, 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 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.
96 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Annual financial report
DIRECTORS' REPORT
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 Australia 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, which represents 11% of the total fees received by the firm.
Tax compliance services
Total Non-audit Services
ROUNDING
$
93,000
93,000
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 or
Directors’ Reports) Instrument 2016/191. Estia Health Limited is an entity to which the class order applies.
The Group is not subject to significant environmental legislation under either Commonwealth or State legislation.
This report is made on 24 August 2021 in accordance with a resolution of Directors.
Dr. Gary H Weiss AM
Chairman
DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
CLIMATE RISK (CONTINUED)
Impact
Physical Risks
Physical risks resulting from climate change can be event driven (acute) or longer-term shifts
(chronic) in climate patterns. Physical risks may have financial implications for organisations, such
as direct damage to assets. Financial performance may also be affected by changes in water
availability, sourcing, and quality; food security; and extreme temperature changes affecting
organisations’ premises, operations, supply chain, transport needs, and employee safety. Acute
physical risks refer to those that are event-driven, including increased severity of extreme weather
events, such as bush fires, cyclones, hurricanes, or floods. Chronic physical risks refer to
longer-term shifts in climate patterns (e.g., sustained higher temperatures) that may cause sea level
rise or chronic heat waves.
Risk
Strategy
The Group has established a Sustainability Committee, which reports to the Board Risk
Sub-Committee, which has responsibility for monitoring and providing advice to management and
the board on activities which should be undertaken to mitigate the Group’s exposure to climate
change derived risks, both transition and physical risks. The Committee engages external
consultants to conduct assessments and mitigation plans where appropriate, including climate
change impact assessments for each home in the Group’s portfolio including vulnerability to acute
and chronic climate change conditions or events. New homes and potential acquisitions are
assessed for climate change resilience as part of due diligence.
ENVIRONMENTAL REGULATION AND PERFORMANCE
PERFORMANCE RIGHTS
UNISSUED SHARES
1,526,515).
As at the date of this report, there were 3,220,383 unissued ordinary shares under performance rights (2020:
SHARES ISSUED AS A RESULT OF THE VESTING OF PERFORMANCE RIGHTS
A total of 23,055 performance rights were exercised during the year ended 30 June 2021 (2020: 13,693) and
were issued as shares on 5 November 2020. During the year ended 30 June 2021, 2,268,751 rights were
granted (2020: 994,018) and 551,828 rights were forfeited (2020: 990,206).
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
In accordance with provisions in its constitution, 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:
liabilities incurred by the person in the capacity as an officer where permitted under section 199A(2) of
legal costs incurred in relation to civil or criminal proceedings in which the officer becomes involved
legal costs incurred in connection with any investigation or inquiry of any nature because of that
(a)
(b)
(c)
(d)
the Corporations Act 2001;
because of that capacity;
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 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.
Estia Health Annual Financial Report 2020 - 2021
25
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 97
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Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes DIRECTORS’ REPORT
DIRECTORS’ REPORT
Remuneration report
Remuneration report
Dear Shareholders,
Dear Shareholders,
The Estia Health Limited (‘Estia’ or the ‘Group’) Board is pleased to present the Remuneration Report for the year
The Estia Health Limited (‘Estia’ or the ‘Group’) Board is pleased to present the Remuneration Report for the year
ended 30 June 2021 (‘FY21’).
ended 30 June 2021 (‘FY21’).
The impacts of the ongoing COVID-19 pandemic upon the Group’s residents, their families and staff along with
The impacts of the ongoing COVID-19 pandemic upon the Group’s residents, their families and staff along with
uncertainty concerning implementation of the array of recommendations flowing from the Royal Commission into
uncertainty concerning implementation of the array of recommendations flowing from the Royal Commission into
Aged Care Quality and Safety have continued to create a challenging environment to attract, motivate and retain
Aged Care Quality and Safety have continued to create a challenging environment to attract, motivate and retain
staff.
staff.
The Group’s remuneration strategy during this time of ongoing uncertainty has been focused on the attraction and
The Group’s remuneration strategy during this time of ongoing uncertainty has been focused on the attraction and
retention of industry-leading talent in the acknowledgement that this is the key factor that will allow Estia to respond
retention of industry-leading talent in the acknowledgement that this is the key factor that will allow Estia to respond
to company-specific and industry-wide challenges as well as take advantage of opportunities emerging from this
to company-specific and industry-wide challenges as well as take advantage of opportunities emerging from this
landscape, for the benefit of all the Group’s stakeholders, including shareholders.
landscape, for the benefit of all the Group’s stakeholders, including shareholders.
Changes to FY21 Remuneration
Changes to FY21 Remuneration
As disclosed at our 2020 Annual General Meeting (‘AGM’), due to the significant uncertainty around the impact of
As disclosed at our 2020 Annual General Meeting (‘AGM’), due to the significant uncertainty around the impact of
the COVID-19 pandemic and the Royal Commission on the Company’s FY21 operational and financial
the COVID-19 pandemic and the Royal Commission on the Company’s FY21 operational and financial
performance, and the associated challenges in setting meaningful FY21 performance targets, the Board decided
performance, and the associated challenges in setting meaningful FY21 performance targets, the Board decided
not to operate a short-term incentive (‘STI’) plan in FY21 for executive Key Management Personnel (‘KMP’).
not to operate a short-term incentive (‘STI’) plan in FY21 for executive Key Management Personnel (‘KMP’).
Rather, given the importance of stability and continuity of leadership as our organisation managed the array of
Rather, given the importance of stability and continuity of leadership as our organisation managed the array of
complex challenges currently facing the industry, we awarded a once-off retention-based grant of performance
complex challenges currently facing the industry, we awarded a once-off retention-based grant of performance
rights (‘FY21 Retention Incentive’) to our KMP, which will be eligible for vesting on 1 July 2022 subject to continued
rights (‘FY21 Retention Incentive’) to our KMP, which will be eligible for vesting on 1 July 2022 subject to continued
employment with the group. Shareholders approved the award of the FY21 Retention Incentive to the MD and
employment with the group. Shareholders approved the award of the FY21 Retention Incentive to the MD and
CEO Mr. Ian Thorley at the 2020 AGM.
CEO Mr. Ian Thorley at the 2020 AGM.
Unlike in previous years, Earnings Per Share (‘EPS’) was not included as a performance measure in the FY21 LTI,
Unlike in previous years, Earnings Per Share (‘EPS’) was not included as a performance measure in the FY21 LTI,
due to the challenges in setting appropriate three-year targets at the beginning of FY21. The FY21 LTI will be
due to the challenges in setting appropriate three-year targets at the beginning of FY21. The FY21 LTI will be
entirely subject to relative Total Shareholder Return (‘TSR’) measures (consisting of two equally weighted relative
entirely subject to relative Total Shareholder Return (‘TSR’) measures (consisting of two equally weighted relative
TSR performance measures with different comparator groups). Shareholders approved the award of the FY21 LTI
TSR performance measures with different comparator groups). Shareholders approved the award of the FY21 LTI
with these performance measures to the MD and CEO at the 2020 AGM.
with these performance measures to the MD and CEO at the 2020 AGM.
FY21 Remuneration Outcomes
FY21 Remuneration Outcomes
As above, the STI plan did not operate during FY21 and therefore did not vest.
As above, the STI plan did not operate during FY21 and therefore did not vest.
The FY19 LTI,with a three-year performance period to the end of FY21 did not vest as the EPS and relative TSR
The FY19 LTI,with a three-year performance period to the end of FY21 did not vest as the EPS and relative TSR
targets were not met.
targets were not met.
Looking Forward
Looking Forward
An STI plan will once again be offered to the Company’s senior executives in FY22. As in prior years, the incentive
An STI plan will once again be offered to the Company’s senior executives in FY22. As in prior years, the incentive
will be eligible for vesting subject to performance against a scorecard comprised of individual and team-based
financial and non-financial performance measures as well as the successful achievement of a clinical quality
will be eligible for vesting subject to performance against a scorecard comprised of individual and team-based
compliance and accreditation gateway that reflects the primary importance of resident care outcomes.
financial and non-financial performance measures as well as the successful achievement of a clinical quality
compliance and accreditation gateway that reflects the primary importance of resident care outcomes.
Details of the FY22 LTI will be included in the 2021 Notice of AGM, with vesting eligibility for the award to be
measured against both EPS and TSR performance targets.
Details of the FY22 LTI will be included in the 2021 Notice of AGM, with vesting eligibility for the award to be
measured against both EPS and TSR performance targets.
Effective 1 July 2021, several executive KMP fixed remuneration changes will be made. These changes (which
will also reflect the increase of the superannuation guarantee to 10%) have been made following review of
Effective 1 July 2021, several executive KMP fixed remuneration changes will be made. These changes (which
benchmarking data and having regard for the complexity and demands attached to each role and include
will also reflect the increase of the superannuation guarantee to 10%) have been made following review of
increasing the MD and CEO’s fixed remuneration from $720,000 p.a. to $780,000 p.a.. The change to the MD and
benchmarking data and having regard for the complexity and demands attached to each role and include
CEO’s fixed remuneration is the first increase awarded since Mr. Thorley assumed the role in November 2018 and
increasing the MD and CEO’s fixed remuneration from $720,000 p.a. to $780,000 p.a.. The change to the MD and
takes his revised fixed remuneration to the same level as that of his predecessor at that time.
CEO’s fixed remuneration is the first increase awarded since Mr. Thorley assumed the role in November 2018 and
takes his revised fixed remuneration to the same level as that of his predecessor at that time.
In addition, Non-executive Director (NED) base member fees will be increased from $100,000 p.a. to $110,000 p.a.
from 1 July 2021. This adjustment to NED base fees is the first increase since the Initial Public Offer of the Group
In addition, Non-executive Director (NED) base member fees will be increased from $100,000 p.a. to $110,000 p.a.
in 2014.
from 1 July 2021. This adjustment to NED base fees is the first increase since the Initial Public Offer of the Group
in 2014.
On behalf of the Board, I am pleased to present to you the FY21 Remuneration Report for Estia and we look
forward to welcoming you at the 2021 AGM.
On behalf of the Board, I am pleased to present to you the FY21 Remuneration Report for Estia and we look
forward to welcoming you at the 2021 AGM.
Yours sincerely
DIRECTORS’ REPORT
Remuneration report – audited
This report for the year ended 30 June 2021 (FY21) 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:
Introduction
Remuneration governance
Group performance
Remuneration principles and strategy
Executive remuneration
1.
2.
3.
4.
5.
6.
7.
8.
9.
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 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.
There were no changes to the Board or KMP during FY21.
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
Karen Penrose
Non-Executive Director
Norah Barlow ONZM
Non-Executive Director
Ian Thorley
Sean Bilton
Chief Executive Officer (MD and CEO)
Deputy Chief Executive Officer and Chief
Operating Officer (Deputy CEO and COO)
Steve Lemlin
Chief Financial Officer (CFO)
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Yours sincerely
Paul Foster
Chair of the Nomination and Remuneration Committee
Paul Foster
Chair of the Nomination and Remuneration Committee
98 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020-2021
Estia Health Annual Financial Report 2020-2021
27
27
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
DIRECTORS’ REPORT
Remuneration report
Dear Shareholders,
ended 30 June 2021 (‘FY21’).
The Estia Health Limited (‘Estia’ or the ‘Group’) Board is pleased to present the Remuneration Report for the year
The impacts of the ongoing COVID-19 pandemic upon the Group’s residents, their families and staff along with
uncertainty concerning implementation of the array of recommendations flowing from the Royal Commission into
Aged Care Quality and Safety have continued to create a challenging environment to attract, motivate and retain
staff.
The Group’s remuneration strategy during this time of ongoing uncertainty has been focused on the attraction and
retention of industry-leading talent in the acknowledgement that this is the key factor that will allow Estia to respond
to company-specific and industry-wide challenges as well as take advantage of opportunities emerging from this
landscape, for the benefit of all the Group’s stakeholders, including shareholders.
Changes to FY21 Remuneration
As disclosed at our 2020 Annual General Meeting (‘AGM’), due to the significant uncertainty around the impact of
the COVID-19 pandemic and the Royal Commission on the Company’s FY21 operational and financial
performance, and the associated challenges in setting meaningful FY21 performance targets, the Board decided
not to operate a short-term incentive (‘STI’) plan in FY21 for executive Key Management Personnel (‘KMP’).
Rather, given the importance of stability and continuity of leadership as our organisation managed the array of
complex challenges currently facing the industry, we awarded a once-off retention-based grant of performance
rights (‘FY21 Retention Incentive’) to our KMP, which will be eligible for vesting on 1 July 2022 subject to continued
employment with the group. Shareholders approved the award of the FY21 Retention Incentive to the MD and
CEO Mr. Ian Thorley at the 2020 AGM.
Unlike in previous years, Earnings Per Share (‘EPS’) was not included as a performance measure in the FY21 LTI,
due to the challenges in setting appropriate three-year targets at the beginning of FY21. The FY21 LTI will be
entirely subject to relative Total Shareholder Return (‘TSR’) measures (consisting of two equally weighted relative
TSR performance measures with different comparator groups). Shareholders approved the award of the FY21 LTI
with these performance measures to the MD and CEO at the 2020 AGM.
FY21 Remuneration Outcomes
As above, the STI plan did not operate during FY21 and therefore did not vest.
The FY19 LTI,with a three-year performance period to the end of FY21 did not vest as the EPS and relative TSR
targets were not met.
Looking Forward
An STI plan will once again be offered to the Company’s senior executives in FY22. As in prior years, the incentive
will be eligible for vesting subject to performance against a scorecard comprised of individual and team-based
financial and non-financial performance measures as well as the successful achievement of a clinical quality
compliance and accreditation gateway that reflects the primary importance of resident care outcomes.
Details of the FY22 LTI will be included in the 2021 Notice of AGM, with vesting eligibility for the award to be
measured against both EPS and TSR performance targets.
Effective 1 July 2021, several executive KMP fixed remuneration changes will be made. These changes (which
will also reflect the increase of the superannuation guarantee to 10%) have been made following review of
benchmarking data and having regard for the complexity and demands attached to each role and include
increasing the MD and CEO’s fixed remuneration from $720,000 p.a. to $780,000 p.a.. The change to the MD and
CEO’s fixed remuneration is the first increase awarded since Mr. Thorley assumed the role in November 2018 and
takes his revised fixed remuneration to the same level as that of his predecessor at that time.
In addition, Non-executive Director (NED) base member fees will be increased from $100,000 p.a. to $110,000 p.a.
from 1 July 2021. This adjustment to NED base fees is the first increase since the Initial Public Offer of the Group
On behalf of the Board, I am pleased to present to you the FY21 Remuneration Report for Estia and we look
forward to welcoming you at the 2021 AGM.
in 2014.
Yours sincerely
Paul Foster
Chair of the Nomination and Remuneration Committee
Annual financial report
DIRECTORS’ REPORT
Remuneration report – audited
This report for the year ended 30 June 2021 (FY21) 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 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.
There were no changes to the Board or KMP during FY21.
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
Karen Penrose
Non-Executive Director
Norah Barlow ONZM
Non-Executive Director
Ian Thorley
Sean Bilton
Chief Executive Officer (MD and CEO)
Deputy Chief Executive Officer and Chief
Operating Officer (Deputy CEO and COO)
Steve Lemlin
Chief Financial Officer (CFO)
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Estia Health Annual Financial Report 2020-2021
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Estia Health Annual Financial Report 2020-2021
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2020-21 Annual Report | Estia Health 99
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DIRECTORS’ REPORT
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
(https://investors.estiahealth.com.au/investor-centre.)
The Committee met six times in FY21. The managing director (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 2021, the Nomination and Remuneration Committee engaged KPMG to
provide advice regarding market practice and trends, and assistance with other ad-hoc 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.
2.3 Minimum Shareholding Policy
The Board recognises the importance of ensuring that the interests of its leaders are aligned with the long-
term interests of shareholders.
In 2019, Estia’s Senior Executive and Board Minimum Shareholding Policy was introduced. The policy
requires that:
Board members accumulate and maintain a minimum holding in Estia Health shares equivalent to at least
50% of one year’s prevailing base board fees (excluding committee fees); and
Senior Executives (comprising the MD and CEO and their direct reports) accumulate and maintain a
minimum holding in Estia Health shares equivalent to at least 50% of one year’s fixed annual remuneration.
Board members and the MD and CEO have 3 years from the date of appointment, or date of commencement
of the policy, to achieve the above target. Other Senior Executives have 5 years from the above dates.
All members of KMP are in compliance with the policy as at 30 June 2021.
The full policy, including definitions and calculation methodology, can be viewed at
http://www.estiahealth.com.au/investor-centre/corporate-governance.
DIRECTORS’ REPORT
Remuneration report – audited (continued)
3. Group performance
performance is measured.
The table below illustrates Estia’s historic performance against the key metrics upon which the Group
Revenue - $’000
Net profit after tax - $’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
Vesting outcomes – CEO incentives
Short term incentive vesting
Long term incentive vesting
30 June
2021
30 June
2020
$646,305
$636,908
$5,998
($116,909)
30 June
2019
$585,985
$41,290
$3.29
$2.64
16.0
15.8
15.8
$2.64
$1.53
5.544
13.2
(40.69)
(44.8)
(44.8)
$1.53
$2.47
0.0
2.30
2.27
n/a
Nil
Nil
Nil
Nil
Nil
30 June
2018
$547,054
$41,154
30 June
2017
$524,630
$40,698
$3.05
$3.29
15.8
15.8
15.7
22%
Nil
$4.37
$3.05
8.0
18.2
18.0
Nil
Nil
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.
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.
100 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020-2021
29
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
DIRECTORS’ REPORT
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
(https://investors.estiahealth.com.au/investor-centre.)
The Committee met six times in FY21. The managing director (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 2021, the Nomination and Remuneration Committee engaged KPMG to
provide advice regarding market practice and trends, and assistance with other ad-hoc 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.
2.3 Minimum Shareholding Policy
term interests of shareholders.
requires that:
The Board recognises the importance of ensuring that the interests of its leaders are aligned with the long-
In 2019, Estia’s Senior Executive and Board Minimum Shareholding Policy was introduced. The policy
Board members accumulate and maintain a minimum holding in Estia Health shares equivalent to at least
50% of one year’s prevailing base board fees (excluding committee fees); and
Senior Executives (comprising the MD and CEO and their direct reports) accumulate and maintain a
minimum holding in Estia Health shares equivalent to at least 50% of one year’s fixed annual remuneration.
Board members and the MD and CEO have 3 years from the date of appointment, or date of commencement
of the policy, to achieve the above target. Other Senior Executives have 5 years from the above dates.
All members of KMP are in compliance with the policy as at 30 June 2021.
The full policy, including definitions and calculation methodology, can be viewed at
http://www.estiahealth.com.au/investor-centre/corporate-governance.
Annual financial report
DIRECTORS’ REPORT
Remuneration report – audited (continued)
3. Group performance
The table below illustrates Estia’s historic performance against the key metrics upon which the Group
performance is measured.
Revenue - $’000
Net profit after tax - $’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
Vesting outcomes – CEO incentives
Short term incentive vesting
Long term incentive vesting
30 June
2021
$646,305
$5,998
$1.53
$2.47
0.0
2.30
2.27
30 June
2020
$636,908
($116,909)
$2.64
$1.53
5.544
13.2
(40.69)
(44.8)
(44.8)
30 June
2019
$585,985
$41,290
$3.29
$2.64
16.0
15.8
15.8
30 June
2018
$547,054
$41,154
$3.05
$3.29
15.8
15.8
15.7
30 June
2017
$524,630
$40,698
$4.37
$3.05
8.0
18.2
18.0
n/a
Nil
Nil
Nil
Nil
Nil
22%
Nil
Nil
Nil
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.
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.
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DIRECTORS’ REPORT
DIRECTORS’ REPORT
Remuneration report – audited (continued)
Remuneration report – audited (continued)
5. Executive remuneration
5. Executive remuneration
5.1 Remuneration Framework and link to strategy
5.1 Remuneration Framework and link to strategy
In FY21, the executive remuneration framework comprised a mix of fixed annual remuneration, one-off
retention awards and the long-term performance-linked incentive plan (although as stated above, the Board
In FY21, the executive remuneration framework comprised a mix of fixed annual remuneration, one-off
intends to return to offering variable remuneration in the form of STI and LTI grants in FY22, and therefore
retention awards and the long-term performance-linked incentive plan (although as stated above, the Board
the STI remains an ongoing and important component of Estia’s executive remuneration framework). The
intends to return to offering variable remuneration in the form of STI and LTI grants in FY22, and therefore
Group aims to reward executives with a level and mix of remuneration appropriate to their position and
the STI remains an ongoing and important component of Estia’s executive remuneration framework). The
responsibilities, while being market competitive and delivering outcomes that are aligned to the experience of
Group aims to reward executives with a level and mix of remuneration appropriate to their position and
Estia's shareholders.
responsibilities, while being market competitive and delivering outcomes that are aligned to the experience of
Estia's shareholders.
Component
Component
Fixed Annual
Remuneration
Fixed Annual
(FAR)
Remuneration
(FAR)
Short-Term
Incentive Plan
Short-Term
(STI)
Incentive Plan
(STI)
Long-term
Incentive Plan
Long-term
(LTI)
Incentive Plan
(LTI)
Approach
Approach
FAR is set with reference to role, market
and experience of the employee with
FAR is set with reference to role, market
reference to external benchmarking
and experience of the employee with
data, particularly looking at competition
reference to external benchmarking
in the same sector, both public and
data, particularly looking at competition
private.
in the same sector, both public and
private.
Group and individual performance are
considered during the annual
Group and individual performance are
remuneration review.
considered during the annual
remuneration review.
An STI was not granted in FY21 due to
economic uncertainty due to the COVID-
An STI was not granted in FY21 due to
19 pandemic.
economic uncertainty due to the COVID-
19 pandemic.
The Board intends to return to STI
grants in FY22.
The Board intends to return to STI
grants in FY22.
See section 5.3 for further commentary
regarding the FY21 Retention Incentive.
See section 5.3 for further commentary
regarding the FY21 Retention Incentive.
50% relative to constituents of the
50% relative to constituents of the
The FY21 LTI was delivered in the form
of performance rights subject to the
The FY21 LTI was delivered in the form
following performance condition,
of performance rights subject to the
measured over a three-year period:
following performance condition,
measured over a three-year period:
• Total shareholder return (TSR)
performance:
• Total shareholder return (TSR)
performance:
-
ASX300 excluding mining and energy
-
companies; and
ASX300 excluding mining and energy
companies; and
-
average performance of a group of listed
-
companies involved in the provision of aged
average performance of a group of listed
care services.
companies involved in the provision of aged
care services.
EPS was not included as a performance
measure in the FY21 LTI given the challenge
EPS was not included as a performance
of setting appropriate targets at the
measure in the FY21 LTI given the challenge
beginning of the performance period.
of setting appropriate targets at the
beginning of the performance period.
50% relative to the weighted
50% relative to the weighted
Link to business and remuneration
strategy
Link to business and remuneration
strategy
Competitive remuneration packages
that attract and retain high calibre
Competitive remuneration packages
employees from a diverse pool of
that attract and retain high calibre
talent.
employees from a diverse pool of
talent.
Short term incentives align the
interests of executives with
Short term incentives align the
achievement of business strategic
interests of executives with
objectives over the short to medium
achievement of business strategic
term.
objectives over the short to medium
term.
Deferral of 25% of any STI award into
equity increases alignment with
Deferral of 25% of any STI award into
shareholder interests.
equity increases alignment with
shareholder interests.
The LTI is designed to drive
sustainable value creation for
The LTI is designed to drive
shareholders, encourage retention
sustainable value creation for
and encourage a multi-year
shareholders, encourage retention
performance focus.
and encourage a multi-year
performance focus.
Relative TSR focuses executives on
generating returns for shareholders.
Relative TSR focuses executives on
generating returns for shareholders.
A TSR comparator group of companies
providing aged care services was
A TSR comparator group of companies
introduced in order to assess
providing aged care services was
performance against peers with which
introduced in order to assess
Estia competes for shareholder capital.
performance against peers with which
Estia competes for shareholder capital.
The LTI is delivered in equity which
aligns the interests of executives with
The LTI is delivered in equity which
achievement of increased shareholder
aligns the interests of executives with
wealth over the long-term.
achievement of increased shareholder
wealth over the long-term.
DIRECTORS’ REPORT
Remuneration report – audited (continued)
Component
Approach
Link to business and remuneration
Once-off
Awards
strategy
The Company may grant once-off
Once-off awards may be approved by
incentive awards, approved by the
the Board in order to retain or attract
Board, where the circumstances warrant
key talent, to ensure the achievement
it. This may include the grant of retention
of Estia’s business strategy, and to
incentives (see section 5.3 for further
maximise long term shareholder
commentary regarding the FY21
outcomes.
Retention Incentive).
Total
The overall remuneration framework is designed to support and drive the achievement
Remuneration
of Estia’s business strategy:
•
•
•
to be the leader in providing high quality residential aged care homes in Australia;
to provide our residents with the highest standards of aged care services in an
innovative, supportive and caring environment; and
to deliver profitable growth through our robust development pipeline, significant
refurbishment opportunities and through maximising the performance of our core
assets.
A minimum shareholding policy is also in place to drive share ownership amongst
NEDs and Senior Executives.
5.2 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.
The Committee regularly benchmarks the remuneration of the current KMP, and considers the skills and
experience of each individual, as well as the complexity and accountabilities associated with the role, in
setting FAR.
5.3 FY21 Retention Incentive
As disclosed at our 2020 AGM, due to the significant uncertainty around the impact of the COVID-19
pandemic and the Royal Commission on the Company’s FY21 operational and financial performance, and
the associated challenges in setting meaningful FY21 performance targets, the Board decided not to operate
the STI plan in FY21 for KMP.
Rather, given the importance of stability and continuity of leadership as our organisation managed the array
of complex challenges currently facing the industry, our KMP received the FY21 Retention Incentive.
Key terms of the FY21 Retention Incentive are as follows:
• Delivered in performance rights.
•
•
•
•
•
Vests 1 July 2022, subject to continued employment with the Group, and overall Board discretion
having regard for performance and conduct throughout the vesting period.
The FY21 Retention Incentive represents 33% of each of the KMP's FY21 FAR.
The number of rights allocated was determined using face value allocation methodology, using the
volume weighted average price for the 10 trading days immediately following (and not including) the
date of release of FY20 annual results.
In the event of a change of control prior to 1 July 2022, the award will vest in full subject to the
individual remaining employed as at that date.
Leaver provisions align with those which apply to the FY21 LTI (see section 5.4).
In FY22, Estia will return to its historic STI structure.
102 Estia Health | 2020-21 Annual Report
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Estia Health Annual Financial Report 2020-2021
31
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Remuneration report – audited (continued)
Remuneration report – audited (continued)
5. Executive remuneration
5. Executive remuneration
5.1 Remuneration Framework and link to strategy
5.1 Remuneration Framework and link to strategy
In FY21, the executive remuneration framework comprised a mix of fixed annual remuneration, one-off
retention awards and the long-term performance-linked incentive plan (although as stated above, the Board
In FY21, the executive remuneration framework comprised a mix of fixed annual remuneration, one-off
intends to return to offering variable remuneration in the form of STI and LTI grants in FY22, and therefore
retention awards and the long-term performance-linked incentive plan (although as stated above, the Board
the STI remains an ongoing and important component of Estia’s executive remuneration framework). The
intends to return to offering variable remuneration in the form of STI and LTI grants in FY22, and therefore
Group aims to reward executives with a level and mix of remuneration appropriate to their position and
the STI remains an ongoing and important component of Estia’s executive remuneration framework). The
responsibilities, while being market competitive and delivering outcomes that are aligned to the experience of
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.
Estia's shareholders.
Component
Component
Fixed Annual
Remuneration
Fixed Annual
(FAR)
Remuneration
(FAR)
Approach
Approach
Link to business and remuneration
strategy
Link to business and remuneration
strategy
Competitive remuneration packages
FAR is set with reference to role, market
and experience of the employee with
FAR is set with reference to role, market
that attract and retain high calibre
Competitive remuneration packages
reference to external benchmarking
and experience of the employee with
data, particularly looking at competition
reference to external benchmarking
employees from a diverse pool of
that attract and retain high calibre
talent.
employees from a diverse pool of
in the same sector, both public and
data, particularly looking at competition
talent.
Short-Term
Incentive Plan
Short-Term
(STI)
Incentive Plan
(STI)
Long-term
Incentive Plan
Long-term
(LTI)
Incentive Plan
(LTI)
private.
in the same sector, both public and
private.
Group and individual performance are
considered during the annual
Group and individual performance are
remuneration review.
considered during the annual
remuneration review.
An STI was not granted in FY21 due to
Short term incentives align the
economic uncertainty due to the COVID-
An STI was not granted in FY21 due to
interests of executives with
Short term incentives align the
19 pandemic.
economic uncertainty due to the COVID-
achievement of business strategic
interests of executives with
19 pandemic.
The Board intends to return to STI
grants in FY22.
The Board intends to return to STI
grants in FY22.
See section 5.3 for further commentary
regarding the FY21 Retention Incentive.
See section 5.3 for further commentary
regarding the FY21 Retention Incentive.
objectives over the short to medium
achievement of business strategic
term.
objectives over the short to medium
term.
Deferral of 25% of any STI award into
equity increases alignment with
Deferral of 25% of any STI award into
shareholder interests.
equity increases alignment with
shareholder interests.
The FY21 LTI was delivered in the form
The LTI is designed to drive
of performance rights subject to the
The FY21 LTI was delivered in the form
sustainable value creation for
The LTI is designed to drive
following performance condition,
of performance rights subject to the
measured over a three-year period:
following performance condition,
measured over a three-year period:
• Total shareholder return (TSR)
performance:
• Total shareholder return (TSR)
performance:
-
50% relative to constituents of the
ASX300 excluding mining and energy
50% relative to constituents of the
-
shareholders, encourage retention
sustainable value creation for
and encourage a multi-year
shareholders, encourage retention
performance focus.
and encourage a multi-year
performance focus.
Relative TSR focuses executives on
generating returns for shareholders.
Relative TSR focuses executives on
generating returns for shareholders.
A TSR comparator group of companies
companies; and
ASX300 excluding mining and energy
providing aged care services was
A TSR comparator group of companies
companies; and
50% relative to the weighted
-
average performance of a group of listed
50% relative to the weighted
-
companies involved in the provision of aged
average performance of a group of listed
care services.
companies involved in the provision of aged
care services.
EPS was not included as a performance
measure in the FY21 LTI given the challenge
EPS was not included as a performance
of setting appropriate targets at the
measure in the FY21 LTI given the challenge
beginning of the performance period.
of setting appropriate targets at the
beginning of the performance period.
introduced in order to assess
providing aged care services was
performance against peers with which
introduced in order to assess
Estia competes for shareholder capital.
performance against peers with which
Estia competes for shareholder capital.
The LTI is delivered in equity which
aligns the interests of executives with
The LTI is delivered in equity which
achievement of increased shareholder
aligns the interests of executives with
wealth over the long-term.
achievement of increased shareholder
wealth over the long-term.
Annual financial report
DIRECTORS’ REPORT
Remuneration report – audited (continued)
Component
Approach
Once-off
Awards
The Company may grant once-off
incentive awards, approved by the
Board, where the circumstances warrant
it. This may include the grant of retention
incentives (see section 5.3 for further
commentary regarding the FY21
Retention Incentive).
Link to business and remuneration
strategy
Once-off awards may be approved by
the Board in order to retain or attract
key talent, to ensure the achievement
of Estia’s business strategy, and to
maximise long term shareholder
outcomes.
Total
Remuneration
The overall remuneration framework is designed to support and drive the achievement
of Estia’s business strategy:
•
•
•
to be the leader in providing high quality residential aged care homes in Australia;
to provide our residents with the highest standards of aged care services in an
innovative, supportive and caring environment; and
to deliver profitable growth through our robust development pipeline, significant
refurbishment opportunities and through maximising the performance of our core
assets.
A minimum shareholding policy is also in place to drive share ownership amongst
NEDs and Senior Executives.
5.2 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.
The Committee regularly benchmarks the remuneration of the current KMP, and considers the skills and
experience of each individual, as well as the complexity and accountabilities associated with the role, in
setting FAR.
5.3 FY21 Retention Incentive
As disclosed at our 2020 AGM, due to the significant uncertainty around the impact of the COVID-19
pandemic and the Royal Commission on the Company’s FY21 operational and financial performance, and
the associated challenges in setting meaningful FY21 performance targets, the Board decided not to operate
the STI plan in FY21 for KMP.
Rather, given the importance of stability and continuity of leadership as our organisation managed the array
of complex challenges currently facing the industry, our KMP received the FY21 Retention Incentive.
Key terms of the FY21 Retention Incentive are as follows:
• Delivered in performance rights.
•
Vests 1 July 2022, subject to continued employment with the Group, and overall Board discretion
having regard for performance and conduct throughout the vesting period.
The FY21 Retention Incentive represents 33% of each of the KMP's FY21 FAR.
The number of rights allocated was determined using face value allocation methodology, using the
volume weighted average price for the 10 trading days immediately following (and not including) the
date of release of FY20 annual results.
In the event of a change of control prior to 1 July 2022, the award will vest in full subject to the
individual remaining employed as at that date.
Leaver provisions align with those which apply to the FY21 LTI (see section 5.4).
•
•
•
•
Estia Health Annual Financial Report 2020-2021
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2020-21 Annual Report | Estia Health 103
In FY22, Estia will return to its historic STI structure.
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DIRECTORS’ REPORT
Remuneration report – audited (continued)
Total shares issued
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.
Cessation of
employment
performance rights will lapse.
Unless the Board determines otherwise, if a participant’s employment with the Group is
terminated during the performance period as a ‘good leaver’ (i.e. as a result of genuine
redundancy, death, terminal illness, total and permanent disablement, or any other
reason as determined by the Board) they will be entitled to receive a pro-rata amount
of their FY21 LTI Incentive (based on the proportion of whole months they were
employed by the Group during the performance period). Any remaining unvested
If their employment with the Group is terminated in circumstances in which they are not
considered a good leaver (e.g. resignation, or termination of employment initiated by
the participant or the Group other than where such termination is as a good leaver),
their FY21 LTI Incentive will immediately lapse.
Notwithstanding the above, the Board may, subject to any requirement for shareholder
approval, determine to treat any of the FY21 LTI in a different manner to that set out
above upon participants ceasing to be an employee of the Group.
Change of control
change of control event occurs, having regard for the performance of the Group during the
The Board may exercise its discretion to allow all or some unvested rights to vest if a
vesting period up to the date of a change of control event.
Clawback policy
based remuneration in the event of serious misconduct or a material misstatement in the
The Board has the discretion to reduce, cancel or clawback any unvested performance-
Group’s financial statements.
5.4.1 LTI Vesting Outcomes
The FY19 LTI performance rights did not vest, as the relevant earnings per share (EPS) and relative total
shareholder return performance targets were not achieved.
5.5 Other Awards
No other incentive awards were granted to KMP in FY21.
During FY20, a retention incentive was granted to the CFO, Steve Lemlin, to recognise his contribution to
Estia since his appointment as CFO in February 2017 and to encourage his continued contribution over
the coming period. The award was delivered in performance rights, with a face value of $125,000, and
vested on 1 July 2021.
DIRECTORS’ REPORT
Remuneration report – audited (continued)
5.4 Long-Term Incentive
A long-term incentive is designed to drive sustainable value creation for shareholders, encourage retention of
key talent and promote a multi-year performance focus.
The LTI is delivered in performance rights, in order to further align the interests of executives with
shareholders over the long term.
Participation
LTI performance rights were offered to all members of executive KMP in FY21.
Delivery of LTI
LTIs are delivered in the form of performance rights. On vesting, performance
rights entitle the holders to ordinary shares.
LTI opportunity
In FY21, all executive KMP had an LTI opportunity of 100% of FAR.
Allocation
methodology
The quantity of instruments granted under the LTI is determined using face
value allocation methodology, using the volume weighted average price
(‘VWAP’) for the 10 trading days immediately following (and not including) the
date of release of annual results (i.e. LTI opportunity divided by VWAP share
price).
50% relative to the ASX300 excluding mining and energy companies; and
100% of the FY21 LTI award is subject to a relative TSR performance measure,
with two equally weighted comparator groups:
•
•
companies: Regis Healthcare (40% weighting); Japara Healthcare (40% weighting);
Oceania Healthcare (10% weighting) and Summerset Group (10% weighting).
50% relative to the weighted average performance of a group of the following listed
Performance
conditions
TSR vesting schedules are provided below:
Estia’s TSR relative to constituents of the
ASX300 (excluding mining and energy
companies)
Less than median of comparator group
At median of comparator group
Percentage of performance
rights that vest
Nil
50%
Between median and 75th percentile of comparator
group
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
Percentage of performance
rights that vest
Below weighted average performance
At weighted average performance
Straight line vesting
0%
50%
50% - 100%
15 percentage points above weighted average
performance
100%
Performance period
The performance rights granted in FY21 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.
104 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
Annual financial report
DIRECTORS’ REPORT
Remuneration report – audited (continued)
Total shares issued
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.
Delivery of LTI
rights entitle the holders to ordinary shares.
LTIs are delivered in the form of performance rights. On vesting, performance
Cessation of
employment
Unless the Board determines otherwise, if a participant’s employment with the Group is
terminated during the performance period as a ‘good leaver’ (i.e. as a result of genuine
redundancy, death, terminal illness, total and permanent disablement, or any other
reason as determined by the Board) they will be entitled to receive a pro-rata amount
of their FY21 LTI Incentive (based on the proportion of whole months they were
employed by the Group during the performance period). Any remaining unvested
performance rights will lapse.
If their employment with the Group is terminated in circumstances in which they are not
considered a good leaver (e.g. resignation, or termination of employment initiated by
the participant or the Group other than where such termination is as a good leaver),
their FY21 LTI Incentive will immediately lapse.
Notwithstanding the above, the Board may, subject to any requirement for shareholder
approval, determine to treat any of the FY21 LTI in a different manner to that set out
above upon participants ceasing to be an employee of the Group.
Change of control
Clawback policy
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 the 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.
5.4.1 LTI Vesting Outcomes
The FY19 LTI performance rights did not vest, as the relevant earnings per share (EPS) and relative total
shareholder return performance targets were not achieved.
5.5 Other Awards
No other incentive awards were granted to KMP in FY21.
During FY20, a retention incentive was granted to the CFO, Steve Lemlin, to recognise his contribution to
Estia since his appointment as CFO in February 2017 and to encourage his continued contribution over
the coming period. The award was delivered in performance rights, with a face value of $125,000, and
vested on 1 July 2021.
DIRECTORS’ REPORT
Remuneration report – audited (continued)
5.4 Long-Term Incentive
A long-term incentive is designed to drive sustainable value creation for shareholders, encourage retention of
key talent and promote a multi-year performance focus.
The LTI is delivered in performance rights, in order to further align the interests of executives with
shareholders over the long term.
Participation
LTI performance rights were offered to all members of executive KMP in FY21.
LTI opportunity
In FY21, all executive KMP had an LTI opportunity of 100% of FAR.
The quantity of instruments granted under the LTI is determined using face
value allocation methodology, using the volume weighted average price
Allocation
methodology
(‘VWAP’) for the 10 trading days immediately following (and not including) the
date of release of annual results (i.e. LTI opportunity divided by VWAP share
price).
•
•
100% of the FY21 LTI award is subject to a relative TSR performance measure,
with two equally weighted comparator groups:
50% relative to the ASX300 excluding mining and energy companies; and
50% relative to the weighted average performance of a group of the following listed
companies: Regis Healthcare (40% weighting); Japara Healthcare (40% weighting);
Oceania Healthcare (10% weighting) and Summerset Group (10% weighting).
TSR vesting schedules are provided below:
Estia’s TSR relative to constituents of the
ASX300 (excluding mining and energy
companies)
Less than median of comparator group
At median of comparator group
Percentage of performance
rights that vest
Nil
50%
Between median and 75th percentile of comparator
Straight line pro rata vesting
group
between 50% and 100%
Greater than 75th percentile of comparator group
100%
Estia’s TSR relative to the weighted average
Percentage of performance
performance of aged care services peer group
rights that vest
Below weighted average performance
At weighted average performance
Straight line vesting
15 percentage points above weighted average
performance
0%
50%
100%
50% - 100%
Performance
conditions
Performance period
The performance rights granted in FY21 have a performance period of three years.
Lapse of
Any performance rights that remain unvested at the end of the performance period will
performance rights
lapse immediately.
Estia Health Annual Financial Report 2020-2021
33
Estia Health Annual Financial Report 2020-2021
34
2020-21 Annual Report | Estia Health 105
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes
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DIRECTORS’ REPORT
Remuneration report – audited (continued)
7. Executive employment contracts
Remuneration arrangements for executives are formalised in employment agreements as follows:
Name
FY21 FAR
Agreement
commence
Agreement
Expire
Notice of
Employee
termination by
Notice
Ian Thorley
$720,000
23 October 2018 No expiry,
6 months
Sean Bilton
$500,000
23 October 2018 No expiry,
3 months
Steve Lemlin
$489,038
1 February 2017 No expiry,
6 months
continuous
agreement
continuous
agreement
continuous
agreement
Group
6 months (or
payment in lieu
of notice)
3 months (or
payment in lieu
of notice)
6 months (or
payment in lieu
of notice)
8. Non-Executive Director fee arrangements
The Board seeks to set Non-Executive Director (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. The NED fee pool is currently $1,100,000 (last approved at 2019 AGM).
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
Member
$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
Royal Commission & Regulatory
Chair
No additional fee
Committee
Member
No additional fee
COVID-19 Committee
Chair
No additional fee
Member
No additional fee
Effective 1 July 2021, NED base member fees will increase from $100,000 p.a. to $110,000 p.a.. This
represents the first NED base fees since the Group's IPO in 2014 and has been made following a detailed
NED fee benchmarking exercise.
NEDs may be reimbursed for expenses reasonably incurred in attending to the Group’s affairs. NEDs do not
participate in any incentive programs.
Estia Health Annual Financial Report 2020-2021
36
5
3
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2
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0
2
0
2
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
Annual financial report
DIRECTORS’ REPORT
Remuneration report – audited (continued)
7. Executive employment contracts
Remuneration arrangements for executives are formalised in employment agreements as follows:
Name
FY21 FAR
Agreement
commence
Agreement
Expire
Ian Thorley
$720,000
Sean Bilton
$500,000
Steve Lemlin
$489,038
23 October 2018 No expiry,
continuous
agreement
23 October 2018 No expiry,
continuous
agreement
1 February 2017 No expiry,
continuous
agreement
Notice of
termination by
Group
6 months (or
payment in lieu
of notice)
3 months (or
payment in lieu
of notice)
6 months (or
payment in lieu
of notice)
Employee
Notice
6 months
3 months
6 months
8. Non-Executive Director fee arrangements
The Board seeks to set Non-Executive Director (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. The NED fee pool is currently $1,100,000 (last approved at 2019 AGM).
The table below summarises the annual Base NED fees, inclusive of superannuation:
Board
Audit Committee
Nominations & Remuneration Committee
Risk Management Committee
Property & Investment Committee
Royal Commission & Regulatory
Committee
Description
Fees
Chair
$250,000
Member
$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
Chair
No additional fee
Member
No additional fee
COVID-19 Committee
Chair
No additional fee
Member
No additional fee
Effective 1 July 2021, NED base member fees will increase from $100,000 p.a. to $110,000 p.a.. This
represents the first NED base fees since the Group's IPO in 2014 and has been made following a detailed
NED fee benchmarking exercise.
NEDs may be reimbursed for expenses reasonably incurred in attending to the Group’s affairs. NEDs do not
participate in any incentive programs.
2020-21 Annual Report | Estia Health 107
Estia Health Annual Financial Report 2020-2021
36
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes
DIRECTORS’ REPORT
Remuneration report – audited (continued)
8.2 Non-Executive director remuneration
The table below outlines NED remuneration for FY21 in accordance with statutory rules and applicable
accounting standards.
Year
Board fees
Superannuati
on
Total fees
$
$
$
Non-Executive Directors
Gary Weiss
Paul Foster
Warwick Smith
Helen Kurincic
Karen Penrose
Norah Barlow
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
258,306
258,997
135,000
126,216
114,155
114,155
114,155
114,155
114,155
114,155
110,000
100,000
Total
2021
845,772
2020
827,678
21,694
21,003
-
8,784
10,845
10,845
10,845
10,845
10,845
10,845
-
-
54,228
62,321
280,000
280,000
135,000
135,000
125,000
125,000
125,000
125,000
125,000
125,000
110,000
100,000
900,000
890,000
DIRECTORS’ REPORT
Remuneration report – audited (continued)
9. Additional disclosures relating to performance rights and shares
9.1 Performance rights granted during the year
The table below discloses the number of performance rights granted 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 FY21.
Number of
rights
granted
during the
year
Grant date
Fair value
per right at
grant date
Vesting
date
Exercise
price per
option
Expiry
date
Executive director
Ian Thorley
234,375
5/11/2020
0.70 30/06/2023
234,375
5/11/2020
0.35 30/06/2023
152,343
5/11/2020
1.21
1/07/2022
Senior Executives
Sean Bilton
162,760
5/11/2020
0.70 30/06/2023
162,760
5/11/2020
0.35 30/06/2023
105,794
5/11/2020
1.21
1/07/2022
Steve Lemlin
159,192
5/11/2020
0.70 30/06/2023
159,192
5/11/2020
0.35 30/06/2023
103,474
5/11/2020
1.21
1/07/2022
Total
1,474,265
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
30/06/2023
30/06/2023
1/07/2022
30/06/2023
30/06/2023
1/07/2022
30/06/2023
30/06/2023
1/07/2022
KMP, or their related parties directly, indirectly or beneficially held a number of performance rights as detailed
9.2 Performance rights holdings of KMP and related parties
in the table below.
Rights forfeited represent 100% of those rights granted in FY19
Number
of rights
at
30-Jun-20
Granted as
Rights
Rights
remuneration
exercised
Forfeited
Vested at 30 June 2021
Exercisable
Not
exercisable
Number
of rights
at
30-Jun-21
Ian Thorley
466,916
621,093
-
(201,323)
886,686
-
-
Sean Bilton
288,949
431,314
(23,055)
(81,454)
615,754
-
Steve Lemlin
316,008
421,858
-
(106,243)
631,623
-
-
Executive director
Senior Executive
Former Executive
Norah Barlow
103,882
-
-
-
103,882
-
-
Total
1,175,754
1,474,265
(23,055)
(389,020)
2,237,945
-
-
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
DIRECTORS’ REPORT
Remuneration report – audited (continued)
8.2 Non-Executive director remuneration
The table below outlines NED remuneration for FY21 in accordance with statutory rules and applicable
accounting standards.
Year
Board fees
Superannuati
on
$
Total fees
$
Non-Executive Directors
Gary Weiss
Paul Foster
Warwick Smith
Helen Kurincic
Karen Penrose
Norah Barlow
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
$
258,306
258,997
135,000
126,216
114,155
114,155
114,155
114,155
114,155
114,155
110,000
100,000
Total
2021
845,772
2020
827,678
21,694
21,003
-
8,784
10,845
10,845
10,845
10,845
10,845
10,845
-
-
54,228
62,321
280,000
280,000
135,000
135,000
125,000
125,000
125,000
125,000
125,000
125,000
110,000
100,000
900,000
890,000
Annual financial report
DIRECTORS’ REPORT
Remuneration report – audited (continued)
9. Additional disclosures relating to performance rights and shares
9.1 Performance rights granted during the year
The table below discloses the number of performance rights granted 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 FY21.
Number of
rights
granted
during the
year
Grant date
Fair value
per right at
grant date
Vesting
date
Exercise
price per
option
Expiry
date
Executive director
Ian Thorley
Senior Executives
Sean Bilton
234,375
234,375
152,343
5/11/2020
5/11/2020
5/11/2020
0.70 30/06/2023
0.35 30/06/2023
1/07/2022
1.21
162,760
162,760
105,794
5/11/2020
5/11/2020
5/11/2020
0.70 30/06/2023
0.35 30/06/2023
1/07/2022
1.21
Steve Lemlin
Total
159,192
159,192
103,474
1,474,265
5/11/2020
5/11/2020
5/11/2020
0.70 30/06/2023
0.35 30/06/2023
1/07/2022
1.21
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
30/06/2023
30/06/2023
1/07/2022
30/06/2023
30/06/2023
1/07/2022
30/06/2023
30/06/2023
1/07/2022
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 as detailed
in the table below.
Rights forfeited represent 100% of those rights granted in FY19
Number
of rights
at
30-Jun-20
Executive director
Granted as
remuneration
Rights
exercised
Rights
Forfeited
Vested at 30 June 2021
Exercisable
Not
exercisable
Number
of rights
at
30-Jun-21
Ian Thorley
466,916
621,093
-
(201,323)
886,686
-
-
Senior Executive
Sean Bilton
288,949
431,314
(23,055)
(81,454)
615,754
-
Steve Lemlin
316,008
421,858
-
(106,243)
631,623
-
-
Former Executive
Norah Barlow
103,882
-
-
-
103,882
-
-
Total
1,175,754
1,474,265
(23,055)
(389,020)
2,237,945
-
-
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DIRECTORS’ REPORT
DIRECTORS’ REPORT
Remuneration report – audited (continued)
Remuneration report – audited (continued)
9.3 Value of performance rights awarded, exercised and lapsed during the year
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.
The table below discloses the value of performance rights granted, exercised or lapsed during the year.
Value of rights
Value of rights
granted during
granted during
the year a
the year a
Value of rights
Value of rights
exercised during
exercised during
the year b
the year b
Value of rights
Value of rights
lapsed during the
lapsed during the
year c
year c
Remuneration
Remuneration
consisting of
consisting of
rights for the
rights for the
year
year
Executive director
Executive director
Ian Thorley
Ian Thorley
Senior executive
Senior executive
Sean Bilton
Sean Bilton
Steve Lemlin
Steve Lemlin
Total
Total
$
$
431,183
431,183
299,432
299,432
292,867
292,867
1,023,482
1,023,482
$
$
-
-
62,500
62,500
-
-
62,500
62,500
$
$
112,112
112,112
45,360
45,360
59,164
59,164
216,636
216,636
%
%
47%
47%
47%
47%
44%
44%
a Determined at the time of grant per the AASB 2.
a Determined at the time of grant per the AASB 2.
b Determined at the time of exercise.
b Determined at the time of exercise.
c Determined at the time of lapse.
c Determined at the time of lapse.
There were no alterations to the terms and conditions of options awarded since their award date.
There were no alterations to the terms and conditions of options awarded since their award date.
9.4 Shareholdings of KMP and related parties
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
KMP or their related parties directly, indirectly or beneficially held a number of shares in Estia Group as detailed in the
table below:
table below:
Number of
Number of
shares at 1
Jul 2020
shares at 1
Jul 2020
Granted as
Granted as
remunerati
on
remunerati
on
Exercise
Exercise
of rights
of rights
On Market
On Market
trades
trades
Number
Number
of shares
of shares
at 30 June
2021
at 30 June
2021
Held
Held
Nominally
Nominally
Non-executive directors
Non-executive directors
Gary Weiss
Gary Weiss
Paul Foster
Paul Foster
Warwick Smith
Warwick Smith
Helen Kurincic
48,312
48,312
24,000
24,000
117,000
117,000
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
30,000
-
-
65,000
65,000
-
78,312
78,312
24,000
24,000
182,000
182,000
50,000
78,312
-
78,312
-
182,000
182,000
25,000
Helen Kurincic
Karen Penrose
Karen Penrose
Norah Barlow
Norah Barlow
Executive director
Executive director
Ian Thorley
50,000
32,333
-
-
-
-
-
-
50,000
32,333
25,000
32,333
32,333
129,474
-
-
-
-
-
-
32,333
129,474
32,333
129,474
129,474
-
-
-
129,474
129,474
138,001
-
-
-
138,001
53,312
Ian Thorley
Senior executives
138,001
-
-
-
138,001
Senior executives
Sean Bilton
6,719
-
23,055
-
29,774
Steve Lemlin
Sean Bilton
Steve Lemlin
Total
Total
43,663
6,719
-
-
-
23,055
-
-
43,663
29,774
43,663
589,502
-
-
-
23,055
-
95,000
43,663
707,557
589,502
-
23,055
95,000
707,557
500,431
All equity transactions with KMP have been entered into under terms and conditions no more favorable than
those the Group would have adopted if dealing at arm's length.
All equity transactions with KMP have been entered into under terms and conditions no more favorable than
those the Group would have adopted if dealing at arm's length.
10. Other transactions and balances with KMP and their related parties
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.
There were no other transactions with KMP or their related parties during the year.
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39
39
53,312
-
-
-
-
500,431
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Remuneration report – audited (continued)
Remuneration report – audited (continued)
9.3 Value of performance rights awarded, exercised and lapsed during the year
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.
The table below discloses the value of performance rights granted, exercised or lapsed during the year.
Value of rights
Value of rights
granted during
granted during
the year a
the year a
Value of rights
Value of rights
exercised during
exercised during
the year b
the year b
Value of rights
Value of rights
lapsed during the
lapsed during the
year c
year c
Remuneration
Remuneration
consisting of
consisting of
rights for the
rights for the
Executive director
Executive director
Ian Thorley
Ian Thorley
Senior executive
Senior executive
Sean Bilton
Sean Bilton
Steve Lemlin
Steve Lemlin
Total
Total
$
$
431,183
431,183
299,432
299,432
292,867
292,867
1,023,482
1,023,482
$
$
-
-
-
-
62,500
62,500
62,500
62,500
$
$
112,112
112,112
45,360
45,360
59,164
59,164
216,636
216,636
year
year
%
%
47%
47%
47%
47%
44%
44%
a Determined at the time of grant per the AASB 2.
a Determined at the time of grant per the AASB 2.
b Determined at the time of exercise.
b Determined at the time of exercise.
c Determined at the time of lapse.
c Determined at the time of lapse.
9.4 Shareholdings of KMP and related parties
9.4 Shareholdings of KMP and related parties
There were no alterations to the terms and conditions of options awarded since their award date.
There were no alterations to the terms and conditions of options awarded since their award date.
KMP or their related parties directly, indirectly or beneficially held a number of shares in Estia Group as detailed in the
KMP or their related parties directly, indirectly or beneficially held a number of shares in Estia Group as detailed in the
table below:
table below:
Number of
Number of
shares at 1
shares at 1
Jul 2020
Jul 2020
Granted as
Granted as
remunerati
remunerati
on
on
Exercise
Exercise
of rights
of rights
On Market
On Market
trades
trades
Number
of shares
Number
at 30 June
of shares
at 30 June
2021
2021
Held
Nominally
Held
Nominally
Non-executive directors
Non-executive directors
Gary Weiss
Gary Weiss
Paul Foster
Paul Foster
Warwick Smith
Warwick Smith
Helen Kurincic
Helen Kurincic
Karen Penrose
Karen Penrose
Norah Barlow
Norah Barlow
Executive director
Executive director
Ian Thorley
48,312
-
-
30,000
78,312
78,312
48,312
24,000
-
-
-
-
30,000
-
24,000
117,000
-
-
-
-
-
65,000
78,312
24,000
24,000
182,000
78,312
-
-
182,000
117,000
50,000
-
-
-
-
65,000
-
182,000
50,000
182,000
25,000
50,000
32,333
-
-
-
-
-
-
50,000
32,333
25,000
32,333
32,333
129,474
-
-
-
-
-
-
32,333
129,474
32,333
129,474
129,474
-
-
-
129,474
129,474
138,001
-
-
-
138,001
53,312
Ian Thorley
Senior executives
138,001
-
-
-
138,001
53,312
Senior executives
Sean Bilton
6,719
-
23,055
-
29,774
43,663
6,719
-
-
-
23,055
-
-
43,663
29,774
43,663
589,502
-
-
-
23,055
-
95,000
43,663
707,557
-
-
-
-
500,431
589,502
-
23,055
95,000
707,557
500,431
All equity transactions with KMP have been entered into under terms and conditions no more favorable than
those the Group would have adopted if dealing at arm's length.
All equity transactions with KMP have been entered into under terms and conditions no more favorable than
those the Group would have adopted if dealing at arm's length.
10. Other transactions and balances with KMP and their related parties
Steve Lemlin
Sean Bilton
Steve Lemlin
Total
Total
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.
There were no other transactions with KMP or their related parties during the year.
Estia Health Annual Financial Report 2020-2021
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Revenues
Other income
Expenses
Employee benefits expense
Administrative expenses
Occupancy expenses
Resident expenses
Depreciation and amortisation expense
Impairment expense
Net remeasurement of expected credit loss allowance
Direct costs associated with the Royal Commission
Class action settlement
Operating profit or (loss) for the year
Net finance costs
Profit or (Loss) before income tax
Income tax expense
Profit or (Loss) for the year
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
Notes
B1
B1
B2
B3
B4
B5
B5
B6
B7
2021
$'000
2020
$'000
646,305
636,908
19,087
214
443,421
23,206
21,054
64,381
42,263
980
(302)
105
12,409
57,875
48,812
9,063
3,065
5,998
-
-
416,000
20,876
21,343
51,276
39,119
144,622
732
101
-
(56,947)
51,898
(108,845)
8,064
(116,909)
-
-
Total comprehensive income or (loss) for the year, net of tax
5,998
(116,909)
.
Earnings per share
Basic, profit or (loss) for the year attributable to ordinary equity holders of
the Parent
Diluted, profit or (loss) for the year attributable to ordinary equity holders
of the Parent
B8
B8
cents
cents
2.30
2.27
(44.79)
(44.79)
Cash and cash equivalents
Trade and other receivables
Prepayments and other assets
Assets held for sale
Total current assets
Property, plant and equipment
Investment properties
Goodwill
Other intangible assets
Right of Use Assets
Prepayments
Total non-current assets
Total assets
Trade and other payables
Other financial liabilities
Provisions
Income tax payable
Lease liabilities
Total current liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Refundable accommodation deposits and bonds
1,814,385
1,866,359
1,819,710
1,870,324
Notes
C1
C2
C3
C4
C5
C6
C6
C7
C8
C9
C10
C7
D1
C7
C10
B7
D2
D3
D4
2021
$'000
33,428
7,125
8,820
2,601
51,974
845,465
750
681,014
227,584
59,221
351
39,305
508
59,962
1,162
3,897
863,929
968,763
61,225
6,059
100,747
113,833
281,864
615,732
803,459
2,629
2020
$'000
30,600
8,129
6,444
5,441
50,614
842,524
1,500
681,014
226,950
67,137
585
59,527
1,193
52,678
6,504
4,052
836,304
960,258
68,910
5,155
98,404
128,848
301,317
608,749
803,397
1,706
1,250,627
1,261,575
(190,356)
(196,354)
615,732
608,749
The accompanying notes form part of these consolidated financial statements.
The accompanying notes form part of these consolidated financial statements.
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Revenues
Other income
Expenses
Employee benefits expense
Administrative expenses
Occupancy expenses
Resident expenses
Depreciation and amortisation expense
Impairment expense
Net remeasurement of expected credit loss allowance
Direct costs associated with the Royal Commission
Class action settlement
Operating profit or (loss) for the year
Net finance costs
Profit or (Loss) before income tax
Income tax expense
Profit or (Loss) for the year
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
Notes
B1
B1
B2
B3
B4
B5
B5
B6
B7
2021
$'000
2020
$'000
646,305
636,908
19,087
214
443,421
416,000
23,206
21,054
64,381
42,263
980
(302)
105
12,409
57,875
48,812
9,063
3,065
5,998
-
-
20,876
21,343
51,276
39,119
144,622
732
101
-
(56,947)
51,898
(108,845)
8,064
(116,909)
-
-
cents
cents
Blank
.
Earnings per share
the Parent
of the Parent
Total comprehensive income or (loss) for the year, net of tax
5,998
(116,909)
Basic, profit or (loss) for the year attributable to ordinary equity holders of
Diluted, profit or (loss) for the year attributable to ordinary equity holders
B8
B8
2.30
2.27
(44.79)
(44.79)
Annual financial report
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Cash and cash equivalents
Trade and other receivables
Prepayments and other assets
Assets held for sale
Total current assets
Property, plant and equipment
Investment properties
Goodwill
Other intangible assets
Right of Use Assets
Prepayments
Total non-current assets
Total assets
Trade and other payables
Other financial liabilities
Provisions
Income tax payable
Lease liabilities
Refundable accommodation deposits and bonds
Total current liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Notes
C1
C2
C3
C4
C5
C6
C6
C7
C8
C9
C10
C7
D1
C7
C10
B7
D2
D3
D4
2021
$'000
33,428
7,125
8,820
2,601
51,974
845,465
750
681,014
227,584
59,221
351
1,814,385
1,866,359
39,305
508
59,962
1,162
3,897
863,929
968,763
61,225
6,059
100,747
113,833
281,864
2020
$'000
30,600
8,129
6,444
5,441
50,614
842,524
1,500
681,014
226,950
67,137
585
1,819,710
1,870,324
59,527
1,193
52,678
6,504
4,052
836,304
960,258
68,910
5,155
98,404
128,848
301,317
1,250,627
1,261,575
615,732
803,459
2,629
(190,356)
608,749
803,397
1,706
(196,354)
615,732
608,749
The accompanying notes form part of these consolidated financial statements.
The accompanying notes form part of these consolidated financial statements.
Estia Health Annual Financial Report 2020 - 2021
41
Estia Health Annual Financial Report 2020 - 2021
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FOR THE YEAR ENDED 30 JUNE 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Balance at 1 July 2019
Profit or (loss) for the year
Other comprehensive income
Total comprehensive income
Issued capital
$'000
Notes
Share-based
payments
reserve
$'000
Accumulated
losses
$'000
Total
equity
$'000
801,843
-
-
1,794
-
-
(45,019)
(116,909)
-
758,618
(116,909)
-
-
-
(116,909)
(116,909)
Transactions with owners in their capacity
as owners:
Issue of share capital
Transfers from share-based payment reserve 1
Repayment of management equity plan
Dividends
Share-based payments
D3
D3
D3
D3
D4
1,507
41
6
-
-
-
(41)
-
-
(47)
-
-
-
(34,426)
-
1,507
-
6
(34,426)
(47)
As at 30 June 2020
803,397
1,706
(196,354)
608,749
Balance at 1 July 2020
Profit or (loss) for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as
owners:
Issue of share capital
Repayment of management equity plan
Dividends
Share-based payments
As at 30 June 2021
D3
D4
D3
D4
803,397
-
-
-
62
-
-
-
803,459
1,706
-
-
-
(196,354)
5,998
-
5,998
608,749
5,998
-
5,998
(62)
12
-
973
2,629
-
-
-
-
(190,356)
-
12
-
973
615,732
1 The vesting of employee performance rights in July 2019, resulted in the issuance of ordinary shares in the
Company. The issuance of these shares was not previously disclosed and the comparative period has now been
reclassified.
Cash flows from operating activities
Receipts from residents
Receipts from government
Payments to suppliers and employees
Interest received
Finance costs paid
Income taxes paid
Interest expense of lease liability
Net operating cash flows before interest, income tax and RAD,
accommodation bond and ILU entry contributions
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
Repayment of lease liabilities
Net cash flows (used in) financing activities
Net increase 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
2021
$'000
2020
$'000
145,716
462,420
145,941
432,171
(568,772)
(466,936)
39,364
520
(6,153)
(6,065)
(1,943)
111,176
435
(7,473)
(9,086)
(2,171)
25,723
256,599
92,881
272,871
(226,007)
(239,690)
56,315
126,062
(2,036)
41
15,385
(46,997)
(33,607)
239,500
(255,000)
-
-
(4,380)
(19,880)
2,828
30,600
33,428
(5,911)
51
2,283
(74,718)
(78,295)
6
405,000
(400,000)
(32,920)
(3,884)
(31,798)
15,969
14,631
30,600
B9
C6
C3
C4
D3
D3
C1
The accompanying notes form part of these consolidated financial statements.
The accompanying notes form part of these consolidated financial statements.
114 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
43
Estia Health Annual Financial Report 2020 - 2021
44
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
Share-based
payments
Accumulated
Issued capital
Notes
$'000
reserve
$'000
losses
$'000
801,843
1,794
(45,019)
758,618
(116,909)
(116,909)
(116,909)
(116,909)
Balance at 1 July 2019
Profit or (loss) for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity
as owners:
Issue of share capital
Transfers from share-based payment reserve 1
Repayment of management equity plan
Dividends
Share-based payments
As at 30 June 2020
Balance at 1 July 2020
Profit or (loss) for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as
Repayment of management equity plan
owners:
Issue of share capital
Dividends
Share-based payments
As at 30 June 2021
D3
D3
D3
D3
D4
D3
D4
D3
D4
1,507
41
-
-
-
6
-
-
-
-
-
62
-
-
-
-
-
-
-
-
-
-
-
-
(41)
(47)
(62)
12
-
973
803,397
1,706
(196,354)
608,749
803,397
1,706
(34,426)
(34,426)
(47)
(196,354)
5,998
5,998
608,749
5,998
-
5,998
Total
equity
$'000
-
-
6
1,507
12
-
-
973
-
-
-
-
-
-
-
-
-
-
1 The vesting of employee performance rights in July 2019, resulted in the issuance of ordinary shares in the
Company. The issuance of these shares was not previously disclosed and the comparative period has now been
reclassified.
803,459
2,629
(190,356)
615,732
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
Interest expense of lease liability
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
Repayment of lease liabilities
Net cash flows (used in) financing activities
Net increase 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
2021
$'000
2020
$'000
145,716
462,420
(568,772)
145,941
432,171
(466,936)
39,364
520
(6,153)
(6,065)
(1,943)
111,176
435
(7,473)
(9,086)
(2,171)
25,723
256,599
(226,007)
92,881
272,871
(239,690)
56,315
126,062
(2,036)
41
15,385
(46,997)
(33,607)
-
239,500
(255,000)
-
(4,380)
(19,880)
2,828
30,600
33,428
(5,911)
51
2,283
(74,718)
(78,295)
6
405,000
(400,000)
(32,920)
(3,884)
(31,798)
15,969
14,631
30,600
B9
C6
C3
C4
D3
D3
C1
The accompanying notes form part of these consolidated financial statements.
The accompanying notes form part of these consolidated financial statements.
Estia Health Annual Financial Report 2020 - 2021
43
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 115
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Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION A:ABOUT THIS REPORT
A1
CORPORATE INFORMATION
The consolidated financial statements of the Company and its subsidiaries for the year ended 30 June 2021
were authorised for issue in accordance with a resolution of the directors on 24 August 2021.
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.
GOING CONCERN
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 independent living units 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.
Comparative information in certain circumstances has been adjusted to confirm with the current period
presentation.
Refer to Note E4 for information relating to the Group's accounting policies.
A3
STATEMENT OF COMPLIANCE
The financial report also complies with International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
A4
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Group and its controlled
subsidiaries as at 30 June 2021 (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.
SECTION A:ABOUT THIS REPORT (CONTINUED)
CURRENT OR 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 2021. Liabilities are disclosed as current when they are due within 12 months of 30 June 2021 or
when there is no unconditional right to defer settlement for at least 12 months after 30 June 2021.
A5
A6
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 potential impacts of COVID-19, have been taken into
consideration in preparing the financial report on a going concern basis. The Group’s current liabilities exceed
current assets by $916,789,000 as at 30 June 2021 (2020: $909,644,000) 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 $864,437,000 (2020: $837,497,000) 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 quickly 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 Note D1 for further details).
The Group has a syndicated financing facility of $330,000,000 of which $212,167,000 remains undrawn as at 30
June 2021. This debt facility can be drawn down to repay RAD and bond refunds should the Group experience
significant RAD and bond net outflows.
A7
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. In making
any judgement, estimate or assumption relating to reported amounts, management have also considered, where
appropriate the impact of COVID-19.
Uncertainty that relates to these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities impacted 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 2021 are included in the following notes:
116 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
45
Estia Health Annual Financial Report 2020 - 2021
46
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION A:ABOUT THIS REPORT
CORPORATE INFORMATION
A1
A2
A3
A4
The consolidated financial statements of the Company and its subsidiaries for the year ended 30 June 2021
were authorised for issue in accordance with a resolution of the directors on 24 August 2021.
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.
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 independent living units which have been measured at
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand ($’000)
Comparative information in certain circumstances has been adjusted to confirm with the current period
Refer to Note E4 for information relating to the Group's accounting policies.
fair value.
unless otherwise stated.
presentation.
STATEMENT OF COMPLIANCE
The financial report also complies with International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Group and its controlled
subsidiaries as at 30 June 2021 (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.
SECTION A:ABOUT THIS REPORT (CONTINUED)
A5
CURRENT OR 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 2021. Liabilities are disclosed as current when they are due within 12 months of 30 June 2021 or
when there is no unconditional right to defer settlement for at least 12 months after 30 June 2021.
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 potential impacts of COVID-19, have been taken into
consideration in preparing the financial report on a going concern basis. The Group’s current liabilities exceed
current assets by $916,789,000 as at 30 June 2021 (2020: $909,644,000) 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 $864,437,000 (2020: $837,497,000) 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 quickly 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 Note D1 for further details).
The Group has a syndicated financing facility of $330,000,000 of which $212,167,000 remains undrawn as at 30
June 2021. This debt facility can be drawn down to repay 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. In making
any judgement, estimate or assumption relating to reported amounts, management have also considered, where
appropriate the impact of COVID-19.
Uncertainty that relates to these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities impacted 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 2021 are included in the following notes:
Estia Health Annual Financial Report 2020 - 2021
45
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 117
46
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION A:ABOUT THIS REPORT (CONTINUED)
A7
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS (CONTINUED)
Significant accounting judgements, estimates and assumptions
Note B1
Revenue and other income
Note B6
Finance costs
Note B7
Income Taxes recognition of deferred tax assets
Note C2
Allowance for expected credit losses
Note C3
Assets held for sale
Note C4
Property, plant and equipment impairment test
Note C5
Investment properties
Note C6
Intangible assets impairment test
Note C7
Right of use assets and lease liabilities
Note D4
Share-based payments
SECTION B:OUR PERFORMANCE
B1
REVENUE AND OTHER INCOME
Government funded residential care subsidies & supplements
Imputed DAP revenue on RAD and bond balances under AASB 16
Revenues
Resident daily care fees
Other resident fees
Total revenues
Other income
Net gain on disposals of assets held for sale
Decrease in fair value of investment property
Net gain on disposals of property, plant and equipment
Government grants
Total other income
2021
$'000
2020
$'000
456,120
106,569
41,300
42,316
646,305
9,446
-
41
9,600
19,087
443,308
107,092
43,101
43,407
636,908
283
(120)
51
-
214
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 or facilities, provision of care and other services.
Total revenue includes the provision of accommodation, that is accounted for in accordance with AASB 16
Leases ("AASB 16"). This includes operating lease revenue which is recognised on a straight-line basis over the
length of stay. In addition, revenue includes imputed revenue in relation to residents who have chosen to pay a
RAD or bond. This is a non-cash amount.
Government funded residential care subsidies & supplements, includes a payment in October 2020 of either
$975 or $1,435 (depending on the location of the home) for each resident based on June 2020 census data and
a payment of either $763 for Metro or $1,145 for Regional ( depending on the location of the home) in February
2021 . The payment contributed $11,826,000 in revenue for the period (2020: $5,800,000) as a temporary
funding increase.
Following an application for a Government Grant to obtain expense reimbursement associated with the
COVID-19 response, the Group received $7,369,000 by way of reimbursement.
The Group received personal protective equipment ("PPE") from Government during a time of critical shortages
in Australia, which supplemented its own purchases. $2,231,000 relating to PPE supplied by Government was
consumed in the period and as such was recognised as grant income and as PPE expense.
118 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
47
Estia Health Annual Financial Report 2020 - 2021
48
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION A:ABOUT THIS REPORT (CONTINUED)
A7
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS (CONTINUED)
Significant accounting judgements, estimates and assumptions
Note B1
Revenue and other income
Note B6
Finance costs
Note B7
Income Taxes recognition of deferred tax assets
Note C2
Allowance for expected credit losses
Note C3
Assets held for sale
Note C4
Property, plant and equipment impairment test
Note C5
Investment properties
Note C6
Intangible assets impairment test
Note C7
Right of use assets and lease liabilities
Note D4
Share-based payments
SECTION B:OUR PERFORMANCE
B1
REVENUE AND OTHER INCOME
Revenues
Government funded residential care subsidies & supplements
Resident daily care fees
Other resident fees
Imputed DAP revenue on RAD and bond balances under AASB 16
Total revenues
Other income
Net gain on disposals of assets held for sale
Decrease in fair value of investment property
Net gain on disposals of property, plant and equipment
Government grants
Total other income
2021
$'000
2020
$'000
456,120
106,569
41,300
42,316
646,305
9,446
-
41
9,600
19,087
443,308
107,092
43,101
43,407
636,908
283
(120)
51
-
214
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 or facilities, provision of care and other services.
Total revenue includes the provision of accommodation, that is accounted for in accordance with AASB 16
Leases ("AASB 16"). This includes operating lease revenue which is recognised on a straight-line basis over the
length of stay. In addition, revenue includes imputed revenue in relation to residents who have chosen to pay a
RAD or bond. This is a non-cash amount.
Government funded residential care subsidies & supplements, includes a payment in October 2020 of either
$975 or $1,435 (depending on the location of the home) for each resident based on June 2020 census data and
a payment of either $763 for Metro or $1,145 for Regional ( depending on the location of the home) in February
2021 . The payment contributed $11,826,000 in revenue for the period (2020: $5,800,000) as a temporary
funding increase.
Following an application for a Government Grant to obtain expense reimbursement associated with the
COVID-19 response, the Group received $7,369,000 by way of reimbursement.
The Group received personal protective equipment ("PPE") from Government during a time of critical shortages
in Australia, which supplemented its own purchases. $2,231,000 relating to PPE supplied by Government was
consumed in the period and as such was recognised as grant income and as PPE expense.
Estia Health Annual Financial Report 2020 - 2021
47
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 119
48
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
B1
REVENUE AND OTHER INCOME (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
B1
REVENUE AND OTHER INCOME (CONTINUED)
Disaggregation of Revenue
Contract Assets and Liabilities
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 Aged Care 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. This is 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 $15,478,000 in the period (2020:
$16,920,000).
(b) Resident Daily Care Fees
The Group receives Basic Daily Fees in accordance with the Aged Care Act which are funded directly by the
resident as a Basic Daily Fee which is set by the Government. The Basic Daily Fee is calculated as a daily rate
and is payable by a resident for each day that a resident is in a home.
(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.
(d) Imputed Revenue on RAD and Bond Balances under AASB 16
The Group has determined that residents who choose to pay a RAD as bond for their accommodation services,
that these arrangements meet the definition of a lease under AASB 16, accounting for leases. The Group has
recognised as revenue an imputed non-cash charge for accommodation representing the resident's right to
occupy a room under the arrangement. The accounting treatment required a non-cash increase in revenue for
accommodation and a non-cash increase in finance cost on the outstanding RAD and Bond balance, with no net
impact on the result for the period.
Other Income
During the year, the Group separately sold two surplus land sites within NSW at Mona Vale and Wollongong and
one site within Victoria at Grovedale for a total of $16,450,000 (2020: $1,215,000) and recognised a net gain on
sale of $9,446,000 (2020: net gain on sale $283,000).
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.
AASB 15 Revenue from contracts with customers ("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).
SIGNIFICANT ACCOUNTING POLICY
The Group recognises revenue under AASB 15 which 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 because all performance obligations are considered to be met on a daily basis.
Therefore, the Group does not have any outstanding performance obligations that have not been met at the
reporting date.
Government grants, including non-monetary grants, are recognised when all conditions attached to the grant will
be met and the grant will be received. The grant is recognised at an amount equivalent to what will be received,
and non-monetary grants are recognised at fair value and as Other income.
Monetary grants are recognised as income in the profit and loss on a systematic basis over the periods in which
the related costs are recognised as expenses for which the grants are intended to compensate. For
non-monetary grants, both the grants and the related assets are accounted for at fair value. The grants are
recognised as other income in the profit and loss over the periods in which the related asset is consumed and
expensed.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Following the adoption of AASB 16, the Group has determined the use of the Maximum Permissible Interest
Rate ("MPIR") as the interest rate to be used in the calculation of the Imputed DAP Revenue on RAD and Bond
Balances. The MPIR is a rate set by the Government and is used to calculate the Daily Accommodation
Payment to applicable residents.
The Group have used the replacement cost of PPE items which are comparable to the items it has received from
the Government, to determine the value of non-monetary Government grants received during the period of
$2,231,000.
120 Estia Health | 2020-21 Annual Report
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50
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
B1
care.
home.
SECTION B:OUR PERFORMANCE (CONTINUED)
REVENUE AND OTHER INCOME (CONTINUED)
Disaggregation of Revenue
The Group has disaggregated revenue based on the source of the funding for the provision of residential aged
(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 Aged Care 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
The Government may require a resident to pay a proportion of that subsidy or supplement dependent on their
own financial circumstances. This is 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 $15,478,000 in the period (2020:
$16,920,000).
(b) Resident Daily Care Fees
The Group receives Basic Daily Fees in accordance with the Aged Care Act which are funded directly by the
resident as a Basic Daily Fee which is set by the Government. The Basic Daily Fee is calculated as a daily rate
and is payable by a resident for each day that a resident is in a home.
(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.
(d) Imputed Revenue on RAD and Bond Balances under AASB 16
The Group has determined that residents who choose to pay a RAD as bond for their accommodation services,
that these arrangements meet the definition of a lease under AASB 16, accounting for leases. The Group has
recognised as revenue an imputed non-cash charge for accommodation representing the resident's right to
occupy a room under the arrangement. The accounting treatment required a non-cash increase in revenue for
accommodation and a non-cash increase in finance cost on the outstanding RAD and Bond balance, with no net
impact on the result for the period.
Other Income
During the year, the Group separately sold two surplus land sites within NSW at Mona Vale and Wollongong and
one site within Victoria at Grovedale for a total of $16,450,000 (2020: $1,215,000) and recognised a net gain on
sale of $9,446,000 (2020: net gain on sale $283,000).
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.
SECTION B:OUR PERFORMANCE (CONTINUED)
B1
REVENUE AND OTHER INCOME (CONTINUED)
Contract Assets and Liabilities
AASB 15 Revenue from contracts with customers ("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).
SIGNIFICANT ACCOUNTING POLICY
The Group recognises revenue under AASB 15 which 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 because all performance obligations are considered to be met on a daily basis.
Therefore, the Group does not have any outstanding performance obligations that have not been met at the
reporting date.
Government grants, including non-monetary grants, are recognised when all conditions attached to the grant will
be met and the grant will be received. The grant is recognised at an amount equivalent to what will be received,
and non-monetary grants are recognised at fair value and as Other income.
Monetary grants are recognised as income in the profit and loss on a systematic basis over the periods in which
the related costs are recognised as expenses for which the grants are intended to compensate. For
non-monetary grants, both the grants and the related assets are accounted for at fair value. The grants are
recognised as other income in the profit and loss over the periods in which the related asset is consumed and
expensed.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Following the adoption of AASB 16, the Group has determined the use of the Maximum Permissible Interest
Rate ("MPIR") as the interest rate to be used in the calculation of the Imputed DAP Revenue on RAD and Bond
Balances. The MPIR is a rate set by the Government and is used to calculate the Daily Accommodation
Payment to applicable residents.
The Group have used the replacement cost of PPE items which are comparable to the items it has received from
the Government, to determine the value of non-monetary Government grants received during the period of
$2,231,000.
Estia Health Annual Financial Report 2020 - 2021
49
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2020-21 Annual Report | Estia Health 121
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
B2
EMPLOYEE BENEFITS EXPENSES
Salaries and wages expense
Superannuation expense
Other employee expenses
Total employee benefits expenses
2021
$'000
365,446
33,014
44,961
443,421
2020
$'000
344,904
32,091
39,005
416,000
B4
OCCUPANCY EXPENSES
Repairs and maintenance expense
Other occupancy expenses
Total occupancy expenses
2021
$'000
8,555
12,499
21,054
2020
$'000
8,468
12,875
21,343
The Group administered and disbursed COVID-19 aged care retention bonuses on behalf of the Australian
Government during the financial year and considered that it acted as an agent in making these payments on
behalf of the Australian Government. These payments were therefore treated as a disbursement and not a grant
and were presented as a pass-through with no impact on the results. For the year ended 30 June 2021, COVID
aged care retention bonuses totalled $9,104,000 (2020: Nil) were administered and disbursed by the Group.
B3
ADMINISTRATIVE EXPENSES
Advertising and marketing expenses
Telephone and communication expenses
Travel expenses
Printing and stationery expenses
Professional services expenses
Insurance Premiums
Other administrative expenses
Total administrative expenses
2021
$'000
1,326
2,576
800
1,179
5,456
4,200
7,669
23,206
2020
$'000
1,417
2,353
1,594
1,642
3,943
2,843
7,084
20,876
The costs included in administrative expense has been reviewed during the period to more closely reflect the
nature of this cost category, as result the prior period value has been restated.
The Group has various leases that relate to the Groups aged care homes and are accounted for in accordance
with AASB16 Accounting for Leases. Refer Note C7 Right of Use Assets and Lease Liabilities.
The costs included in other occupancy expense has been reviewed during the period to more closely reflect the
nature of this cost category, as result the prior period value has been restated.
B5
DEPRECIATION, AMORTISATION AND IMPAIRMENT EXPENSES
Depreciation and Amortisation Expense
Impairment expense
Total depreciation, amortisation and impairment expenses
Notes
C4, C7
C4, C6
2021
$'000
42,263
980
43,243
2020
$'000
39,119
144,622
183,741
The Group has various leases for aged care homes, office space and minor office equipment. These leases are
accounted for by recognising a depreciable right of use asset with an effective life equivalent to the term of the
lease. Depreciation expense on right of use assets for the period was $4,535,000 (2020: $4,524,000).
The impairment expense in June 2020 comprises $136,059,000 of goodwill and $8,563,000 across the Group's
homes and tangible assets.
122 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
Annual financial report
The Group administered and disbursed COVID-19 aged care retention bonuses on behalf of the Australian
Government during the financial year and considered that it acted as an agent in making these payments on
behalf of the Australian Government. These payments were therefore treated as a disbursement and not a grant
and were presented as a pass-through with no impact on the results. For the year ended 30 June 2021, COVID
aged care retention bonuses totalled $9,104,000 (2020: Nil) were administered and disbursed by the Group.
B2
EMPLOYEE BENEFITS EXPENSES
Salaries and wages expense
Superannuation expense
Other employee expenses
Total employee benefits expenses
B3
ADMINISTRATIVE EXPENSES
Advertising and marketing expenses
Telephone and communication expenses
Travel expenses
Printing and stationery expenses
Professional services expenses
Insurance Premiums
Other administrative expenses
Total administrative expenses
2021
$'000
365,446
33,014
44,961
443,421
2020
$'000
344,904
32,091
39,005
416,000
2021
$'000
1,326
2,576
800
1,179
5,456
4,200
7,669
2020
$'000
1,417
2,353
1,594
1,642
3,943
2,843
7,084
B4
OCCUPANCY EXPENSES
Repairs and maintenance expense
Other occupancy expenses
Total occupancy expenses
2021
$'000
8,555
12,499
21,054
2020
$'000
8,468
12,875
21,343
The Group has various leases that relate to the Groups aged care homes and are accounted for in accordance
with AASB16 Accounting for Leases. Refer Note C7 Right of Use Assets and Lease Liabilities.
The costs included in other occupancy expense has been reviewed during the period to more closely reflect the
nature of this cost category, as result the prior period value has been restated.
B5
DEPRECIATION, AMORTISATION AND IMPAIRMENT EXPENSES
Depreciation and Amortisation Expense
Impairment expense
Total depreciation, amortisation and impairment expenses
Notes
C4, C7
C4, C6
2021
$'000
42,263
980
43,243
2020
$'000
39,119
144,622
183,741
The Group has various leases for aged care homes, office space and minor office equipment. These leases are
accounted for by recognising a depreciable right of use asset with an effective life equivalent to the term of the
lease. Depreciation expense on right of use assets for the period was $4,535,000 (2020: $4,524,000).
The costs included in administrative expense has been reviewed during the period to more closely reflect the
nature of this cost category, as result the prior period value has been restated.
23,206
20,876
The impairment expense in June 2020 comprises $136,059,000 of goodwill and $8,563,000 across the Group's
homes and tangible assets.
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 123
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
B6
FINANCE INCOME AND COSTS
Finance Income
Interest income from cash at banks
Total finance income
Finance Costs
Imputed interest cost on RAD and bond balances
Interest expense on leases under AASB 16
Interest expense on bank loans
Interest expense on accommodation bonds for departed residents
Other finance costs
Total finance costs
Notes
B1
B1
2021
$'000
520
520
42,316
1,943
1,509
2,019
1,545
49,332
2020
$'000
435
435
43,407
2,171
2,204
2,512
2,039
52,333
Net finance costs
48,812
51,898
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 D2
for information relating to loans and borrowings.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group has determined the use of the Maximum Permissible Interest Rate ("MPIR") as the interest rate in the
calculation of the Imputed Interest Cost on RAD and Bond Balances. The MPIR is a rate set by the Government
and is used to calculate the Daily Accommodation Payment to applicable residents.
Where the Group, as a lessee, cannot readily determine the interest rate implicit in a lease, it uses an
Incremental Borrowing Rate ("IBR") to calculate interest expense on leases. The IBR is the interest rate that the
lessee would have to pay to borrow over a similar term of each lease. The Group estimates the IBR using
market interest rates and adjusts these rates to include the effect of the lessee's own stand alone credit rating.
INCOME TAX EXPENSE
B7
are:
The major components of income tax expense for the twelve months ended 30 June 2021 and 30 June 2020
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
Income tax expense reported in the consolidated statement of profit or loss
and other comprehensive income
3,065
8,064
Reconciliation of income tax expense and the accounting profit:
Accounting profit or (loss) before income tax
At the Australian statutory income tax rate of 30% (2020: 30%)
Adjustments in respect of income tax of previous year
Utilisation of previously unrecognised tax losses
Expenditure not allowable for income tax purposes
- Goodwill impairment expense
- Other expenditure
Income tax expense
2021
$'000
1,155
(433)
1,831
512
2021
$'000
9,064
2,719
79
(13)
-
280
3,065
(12,129)
2020
$'000
16,093
355
(8,090)
(294)
2020
$'000
(108,845)
(32,654)
61
(176)
40,818
15
8,064
100,781
124 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
B6
FINANCE INCOME AND COSTS
Finance Income
Interest income from cash at banks
Total finance income
Finance Costs
Imputed interest cost on RAD and bond balances
Interest expense on leases under AASB 16
Interest expense on bank loans
Interest expense on accommodation bonds for departed residents
Other finance costs
Total finance costs
Net finance costs
Interest income
Borrowing costs
SIGNIFICANT ACCOUNTING POLICY
Interest income is recognised based on the effective interest method.
Notes
B1
B1
2021
$'000
520
520
42,316
1,943
1,509
2,019
1,545
49,332
2020
$'000
435
435
43,407
2,171
2,204
2,512
2,039
52,333
48,812
51,898
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 D2
for information relating to loans and borrowings.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group has determined the use of the Maximum Permissible Interest Rate ("MPIR") as the interest rate in the
calculation of the Imputed Interest Cost on RAD and Bond Balances. The MPIR is a rate set by the Government
and is used to calculate the Daily Accommodation Payment to applicable residents.
Where the Group, as a lessee, cannot readily determine the interest rate implicit in a lease, it uses an
Incremental Borrowing Rate ("IBR") to calculate interest expense on leases. The IBR is the interest rate that the
lessee would have to pay to borrow over a similar term of each lease. The Group estimates the IBR using
market interest rates and adjusts these rates to include the effect of the lessee's own stand alone credit rating.
B7
INCOME TAX EXPENSE
The major components of income tax expense for the twelve months ended 30 June 2021 and 30 June 2020
are:
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
2021
$'000
1,155
(433)
1,831
512
2020
$'000
16,093
355
(8,090)
(294)
Income tax expense reported in the consolidated statement of profit or loss
and other comprehensive income
3,065
8,064
Reconciliation of income tax expense and the accounting profit:
Accounting profit or (loss) before income tax
At the Australian statutory income tax rate of 30% (2020: 30%)
Adjustments in respect of income tax of previous year
Utilisation of previously unrecognised tax losses
Expenditure not allowable for income tax purposes
- Goodwill impairment expense
- Other expenditure
Income tax expense
2021
$'000
9,064
2,719
79
(13)
-
280
3,065
(12,129)
2020
$'000
(108,845)
(32,654)
61
(176)
40,818
15
8,064
100,781
Estia Health Annual Financial Report 2020 - 2021
53
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2020-21 Annual Report | Estia Health 125
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
B7
INCOME TAX EXPENSE (CONTINUED)
Consolidated statement of
profit or loss and other
comprehensive income
Consolidated statement of
financial position
2021
$'000
(3,672)
(8)
(719)
(2,216)
-
2,028
-
-
2,244
(2,343)
(2,343)
2020
$'000
2,541
(8)
281
2,216
-
3,126
36
1,195
(1,003)
8,384
8,384
Accelerated depreciation and impairment
IPO transaction fees
Other
Assets held for sale
Bed licences
Provisions and accruals
Investment properties
Right of use assets
Lease liabilities
Deferred tax (credit) or expense
Deferred tax, net liabilities
Reflected in the statement of financial position as follows
Deferred tax assets
Deferred tax liabilities
Deferred tax, net liabilities
Reconciliation of deferred tax liabilities, net:
Balance at 1 July 2020
Income Tax expense during the year recognised in profit or loss
Adjustments in respect of income tax of previous year
Balance at 30 June 2021
2021
$'000
(60,979)
-
(1,264)
-
(64,571)
22,075
-
21,889
(17,897)
(100,747)
(100,747)
44,347
(145,094)
(100,747)
$'000
(98,404)
(1,831)
(512)
(100,747)
2020
$'000
(57,307)
8
(545)
2,216
(64,571)
20,047
-
21,889
(20,141)
(98,404)
(98,404)
45,067
(143,471)
(98,404)
-
-
-
-
B7
INCOME TAX EXPENSE (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 a tax asset or liability 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
19 June 2013.
Estia Health Limited and its wholly-owned controlled entities implemented the tax consolidation legislation as of
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.
126 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
Annual financial report
B7
INCOME TAX EXPENSE (CONTINUED)
Consolidated statement of
profit or loss and other
Consolidated statement of
comprehensive income
financial position
2021
$'000
(3,672)
(8)
(719)
(2,216)
2,028
-
-
-
2,244
(2,343)
(2,343)
2020
$'000
2,541
(8)
281
2,216
-
3,126
36
1,195
(1,003)
8,384
8,384
Accelerated depreciation and impairment
IPO transaction fees
Other
Assets held for sale
Bed licences
Provisions and accruals
Investment properties
Right of use assets
Lease liabilities
Deferred tax (credit) or expense
Deferred tax, net liabilities
Reflected in the statement of financial position as follows
Deferred tax assets
Deferred tax liabilities
Deferred tax, net liabilities
Reconciliation of deferred tax liabilities, net:
Balance at 1 July 2020
Income Tax expense during the year recognised in profit or loss
Adjustments in respect of income tax of previous year
Balance at 30 June 2021
2021
$'000
2020
$'000
(60,979)
(57,307)
(1,264)
(64,571)
22,075
-
-
-
21,889
(17,897)
(100,747)
(100,747)
44,347
(145,094)
(100,747)
$'000
(98,404)
(1,831)
(512)
(100,747)
8
(545)
2,216
(64,571)
20,047
-
21,889
(20,141)
(98,404)
(98,404)
45,067
(143,471)
(98,404)
-
-
-
-
B7
INCOME TAX EXPENSE (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 a tax asset or liability 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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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
B7
INCOME TAX EXPENSE (CONTINUED)
B9
CASH FLOW RECONCILIATION
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 or loss 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 or loss 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.
The shares that may dilute basic earnings per share in the future, were anti-dilutive for the period ended 30 June
2020 due to the loss for the year and therefore they were not included in the calculation of diluted earnings per
share.
Profit (Loss) attributable to ordinary equity holders of the Parent for basic and
diluted earnings
2021
$'000
2020
$'000
5,998
(116,909)
2021
2020
Weighted average number of ordinary shares for basic EPS
261,294,969
261,014,726
(Decrease) or increase in refundable accommodation deposits and bonds
Effect of dilution
3,013,807
1,538,291
Net cash flows from operating activities
Weighted average number of ordinary shares for the effect of dilution
264,308,776
262,553,017
Basic profit or (loss) per share
Diluted profit or (loss) per share
2021
cents
2.30
2.27
2020
cents
(44.79)
(44.79)
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(a) Reconciliation of net profit or (loss) after income tax to net cash flows from operations
Profit/(Loss) for the year
Adjustments to reconcile profit or (loss) after income tax to net cash
flows:
Depreciation of property, plant and equipment
Depreciation on right of use assets
Imputed revenue on RAD and bond balances
Imputed interest cost on RAD and bond balances
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
Net (gain) or loss on fair value of investment properties
Changes in assets and liabilities
Decrease or (increase) in trade and other receivables
Decrease or (increase) in prepayments and other assets
Decrease or (increase) in deferred tax assets
(Decrease) or increase in deferred tax liabilities
(Decrease) or increase in current tax payable
(Decrease) or increase in trade and other payables
(Decrease) or increase in provisions
2021
$'000
2020
$'000
5,998
(116,909)
37,728
4,535
42,316
(42,316)
1,402
980
(41)
(9,446)
(2,968)
(718)
923
-
(71)
(2,397)
720
1,622
666
(21,399)
8,189
30,592
56,315
33,150
4,524
43,407
(43,407)
1,445
144,622
(51)
(283)
(1,910)
440
(47)
120
(835)
(1,595)
(5,185)
(2,755)
7,111
22,260
8,779
33,181
126,062
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION B:OUR PERFORMANCE (CONTINUED)
SECTION B:OUR PERFORMANCE (CONTINUED)
B7
INCOME TAX EXPENSE (CONTINUED)
B9
CASH FLOW RECONCILIATION
(a) Reconciliation of net profit or (loss) after income tax to net cash flows from operations
5,998
Profit/(Loss) for the year
(116,909)
2021
$'000
2020
$'000
Adjustments to reconcile profit or (loss) after income tax to net cash
flows:
Depreciation of property, plant and equipment
Depreciation on right of use assets
Imputed revenue on RAD and bond balances
Imputed interest cost on RAD and bond balances
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
Net (gain) or loss on fair value of investment properties
Changes in assets and liabilities
Decrease or (increase) in trade and other receivables
Decrease or (increase) in prepayments and other assets
Decrease or (increase) in deferred tax assets
(Decrease) or increase in deferred tax liabilities
(Decrease) or increase in current tax payable
(Decrease) or increase in trade and other payables
(Decrease) or increase in provisions
(Decrease) or increase in refundable accommodation deposits and bonds
Effect of dilution
3,013,807
1,538,291
Net cash flows from operating activities
Weighted average number of ordinary shares for the effect of dilution
264,308,776
262,553,017
37,728
4,535
42,316
(42,316)
1,402
980
(41)
(9,446)
(2,968)
(718)
923
-
(71)
(2,397)
720
1,622
666
(21,399)
8,189
30,592
56,315
33,150
4,524
43,407
(43,407)
1,445
144,622
(51)
(283)
(1,910)
440
(47)
120
(835)
(1,595)
(5,185)
(2,755)
7,111
22,260
8,779
33,181
126,062
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 or loss 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 or loss 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.
The shares that may dilute basic earnings per share in the future, were anti-dilutive for the period ended 30 June
2020 due to the loss for the year and therefore they were not included in the calculation of diluted earnings per
share.
Profit (Loss) attributable to ordinary equity holders of the Parent for basic and
diluted earnings
Weighted average number of ordinary shares for basic EPS
261,294,969
261,014,726
2021
$'000
2020
$'000
5,998
(116,909)
2021
2020
2021
cents
2.30
2.27
2020
cents
(44.79)
(44.79)
Basic profit or (loss) per share
Diluted profit or (loss) per share
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION B:OUR PERFORMANCE (CONTINUED)
B9
CASH FLOW RECONCILIATION (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Operating cash flow
SECTION C:ASSETS & LIABILITIES
C1
CASH AND CASH EQUIVALENTS
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.
Cash at bank
Cash on hand
Total cash and cash equivalents
2020
$'000
Net cash flows
$'000
(b) Reconciliation of liabilities arising from
financing activities
Non-current loans and borrowings
Lease liabilities
Total liabilities from financing activities
130,000
72,961
202,961
(15,500)
(4,270)
(19,770)
Other
$'000
667
(649)
18
2021
$'000
113,833
69,340
183,173
Cash at bank earns interest at floating rates based on daily bank deposit rates.
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.
2021
$'000
33,300
128
33,428
2020
$'000
30,522
78
30,600
130 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION B:OUR PERFORMANCE (CONTINUED)
B9
CASH FLOW RECONCILIATION (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Operating cash flow
SECTION C:ASSETS & LIABILITIES
C1
CASH AND CASH EQUIVALENTS
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.
Cash at bank
Cash on hand
Total cash and cash equivalents
2021
$'000
33,300
128
33,428
2020
$'000
30,522
78
30,600
2020
$'000
Net cash flows
$'000
(b) Reconciliation of liabilities arising from
financing activities
Non-current loans and borrowings
Lease liabilities
Total liabilities from financing activities
130,000
72,961
202,961
(15,500)
(4,270)
(19,770)
Other
$'000
667
(649)
18
2021
$'000
113,833
69,340
183,173
Cash at bank earns interest at floating rates based on daily bank deposit rates.
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.
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C2
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Allowance for expected credit losses
Total trade and other receivables
Allowance for expected credit loss
C3
ASSETS HELD FOR SALE
Assets held for sale
Total assets held for sale
2021
$'000
6,767
1,653
(1,295)
7,125
2020
$'000
8,593
1,549
(2,013)
8,129
Set out below is the movement in the allowance for expected credit losses of trade receivables for the period.
As at 1 July
(Release) or provision for expected credit losses
Utilised
At 30 June
2021
$'000
2,013
(302)
(416)
1,295
2020
$'000
1,573
732
(292)
2,013
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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In calculating the allowance for expected credit loss, the Group applies judgements when identifying customers
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 customer, 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 customer balances. Refer to D5 Credit Risk for additional information.
The Group determined that the risk characteristics of its customers were not significantly impacted by COVID-19
during the period. The Group observed there to be no significant shift in customer payment patterns and
performance following the declaration of the COVID-9 pandemic in Australia from March 2020 that would
materially impact the ability to collect outstanding debtors balances.
2021
$'000
2,601
2,601
2020
$'000
5,441
5,441
On 4 November 2020, the Group completed the previously announced sale of land in Mona Vale, New South
Wales, and recorded a pre-tax profit on sale of $7,792,000 in the period.
Development options for a site at Crown Street, Wollongong, New South Wales, were re-assessed in the period
and the decision was made to dispose the site. A contract for sale for $3,800,000 was executed in October 2020
which was settled on 15 December 2020 for a pre-tax profit of $435,000 in the period.
Land in Grovedale, Victoria, was contracted for sale in December 2020 and settled in April 2021, recognising a
pre-tax profit of $475,000.
The Group has a property in Wombarra, NSW for which a process for disposal commenced in June 2020 and
continued during the current period.
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 in its current condition and 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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
For an asset held for sale for which fair value less cost of disposal cannot be referenced to a binding
unconditional contact of sale, the Group takes into consideration various external sources of information, such
as comparable sales history and guidance provided by independent external parties, to determine the likely fair
value less cost of disposal for the asset.
132 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
Annual financial report
C2
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Allowance for expected credit losses
Total trade and other receivables
Allowance for expected credit loss
(Release) or provision for expected credit losses
As at 1 July
Utilised
At 30 June
2021
$'000
6,767
1,653
(1,295)
7,125
2021
$'000
2,013
(302)
(416)
1,295
2020
$'000
8,593
1,549
(2,013)
8,129
2020
$'000
1,573
732
(292)
2,013
Set out below is the movement in the allowance for expected credit losses of trade receivables for the period.
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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In calculating the allowance for expected credit loss, the Group applies judgements when identifying customers
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 customer, 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 customer balances. Refer to D5 Credit Risk for additional information.
The Group determined that the risk characteristics of its customers were not significantly impacted by COVID-19
during the period. The Group observed there to be no significant shift in customer payment patterns and
performance following the declaration of the COVID-9 pandemic in Australia from March 2020 that would
materially impact the ability to collect outstanding debtors balances.
C3
ASSETS HELD FOR SALE
Assets held for sale
Total assets held for sale
2021
$'000
2,601
2,601
2020
$'000
5,441
5,441
On 4 November 2020, the Group completed the previously announced sale of land in Mona Vale, New South
Wales, and recorded a pre-tax profit on sale of $7,792,000 in the period.
Development options for a site at Crown Street, Wollongong, New South Wales, were re-assessed in the period
and the decision was made to dispose the site. A contract for sale for $3,800,000 was executed in October 2020
which was settled on 15 December 2020 for a pre-tax profit of $435,000 in the period.
Land in Grovedale, Victoria, was contracted for sale in December 2020 and settled in April 2021, recognising a
pre-tax profit of $475,000.
The Group has a property in Wombarra, NSW for which a process for disposal commenced in June 2020 and
continued during the current period.
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 in its current condition and 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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
For an asset held for sale for which fair value less cost of disposal cannot be referenced to a binding
unconditional contact of sale, the Group takes into consideration various external sources of information, such
as comparable sales history and guidance provided by independent external parties, to determine the likely fair
value less cost of disposal for the asset.
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C4
PROPERTY, PLANT AND EQUIPMENT
Reconciliation of property, plant and equipment
Property
Improvements
$'000
Furniture,
fixtures &
equipment
$'000
Motor
vehicles
$'000
Construction
in progress
$'000
Total
$'000
Land
$'000
Buildings
$'000
Note
192,840 504,816
-
26,653
(445)
3,148
3,960
(885)
(5,250)
-
193,813 531,024
750
35,492
(28)
-
-
-
64,823
2,783
15,129
(46)
-
82,689
3,238
3,056
(131)
92,045
9,884
19,143
(2,112)
(48)
118,912
9,195
11,790
(2,232)
(3,748)
-
190,065 567,238
-
88,852
-
137,665
B5
B5
B5
B5
-
-
-
-
-
-
821
-
821
39,930
11,498
4,844
(445)
55,827
11,352
-
(30)
67,148
4,213
4,148
858
(30)
9,189
5,238
-
(131)
35,420
17,431
589
(2,046)
51,394
19,694
-
(2,175)
14,296
68,914
989
65
-
(155)
-
899
246
-
(153)
-
992
847
72
-
(149)
770
41
-
(152)
659
47,593 903,106
67,861
51,981
-
(64,885)
(3,643)
-
(108)
(5,406)
34,581 961,918
44,012
30,583
-
(50,338)
(4,878)
(2,334)
-
(3,748)
12,492 997,304
-
-
2,213
-
80,410
33,149
8,504
(2,670)
2,213 119,393
36,325
980
(4,860)
-
159
(2,372)
- 151,838
193,813 475,198
189,244 500,089
73,500
74,556
67,516
68,752
129
332
32,368 842,524
12,492 845,465
Cost
Balance at 1 July 2019
Additions
Transfers
Disposals
Transfer to assets held for
sale
Balance at 30 June 2020
Additions
Transfers
Disposals
Transfer to assets held for
sale
Balance at 30 June 2021
Accumulated depreciation
and impairment
Balance at 1 July 2019
Depreciation expense
Impairment expense
Disposals
Balance at 30 June 2020
Depreciation expense
Impairment expense
Disposals
Balance at 30 June 2021
Net book value
As at 30 June 2020
As at 30 June 2021
C4
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 are 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
Depreciation is calculated on a straight-line or written down value basis over the estimated useful life of the
control is obtained.
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.
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 are tested for impairment at the lowest level Cash Generating Unit ("CGU"). Each
mature home is determined to be a separate CGU because it generates cash flows which are largely
independent of other assets.
The Group also assesses the indicators for impairment at each financial year end. If impairment indicators exist
an impairment test will be performed. The impairment test consists of comparing the recoverable amount of a
CGU against its carrying value. Recoverable amount is the higher of the CGU’s fair value less costs of disposal
and value in use. The carrying value is determined on a basis consistent with the way the recoverable amount of
the CGU is determined. The carrying value of the CGU represents those assets that can be attributed directly or
allocated on a reasonable and consistent basis.
Additionally, the Group assesses the residual values, useful lives and methods of depreciation of property, plant
and equipment and adjusts prospectively, if appropriate.
134 Estia Health | 2020-21 Annual Report
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Estia Health Annual Financial Report 2020 - 2021
64
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C4
PROPERTY, PLANT AND EQUIPMENT
Reconciliation of property, plant and equipment
Land
$'000
Buildings
Improvements
equipment
vehicles
in progress
$'000
$'000
$'000
$'000
$'000
Total
$'000
Note
Property
Furniture,
fixtures &
Motor
Construction
Cost
Additions
Transfers
Disposals
sale
Additions
Transfers
Disposals
sale
Balance at 1 July 2019
192,840 504,816
3,148
3,960
26,653
64,823
2,783
15,129
92,045
9,884
19,143
47,593 903,106
51,981
67,861
(64,885)
-
(885)
(445)
(46)
(2,112)
(155)
-
(3,643)
Transfer to assets held for
Balance at 30 June 2020
193,813 531,024
82,689
118,912
(5,250)
(48)
750
35,492
(28)
3,238
3,056
(131)
9,195
11,790
(2,232)
(108)
(5,406)
34,581 961,918
30,583
44,012
(50,338)
-
-
(3,748)
(153)
(2,334)
(4,878)
Transfer to assets held for
(3,748)
Balance at 30 June 2021
190,065 567,238
88,852
137,665
992
12,492 997,304
-
-
-
39,930
11,498
4,844
(445)
55,827
11,352
-
(30)
-
-
-
-
-
-
-
-
-
-
821
989
65
899
246
-
-
-
-
847
72
-
(149)
770
41
-
-
-
4,213
4,148
858
(30)
9,189
5,238
-
-
-
35,420
17,431
589
(2,046)
51,394
19,694
80,410
33,149
8,504
(2,670)
2,213
-
-
-
-
2,213 119,393
36,325
159
980
Balance at 30 June 2021
821
67,148
14,296
68,914
659
- 151,838
(131)
(2,175)
(152)
(2,372)
(4,860)
Accumulated depreciation
and impairment
Balance at 1 July 2019
Depreciation expense
Impairment expense
Disposals
Balance at 30 June 2020
Depreciation expense
Impairment expense
Disposals
B5
B5
B5
B5
Net book value
As at 30 June 2020
As at 30 June 2021
193,813 475,198
189,244 500,089
73,500
74,556
67,516
68,752
129
332
32,368 842,524
12,492 845,465
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C4
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 are 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.
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 are tested for impairment at the lowest level Cash Generating Unit ("CGU"). Each
mature home is determined to be a separate CGU because it generates cash flows which are largely
independent of other assets.
The Group also assesses the indicators for impairment at each financial year end. If impairment indicators exist
an impairment test will be performed. The impairment test consists of comparing the recoverable amount of a
CGU against its carrying value. Recoverable amount is the higher of the CGU’s fair value less costs of disposal
and value in use. The carrying value is determined on a basis consistent with the way the recoverable amount of
the CGU is determined. The carrying value of the CGU represents those assets that can be attributed directly or
allocated on a reasonable and consistent basis.
Additionally, the Group assesses the residual values, useful lives and methods of depreciation of property, plant
and equipment and adjusts prospectively, if appropriate.
Estia Health Annual Financial Report 2020 - 2021
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Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 135
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Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C4
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group capitalises costs relating to the construction and refurbishment of aged care facilities. The initial
capitalisation of costs is based on the Group’s judgement that the project is expected to generate future
economic benefits. Subsequent to determining the initial eligibility for capitalisation the Group reassesses on a
regular basis whether projects are still sufficiently probable of completion and expected to deliver desired
economic benefits.
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C5
INVESTMENT PROPERTIES
Balance at beginning of period
Transfer from property, plant and equipment
Fair value adjustments
Total investment properties
2021
$'000
1,500
(750)
-
750
2020
$'000
1,620
-
(120)
1,500
Investment properties comprise Independent Living Units ("ILUs") located in one retirement village 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.
in use.
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
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The fair value of investment properties of $750,000 (2020: $1,500,000) has been categorised as Level 3 based
on the inputs to the valuation technique used (see Note D6).
136 Estia Health | 2020-21 Annual Report
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Estia Health Annual Financial Report 2020 - 2021
66
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C4
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
C5
INVESTMENT PROPERTIES
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group capitalises costs relating to the construction and refurbishment of aged care facilities. The initial
capitalisation of costs is based on the Group’s judgement that the project is expected to generate future
economic benefits. Subsequent to determining the initial eligibility for capitalisation the Group reassesses on a
regular basis whether projects are still sufficiently probable of completion and expected to deliver desired
economic benefits.
Balance at beginning of period
Transfer from property, plant and equipment
Fair value adjustments
Total investment properties
2021
$'000
1,500
(750)
-
750
2020
$'000
1,620
-
(120)
1,500
Annual financial report
Investment properties comprise Independent Living Units ("ILUs") located in one retirement village 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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The fair value of investment properties of $750,000 (2020: $1,500,000) has been categorised as Level 3 based
on the inputs to the valuation technique used (see Note D6).
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 137
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Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C6
GOODWILL AND OTHER INTANGIBLE ASSETS
Book Cost
Balance at 1 July 2019
Additions
Disposals
Balance at 30 June 2020
Additions
Balance as at June 2021
Accumulated amortisation
Balance at 1 July 2019
Amortisation expense
Impairment
Disposals
Balance at 30 June 2020
Accumulated amortisation
Amortisation expense
Balance at 30 June 2021
Net book value
As at 30 June 2020
As at 30 June 2021
Goodwill
$'000
Bed licences
$'000
Software costs
$'000
Total
$'000
Note
B5
817,074
-
-
817,074
217,931
3,350
-
221,281
9,095
2,529
(94)
11,530
1,044,100
5,879
(94)
1,049,885
-
-
2,035
2,035
817,074
221,281
13,565
1,051,920
-
-
136,059
-
136,059
-
136,059
681,014
681,014
-
-
-
-
-
-
-
4,451
1,445
59
(94)
5,861
4,451
1,445
136,118
(94)
141,920
1,402
7,263
1,402
143,322
221,281
221,281
5,669
6,303
907,964
908,598
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C6
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 3- 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
The Accounting Policy for bed licences remains unchanged, where 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 licences 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 licences 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.
The current Government has stated its intention to abolish bed licence restrictions and the Aged Care Approval
Rounds (“ACAR”) from 1 July 2024. This proposal has the potential to impact the accounting value of bed
licences. At 30 June 2021, the Group recognises bed licences at a book value of $221,281,000, less an
associated deferred tax liability of $64,571,000 representing a net asset position of $156,710,000. Legislation
has not yet been drafted or passed to give effect to this intention and the exact nature of any changes to the
licencing regime remains uncertain at the date of this report. Until such time as any legislation is passed,
Approved Providers will still be required to own bed licences to be eligible for Government subsidies under the
Aged Care Act. As a result, the Group has determined that the bed licences continue to have an indefinite life
and the carrying value remains appropriate at the date of this report.
138 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot C6
GOODWILL AND OTHER INTANGIBLE ASSETS
Book Cost
Balance at 1 July 2019
Additions
Disposals
Additions
Balance as at June 2021
Accumulated amortisation
Balance at 1 July 2019
Amortisation expense
Impairment
Disposals
Balance at 30 June 2020
Accumulated amortisation
Amortisation expense
Balance at 30 June 2021
Net book value
As at 30 June 2020
As at 30 June 2021
Goodwill
Bed licences
Software costs
$'000
$'000
$'000
Total
$'000
Note
817,074
217,931
3,350
817,074
221,281
13,565
1,051,920
-
-
-
-
-
-
-
136,059
136,059
136,059
681,014
681,014
9,095
2,529
(94)
1,044,100
5,879
(94)
2,035
2,035
4,451
1,445
4,451
1,445
59
(94)
136,118
(94)
5,861
141,920
1,402
7,263
1,402
143,322
-
-
-
-
-
-
-
-
-
221,281
221,281
5,669
6,303
907,964
908,598
B5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
Annual financial report
Balance at 30 June 2020
817,074
221,281
11,530
1,049,885
The useful lives of intangible assets are assessed as either finite or indefinite.
C6
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.
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 3- 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
The Accounting Policy for bed licences remains unchanged, where 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 licences 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 licences 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.
The current Government has stated its intention to abolish bed licence restrictions and the Aged Care Approval
Rounds (“ACAR”) from 1 July 2024. This proposal has the potential to impact the accounting value of bed
licences. At 30 June 2021, the Group recognises bed licences at a book value of $221,281,000, less an
associated deferred tax liability of $64,571,000 representing a net asset position of $156,710,000. Legislation
has not yet been drafted or passed to give effect to this intention and the exact nature of any changes to the
licencing regime remains uncertain at the date of this report. Until such time as any legislation is passed,
Approved Providers will still be required to own bed licences to be eligible for Government subsidies under the
Aged Care Act. As a result, the Group has determined that the bed licences continue to have an indefinite life
and the carrying value remains appropriate at the date of this report.
Estia Health Annual Financial Report 2020 - 2021
67
Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 139
68
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C6
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
C7
RIGHT OF USE ASSETS AND LEASE LIABILITIES
Goodwill
The Group has lease agreements for various aged care facilities, office space and minor office equipment with
Goodwill is initially measured at cost and represents the excess of the total 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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group performs impairment testing on goodwill and intangible assets, such as bed licences, annually and
also when an impairment indicator(s) exist. The Group considers the relationship between its market
capitalisation and its net book value, among other factors, when reviewing for indicators of impairment.
For impairment testing purposes, goodwill and bed licences are allocated to a group of CGUs that represent the
lowest level within the Group at which these assets are monitored. This is consistent with the Group’s operating
segment identified in Note E5. The carrying value of the CGU was then compared against its recoverable
amount. The recoverable amount of the CGU was determined on a value-in-use calculation basis by discounting
cash flow projections approved by the Board and senior management that cover a five year period (2021 to
2025) after which a terminal value is applied. The valuations used to test carrying values are based on forward
looking assumptions which are uncertain. The forecasts also considered the impacts of COVID-19, including
potential outbreaks, during the forecast period.
The most sensitive assumptions used in the calculation of the value in use of the CGU are the discount rate and
long term growth rate. Sensitivity analysis on reasonably likely changes to these assumptions did not result in an
outcome where impairment would be required.
Discount rate of 9.3% was applied to the cash flow forecasts, including terminal value. This rate reflects the
current market assessments of the risks specific to the industry the CGU operates in, and also taking into
consideration the time value of money. The calculation of the rate is based on the specific circumstances of the
asset and is derived from its weighted average cost of capital.
Long term growth rate of 2.3% which reflects an assessment of inflation and perpetual growth using market
and economic data.
The discount and growth rates used at 30 June 2021 in assessing the recoverable amount are as follows:
Post-tax discount rate
Pre-tax discount rate
Long term growth rate
2021
%
9.3
12.5
2.3
2020
%
9.3
12.5
2.3
varying lease terms.
Right of use assets
As at 1 July 2020
Additions during the year
Depreciation expense
Interest expense
Lease payments
Remeasurement of leases
Property
Leases
$'000
66,992
(4,362)
-
-
-
(3,913)
58,717
Other
Equipment
$'000
145
532
(174)
-
-
-
503
Total
$'000
67,137
532
(4,536)
-
-
(3,913)
59,220
Lease
Liabilities
$'000
72,962
532
-
2,080
(6,371)
(4,081)
65,122
Total Right of use assets as at 30 June 2021
The Group had low value leases relating to office equipment such as printers and photocopiers. An amount of
$121,000 (2020: $122,000) was recognised as an expense during the period.
Under its lease agreements, the Group incurs variable lease payments in the form of expenditure in relation to
insurance, council and water rates, and water consumption. The Group recognised an amount of $477,900
(2020:$350,000) as an expense in the period.
SIGNIFICANT ACCOUNTING POLICY
In accordance with AASB 16, the Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
Right-of-use-assets
The Group recognises right-of-use assets at the commencement date of the lease (that is, the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred if any, and
lease payments made at or before the commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised
right-of use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the
lease term. Right-of-use assets are subject to impairment.
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION C:ASSETS & LIABILITIES (CONTINUED)
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
C6
Goodwill
Goodwill is initially measured at cost and represents the excess of the total 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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group performs impairment testing on goodwill and intangible assets, such as bed licences, annually and
also when an impairment indicator(s) exist. The Group considers the relationship between its market
capitalisation and its net book value, among other factors, when reviewing for indicators of impairment.
For impairment testing purposes, goodwill and bed licences are allocated to a group of CGUs that represent the
lowest level within the Group at which these assets are monitored. This is consistent with the Group’s operating
segment identified in Note E5. The carrying value of the CGU was then compared against its recoverable
amount. The recoverable amount of the CGU was determined on a value-in-use calculation basis by discounting
cash flow projections approved by the Board and senior management that cover a five year period (2021 to
2025) after which a terminal value is applied. The valuations used to test carrying values are based on forward
looking assumptions which are uncertain. The forecasts also considered the impacts of COVID-19, including
potential outbreaks, during the forecast period.
The most sensitive assumptions used in the calculation of the value in use of the CGU are the discount rate and
long term growth rate. Sensitivity analysis on reasonably likely changes to these assumptions did not result in an
outcome where impairment would be required.
Discount rate of 9.3% was applied to the cash flow forecasts, including terminal value. This rate reflects the
current market assessments of the risks specific to the industry the CGU operates in, and also taking into
consideration the time value of money. The calculation of the rate is based on the specific circumstances of the
asset and is derived from its weighted average cost of capital.
Long term growth rate of 2.3% which reflects an assessment of inflation and perpetual growth using market
and economic data.
The discount and growth rates used at 30 June 2021 in assessing the recoverable amount are as follows:
Post-tax discount rate
Pre-tax discount rate
Long term growth rate
2021
%
9.3
12.5
2.3
2020
%
9.3
12.5
2.3
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C7
RIGHT OF USE ASSETS AND LEASE LIABILITIES
The Group has lease agreements for various aged care facilities, office space and minor office equipment with
varying lease terms.
Right of use assets
As at 1 July 2020
Additions during the year
Depreciation expense
Interest expense
Lease payments
Remeasurement of leases
Total Right of use assets as at 30 June 2021
Property
Leases
$'000
Other
Equipment
$'000
66,992
-
(4,362)
-
-
(3,913)
58,717
145
532
(174)
-
-
-
503
Total
$'000
67,137
532
(4,536)
-
-
(3,913)
59,220
Lease
Liabilities
$'000
72,962
532
-
2,080
(6,371)
(4,081)
65,122
The Group had low value leases relating to office equipment such as printers and photocopiers. An amount of
$121,000 (2020: $122,000) was recognised as an expense during the period.
Under its lease agreements, the Group incurs variable lease payments in the form of expenditure in relation to
insurance, council and water rates, and water consumption. The Group recognised an amount of $477,900
(2020:$350,000) as an expense in the period.
SIGNIFICANT ACCOUNTING POLICY
In accordance with AASB 16, the Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
Right-of-use-assets
The Group recognises right-of-use assets at the commencement date of the lease (that is, the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred if any, and
lease payments made at or before the commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised
right-of use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the
lease term. Right-of-use assets are subject to impairment.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C7
RIGHT OF USE ASSETS AND LEASE LIABILITIES (CONTINUED)
C8
TRADE AND OTHER PAYABLES
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The
variable lease payments that do not depend on an index or a rate are recognised as expense in the period on
which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short term leases and leases of low value assets
The Group applies the short-term lease recognition exemption to its short-term leases of minor office equipment
(that is, those leases that have a lease term of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office
equipment that are considered of low value. Lease payments on short-term leases and leases of low-value
assets are recognised as an expense on a straight-line basis over the lease term.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In determining the lease term used to ascertain total future lease payments, the Group considers all facts and
circumstances that create an economic benefit to exercise an extension option. Renewal options are only
considered to be part of the lease term if the lease is reasonably certain to be extended. The Group has included
renewal periods as part of the lease term for all leases as it is reasonably certain these will be extended. This
assessment is reviewed if a significant event or change in circumstances occurs which affects this assessment
and is also within the control of the Group.
Where the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental borrowing
rate (IBR) to calculate the present value of future lease payments. The IBR is the interest rate that the lessee
would have to pay to borrow over a similar term of each lease. The Group estimates the IBR using market
interest rates and adjusts these rates to include the effect of the lessee's own stand alone credit rating.
Total trade and other payables
39,305
59,527
Current trade and other payables
Trade creditors
Payroll liabilities
Sundry creditors and accruals
Total current trade and other payables
C9
OTHER FINANCIAL LIABILITIES
Independent living unit (ILU) entry contributions
Total other financial liabilities
2021
$'000
13,692
15,723
9,890
39,305
2020
$'000
9,643
36,297
13,587
59,527
2021
$'000
508
508
2020
$'000
1,193
1,193
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.
SIGNIFICANT ACCOUNTING POLICY
ILU entry contributions are recognised at fair value through profit or loss with resulting fair value adjustments
recognised in profit or loss. Fair value is measured as the amount payable on demand and is measured as the
net of the principal amount at the point of entry, plus the resident's share in any increase or decrease in the
market value of the occupied ILU (for ILU contracts that contain a capital gain or loss share clause) and less any
deferred management fees that have accrued up to the reporting date.
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION C:ASSETS & LIABILITIES (CONTINUED)
Annual financial report
RIGHT OF USE ASSETS AND LEASE LIABILITIES (CONTINUED)
C7
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The
variable lease payments that do not depend on an index or a rate are recognised as expense in the period on
which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short term leases and leases of low value assets
The Group applies the short-term lease recognition exemption to its short-term leases of minor office equipment
(that is, those leases that have a lease term of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office
equipment that are considered of low value. Lease payments on short-term leases and leases of low-value
assets are recognised as an expense on a straight-line basis over the lease term.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In determining the lease term used to ascertain total future lease payments, the Group considers all facts and
circumstances that create an economic benefit to exercise an extension option. Renewal options are only
considered to be part of the lease term if the lease is reasonably certain to be extended. The Group has included
renewal periods as part of the lease term for all leases as it is reasonably certain these will be extended. This
assessment is reviewed if a significant event or change in circumstances occurs which affects this assessment
and is also within the control of the Group.
Where the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental borrowing
rate (IBR) to calculate the present value of future lease payments. The IBR is the interest rate that the lessee
would have to pay to borrow over a similar term of each lease. The Group estimates the IBR using market
interest rates and adjusts these rates to include the effect of the lessee's own stand alone credit rating.
C8
TRADE AND OTHER PAYABLES
Current trade and other payables
Trade creditors
Payroll liabilities
Sundry creditors and accruals
Total current trade and other payables
2021
$'000
13,692
15,723
9,890
39,305
2020
$'000
9,643
36,297
13,587
59,527
Total trade and other payables
39,305
59,527
C9
OTHER FINANCIAL LIABILITIES
Independent living unit (ILU) entry contributions
Total other financial liabilities
2021
$'000
508
508
2020
$'000
1,193
1,193
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.
SIGNIFICANT ACCOUNTING POLICY
ILU entry contributions are recognised at fair value through profit or loss with resulting fair value adjustments
recognised in profit or loss. Fair value is measured as the amount payable on demand and is measured as the
net of the principal amount at the point of entry, plus the resident's share in any increase or decrease in the
market value of the occupied ILU (for ILU contracts that contain a capital gain or loss share clause) and less any
deferred management fees that have accrued up to the reporting date.
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION C:ASSETS & LIABILITIES (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK
C10
PROVISIONS
Current provisions
Employee benefits
Non-current provisions
Employee benefits
Total provisions
2021
$'000
2020
$'000
59,962
52,678
6,059
66,021
5,155
57,833
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.
D1
REFUNDABLE ACCOMMODATION DEPOSITS AND BONDS
Current residents
Departed residents
Total refundable accommodation deposits and bonds - amounts received
2021
$'000
761,100
102,829
863,929
2020
$'000
736,402
99,902
836,304
The comparative period has been restated to correct an error in the split previously reported in the total balance between
Current and Departed residents as at 30 June 2020
Terms and conditions relating to Refundable Accommodation Deposits ("RADs") and Accommodation
Bonds ("Bonds")
legislated time frames.
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. 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
RADs 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, with the intention of ensuring it has sufficient liquidity, in the form
of cash or undrawn lines of credit, 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. 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.
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION C:ASSETS & LIABILITIES (CONTINUED)
C10
PROVISIONS
Current provisions
Employee benefits
Non-current provisions
Employee benefits
Total provisions
2021
$'000
2020
$'000
59,962
52,678
6,059
66,021
5,155
57,833
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.
SECTION D:CAPITAL, FINANCING, RADS AND RISK
D1
REFUNDABLE ACCOMMODATION DEPOSITS AND BONDS
Current residents
Departed residents
Total refundable accommodation deposits and bonds - amounts received
2021
$'000
761,100
102,829
863,929
2020
$'000
736,402
99,902
836,304
The comparative period has been restated to correct an error in the split previously reported in the total balance between
Current and Departed residents as at 30 June 2020
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. 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.
RADs 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, with the intention of ensuring it has sufficient liquidity, in the form
of cash or undrawn lines of credit, 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. 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.
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D2
LOANS AND BORROWINGS
Non-current loans and borrowings
Bank loans, secured
Total non-current loans and borrowings
D3
ISSUED CAPITAL AND RESERVES
2021
$'000
2020
$'000*
113,833
113,833
128,848
128,848
Issued and fully paid
Ordinary shares
Total share capital
2021
$'000
2020
$'000
803,459
803,459
803,397
803,397
* Directly attributable transaction costs are deducted from the initial carrying value of the bank loan and are amortised over the
term of the Facility. The amount deducted from carrying value in the period was $667,000 (30 June 2020: $1,152,000).
(a) Movements in ordinary shares on issue
At 30 June 2021, the Group had available $210,941,000 (2020:$197,152,000 ) of undrawn committed borrowing
facilities, which excludes $4,559,000 (2020: $4,000,000) of bank guarantees disclosed in Note E2.
Terms and conditions of loans
The Group has a syndicated debt facility ('Facility') with a number of major Australian banks. The Facility may be
used for general corporate purposes including funding acquisitions, capital expenditure, working capital
requirements and providing sufficient liquidity to redeem refundable accommodation deposits (RAD) or bonds.
The Facility is secured by real property mortgages and security interests over a majority of the freehold property,
and material leases, with 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 2021 was $330,000,000. In addition, the Facility has an
accordian feature which allows for the facility to be increased by an additional $170,000,000, subject to lender
participation and the satisfaction of specified terms and conditions of the accordian feature being satisfied. The
Facility will mature in November 2022. Refer to D5 interest Rate Risk for further details.
SIGNIFICANT ACCOUNTING POLICY
Borrowings are recognised initially at fair value. Directly attributable transaction costs are deducted from the
initial carrying value of the loan and these costs amortised over the term of the facility.
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.
Beginning of the financial year
261,271,914
803,397
260,602,749
801,843
Vesting of employee Performance Rights
23,055
2021
Number of
shares
2020
$'000
Number of
shares
$'000
-
-
-
62
-
-
-
669,165
1,507
-
-
-
-
41
6
261,294,969
803,459
261,271,914
803,397
The Group grants performance rights to some employees, including key management personnel, as part of their
remuneration. Upon vesting, the rights are equity settled by the issuance of ordinary shares in the Group. Refer
to Note D4 for further details of these plans. In July 2020, performance rights vested resulting in the issuance of
Dividend Reinvestment Plan
Transfers share-based payment reserve
Movement in management equity plan
End of the financial year
Ordinary shares have no par value per share.
23,055 ordinary shares in the Group.
Reclassification of prior period balance
13,683 performance rights vested in July 2019 and were not recorded and disclosed in the twelve-month period
ended 30 June 2020. The comparative period has now been reclassified to reflect the vesting of the
performance rights and the issuance of 13,693 ordinary shares in the Group.
(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 D4 for
further details of these plans.
(c) Franking credits
$19,087,000).
The franking credit balance of Estia Health Limited for the year ended 30 June 2021 is $27,843,000 (2020:
146 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D2
LOANS AND BORROWINGS
Non-current loans and borrowings
Bank loans, secured
Total non-current loans and borrowings
D3
ISSUED CAPITAL AND RESERVES
2021
$'000
2020
$'000*
113,833
113,833
128,848
128,848
Issued and fully paid
Ordinary shares
Total share capital
2021
$'000
2020
$'000
803,459
803,459
803,397
803,397
Annual financial report
At 30 June 2021, the Group had available $210,941,000 (2020:$197,152,000 ) of undrawn committed borrowing
facilities, which excludes $4,559,000 (2020: $4,000,000) of bank guarantees disclosed in Note E2.
Terms and conditions of loans
The Group has a syndicated debt facility ('Facility') with a number of major Australian banks. The Facility may be
used for general corporate purposes including funding acquisitions, capital expenditure, working capital
requirements and providing sufficient liquidity to redeem refundable accommodation deposits (RAD) or bonds.
The Facility is secured by real property mortgages and security interests over a majority of the freehold property,
and material leases, with 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 2021 was $330,000,000. In addition, the Facility has an
accordian feature which allows for the facility to be increased by an additional $170,000,000, subject to lender
participation and the satisfaction of specified terms and conditions of the accordian feature being satisfied. The
Facility will mature in November 2022. Refer to D5 interest Rate Risk for further details.
Borrowings are recognised initially at fair value. Directly attributable transaction costs are deducted from the
initial carrying value of the loan and these costs amortised over the term of the facility.
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.
* Directly attributable transaction costs are deducted from the initial carrying value of the bank loan and are amortised over the
term of the Facility. The amount deducted from carrying value in the period was $667,000 (30 June 2020: $1,152,000).
(a) Movements in ordinary shares on issue
Beginning of the financial year
Vesting of employee Performance Rights
Dividend Reinvestment Plan
Transfers share-based payment reserve
Movement in management equity plan
End of the financial year
Ordinary shares have no par value per share.
2021
Number of
shares
2020
$'000
Number of
shares
261,271,914
23,055
-
-
-
261,294,969
803,397
62
-
-
-
803,459
260,602,749
-
669,165
-
-
261,271,914
$'000
801,843
-
1,507
41
6
803,397
SIGNIFICANT ACCOUNTING POLICY
Reclassification of prior period balance
The Group grants performance rights to some employees, including key management personnel, as part of their
remuneration. Upon vesting, the rights are equity settled by the issuance of ordinary shares in the Group. Refer
to Note D4 for further details of these plans. In July 2020, performance rights vested resulting in the issuance of
23,055 ordinary shares in the Group.
13,683 performance rights vested in July 2019 and were not recorded and disclosed in the twelve-month period
ended 30 June 2020. The comparative period has now been reclassified to reflect the vesting of the
performance rights and the issuance of 13,693 ordinary shares in the Group.
(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 D4 for
further details of these plans.
(c) Franking credits
The franking credit balance of Estia Health Limited for the year ended 30 June 2021 is $27,843,000 (2020:
$19,087,000).
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 147
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Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D3
ISSUED CAPITAL AND RESERVES (CONTINUED)
(d) Dividends paid
There was no final dividend paid for the year ended 30 June 2020.
On 23 February 2021 the Directors resolved not to declare an interim dividend for the six-month period ended 31
December 2020. (2020:$14,098,838 at 5.4 cents per share)
On 24 August 2021 the Directors declared a final dividend for the year end 30 June 2021 of 2.30 cents per share
representing 100% of profit for the period of $5,998,000. (2020:nil)
(e) Dividend Reinvestment Plan (DRP)
The DRP allows eligible shareholders to reinvest all or part of their dividend distribution into shares. As there
was no dividend payable in FY21, there was no reinvestment through this program during the current or prior
period.
Whilst the Directors have announced a final dividend relating to FY21 which is payable in FY22, the DRP
program has been suspended at this time.
D4
SHARE-BASED PAYMENTS
At 30 June 2021, the Group had the following share-based payments arrangements:
The number of performance rights granted under the retention plan during the period ended 30 June 2021 was
(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 and dual listed NZX/ASX 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.
Unlike in previous years, Earnings Per Share (‘EPS’) was not included as a performance measure in the FY21
LTI, due to the challenges in setting appropriate three-year targets at the beginning of FY21. The FY21 LTI will
be entirely subject to relative Total Shareholder Return (‘TSR’) measures (consisting of two equally weighted
relative TSR performance measures with different comparator groups).
During the period the Group granted a total of 1,629,361 rights (2020: 824,290) to executives.
(b) Short-Term Incentive Plan (STIP)
In the comparison period, the STIP, awards were made to key managers and executives who have a significant
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.
D4
SHARE-BASED PAYMENTS (CONTINUED)
(b) Short-Term Incentive Plan (STIP) (continued)
Additionally, in the comparative period, 50% of the STIP was measured on a combined basis against EBITDA
and NPAT, as well as other role specific measures for the remaining 50%. Other role specific measures include
Lost Time Injury Frequency Rate reduction targets, organisational culture measures, delivery of efficiencies
through management of external financing, and developments in connection with clinical governance and risk
management processes
In the current period, due to the significant uncertainty around the impact of the COVID-19 pandemic and the
Royal Commission on the Company’s FY21 operational and financial performance, and the associated
challenges in setting meaningful FY21 performance targets, the Board decided not to operate a short-term
incentive (‘STI’) plan in FY21 for executive Key Management Personnel (‘KMP’).
The number of performance rights granted under the STIP during the year ended 30 June 2021 relating to the
incentive payments earned in the year ended 30 June 2020 was nil (2020: 23,055).
(c) Retention Plan ("RP')
Under the RP, awards in the form of performance rights, are made to key managers and executives to
encourage retention of their employment with the Group. The executive must remain employed with the Group
from the date the award is granted to the vesting date of the performance right. Upon successful vesting of the
performance rights, the executive is issued ordinary shares in the Group, equivalent to the number of
performance rights originally granted.
639,390 (2020:146,673).
(d) Management Equity Plan (MEP)
existing holders, it is no longer offered.
The MEP is a legacy plan which was approved by the Board and implemented prior to listing and other than for
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 2021. There has been no change since 30
June 2019.
Total
Number of MEP
Total amount
funded through MEP
Interest rate on MEP
shares
50,000
subscribed ($’000)
loans
100
100%
loan
5.95%
% of MEP Shares
All MEP shares listed above were released from escrow on 11 December 2017.
(e) Movements during the year
performance rights during the year:
The following tables illustrate the number and weighted-average exercise prices (WAEP) of, and movements in,
148 Estia Health | 2020-21 Annual Report
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Estia Health Annual Financial Report 2020 - 2021
78
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Annual financial report
ISSUED CAPITAL AND RESERVES (CONTINUED)
D3
(d) Dividends paid
There was no final dividend paid for the year ended 30 June 2020.
On 23 February 2021 the Directors resolved not to declare an interim dividend for the six-month period ended 31
December 2020. (2020:$14,098,838 at 5.4 cents per share)
On 24 August 2021 the Directors declared a final dividend for the year end 30 June 2021 of 2.30 cents per share
representing 100% of profit for the period of $5,998,000. (2020:nil)
(e) Dividend Reinvestment Plan (DRP)
The DRP allows eligible shareholders to reinvest all or part of their dividend distribution into shares. As there
was no dividend payable in FY21, there was no reinvestment through this program during the current or prior
Whilst the Directors have announced a final dividend relating to FY21 which is payable in FY22, the DRP
program has been suspended at this time.
period.
D4
SHARE-BASED PAYMENTS
(a) Long-Term Incentive Plan (LTIP)
At 30 June 2021, the Group had the following share-based payments arrangements:
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 and dual listed NZX/ASX 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.
Unlike in previous years, Earnings Per Share (‘EPS’) was not included as a performance measure in the FY21
LTI, due to the challenges in setting appropriate three-year targets at the beginning of FY21. The FY21 LTI will
be entirely subject to relative Total Shareholder Return (‘TSR’) measures (consisting of two equally weighted
relative TSR performance measures with different comparator groups).
During the period the Group granted a total of 1,629,361 rights (2020: 824,290) to executives.
(b) Short-Term Incentive Plan (STIP)
In the comparison period, the STIP, awards were made to key managers and executives who have a significant
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.
D4
SHARE-BASED PAYMENTS (CONTINUED)
(b) Short-Term Incentive Plan (STIP) (continued)
Additionally, in the comparative period, 50% of the STIP was measured on a combined basis against EBITDA
and NPAT, as well as other role specific measures for the remaining 50%. Other role specific measures include
Lost Time Injury Frequency Rate reduction targets, organisational culture measures, delivery of efficiencies
through management of external financing, and developments in connection with clinical governance and risk
management processes
In the current period, due to the significant uncertainty around the impact of the COVID-19 pandemic and the
Royal Commission on the Company’s FY21 operational and financial performance, and the associated
challenges in setting meaningful FY21 performance targets, the Board decided not to operate a short-term
incentive (‘STI’) plan in FY21 for executive Key Management Personnel (‘KMP’).
The number of performance rights granted under the STIP during the year ended 30 June 2021 relating to the
incentive payments earned in the year ended 30 June 2020 was nil (2020: 23,055).
(c) Retention Plan ("RP')
Under the RP, awards in the form of performance rights, are made to key managers and executives to
encourage retention of their employment with the Group. The executive must remain employed with the Group
from the date the award is granted to the vesting date of the performance right. Upon successful vesting of the
performance rights, the executive is issued ordinary shares in the Group, equivalent to the number of
performance rights originally granted.
The number of performance rights granted under the retention plan during the period ended 30 June 2021 was
639,390 (2020:146,673).
(d) 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 2021. There has been no change since 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.
(e) Movements during the year
The following tables illustrate the number and weighted-average exercise prices (WAEP) of, and movements in,
performance rights during the year:
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 149
78
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D4
SHARE-BASED PAYMENTS (CONTINUED)
(e) Movements during the year (continued)
Performance rights only
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Exercisable as at 30 June
2021
2020
Number
WAEP
Number
WAEP
1,526,515
2,268,751
(551,828)
(23,055)
3,220,383
-
-
-
-
-
1,536,396
994,018
(990,206)
(13,693)
1,526,515
-
-
-
-
-
The weighted average fair value of performance rights granted during the year was $0.67 (2020: $0.58).
LTIP-Recognition and measurement of fair value
(f) 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 reversal
Long-term incentive plan expense
Short-term incentive plan expense
Management equity plan expense
Share-based payments expense recognised in profit or loss
SIGNIFICANT ACCOUNTING POLICY
2021
$'000
(143)
1,116
-
12
985
2020
$'000
(121)
-
62
12
(47)
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.
D4
SHARE-BASED PAYMENTS (CONTINUED)
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
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted
or loss.
earnings per share.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
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, 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.
Retention Performance (RP) rights were introduced in the FY21 plan.
Assumption
FY21 Plan
FY20 Plan
FY19 Plan
Share price at grant date
Dividend yield
Volatility
Risk free rate
Probability of achieving EPS
Fair value of right - EPS
Fair Value of right - RP
$1.29
4.0%
47%
0.8%
N/A
N/A
$1.21
$2.71
3.0%
30%
0.7%
10%
$2.50
$2.19
5.0%
38%
2.0%
40%
$1.92
Fair value of right - TSR
$0.35 - $0.70
$0.68 - $0.76
$0.46 - $0.47
STIP-Recognition and measurement of fair value
The fair value of the performance rights issued under the STIP are determined at grant date. The number of
shares issued are determined by 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 $2.71 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.
150 Estia Health | 2020-21 Annual Report
Estia Health Annual Financial Report 2020 - 2021
79
Estia Health Annual Financial Report 2020 - 2021
80
Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot Annual financial report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D4
SHARE-BASED PAYMENTS (CONTINUED)
(e) Movements during the year (continued)
Performance rights only
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Exercisable as at 30 June
2021
2020
Number
WAEP
Number
WAEP
1,526,515
2,268,751
(551,828)
(23,055)
3,220,383
-
-
-
-
-
1,536,396
994,018
(990,206)
(13,693)
1,526,515
-
-
-
-
-
D4
SHARE-BASED PAYMENTS (CONTINUED)
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
The weighted average fair value of performance rights granted during the year was $0.67 (2020: $0.58).
LTIP-Recognition and measurement of fair value
(f) Expense recognised in profit or loss
arrangements were as follows:
The share-based payments expense recognised in profit or loss as an employee benefit for each of the share
2021
$'000
(143)
1,116
-
12
985
2020
$'000
(121)
-
62
12
(47)
Long-term incentive plan reversal
Long-term incentive plan expense
Short-term incentive plan expense
Management equity plan expense
Share-based payments expense recognised in profit or loss
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.
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, 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.
Retention Performance (RP) rights were introduced in the FY21 plan.
Assumption
FY21 Plan
FY20 Plan
FY19 Plan
Share price at grant date
Dividend yield
Volatility
Risk free rate
Probability of achieving EPS
$1.29
4.0%
47%
0.8%
N/A
$2.71
3.0%
30%
0.7%
10%
$2.19
5.0%
38%
2.0%
40%
Fair value of right - TSR
$0.35 - $0.70
$0.68 - $0.76
$0.46 - $0.47
Fair value of right - EPS
Fair Value of right - RP
N/A
$1.21
$2.50
$1.92
STIP-Recognition and measurement of fair value
The fair value of the performance rights issued under the STIP are determined at grant date. The number of
shares issued are determined by 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 $2.71 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.
Estia Health Annual Financial Report 2020 - 2021
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Estia Health Annual Financial Report 2020 - 2021
2020-21 Annual Report | Estia Health 151
80
Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities consist of interest-bearing loans and borrowings, trade and other
payables, Refundable Accommodation Deposits and lease liabilities. 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 Group is not exposed to commodity, equity risks or currency risk.
The sensitivity analyses in the following sections relate to the position as at 30 June 2021 and 30 June 2020.
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 2021 and 30 June 2020.
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 2021
and 30 June 2020.
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
2021
%
0.6
1.5
2.3
2020
%
1.1
1.4
2.9
Fixed or
Floating
Floating
Floating
Floating
The details of debt are disclosed in Note D2 to the financial statements.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
D5
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:
Effect on profit before tax
Higher or (lower)
Effect on equity
Higher or (lower)
2021
$'000
(141)
141
2020
$'000
(174)
174
2021
$'000
(98)
98
2020
$'000
(122)
122
+0.25% (25 basis points)
-0.25% (25 basis points)
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 maximum loss is equal to the carrying amount of the asset. The Group
is exposed to credit risk from customer receivables and from its deposits with banks.
Approximately 76% (2020: 75%) of the revenue of the Group is obtained from Commonwealth Government
funding. This funding is maintained for providers as long as they continue to comply with Accreditation standards
and other requirements per the Aged Care Act.
Trade and other receivables
Customer credit risk is managed subject to an established Group policy which requires the regular monitoring
and follow up of outstanding customer receivables.
The Group limits its exposure to credit risk by establishing a maximum payment period of 30 days, and where
possible, setting customers up to settle accounts via direct debit.
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 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 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 these receivables.
The following table provides information about the expected credit losses for trade receivables, excluding the
Commonwealth Government balance of $3,317,000 at 30 June 2021 (2020: $3,323,000):
152 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Annual financial report
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities consist of interest-bearing loans and borrowings, trade and other
payables, Refundable Accommodation Deposits and lease liabilities. 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 Group is not exposed to commodity, equity risks or currency risk.
The sensitivity analyses in the following sections relate to the position as at 30 June 2021 and 30 June 2020.
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 2021 and 30 June 2020.
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 2021
and 30 June 2020.
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
The details of debt are disclosed in Note D2 to the financial statements.
Weighted average effective
interest rates
2021
%
0.6
1.5
2.3
2020
%
1.1
1.4
2.9
Fixed or
Floating
Floating
Floating
Floating
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
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 or (lower)
Effect on equity
Higher or (lower)
2021
$'000
(141)
141
2020
$'000
(174)
174
2021
$'000
(98)
98
2020
$'000
(122)
122
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 maximum loss is equal to the carrying amount of the asset. The Group
is exposed to credit risk from customer receivables and from its deposits with banks.
Approximately 76% (2020: 75%) of the revenue of the Group is obtained from Commonwealth Government
funding. This funding is maintained for providers as long as they continue to comply with Accreditation standards
and other requirements per the Aged Care Act.
Trade and other receivables
Customer credit risk is managed subject to an established Group policy which requires the regular monitoring
and follow up of outstanding customer receivables.
The Group limits its exposure to credit risk by establishing a maximum payment period of 30 days, and where
possible, setting customers up to settle accounts via direct debit.
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 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 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 these receivables.
The following table provides information about the expected credit losses for trade receivables, excluding the
Commonwealth Government balance of $3,317,000 at 30 June 2021 (2020: $3,323,000):
Estia Health Annual Financial Report 2020 - 2021
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Credit risk (continued)
D5
Liquidity risk
At 30 June 2021
Current
<30 days
30-60 days
61-90 days
>90 days
Total
At 30 June 2020
Current
<30 days
30-60 days
61-90 days
>90 days
Total
Expected
credit loss
rate
%
Gross
carrying
amount
$'000
Expected
credit loss
$'000
6%
17%
27%
36%
85%
36%
1,603
453
229
144
1,191
3,620
99
76
62
52
1,008
1,297
Expected
credit loss
rate
%
Gross
carrying
amount
$'000
Expected
credit loss
$'000
6%
16%
22%
20%
81%
38%
1,892
533
388
465
2,033
5,311
110
84
85
93
1,640
2,012
During the year, the Group has focused on the recovery of aged debt. This action has resulted in a significant
reduction in the gross carrying amount as well as a moderate change in the aging profile distribution. There has
been no change to the underlying methodology or approach to the calculation of expected credit loss.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
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.
On demand
12 months 1 to 5 years
Less than
More than 5
$'000
$'000
$'000
years
$'000
Total
$'000
Year ended 30 June 2021
Trade and other payables
Loans and borrowings
Refundable accommodation deposits
837
36,960
114,500
and bonds
Other financial liabilities
Lease liabilities
Total Commitments
Year ended 30 June 2020
Trade and other payables
Loans and borrowings
bonds
Other financial liabilities
Lease liabilities
Total Commitments
-
-
-
-
863,929
508
865,274
836,304
1,193
838,423
6,005
42,965
20,335
134,835
59,950
59,950
-
-
-
-
-
-
-
-
-
-
-
-
6,123
64,724
22,102
152,102
67,225
67,225
-
-
-
-
-
-
-
-
37,797
114,500
863,929
508
86,290
1,103,024
59,527
130,000
836,304
1,193
95,450
1,122,474
Refundable accommodation deposits and
926
58,601
130,000
154 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Annual financial report
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
D5
Credit risk (continued)
Expected
credit loss
Gross
carrying
amount
$'000
Expected
credit loss
$'000
rate
%
6%
17%
27%
36%
85%
36%
rate
%
6%
16%
22%
20%
81%
38%
Expected
credit loss
Gross
carrying
amount
$'000
Expected
credit loss
$'000
1,603
453
229
144
1,191
3,620
1,892
533
388
465
2,033
5,311
99
76
62
52
1,008
1,297
110
84
85
93
1,640
2,012
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
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.
On demand
Less than
12 months 1 to 5 years
More than 5
years
$'000
$'000
$'000
$'000
Total
$'000
Year ended 30 June 2021
Trade and other payables
Loans and borrowings
Refundable accommodation deposits
and bonds
Other financial liabilities
Lease liabilities
Total Commitments
Year ended 30 June 2020
Trade and other payables
Loans and borrowings
Refundable accommodation deposits and
bonds
Other financial liabilities
Lease liabilities
Total Commitments
837
-
863,929
508
-
865,274
926
-
836,304
1,193
-
838,423
36,960
-
-
-
6,005
42,965
58,601
-
-
-
6,123
64,724
-
114,500
-
-
20,335
134,835
-
130,000
-
-
22,102
152,102
-
-
37,797
114,500
-
-
59,950
59,950
863,929
508
86,290
1,103,024
-
-
59,527
130,000
-
-
67,225
67,225
836,304
1,193
95,450
1,122,474
At 30 June 2021
Current
<30 days
30-60 days
61-90 days
>90 days
Total
At 30 June 2020
Current
<30 days
30-60 days
61-90 days
>90 days
Total
During the year, the Group has focused on the recovery of aged debt. This action has resulted in a significant
reduction in the gross carrying amount as well as a moderate change in the aging profile distribution. There has
been no change to the underlying methodology or approach to the calculation of expected credit loss.
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 155
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Tax Transparency ReportCorporate GovernanceOur BoardAnnual Financial ReportAdditional InformationDirectory of Estia Health Homes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
D6
FAIR VALUE MEASUREMENT
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 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. Any unremedied 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 2021.
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 uses fair value for Investment Properties, which are
valued using Level 3 inputs. The Group's Investment Properties represent Independent Living Units ("ILU")
which are occupied by residents who have contributed a non-interest-bearing loan to occupy the ILU. The
resident vacates the property based on the applicable State-based Retirement Village Acts.
During the period, residents vacated two properties. The Group elected to use these properties for the provision
of residential aged care services and transferred the properties into its control at an amount equivalent to its fair
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
value of $750,000.
unobservable.
Date of Valuation
Level 1
Level 2
Level 3
Total
$'000
750
1,500
Fair value measurement using
$'000
$'000
-
-
-
-
$'000
750
1,500
Investment properties
30 June 2021
30 June 2020
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
At the reporting date, the key unobservable inputs used by the Group in determining the fair value of its
investment properties are summarised below:
Committee.
Unobservable inputs
Discount rate
Growth rate
Cash flow term (years)
30 June 2021 30 June 2020
16.50%
2.50%
50
15.00%
2.85%
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.
156 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot D5
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 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. Any unremedied 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 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
D6
FAIR VALUE MEASUREMENT
Annual financial report
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 uses fair value for Investment Properties, which are
valued using Level 3 inputs. The Group's Investment Properties represent Independent Living Units ("ILU")
which are occupied by residents who have contributed a non-interest-bearing loan to occupy the ILU. The
resident vacates the property based on the applicable State-based Retirement Village Acts.
During the period, residents vacated two properties. The Group elected to use these properties for the provision
of residential aged care services and transferred the properties into its control at an amount equivalent to its fair
value of $750,000.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
Date of Valuation
Investment properties
30 June 2021
30 June 2020
Total
$'000
750
1,500
Fair value measurement using
Level 1
Level 2
Level 3
$'000
$'000
-
-
-
-
$'000
750
1,500
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 2021 30 June 2020
16.50%
2.50%
50
15.00%
2.85%
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.
Estia Health Annual Financial Report 2020 - 2021
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2020-21 Annual Report | Estia Health 157
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION E: OTHER INFORMATION
D6
FAIR VALUE MEASUREMENT (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
The Group measures its 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.
E1
year.
RELATED PARTY DISCLOSURES
Note E6 provides the information about the Group’s structure including the details of the subsidiaries and the
holding company. Note D4 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
The table below discloses the compensation recognised as an expense during the reporting period related to
Key Management Personnel.
Share based payments include expenses recognised under the Retention Bonus scheme.
2021
$'000
2,490
119
580
3,189
2020
$'000
2,455
125
(133)
2,447
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation of key management personnel
COMMITMENTS AND CONTINGENCIES
E2
Capital commitments
During the year, the Group entered into contracts relating to the development of aged care homes. As at 30
June 2021, the remaining capital commitments amounted to $5,547,000 (2020: $20,238,000).
Bank guarantees
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 $4,559,000 (2020: $4,000,000). These are secured against the
borrowing facilities disclosed in Note D2. As at the date of signing this report, there are no calls against these
158 Estia Health | 2020-21 Annual Report
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Chairman and CEO messageSector TrendsKey HighlightsExecutive TeamOur ApproachOur StrategySustainabilityProgress Snapshot NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION D:CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION E: OTHER INFORMATION
D6
FAIR VALUE MEASUREMENT (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
The Group measures its 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.
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 D4 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.
Share based payments include expenses recognised under the Retention Bonus scheme.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation of key management personnel
E2
COMMITMENTS AND CONTINGENCIES
2021
$'000
2,490
119
580
3,189
2020
$'000
2,455
125
(133)
2,447
Capital commitments
During the year, the Group entered into contracts relating to the development of aged care homes. As at 30
June 2021, the remaining capital commitments amounted to $5,547,000 (2020: $20,238,000).
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 $4,559,000 (2020: $4,000,000). These are secured against the
borrowing facilities disclosed in Note D2. As at the date of signing this report, there are no calls against these
guarantees.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION E: OTHER INFORMATION (CONTINUED)
SECTION E: OTHER INFORMATION (CONTINUED)
E3
AUDITOR REMUNERATION
Fees to the auditor for statutory financial report
Fees for assurance services that are not required by legislation to be provided by
the auditor
Fees for other services - Tax Compliance
Total auditor remuneration
The auditor of Estia Health Limited and its subsidiaries is Ernst & Young.
E4
SUBSEQUENT EVENTS
2021
$'000
723
17
93
833
2020
$'000
800
16
88
904
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.
E6
Name
1.
2.
3.
4.
INFORMATION RELATING TO SUBSIDIARIES
The consolidated financial statements of the Group include:
Estia Finance Proprietary Limited
Estia Investments Proprietary Limited
Kenna Investments Proprietary Limited
Hayville Proprietary Limited
Camden Village Proprietary Limited
Kilbride Village Proprietary Limited
Country of
% Equity Interest
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
2021
100%
100%
100%
100%
100%
100%
2020
100%
100%
100%
100%
100%
100%
Principal activities
Estia Health Limited : Holding company.
Estia Finance Pty Limited: Holder of financing facilities.
Estia Investments Pty Limited: Current Approved Provider under the Aged Care Act.
All entities are holders of assets accept for Estia Finance Pty Limited.
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FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION E: OTHER INFORMATION (CONTINUED)
SECTION E: OTHER INFORMATION (CONTINUED)
Annual financial report
E3
AUDITOR REMUNERATION
Fees to the auditor for statutory financial report
Fees for assurance services that are not required by legislation to be provided by
the auditor
Fees for other services - Tax Compliance
Total auditor remuneration
The auditor of Estia Health Limited and its subsidiaries is Ernst & Young.
2021
$'000
723
17
93
833
2020
$'000
800
16
88
904
SUBSEQUENT EVENTS
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.
E4
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.
E6
INFORMATION RELATING TO SUBSIDIARIES
The consolidated financial statements of the Group include:
Name
Country of
% Equity Interest
Estia Finance Proprietary Limited
Estia Investments Proprietary Limited
Kenna Investments Proprietary Limited
Hayville Proprietary Limited
Camden Village Proprietary Limited
Kilbride Village Proprietary Limited
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
2021
100%
100%
100%
100%
100%
100%
2020
100%
100%
100%
100%
100%
100%
Principal activities
1.
Estia Health Limited : Holding company.
2.
3.
4.
Estia Finance Pty Limited: Holder of financing facilities.
Estia Investments Pty Limited: Current Approved Provider under the Aged Care Act.
All entities are holders of assets accept for Estia Finance Pty Limited.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION E: OTHER INFORMATION (CONTINUED)
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
(Loss) or profit of the parent entity
Total comprehensive (loss) or income of the parent entity
2021
$'000
2020
$'000
561,581
570,398
1,131,979
559,796
570,406
1,130,202
-
455,670
455,670
676,309
803,459
2,629
(129,779)
676,309
-
454,623
454,623
675,579
803,356
1,747
(129,524)
675,579
(206)
(206)
(104,992)
(104,992)
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 which are carried
at cost.
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 28th June
2021 with the following entities:
•
•
•
•
•
•
Estia Finance Proprietary Limited
Estia Investments Proprietary Limited
Kenna Investments Proprietary Limited
Hayville Proprietary Limited
Camden Village Proprietary Limited
Kilbride Village Proprietary Limited
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 ASIC Instrument 2016/785, relief has been granted to these entities from the Corporations Act 2001
requirements for the preparation, audit and lodgement of their financial reports.
PARENT ENTITY INFORMATION (CONTINUED)
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
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.
E7
group.
E8
•
•
E9
CHANGES IN ACCOUNTING POLICY
Changes in accounting policy, disclosures, standards and interpretations
The accounting policies adopted in preparation of the full year consolidated financial statements are consistent
with those followed in the preparation of the Group’s financial statements for the year ended 30 June 2020,
except for the adoption of amendments to standards effective as of 1 July 2020.
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is
not yet effective.
Configuration or Customisation Costs in a Cloud Computing Arrangement
In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision for configuration and
customisation costs incurred related to implementing Software as a Service (SaaS) arrangements. The Group is
currently assessing the impact of the agenda decision on its current accounting policy, which may result in
previously capitalised costs needing to be recognised as an expense.
The process to quantify the impact of the decision is presently ongoing. An internal project team has been
appointed to determine the impact ahead of the release of the Groups interim reporting for the period ended 31
At the date of this report, the impact of the IFRIC agenda decision on the Group/Company is not reasonably
December 2021.
estimable
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
SECTION E: OTHER INFORMATION (CONTINUED)
SECTION E: OTHER INFORMATION (CONTINUED)
Annual financial report
2021
$'000
2020
$'000
561,581
570,398
559,796
570,406
1,131,979
1,130,202
-
455,670
455,670
676,309
803,459
2,629
(129,779)
676,309
-
454,623
454,623
675,579
803,356
1,747
(129,524)
675,579
(206)
(206)
(104,992)
(104,992)
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
2021 with the following entities:
•
•
•
•
•
•
Estia Finance Proprietary Limited
Estia Investments Proprietary Limited
Kenna Investments Proprietary Limited
Hayville Proprietary Limited
Camden Village Proprietary Limited
Kilbride Village Proprietary Limited
(Loss) or profit of the parent entity
Total comprehensive (loss) or income of the parent entity
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 which are carried
at cost.
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 28th June
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 ASIC Instrument 2016/785, relief has been granted to these entities from the Corporations Act 2001
requirements for the preparation, audit and lodgement of their financial reports.
E7
PARENT ENTITY INFORMATION (CONTINUED)
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.
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
CHANGES IN ACCOUNTING POLICY
Changes in accounting policy, disclosures, standards and interpretations
The accounting policies adopted in preparation of the full year consolidated financial statements are consistent
with those followed in the preparation of the Group’s financial statements for the year ended 30 June 2020,
except for the adoption of amendments to standards effective as of 1 July 2020.
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is
not yet effective.
Configuration or Customisation Costs in a Cloud Computing Arrangement
In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision for configuration and
customisation costs incurred related to implementing Software as a Service (SaaS) arrangements. The Group is
currently assessing the impact of the agenda decision on its current accounting policy, which may result in
previously capitalised costs needing to be recognised as an expense.
The process to quantify the impact of the decision is presently ongoing. An internal project team has been
appointed to determine the impact ahead of the release of the Groups interim reporting for the period ended 31
December 2021.
At the date of this report, the impact of the IFRIC agenda decision on the Group/Company is not reasonably
estimable
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DIRECTORS' DECLARATION
SECTION E: OTHER INFORMATION (CONTINUED)
E9
CHANGES IN ACCOUNTING POLICY (CONTINUED)
New and Amended Accounting Standards and Interpretations
The adoption of amendments and revisions to accounting pronouncements applicable from 1 July 2020,
including the change in definition of a business under the amendments to AASB 3 ‘Business Combinations’,
revisions to the Conceptual Framework for Financial Reporting and definition of materiality did not have a
significant impact on the Group’s Financial Statements.
Standards issued but not yet effective
A number of other accounting standards and interpretations, have been issued and will be applicable in future
periods. While these remain subject to ongoing assessment, no significant impacts have been identified to date.
These standards have not been applied in the preparation of these Financial Statements.
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 2021
are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of
its performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
(b)
the financial statements and notes also comply with International Financial Reporting Standards as
(c)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
disclosed in Note A3; and
become due and payable; and
(d)
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.
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 2021.
On behalf of the Board
Dr. Gary H Weiss AM
Chairman
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FOR THE YEAR ENDED 30 JUNE 2021
Annual financial report
SECTION E: OTHER INFORMATION (CONTINUED)
E9
CHANGES IN ACCOUNTING POLICY (CONTINUED)
New and Amended Accounting Standards and Interpretations
The adoption of amendments and revisions to accounting pronouncements applicable from 1 July 2020,
including the change in definition of a business under the amendments to AASB 3 ‘Business Combinations’,
revisions to the Conceptual Framework for Financial Reporting and definition of materiality did not have a
significant impact on the Group’s Financial Statements.
Standards issued but not yet effective
A number of other accounting standards and interpretations, have been issued and will be applicable in future
periods. While these remain subject to ongoing assessment, no significant impacts have been identified to date.
These standards have not been applied in the preparation of these Financial Statements.
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 2021
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 2021 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;
(b)
(c)
(d)
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.
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 2021.
On behalf of the Board
Dr. Gary H Weiss AM
Chairman
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8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor’s Report to the Members of Estia Health Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Estia Health Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2021, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and
of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We
have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
report section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial report. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the accompanying financial report.
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Annual financial report
Carrying value of goodwill and bed licences
Why significant
How our audit addressed the key audit matter
At 30 June 2021 the Group’s goodwill and bed
licences balance was $902 million which
represents 48% of total assets.
We assessed the appropriateness of the allocation
of goodwill and bed licences to the Group and
composition of the carrying amount of the CGU.
The Group reviews the carrying amount of
goodwill and bed licences annually, or more
frequently, if impairment indicators are present.
Involving our valuation specialists, we assessed
the key assumptions underlying the discounted
cash flow valuation. In doing so, we:
The group of cash generating units (CGUs) to
which goodwill and bed licences can be allocated
is consistent with the operating segment as
identified and disclosed in Note E5, which is the
whole Group.
The Group has used a discounted cash flow
model to estimate the value in use of the assets.
The estimates are based on conditions existing
as at 30 June 2021. The impairment analysis
was considered a key audit matter due to the
process to estimate the recoverable amount
significant
being
judgement
the
continued effects of COVID-19.
including consideration of
complex and
requiring
The Group has disclosed in note C6 to the
consolidated financial report the assessment
method, including the significant underlying
assumptions, the results of the assessment and
impairment loss as well as the impact of applying
sensitivities.
•
Tested the mathematical accuracy of the
discounted cash flow model;
• Assessed key assumptions such as Board-
approved forecast cash flows, including
working capital levels and cash flows related
to refundable accommodation deposits;
• Assessed the impact of COVID-19 based on
conditions existing and emerging at 30 June
2021 on cash flow forecast of revenues,
operating costs and the effect of changes in
residency mix;
• Assessed the Group’s current year actual
results in comparison to prior year forecasts
to assess forecasting accuracy;
• Assessed the Group’s assumptions for
terminal growth rates in the discounted cash
flow model in comparison to economic and
industry forecasts;
• Assessed the adequacy of the estimated
maintenance capital expenditure with
reference to historical data;
• Assessed the impact of the announcements
by the Government in response to
recommendations from the Royal Commission
into Aged Care Quality and Safety (“Royal
Commission’), including their intention to
abolish the Aged Care Allocation Round and
associated supply restrictions on bed
licences, noting that legislation has not yet
been drafted or passed to give effect to this
intention and the exact nature of any changes
to the licencing regime remained uncertain as
at 30 June 2021.
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Why significant
How our audit addressed the key audit matter
• Assessed the discount rate through
comparing the weighted average cost of
capital for the Group with comparable
businesses including the potential impacts of
the government response to Royal
Commission recommendations,
announcement to abolish the Aged Care
Allocation Round and COVID-19;
Considered earnings multiples of comparable
businesses as a valuation cross check to the
Group’s determination of recoverable
amount.
Performed sensitivity analysis in respect of
the assumptions noted above to ascertain the
extent of changes in those assumptions which
either individually or collectively would
materially impact the recoverable amount of
the CGU and we assessed the likelihood of
these changes in assumptions arising;
•
•
• Assessed the adequacy of the Group’s
disclosures of the key assumptions to which
the outcome of the impairment test is most
sensitive; that is, those that have the most
significant effect on the determination of the
recoverable amount of goodwill and bed
licences.
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Annual financial report
Construction in Progress
Why significant
How our audit addressed the key audit matter
Our audit procedures included the following:
• Agreed a sample of additions to supporting
evidence and assessed the nature of amounts
capitalised;
•
Evaluated key assumptions applied and
estimates made for amounts capitalised,
including the feasibility of the project, the
stage of the projects in the development
phase and the measurement and
completeness of costs included;
• Assessed whether costs were transferred to
appropriate asset categories when ready for
use on a timely basis and that the relevant
depreciation or amortisation rates were
applied;
•
Considered whether there were any indicators
of impairment present after examining the
business case documentation of development
projects, any impacts of COVID-19 on
management adhering to the construction
development timeline, enquiries of executives
responsible for management of the projects
and comparing the cost of development to
forecasts;
• Assessed the key inputs in the determination
of value in use of ongoing projects under
construction and performed sensitivity
analysis in respect of these inputs;
• Assessed the adequacy of the Group’s
disclosures regarding the timing that costs
are recognised as an asset and the
deprecation rates applied to each asset
category.
Costs incurred during the year that were
capitalised to Construction in Progress
amounted to $31 million. This represents
costs of development projects and
significant refurbishments of existing aged
care facilities.
for
The specific criteria to be met
in
capitalisation of development costs
accordance with Australian Accounting
Standards involves judgement, including
the feasibility of the project, intention and
ability to complete the construction, ability
to use or sell the assets, generation of
future economic benefits and the ability to
measure the costs reliably.
In addition, as a result of COVID-19, the
Group
ongoing
reassessed whether
projects remained feasible and therefore,
likely to be completed. This resulted in
further assessments of the recoverability
of costs already incurred and capitalised. In
the case of construction
in progress,
determining the recoverable amounts of
requires
projects under development
of
use
additional
assumptions which are affected by future
economic
market
developments.
judgement
conditions
and
or
Costs are transferred to asset categories
based on management’s assessment of
whether an asset
is ready for use.
Depreciation rates are applied based on the
asset category.
Construction in Progress was considered a
key audit matter due to the quantum of the
balance and
in
judgement
applying the capitalisation criteria and
undertaking the impairment analysis. The
Group has disclosed in Note C4 to the
consolidated
the
financial
capitalisation policy.
required
report
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Revenue Recognition
Why significant
Revenue is generated primarily through two
sources, being Government Subsidies and
Resident Billings. Both sources are subject to
strict legislation, detailing the rates and charges
that the Group receives for each resident.
from
resident billings
Income derived
is
recognised as billed within the relevant month.
Subsidies received from the Department of Health
vary depending on a number of factors, including
the resident’s financial means and level of care.
The Group also received a temporary funding
increase and COVID-19 related supplements
which have been recognised in the year ended 30
June 2021.
The Group raises a government revenue accrual
at year-end to recognise any differences between
the monies received by Medicare at the start of
the month (June) and additional monies the Group
is entitled to arising from variations in resident
occupancy levels or associated rates during June.
Revenue was considered a key audit matter given
the effect of strict legislation, adjustment in rates
by government from time to time, and the volume
of transactions with residents and government.
Group’s
The
and
disaggregation policies have been disclosed in
note B1 to the consolidated financial report.
recognition
revenue
How our audit addressed the key audit
matter
We evaluated the effectiveness of key
controls in relation to the capture and
measurement of revenue transactions across
all material revenue streams. In particular,
we undertook the following procedures:
• Assessed whether ACFI assessments
were prepared by an authorised person,
and were calculated based on resident
care assessments;
•
•
•
Compared the government revenue
recognised to payments received;
Tested whether resident revenue agreed
to agreements, legislated billing rates,
and payments received;
Tested whether the application of the
Daily Care Fee incorporated rate
increases;
• Assessed whether resident additional
service fees changes were approved and
whether billing rates were correct.
We performed the following other audit
procedures in relation to revenue:
•
•
Compared the revenue accrual to actual
occupancy rates;
Tested whether the revenue recognised
related to performance obligations
satisfied within the year;
• Assessed whether the COVID-19 support
supplements received by the Group
during the year related to performance
obligations already satisfied within the
year;
• Assessed the appropriateness of the
financial statement disclosures in
relation to the Group’s revenue
recognition and disaggregation policies.
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Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2021 Annual Report other than the financial report and our auditor’s report
thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date
of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the
date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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► Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
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Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 98 to 110 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Estia Health Limited for the year ended 30 June 2021,
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
24 August 2021
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Our Strategy
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Annual financial report
Disclaimer
Acknowledgement
Forward-looking statements
Thank you to all the residents and employees who
feature in this report.
Estia Health acknowledges the Traditional Custodians
of the lands throughout Australia in which we operate
and pays its respects to elders both past, present
and emerging. We recognise their rich cultures
and continuing connection to land and waters.
Aboriginal and Torres Strait Islander peoples are
advised that this document may contain names and
images of people who are deceased. All references
to Indigenous people in this document are intended
to include Aboriginal and/or Torres Strait Islander
people.
Photography
Many of the photographs featured in this report were
taken prior to or whilst the need for social distancing,
wearing of masks and other Personal Protective
Equipment (PPE), was not a requirement.
Reliance on third party information
This report may contain information that has been
derived from publicly available sources that have not
been independently verified.
No representation or warranty is made as to
the accuracy, completeness or reliability of the
information. No responsibility, warranty or liability
is accepted by Estia Health, its officers, employees,
agents or contractors for any errors, misstatements in
or omissions from this report.
Not investment advice
This report is not intended and should not be
considered to be the giving of investment advice
by Estia Health or any of its shareholders, Directors,
officers, agents, employees or advisers. The
information provided in this presentation has been
prepared without taking into account the recipient’s
investment objectives, financial circumstances
or particular needs. Each party to whom this
presentation is made available must make its own
independent assessment of Estia Health after making
such investigations and taking such advice as may be
deemed necessary.
No offer of securities
Nothing in this report should be construed as either
an offer to sell or a solicitation of an offer to buy or
sell Estia Health securities in any jurisdiction.
This report may include forward-looking statements.
Although Estia Health believes the expectations
expressed in such forward-looking statements are
based on reasonable assumptions, these statements
are not guarantees or predictions of future
performance, and involve both known and unknown
risks, uncertainties and other factors, many of which
are beyond Estia Health’s control. As a result, actual
results or developments may differ materially from
those expressed in the statements contained in this
presentation. Investors are cautioned that statements
contained in this presentation are not guarantees or
projections of future performance and actual results
or developments may differ materially from those
projected in forward-looking statements.
No liability
To the maximum extent permitted by law, neither
Estia Health’s nor its related bodies corporate,
Directors, employees or agents, nor any other person,
accepts any liability, including without limitation any
liability arising from fault or negligence, for any direct,
indirect or consequential loss arising from the use of
this presentation or its contents or otherwise arising
in connection with it.
Disclosure of non-IFRS financial
information
Throughout this report, there are occasions where
financial information is presented not in accordance
with accounting standards. There are a number
of reasons why Estia Health has chosen to do this
including: to maintain a consistency of disclosure
across reporting periods; to demonstrate key
financial indicators in a comparable way to how the
market assesses the performance of Estia Health;
to demonstrate the impact that significant one-
off items have had on Estia Health’s performance.
Where Estia Health’s learnings have been distorted
by significant items Management have used their
discretion in highlighting these. These items are non-
recurring in nature and considered to be outside the
normal course of business. Unaudited numbers used
throughout are labelled accordingly.
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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 02 September 2021.
(a) 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
71
906
1,094
2,920
1,859
6,850
222,510,532
21,925,887
8,286,165
7,844,993
874,065
261,441,642
85.11
8.39
3.17
3.00
0.33
100.00
(b) 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
7
7
0
0
0
14
2,657,198
381,653
0
0
0
3,038,851
87.44
12.56
0.00
0.00
0.00
100.00
(c) Less than marketable parcels of ordinary shares
There are 469 shareholders with unmarketable parcels totalling 31,586 shares.
(d) 20 Largest Shareholders
The twenty largest shareholders of quoted equity securities are as follows:
nAME
1.
J P Morgan Nominees Australia Pty Limited
2. HSBC Custody Nominees (Australia) Limited
3. Citicorp Nominees Pty Limited
4. National Nominees Limited
5. Network Investment Holdings Pty Ltd
6. Argo Investments Limited
7. Network Investment Holdings Pty Ltd
8. BNP Paribas Noms Pty Ltd
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