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Brookdale Senior LivingANNUAL REPORT
2022-23
Acknowledgement of Country:
We acknowledge the Traditional Owners of Country throughout
Australia and recognise their continuing connection to lands on
which we operate our homes. We pay our respects to Elders
past, present and emerging, for they hold the memories, the
traditions, the culture and hopes of First Nations peoples.
Contents
About this Annual Report
Vision, Purpose and Values
Chairman and CEO’s Review
Key Highlights
About Estia Health
Board and Governance
Corporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
4
6
8
12
14
16
19
21
23
24
28
31
37
Directory of Estia Health homes
160
Thank you to all the residents and employees who feature in this report.
2022-23 Annual Report | Estia Health 3
About this report
Chairman and CEO’s Review
Key Highlights
About Estia Health
Board and Governance
Corporate Governance
About this Annual Report
Report structure
This report is designed to be read in its entirety. The
required elements of the Directors’ Report, including
the Operating and Financial Review (OFR) as
required by ASIC Regulatory Guide 247, are covered
on pages 39 to 92. Specific commentary on Estia
Health’s financial performance is contained on pages
94 to 148 and references information reported in
the Annual Financial Report (pages 37 to 157). The
Annual Financial Report includes Estia Health Limited
(the Company or Parent Entity) and the entities it
controlled (collectively the Group, the Consolidated
Entity or Estia Health) at the end of, or during, the
year ended 30 June 2023. Commentary on matters
relating to performance and leadership may extend
beyond 30 June 2023 where appropriate.
Throughout the report, the Consolidated Entity
is referred to as Estia Health or the Group. The
Directors’ Declaration forms part of the Financial
Report under the Corporations Act.
Climate-Related Disclosures
Our 2022-23 Annual Report provides an overview of
the Group’s financial and non-financial performance.
Estia Health follows the guidance provided by the
Financial Stability Board’s Task Force on Climate-
Related Financial Disclosures (TCFD) voluntary
disclosure framework. The financial year ending
30 June 2023 (FY23) TCFD report, comprised within
the Directors’ Report section of the Annual Financial
Report, details how the Group considers governance,
risk management, strategy, metrics and targets in
relation to climate change.
Forward-looking statements and
materiality
This report includes information about Estia Health’s
performance for the period 1 July 2022 to 30 June
2023. Any forward-looking statements are based
on the Group’s current expectations, best estimates
and assumptions as at the date of preparation, many
of which are beyond the Group’s control. These
forward-looking statements are not guarantees or
predictions of future performance and involve known
and unknown risks, which may cause actual results to
differ materially from those expressed in the report.
A matter is considered material if management and
those charged with governance believe it could
significantly impact the value created and delivered in
the short, medium and long term.
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 or
omissions from this report.
Not investment advice
This report is not intended and should not be
considered to be investment advice by Estia Health
or any of its shareholders, Directors, officers, agents,
employees or advisers. The information provided
in this report has been prepared without taking
into account the recipient’s investment objectives,
financial circumstances or particular needs.
Each party to whom the report is made available
must make its own independent assessment of Estia
4 Estia Health | 2022-23 Annual Report
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.
Disclosure of non-IFRS financial
information
Throughout this report, there are occasions where
financial information is presented not in accordance
with accounting standards. Estia Health has done
this for various reasons including: to maintain a
consistency of disclosure across reporting periods; to
demonstrate key financial indicators in a comparable
way to how the market assesses performance; and
to demonstrate the impact that significant one-off
items have had on performance. Where Estia Health’s
earnings have been distorted by significant items,
management has used discretion in highlighting
these. These items are nonrecurring in nature and
considered to be outside the normal course of
business. Unaudited numbers used throughout are
labelled accordingly.
Reporting suite
See the documents that make up our reporting suite
at https://investors.estiahealth.com.au/investor-
centre/, including:
Report
Key Information
Annual Report
Financial
Statements
Corporate
Governance
Statement
Sustainability
Report
The Annual Report is primarily
intended for current and
prospective investors and other
providers of financial capital,
although it will be of interest to
other stakeholders. It includes a
detailed analysis of the Group’s
financial results and audited
financial statements, prepared
in accordance with International
Financial Reporting Standards
(IFRS).
The Financial Statements is an
audited report prepared with
reference to the International
Financial Reporting Standards
and applicable corporate
regulations in Australia.
The Corporate Governance
Statement outlines the principal
corporate governance practices
in place during the financial year
ended 30 June 2023.
The Sustainability Report is the
disclosure of environmental,
social and corporate governance
data relevant to the Group,
published later in 2023.
Investor
Presentation
The Investor Information Pack
provides a summary and analysis
of operations during the financial
year ended 30 June 2023.
Workplace
Gender Equality
Agency (WGEA)
Report
The WGEA report details the
gender ratio of employees and
contractors in occupational
categories, including
apprentices and trainees.
Modern Slavery
Report
The Modern Slavery Statement,
prepared and delivered in
accordance with the Modern
Slavery Act 2018 (Cth), reports
on the risks of modern slavery
in the Group’s operations and
supply chains, and actions to
address those risks.
2022-23 Annual Report | Estia Health 5
Executive Leadership TeamCOVID-19SustainabilityRisk ManagementTax Transparency ReportAnnual Financial Report Vision, Purpose and Values
Our Vision
Estia Health value creation
Trusted aged care is accessible to all
Our Purpose
We exist to enrich and celebrate
life together
To enrich a life means every small action we
take can make a difference. As aged care
professionals, we look after people at the
most important time of their lives. We want
to celebrate this time with our residents, their
families and our employees.
Our Family Code
A family where everyone belongs
We achieve our purpose by living our family code.
Our Principles
Value Creation – financial and non-financial
e
r
a
C
r
e
m
o
t
s
u
C
l
e
p
o
e
P
y
t
i
n
u
m
m
o
C
h
t
w
o
r
G
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
Creating
happiness
Always
approachable
Taking
responsibility
Embracing
diversity
Growing
together
We make magical
moments happen,
in small and
special ways
We make time to
listen because we
care
We own our
decisions and actions
to improve ourselves
and help others
We acknowledge
and respect
individual
uniqueness
We bring out the
best in each other
and are stronger
together
Our Values
Compassion
Responsiveness
Accountability
Respect
Collaboration
We demonstrate
care and
understanding
with empathy
We are
approachable, we
listen and we take
action
We are responsible
and always act with
integrity
We embrace
individuality and
choice
We positively
engage together
to deliver our
purpose
6 Estia Health | 2022-23 Annual Report
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance 2022-23 Annual Report | Estia Health 7
Executive Leadership TeamCOVID-19SustainabilityRisk ManagementTax Transparency ReportAnnual Financial Report About this report
Chairman and CEO’s Review
Key Highlights
About Estia Health
Board and Governance
Corporate Governance
Chairman and
CEO’s Review Dr. Gary H Weiss, AM
Chairman
Sean Bilton
CEO and Managing Director
Dear Shareholders,
On behalf of the Estia Health Board of Directors, we
are pleased to present our 2023 Annual Report.
The 2023 financial year, while not without its
challenges, was marked by resilience and renewal, and
an unwavering commitment to our purpose ‘to enrich
and celebrate life together’.
Overall, the year reflected a reset from the challenges
of recent years which allowed us to embark on
some key strategic initiatives and increase value for
shareholders. The impact of COVID-19 has lessened,
occupancy has continued to recover and funding
increases under AN-ACC were received ahead of the
mandated care minutes requirement.
Industry Overview
Residential aged care remains a needs-based
essential service and represents a vital component of
the continuum of care, with currently almost 250,000
older Australians accessing residential aged care in a
typical year.
Post Aged Care Royal Commission reform continues
to be implemented at pace which, while creating
a challenging operating environment, is providing
greater clarity for the regulatory framework moving
forward.
The final pieces of the reform agenda are
largely known or substantially progressed. The
implementation of the new funding model for aged
care, the Australian National Aged Care Classification
system (referred to as AN-ACC), in October 2022 has
delivered better funding to the sector, primarily to
facilitate higher care minutes.
significant advance on the previous indexation system
which has historically delivered increases in funding
below the level of input cost inflation. Most notably,
a framework now exists to address historic margin
erosion.
Our industry’s journey towards the mandatory care
minutes targets and 24/7 registered nurse availability
is well underway and Estia Health, like most providers,
is transitioning its workforce to meet the new standards.
More generally, workforce availability has improved
over the financial year, primarily in metropolitan areas,
although the use of agency and overtime remains
much higher than pre-pandemic levels. Rural and
regional areas remain difficult and meeting staffing
requirements in those locations will be a significant
challenge given the strong competition for resources.
Workforce availability is expected to be further
assisted by significantly increased pay rates for direct
care staff, via the Fair Work Commission Work Value
case, and we are pleased that there has been greater
acknowledgement of the essential role played by
aged care workers in our society. We look forward
to a final decision for other aged care workers not
covered by the initial interim decision.
Amidst this changing landscape, the sector continues
to experience a reduction in the number of providers
and low levels of new supply. The many industry
changes are likely to create ongoing challenges for
smaller providers, with much of the structure of these
reforms being more easily implemented by larger
providers. When combined with a highly fragmented
industry structure, we expect there to be further
consolidation in the sector.
More importantly, the new role of the Independent
Health and Aged Care Pricing Authority (IHACPA) to
make recommendations to Government in relation
to the costs of providing care has become clearer.
Their initial review and advice to Government was a
Consumer satisfaction and care quality remain
paramount. The Star Ratings system, implemented
in December 2022, provides an overall rating based
on four criteria. While the initial methodology
will continue to evolve, it is acting as an external
8 Estia Health | 2022-23 Annual Report
benchmark which will drive ongoing improvement
in care and services, ultimately benefitting both
consumers and providers.
achieved a sustained reduction in its effects on the
health of our residents and employees, translating to
lower costs and mitigating its impact on occupancy.
Finally, a key initiative currently underway in the
sector is the recently established Aged Care
Taskforce. The Taskforce is focusing on the future
sustainability of the sector in the broadest sense,
including a thorough examination of the role of
resident co-contributions and the subsequent impact
on funding for Government and providers, while
maintaining an equitable environment with suitable
safety nets.
FY23 Financial Performance
We were pleased to report a material increase in
EBITDA for the year, signalling a turnaround in
our earnings performance from recent years. We
recognise that this achievement would not have been
possible without the outstanding dedication and hard
work of our teams across the organisation.
Assisted by higher occupancy, lower COVID-19 costs
and higher COVID-19 grant recoveries, there was a
material increase in EBITDA in our mature homes’
portfolio to $116.1 million in the financial year.
The impact of ongoing bed licence amortisation
resulting from the changes to the aged care bed
licence regime, which has been outlined in prior
periods, was the major contributing factor to the
overall net loss after tax of $33.9 million.
We have experienced material net inflows in
refundable accommodation deposits, contributing
a total cashflow of $85.7 million for the full year,
which was the highest achieved for many years.
This underpinned a substantial reduction in net
debt, despite the investment of $76.4 million in the
acquisition of five operating homes and $37.9 million
on capital expenditure related to two greenfield
developments which are due to open later this year.
Our balance sheet remains in a strong position,
with net debt at 30 June 2023 of $43.8 million, with
significant undrawn capacity in our $330 million
sustainability-linked debt facility.
The significant improvement in EBITDA has also
translated to an improved net profit position
(excluding exceptional items), which has enabled
us to deliver our shareholders a final fully franked
dividend of 12 cents per share, representing a
significant turnaround from limited dividends during
the period heavily impacted by the pandemic.
Operational Performance
COVID-19 remained a material factor in our operations
during the course of FY23, with continued outbreaks
and exposures peaking at various times during
the year. Despite the ongoing challenges, we have
The continuing recovery of our core business has
also been an ongoing focus, reflected in a steady
upward trajectory in occupancy rates to a position
approaching pre-pandemic levels. Our occupancy
increased with second half occupancy building on the
first half and resulting in a 0.7% increase in average
occupancy over the fiscal year to 92.3%.
The Group continues to target initiatives to enhance
workforce supply, boost employee engagement
and ensure remuneration is competitive, with a
goal to attract and retain top-tier talent within our
organisation. We believe larger providers, such as
Estia Health, have an advantage due to an ability to
invest in career pathways, central support for local
teams and enhanced recruitment and onboarding
systems.
We have also continued to prioritise the wellbeing,
safety and care of our more than 6,000 residents
and over 8,000 dedicated team members across
our homes who have always been at the core of
our values. Their resilience and collective spirit have
been commendable amidst the uncertainties and
challenges that the year continued to present.
Governance and Remuneration
Strengthened governance arrangements are taking
centre stage across the sector, including enhanced
reporting and a significant increase in administration
obligations. While these initiatives are targeted to
bolster consumer transparency, they do come with
an associated cost and burden on providers. Estia
Health is well placed to meet these requirements with
our robust governance structure, consistent with the
requirements of an ASX listed organisation.
The Clinical Governance Committee, under the expert
leadership of Professor Simon Willcock AM, continues
to ensure that our clinical outcomes and performance
are to the highest standard. Furthermore, our
sustainable practices and focus on ‘ESG’ remain
integral to our operational strategies.
We continue to support and promote diversity
within our team. We are proud to report that women
constitute 50% of our Board of Directors and
Executive Leadership Team roles. Our commitment
to eliminating gender pay gaps remains robust,
reflecting in our gender balanced Board and Executive.
In keeping with our goals, our remuneration
framework continues to align resident, shareholder
and employee interests. This year, we have intensified
our efforts in staff recruitment and retention,
launching innovative programs and training to ensure
Estia Health remains an employer of choice in the
aged care sector.
2022-23 Annual Report | Estia Health 9
Executive Leadership TeamCOVID-19SustainabilityRisk ManagementTax Transparency ReportAnnual Financial Report About this report
Chairman and CEO’s Review
Key Highlights
About Estia Health
Board and Governance
Corporate Governance
We are grateful for the extraordinary commitment,
dedication, passion and care shown by all our team
members at Estia Health and value the support of our
residents, families and the communities to which Estia
Health belongs.
Yours sincerely,
Dr. Gary Weiss, AM
Chairman
Sean Bilton
CEO and Managing Director
October 2023
October 2023
Growth Initiatives
Our pursuit of strategic growth opportunities
delivered an additional 557 places over the
year, primarily through incremental acquisition
opportunities of high quality, well located operating
assets.
The Group completed the acquisition of five homes
with 533 operating places during FY23. Each of the
homes acquired were contemporary with single
rooms and ensuites, with the majority less than five
years old and at prices well below replacement cost.
We also completed a 24 place expansion of Estia
Health Burton in South Australia with the extension
opening in Q2 FY23.
Our 2023 growth has been further extended with
the recent settlement of the previously announced
acquisition of 264 places across two homes operated
by Royal Freemasons in Victoria. These two homes
will facilitate the consolidation of Estia Health’s
current smaller and less contemporary homes in
those markets and is expected to significantly
improve earnings in those locations.
Outlook
On 7 August 2023, Estia Health announced it had
entered into a Scheme Implementation Agreement
with Bain Capital under which Bain Capital has agreed
to acquire 100% of the shares in Estia Health. Details
of the proposal are set out in the Scheme Booklet
which has been dispatched to shareholders this week.
The Board of Estia Health has unanimously
recommended shareholders vote in favour of the
Scheme, in the absence of a superior proposal and
subject to the Independent Expert continuing to
conclude that the Scheme is in the best interests of
shareholders.
The Scheme is still subject to various conditions,
including approval by shareholders at the Scheme
Meeting, with implementation expected to occur at
the end of November 2023 should all conditions be
met.
We see Bain Capital’s interest in Estia Health as a
strong endorsement of our strategy to build a market
leading aged care provider focused on creating high
quality outcomes for our residents and families and
an attractive and supportive environment for our
employees.
10 Estia Health | 2022-23 Annual Report
2022-23 Annual Report | Estia Health 11
Executive Leadership TeamCOVID-19SustainabilityRisk ManagementTax Transparency ReportAnnual Financial Report About this report
Chairman and CEO’s Review
Key highlights
About Estia Health
Board and Governance
Corporate Governance
Key Highlights
Financial performance
OPERATIONAL PLACES
AVERAGE OCCUPANCy¹
OPERATIONAL REVENUE²
6,289
6,182
6,163
6,720
93.2%
$713.1m
92.3%
91.2%
91.6%
$631.8m
$593.5m $604.0m
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
PROFIT/(LOSS) AFTER TAx
BEFORE ExCEPTIONAL ITEMS
EARNINGS/(LOSS)
PER ShARE
DIVIDENDS PER ShARE
$38.4m
2.2¢
15.7¢
$25.2m
$14.7m
(13.1¢)
(20.1¢)
5.4¢
($9.6m)
(44.8¢)
2.3¢
2.3¢
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
1 Mature homes only
2 Excludes AASB 16 imputed DAP and grant impacts
12 Estia Health | 2022-23 Annual Report
Health and safety
Employees
Gender diversity
LTIFR3
EMPLOyEE TURNOVER
BOARD AND ExECUTIVE
POSITION COMPOSITION
FY23
8.1
FY22
FY21
8.8
11.9
28.1%
FY20
4.9
FY22: 29.6%
50% Male
50% Female
Compliance
Sustainability
Approximately
99%
Approximately
99% ACQSC
accreditation
requirements
fully met
20%
20% of waste was
diverted from
landfill despite
increased PPE
usage and disposal
(FY22: 18%)
Professional development
PROFESSIONAL DEVELOPMENT PROGRAMS
COMPLETED
FY23
FY22
FY21
FY20
2,825
36,836
38,823
14,884
hOURS OF TRAINING PER EMPLOyEE
FY23
FY22
FY21
FY20
5.3
3.3
8.0
7.6
Star Ratings for Residential
Aged Care
OVERALL STAR RATING – PROPORTION OF
hOMES IN EACh CATEGORy
60%
50%
40%
30%
20%
10%
0%
52.9%
50.1%
44.7%
42.7%
0.0%
0.2%
4.4% 2.8%
2.2%
0.0%
1 Star
2 Star
3 Star
4 Star
5 Star
Estia Health
Sector
3 Lost Time Injury Frequency Rate (LTIFR) 12 month rolling average
4 Satisfaction defined as percentage of responses that report experience as “most of the time” or “always”
2022-23 Annual Report | Estia Health 13
Executive Leadership TeamCOVID-19SustainabilityRisk ManagementTax Transparency ReportAnnual Financial Report About this report
Chairman and CEO’s Review
Key Highlights
About Estia health
Board and Governance
Corporate Governance
About Estia Health
Estia Health is one of Australia’s largest providers of residential aged care, with
a footprint across four Australian states. The Group’s approach to aged care is
underpinned by ensuring a network of homes that reflect the resident-centred
services and needs valued within their local communities.
The team of over 8,000 nurses, carers and support
staff care for more than 8,000 residents each year
across 73 homes.
Estia Health aims to create homes where everyone is
welcome and reflect the needs of residents, the local
communities and the people that support and work
with the Group.
Residents are welcomed from all walks of life, with the
Group’s purpose ‘to enrich and celebrate life together’.
A program of capital investment and re-investment
continues to increase capacity to care for ageing
Australians and continually improves asset quality.
A committed and skilled workforce, led by an
experienced management team, delivers care services
which focus on the needs of residents and those that
support them.
homes
Places
73 operational homes
6,720 operational places
Freehold sites
67 freehold sites
Single rooms
5,661 or 92% single rooms
Employees
Approximately 8,200
employees
Compliance by
requirements
~99% ACQSC accreditation
requirements fully met
Residents cared for
annually
More than 8,000 residents
in FY23
Star ratings system
96% of homes rated equal
to or greater than 3 star
as at 7 August 2023
14 Estia Health | 2022-23 Annual Report
NEW SOUTh WALES
18 homes
Albury
Bankstown
Bexley
Blakehurst
Camden
Dalmeny
Epping
Figtree
Forster
Kilbride
Kogarah
Manly Vale
Merrylands
Ryde
Taree
Tea Gardens
Tuncurry
Willoughby
QUEENSLAND
10 homes
Albany Creek
Mudgeeraba
Gold Coast
Hervey Bay
Maroochydore
Mount Coolum
Nambour
Pacific
Paradise
Southport
Twin Waters
SOUTh AUSTRALIA
19 homes
Aberfoyle Park
Aldgate
Burton
Craigmore
Daw Park
Encounter Bay
Flagstaff Hill
Golden Grove
Hope Valley
Kadina
VICTORIA
26 homes
Altona
Meadows
Ardeer
Bannockburn
Benalla
Bendigo
Bentleigh
Coolaroo
Dandenong
Epping
Kensington
Gardens
Lockleys
Myrtle Bank
Parkside
Salisbury
Salisbury East
Strathalbyn
Toorak
Gardens
Valley View
Knoxfield
Leopold
Melton South
Mount Clear
Oakleigh East
Plenty Valley
Ringwood
South Morang
Victoria
Heights
Glen Waverley
Wattle Glen
Grovedale
Heidelberg
Werribee
Wodonga
Keysborough
Yarra Valley
2022-23 Annual Report | Estia Health 15
Executive Leadership TeamCOVID-19SustainabilityRisk ManagementTax Transparency ReportAnnual Financial Report About this report
Chairman and CEO’s Review
Key Highlights
About Estia Health
Board and Governance
Corporate Governance
Board and Governance
Estia Health’s Board comprises a majority of Independent Non-executive Directors
who, together with the Chief Executive Officer / 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
optimal outcomes for residents, shareholders, employees, suppliers, government
regulators and members of the community in which Estia Health operates.
Board of Directors
Dr. Gary Weiss, AM
Independent Non-executive
Director and Chair
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,
16 Estia Health | 2022-23 Annual Report
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.
Sean Bilton
Chief Executive Officer and
Managing Director
(appointed July 2022)
BEc (UNSW), F FIN, INSEAD
Appointed as the Chief Executive
Officer and Managing Director at
Estia Health in July 2022, Sean was previously in the
roles of Chief Operating Officer and Deputy CEO since
October 2018.
In his COO role, Sean led the Workforce, Funding and
Procurement Teams, together with P&L responsibility
for Estia Health’s portfolio of homes. Sean has also
overseen the successful commissioning of three
new homes and consideration of future growth
opportunities. His success in leading the company
through an unprecedented and complex period
of change during the COVID-19 pandemic and the
Aged Care Royal Commission ensured Estia Health’s
continued standing in the sector.
During his tenure, Sean has worked closely with
the Chief People Officer on the development and
operationalisation of Estia Health’s employee attraction
and retention strategy.
Sean has worked for more than 15 years in the sector,
his involvement commencing as an Asset Manager
at AMP Capital where he managed the integration of
multiple acquisitions, which were the genesis of the
Opal Healthcare business.
When joining Opal as the Head of Commercial in 2010,
Sean was responsible for overseeing the acquisition
and development led growth of the business, as well as
customer acquisition, communications, and marketing.
He holds a Bachelor of Economics from UNSW, is a
Fellow of the Financial Services Institute of Australia
and a graduate of the Advanced Management
Program at INSEAD.
Norah Barlow, ONZM
Independent Non-executive
Director
BCA, ACA
Norah holds a Bachelor of
Commerce and Administration
from Victoria University and is a
Chartered Accountant.
Norah is amongst Australasia’s most experienced
and respected executives and directors, with an
in-depth knowledge of the aged and health care
sector. Norah also holds extensive experience as the
highly respected former CEO and former Director of
Summerset Group, an NZX and ASX-listed company
named Australasia’s best retirement village operator
for 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.
Paul Foster
Independent 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
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 Director of 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.
helen Kurincic
Independent 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.
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.
Karen Penrose
Independent Non-executive
Director
B.Com (UNSW), FAICD, 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
2022-23 Annual Report | Estia Health 17
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Key Highlights
About Estia Health
Board and Governance
Corporate Governance
about consumer outcomes, financial management
and well-versed in operating in a rapidly changing
regulatory environment.
Karen is a Director and Chair of the Audit Committee
of Bank of Queensland, Ramsay Health Care and
Cochlear. She is also Director of Marshall Investments
Pty Ltd and Rugby Australia Limited.
Karen was formally a director of Vicinity Centres,
Future Generation Global Investment Company
Limited, AWE Limited and Spark Infrastructure Group
Limited.
Karen is a member of Chief Executive Women.
Professor Simon Willcock, AM
Independent Non-executive
Director
MBBS (Hons 1), PhD, FRACGP,
GAICD
Simon was appointed to the
Board on 1 September 2022. He
is a General Practitioner and the Director of Primary
Care and wellbeing at MQ Health (a Macquarie
University health entity). He was previously Head of
the Discipline of General Practice in the University of
Sydney Medical Program.
His education and research interests include the
health of doctors, generational change in the
medical workforce, aged care, men’s health and
musculoskeletal medicine. Simon trained as a rural
procedural GP and practiced in Inverell, NSW for
seven years. For the past thirty years he has worked
in academic and clinical practice in Sydney and has
had a number of educational leadership roles.
Simon was until recently an elected board member
and Chair of the Avant Mutual Group and is currently
an elected board member and Deputy Chair of the
Sydney North Health Network.
18 Estia Health | 2022-23 Annual Report
Corporate Governance
Estia Health’s Corporate Governance Statement for 2023 (Statement) outlines
the Group’s principal corporate governance practices in place during the financial
year ended 30 June 2023. Copies of all governance documents referred to in this
Statement can be found at the Estia Health investor website.
Each of these committees operate in accordance with
specific charters clarifying composition, functions and
responsibilities.
In addition, the Board may establish other committees
or sub-committees or delegate authority to existing
committees to oversee specific activities.
In FY23, there were 50 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 directors believe that informal
conversations with staff are important in assessing
the culture within Estia Health, resulting in visits to
homes being scheduled throughout the year, with
director’s also attending the annual management
conference.
Details of the number of committee meetings held
during the year and individual directors’ attendance
at these meetings can be found in the 2023 Directors’
Report.
Governance policies and practices are consistent with
the 4th edition of the ASX Corporate Governance
Council’s Corporate Governance Principles and
Recommendations (ASx Governance Principles).
These policies and practices are reflected in this
Statement as well as our Appendix 4G. The Statement
was approved by the Board on 22 August 2023.
The Board and executive leadership team maintain
high standards of corporate governance as part of the
Group’s commitment to create value for stakeholders
through effective strategic planning, risk management,
transparency and corporate responsibility.
Governance practices are reviewed regularly
considering the growth in the Group and relevant
emerging corporate governance developments.
Board committees
Our Board has delegated specific authority to four
Board committees, which assist the Board by examining
various issues and making recommendations. The
composition and effectiveness of the committees are
reviewed on an annual basis, with a description of
each committee and its responsibilities set out in the
Corporate Governance Statement.
• Audit Committee
• Risk Management Committee
• Nomination and Remuneration Committee
• Property and Investment Committee.
Committee membership
The composition of the committees which operated during the financial year was as follows:
Membership
Audit Committee
Nomination &
Remuneration
Committee
Risk Management
Committee
Property & Investment
Committee
Chair
Karen Penrose
Paul Foster
Helen Kurincic
Norah Barlow ONZM
Member
Dr Gary H Weiss AM
Dr Gary H Weiss AM
Paul Foster
Dr Gary H Weiss AM
Member
Helen Kurincic
Helen Kurincic
Karen Penrose
Paul Foster
Member
1 Appointed 1 September 2022
Prof. Simon Willcock AM1
2022-23 Annual Report | Estia Health 19
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About Estia Health
Board and Governance
Corporate Governance
Responsibilities of management
The Chief Executive Officer and Managing Director (CEO/MD) oversees the day-to-day management of the
business and, with the support of the executive leadership team, reports to the Board on the exercise of his
delegated authority. The CEO/MD has been delegated the authority to manage the Group in accordance with
the strategy, plans and policies approved by the Board. The delegations are reviewed by the Board from time
to time.
The CEO/MD, Chief Operating Officer (COO) and Chief Financial Officer (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.
Estia Health Board
Formally delegates certain functions to Board Committees and to management via the Board and
Committee Charters. Directly retains responsibility for a number of matters, including:
• overall strategic guidance, instilling of the Group’s values and approving the Code of Conduct
• oversight of management
• oversight of financial and capital management
• promotion of effective engagement with shareholders
• promoting ethical and responsible decision-making
• ensuring a robust risk management framework is in place
• establishing the Group’s risk appetite
• monitoring the systems of compliance, risk management and control
• oversight of the Group’s process for making timely and balanced disclosure of all material
information
• oversight of policies governing the Group’s relationship with other stakeholders and those
related to Environment, Social and Governance (ESG), Work Health and Safety (WHS) and other
regulatory and statutory requirements.
Board committees
I
N
O
T
A
G
E
L
E
D
Audit
Committee
Risk
Management
Committee
Nomination &
Remuneration
Committee
Property &
Investment
Committee
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
CEO/Managing Director and other senior executives
Executive committees
Operations and line management
20 Estia Health | 2022-23 Annual Report
Executive Leadership Team
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Executive Leadership Team
Sean Bilton
Chief Executive Officer and
Managing Director
Appointed as the Chief Executive
Officer and Managing Director
at Estia Health in July 2022,
Sean was previously in the roles
of Chief Operating Officer and Deputy CEO since
October 2018.
In his COO role, Sean led the Workforce, Funding and
Procurement Teams, together with P&L responsibility
for Estia Health’s portfolio of homes. Sean has also
overseen the successful commissioning of three
new homes and consideration of future growth
opportunities. His success in leading the company
through an unprecedented and complex period
of change during the COVID-19 pandemic and the
Aged Care Royal Commission ensured Estia Health’s
continued standing in the sector.
During his tenure, Sean has worked closely with
the Chief People Officer on the development and
operationalisation of Estia Health’s employee
attraction and retention strategy.
Sean has worked for more than 15 years in the sector,
his involvement commencing as an Asset Manager
at AMP Capital where he managed the integration of
multiple acquisitions, which were the genesis of the
Opal Healthcare business.
When joining Opal as the Head of Commercial
in 2010, Sean was responsible for overseeing
the acquisition and development led growth of
the business, as well as customer acquisition,
communications, and marketing.
He holds a Bachelor of Economics from UNSW, is a
Fellow of the Financial Services Institute of Australia
and a graduate of the Advanced Management
Program at INSEAD.
Fiona Caldwell
Chief Information Officer
With over 25 years’ experience
in various IT strategic and
operational leadership capacities,
Fiona brings to Estia Health 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.
Fiona is a recognised leader in optimising the IT
user experience. She has extensive experience in
the Government and Commercial sectors, including
Village Roadshow, Cenitex and the Tatts Group.
Fiona holds a Bachelor of Computing and Master of
Business Administration from Monash University.
Cath Gillard
Chief People Officer
Cath’s professional career spans
over 25 years in human resources
and employee relations. Prior to
joining Estia Health in May 2022
as Chief People Officer, Cath was
the Executive Director People & Culture at Australian
Red Cross Lifeblood, a role she held for five years.
Cath has also held senior human resources positions
within the General Electric group of companies,
Linfox and the Toll Group.
Earlier in her career, Cath practiced as an employment
and industrial relations lawyer for over a decade with
law firms Minter Ellison and Lander & Rogers. At
the time, she provided legal advice across multiple
industry sectors including health, state government,
financial services, manufacturing and construction.
Cath holds a Bachelor of Laws (Honours) and a
Bachelor of Arts from The University of Melbourne
and a Masters of Management (Human Resources)
from Monash University. She is a Graduate of the
Australian Institute of Company Directors and is a
Certified Human Resources Practitioner (Australian
Human Resources Institute).
Damian hiser
Chief Operating Officer
Appointed as Chief Operating
Officer of Estia Health in
July 2022, Damian is a senior
healthcare executive with more
than three decades experience
in the private health care sector, both overseas and
in Australia, and most recently over ten years in aged
care in Australia. Prior to his appointment as the COO,
Damian was the Chief Customer Officer from October
2017.
Damian brings a wealth of experience, financial
acumen, and understanding of the complexities of
both health and aged care systems.
As Chief Operating Officer, Damian is responsible
for leading Estia Health’s operations teams, initiating
improvements to ensure the highest level of care is
delivered to residents in our homes annually. Damian
ensures that every one of our 70+ homes engage with
their local communities and delivers exceptional and
2022-23 Annual Report | Estia Health 21
compassionate care for all our residents and their
families.
Anthony Rice
Chief Financial Officer
Joining Estia Health in July
2023 as Chief Financial Officer,
Anthony holds 25 years’
experience in senior finance roles
across a range of aged care,
healthcare and finance sector businesses.
Prior to joining Estia Health, Anthony was Chief
Financial Officer and Chief Investment Officer of
Japara Healthcare, an ASX listed aged care provider.
Prior to joining Japara Healthcare, Anthony’s
background was as a specialist aged care, real estate
and healthcare sector corporate adviser with over 20
years’ experience in investment banking, at JPMorgan
and most recently at Macquarie Group, where as a
Managing Director he advised clients on corporate
strategy, debt and equity raising and mergers and
acquisitions.
Anthony is a Chartered Accountant and holds a
Masters in Applied Finance from the University of
Melbourne.
Suzy Watson
General Counsel and Chief
Privacy Officer
Suzy was appointed to the role
of General Counsel in October
2014 and in this role provides
comprehensive advice on a full
spectrum of legal and compliance matters to support
corporate activity, operations and strategic growth.
Prior to this appointment, she served as the in-house
counsel for the Bupa Group both in Sydney and
internationally. Suzy holds over 15 years of experience
in both private practice and in house roles spanning
healthcare, commercial and corporate law. She is
a dual qualified lawyer in both Australia and in the
United Kingdom.
Suzy holds an LLM (Applied Law) majoring in
In-House Legal Practice (Distinction), an LLM in
International Economic Law (Distinction) and a
Bachelor of Arts (Hons) in Law and Government from
the University of Manchester.
Suzy was awarded the 2016 Leonard Watson Chant
Legacy scholarship (Governance Institute of Australia)
and the National Industry Scholarship for Women in
Leadership.
Suzy is a Fellow of the Governance Institute of
Australia, a member of the Law Institute of Victoria
and the Association of Corporate Counsel.
Damian holds a Bachelor of Optometry (UNSW) and
a Master of Business Administration (UTS).
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.
Prior to her appointment with Estia Health, Leanne
was National Deputy Clinical Governance Manager
for Ramsay Health Care and previously Group
Vice President Nursing, Learning and Operational
Excellence with Parkway Health based in Singapore.
Leanne is responsible for leading Estia Health’s
delivery of high quality care to residents in safe
and supportive environments. This involves the
development and implementation of a person-
centred care framework that combines quality and
risk management strategies. Leanne’s role is focused
on embedding a continuous improvement culture,
using quality indicator measurement and a risk
management framework that enables transparent
incident reporting, data analysis, trending and
benchmarking with validation of compliance via audit.
Leanne is a Registered Nurse with a post registration
Bachelor of Nursing awarded from Deakin University
and a Master of Business from Monash University.
Michael Lockwood
Chief Development and
Property Officer
Michael has worked in the
property and construction
industry for over 20 years,
with more than half this time
directly involved in the aged care and retirement
living sectors. He has held roles working closely with
developers, builders and not-for-profit operators.
Michael is responsible for executing Estia Health’s
property growth and renewal strategy, as well as
asset management across the portfolio.
Prior to joining Estia Health, Michael was the General
Manager, Property & Housing for Catholic Healthcare
and previously Construction Manager for Anglican
Retirement Villages where he led the strategy, new
developments and property services.
Michael holds a Bachelor of Engineering (Civil)
from the University of Technology, Sydney as well
as a Master of Commerce (Property Investment &
Development) from the University of Western Sydney.
22 Estia Health | 2022-23 Annual Report
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COVID-19
The steadily reducing impact of COVID-19 throughout the reporting period reflects
ongoing efforts to manage and mitigate the impact of the pandemic.
The Group continues to adopt a disciplined and
carefully managed program of protective and
preventative measures in accordance with local health
authorities and its own risk assessments. These
measures have varied throughout the year as external
circumstances have evolved.
The Group has ensured that all staff without
medical exemption have had at least three doses
of an approved COVID-19 vaccine, and mandates
participation in the annual influenza vaccine program.
In addition, the Group has strongly encouraged and
facilitated vaccination of residents.
The impact of COVID-19 on the sector continued
to reduce in the early part of the period, in line
with the reduced impact in the wider Australian
community and reduced Public Health settings. This
saw a reduction in outbreaks, exposures and costs
associated with personal protective equipment,
cleaning and waste disposal, as well as a reduction in
enforced staff absences through sickness.
More than three years since the pandemic was
declared, the Group’s frontline staff continue to
demonstrate extraordinary support and care for
residents and families at a time when many are also
experiencing the consequences of COVID-19 within
their own families and communities. Their dedication
and commitment to supporting residents in such
difficult circumstances has been remarkable.
The ‘Fourth Wave’, which escalated in the community
during November and into January 2023, resulted in
a partial reversal of this decline, which was repeated
during the ‘Fifth Wave’ in May and June 2023.
Nevertheless, the high level of vaccination rates
and the effectiveness of anti-viral medications is
frequently resulting in shortened periods of infection
and lower levels of impact on the health of residents
and staff compared to prior periods. This has resulted
in the direct operational and financial impacts of
COVID-19 continuing to reduce, supported by the
extension of Government grant schemes to recover
the majority of costs associated with managing
outbreaks.
At other times during the year, the extent of COVID-19
in the wider community has been reflected in lower
frequency and impact of outbreaks in the whole
sector, including the Group’s homes.
2022-23 Annual Report | Estia Health 23
Sustainability
As one of Australia’s largest providers in aged care services, Estia Health is
committed to the generation of value, both in financial and non-financial aspects,
for our stakeholders. This includes our residents, their families, our employees,
investors and the broader community. Our corporate strategic framework is
structured around five fundamental pillars: People, Customer, Community, Quality
and Growth. These pillars define how we deliver our industry-leading aged care
services. Integrated across each of these pillars is the principle of sustainability,
demonstrating our commitment to addressing environmental, social and
governance (ESG) challenges.
We believe that the integration of sustainability principles into our overall strategy, procedures and practices,
recognises that this is an important part of creating value for all our stakeholders. This year, we continued to
advance our performance across environmental, social and governance domains, with a dedicated Sustainability
Committee, comprised of Executives and Senior Management, with the responsibility of formulating and
implementing sustainability initiatives, monitoring performance metrics and focussing on strategic targets
within the Sustainability Strategy.
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Approach to sustainability
Our 2020-2024 Sustainability Strategy recognises the long-term viability and profitability of the Group. This
depends on the wellbeing of employees, our commitment to fostering and integrating with local communities
and the ongoing health and preservation of natural environments. The Estia Health 2020-2024 Sustainability
Framework is mapped against the United Nations Sustainable Development Goals (SDGs), with key projects and
initiatives aimed at achieving priority targets within our Sustainability Framework in the three focus areas of:
Supporting our people; Enhancing our community; and Respecting our environment.
Supporting our people
Caring for the safety and wellbeing of our residents and employees continues to be the highest priority of Estia
Health. The safety and care of our residents is achieved through the skills, dedication and compassionate care
of our people. In the aged care sector, the pursuit of talent and the ability to attract and retain a highly skilled
workforce persist as a challenge, both for our industry and our organisation. Our strategic workforce approach,
based upon organisational culture, career progression and employee value proposition, aims to set us apart
from others in the sector, as we seek to become the residential aged care employer of choice. We do this by
offering a safe, caring and supportive environment for our people to grow their careers, develop skills and work
collaboratively as an important member of the Estia Health family.
Enhancing our community
Estia Health aged care homes provide vital social infrastructure within our 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. Our commitment to community engagement goes beyond the
boundaries of our homes, and we recognise the importance of our residents maintaining their connections with
the broader community. It is through these connections that our residents can build meaningful relationships,
fostering a sense of belonging and connectedness, enriching the lives of our residents. Throughout the year,
all of our aged care homes have consistently maintained active community engagement plans, positively
contributing to our immediate surroundings while also reinforcing our commitment to being a responsible and
engaged member of the broader community.
Respecting our environment
We recognise our role in ensuring the enduring sustainability of our organisation and the planet for protection
of the environment for future generations. In line with our commitment to the environment, we continued in
our work in the reduction of greenhouse gas emissions, more efficient energy consumption, responsible water
usage and effective waste management. We monitor climate-related risks and opportunities. In doing so, we
align ourselves with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
The TCFD roadmap, outlined in the Directors’ Report which forms part of the annual financial report section of
this Annual Report, sets out the Group strategy and provides a structured framework which guides our efforts in
assessing and mitigating climate-related risks while also harnessing the opportunities they present.
2022-23 Annual Report | Estia Health 25
FY23 sustainability outcomes
Foundation
Focus area
Alignment to SDG
Description
health & safety
Wellbeing
Supporting our people
Lost Time Injury Frequency Rate (LTIFR) 1
Estia Health employees who have completed psychological first aid
training
Fy24
target
Fy23
outcome
6.0
4%
8.1
3.1%
Diversity & inclusion
Gender pay gap for equivalent roles 2
Zero
2.2%
Training & development
Recruitment to leadership roles internally
50%
41%
Energy & carbon
Reduction in operational emissions intensity (Scope 1 and 2)
20%
19%
Climate resilience
Assets assessed for vulnerability to climate change
100%
100%
Respecting our environment
Waste
Generated waste diverted from landfill 3
30%
20%
Water
Supply chain
Community connection
Social impact
Enhancing our community
1 LTIFR target was adjusted from 3.0 to 6.0 in December 2022
2 Defined as zero gender pay gap for equivalent roles (defined as within a statistical tolerance range of +/- 2%)
3 Waste diversion target was adjusted from 50% to 30% in December 2022
4 Target adjusted from ‘High risk suppliers that have completed an additional screening for modern slavery risks’ in December 2022
5 CER superseded by NQIP - CER reporting ceased as of 31 March 2023
26 Estia Health | 2022-23 Annual Report
Average water consumption intensity reduction
Under review
Audit
Commenced
Key suppliers representing 80% of total non-direct employee
costs will have Sustainability and Modern Slavery commitments
incorporated into new or renewed contracts 4
80% by value of
73% by value of
total expenses
total expenses
Homes that have an active and bespoke community engagement
plan updated annually
100%
100%
Designed, implemented, and annually report against a Social Impact
87%
76%
Framework 5
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Foundation
Focus area
Alignment to SDG
Description
health & safety
Wellbeing
Supporting our people
Lost Time Injury Frequency Rate (LTIFR) 1
Estia Health employees who have completed psychological first aid
training
Fy24
target
Fy23
outcome
6.0
4%
8.1
3.1%
Diversity & inclusion
Gender pay gap for equivalent roles 2
Zero
2.2%
Training & development
Recruitment to leadership roles internally
50%
41%
Energy & carbon
Reduction in operational emissions intensity (Scope 1 and 2)
20%
19%
Climate resilience
Assets assessed for vulnerability to climate change
100%
100%
Respecting our environment
Waste
Generated waste diverted from landfill 3
30%
20%
Water
Supply chain
Community connection
Social impact
Enhancing our community
Average water consumption intensity reduction
Under review
Audit
Commenced
Key suppliers representing 80% of total non-direct employee
costs will have Sustainability and Modern Slavery commitments
incorporated into new or renewed contracts 4
80% by value of
total expenses
73% by value of
total expenses
Homes that have an active and bespoke community engagement
plan updated annually
100%
100%
Designed, implemented, and annually report against a Social Impact
Framework 5
87%
76%
2022-23 Annual Report | Estia Health 27
Risk Management
The Board, the Board Risk Management Committee and management level
committees are committed to the development and implementation, monitoring,
review and continuous improvement of Estia Health’s risk management approach
and framework.
The Group’s risk management approach is an
integrated, continuous process aimed at ensuring
strategic and operational objectives are achieved
and maintained, with internal control systems
encompassing all policies, processes, standard
operating procedures and practices established
by management and / or the Board to provide
reasonable assurance that:
• established corporate and business strategies and
objectives are achieved
• risk exposure is identified and adequately
monitored and managed
• resources are acquired economically, adequately
protected and managed efficiently and effectively
in carrying out the Group’s business
Risk Management Framework
• significant financial, managerial and operating
information is accurate, relevant, timely and reliable
• there is an adequate level of compliance with
policies, standards, procedures and applicable laws
and regulations.
The framework adopts a continuous improvement
approach ensuring supporting process and practices
continually evolve. While risk management is part
of the responsibility of all Estia Health employees,
managers, leaders and ultimately the Board, each risk
has an identified executive leadership team member
as an owner, with new and emerging risk reviewed
regularly within the framework.
Audit Committee
Line 3
Board
Risk Committee
Clinical Governance
Committee
Line 2
Line 1
Nomination and
Remuneration Committee
Executive Risk
Committee
e
t
i
t
e
p
p
A
d
n
a
e
c
n
a
r
e
o
T
l
Quality
Improvement
Committee
Clinical
Development
Steering
Committee
WhS and
People
Committees
Environmental,
Social and
Governance
(Sustainability)
Committee
LT.
Governance/
Security
Committee
g
n
i
t
r
o
p
e
R
d
n
a
n
o
i
t
a
l
a
c
s
E
Operations and Line Management
28 Estia Health | 2022-23 Annual Report
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Three lines of defence
1st Line Roles
2nd Line Roles
3rd Line Roles
• Front line employees and
• Executive Risk Committee
• Risk Committee (Board
Three Lines Model
l
s
e
o
R
management
• Operations and Executive
management
• Home-level Continuous
Improvement Committee
• Clinical Governance
Committee (CGC)
subcommittee)
• Internal & External Audit
Executive Management Team
Executive Risk Committee
Risk Committee
• Oversee the effectiveness of
risk management system and
controls
• Oversee compliance with
the legal and regulatory
requirements
• Make recommendations to the
Board regarding risks, actions
adequacy of risk framework
and disclosure on risk
Internal & External Audit
• Evaluates and tests internal
controls
• Sets and implements policy/
process requirements in
adherence to risk management
framework
• Provides non-clinical oversight
• Takes reports from committees
and Executive on risk matters
Clinical Governance Committee
(CGC)
• Reviews policies and
outcomes of clinical practice
and oversight of clinical
governance Quality and Risk
Team
• Independent oversight,
coaching, support, challenge
and monitoring of risk
awareness, identification and
management
• Coordinate responses to key
regulatory changes
s
e
i
t
i
l
i
b
i
s
n
o
p
s
e
R
• Consider risk within strategic,
operational and planning
reviews
• Understand and aware
of legislative / regulatory
obligations
• Collaborate with 2nd line to
effectively identify, measure
and report risk and compliance
breaches
• Create and maintain a culture
that proactively manages risk
and compliance
• Makes decisions being mindful
of creating and protecting
value
Line Management (Home,
Central Services)
• Primary responsibility for
effective day to day risk
treatment
• Ensures strong internal
controls
• Awareness of risk processes
and how and where to escalate
events
• Following guidance on risk or
risk events
Home Level – Continuous
Improvement Committee
• Oversee and report to QIC
and CDSC on effectiveness of
quality and risk activities at
home level
d
r
a
o
B
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t
l
a
e
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a
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&
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a
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e
v
o
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s
e
e
s
r
e
v
O
2022-23 Annual Report | Estia Health 29
30 Estia Health | 2022-23 Annual Report
Tax
Transparency
Report
For the year ended 30 June 2023
Estia Health Limited
ABN 37 160 986 201
Chief Financial Officer’s Introduction
Tax Governance and Strategy
Tax Reconciliations and Contributions
Income Tax Benefit Reconciliation
Reconciliation of Income Tax Benefit
to Current Tax Payable
Explanation of Current Tax Payable
Explanation of Material Temporary and Non-Temporary
Differences
Summary of Tax Contributions
32
33
33
33
34
34
34
35
2022-23 Annual Report | Estia Health 31
Chief Financial Officer’s
Introduction
Estia Health Limited (the “Group”) is one of Australia’s largest residential aged care
providers with more than 8,000 employees caring for over 8,000 residents during
the year across 73 homes in New South Wales, Queensland, Victoria and South
Australia.
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, developing and commissioning
new homes, enhancing existing homes and
complementary acquisitions
• 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
• Seeks to maintain constructive working
relationships with the Australian Taxation Office
(“ATO”) and other relevant tax authorities.
transparency report provides information on the
Group’s tax affairs for FY23, including our tax strategy
and governance, effective tax rate, and Australian tax
contributions. This tax transparency report should be
read in conjunction with the financial statements on
pages 94 to 148 of this Annual Report.
The purpose of this tax transparency report is to
provide an overview of the tax contributions made
by the Group and provide further information in
relation to the Group’s tax governance process and
tax profile. The information contained within this
tax transparency report has been sourced from
the audited financial statements contained within
this Annual Report and other records of the Group.
All information relates to the financial and income
tax return years ended 30 June 2023 and 30 June
2022. All currency is in Australian Dollars, which is
consistent with the currency reported in the audited
financial statements.
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 responsibilities and the extent of
our contribution to tax generation, collection and
remittance to the relevant tax authorities in Australia.
The information provided in this tax transparency
report is released on a voluntary basis in accordance
with the recommendations contained in the Board of
Taxation’s Voluntary Tax Transparency Code. This tax
Anthony Rice
Chief Financial Officer
October 2023
32 Estia Health | 2022-23 Annual Report
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
TAx GOVERNANCE AND STRATEGY
The Group’s tax governance is overseen by the Board’s Audit Committee. The Board Tax Policy and Tax Risk
Management Framework guide the Group’s approach to tax risk, outlines how the Group operates and are
approved and implemented by the Board’s Audit Committee. 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
• the provision of full and timely disclosures
• 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 the position taken is “more
likely to be correct than incorrect”, as defined in the Taxation Administration Act 1953. Tax positions taken in
relation to significant items where this definition is considered as potentially open to challenge are reported to
the Board’s Audit Committee. Where appropriate, the Group engages with its external advisers to receive 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 objectives and are not driven by the
objective of securing tax outcomes.
TAx RECONCILIATIONS AND CONTRIBuTIONS
INCOME TAx BENEFIT RECONCILIATION
A full reconciliation of the Group’s accounting loss for the year to its income tax benefit is included in Note
B7 to the financial statements on page 108 of this Annual Report. The Group’s accounting loss has been
determined in accordance with Australian Accounting Standards (the “Standards”). From this accounting loss,
the Group applies Australian tax legislation to determine its taxable income or loss for the period, by deducting
allowable deductions from assessable income.
For FY23, the Group has determined that it has tax losses to which it applied the Australian statutory income
tax rate of 30% (2022: 30%) to calculate the income tax benefit for the year.
Accounting loss before income tax
2023
2022
$’000
$’000
(43,373)
(73,558)
At the Australian statutory income tax rate of 30% (2022: 30%)
(13,012)
(22,067)
Adjustments in respect of income tax of previous year
Utilisation of previously unrecognised tax losses
Non-deductible expenses
Income tax benefit
Effective tax benefit rate
(2)
(166)
3,705
31
-
840
(9,475)
(21,196)
(21.8%)
(28.8%)
The Group’s Effective Tax Rate of negative 21.8% (2022: negative 28.8%) deviates from the Australian statutory
income tax rate of 30% due to the non-deductible expenses incurred in the current year, including acquisition
related costs of $8,588,000 ($2,576,000 tax effected ) (2022: Nil) and various other immaterial non-deductible
costs, reducing the income tax benefit to the Group.
2022-23 Annual Report | Estia Health 33
TAx RECONCILIATIONS AND CONTRIBuTIONS (Continued)
RECONCILIATION OF INCOME TAx BENEFIT TO CURRENT TAx PAYABLE
Income tax benefit
Add / (subtract):
Net temporary differences
Under provision in prior years
2023
$’000
2022
$’000
(9,475)
(21,196)
24,496
-
17,795
(2,137)
Current tax expense / (benefit) included in income tax expense
15,021
(5,538)
Add / (subtract):
Tax refunds from / (payments to) tax authorities
8,870
(7,584)
Income tax payable acquired upon business combinations
Net opening balance
Net current tax payable / (receivable)
491
(11,960)
-
1,162
12,422
(11,960)
ExPLANATION OF CURRENT TAx PAYABLE
As at 30 June 2023, the Group has a current tax payable balance of $12,422,000.
The Group received the tax refund from the ATO in November 2022 relating to the tax receivable balance
of $11,960,000 reported at 30 June 2022. As result of the reported tax loss during FY22 the Group was not
required to remit monthly PAYG instalments subsequent to the processing of the FY22 income tax return in
September 2022.
ExPLANATION OF MATERIAL TEMPORARY AND NON-TEMPORARY DIFFERENCES
A detailed reconciliation of accounting loss to income tax benefit and material temporary and non-temporary
differences is disclosed in Note B7 to the financial statements on page 108 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
purposes. The deferred tax assets and liabilities closing balances at each year end that created the movement
in the material temporary differences in the 30 June 2023 year are summarised in the table below.
Deferred tax assets / (liabilities) relating to:
Amortisation of bed licences
Accelerated depreciation and impairment
Accrued income and expenses
Net deferred tax liabilities
2023
$’000
2022
$’000
(23,480)
(46,961)
(54,916)
(59,562)
19,947
22,564
(58,449)
(83,959)
The total FY23 movement in net deferred tax liabilities of $25,510,000 comprises three components:
• $24,496,000 charged to the consolidated statement of profit or loss
• $343,000 credited to equity
• $1,357,000 arose upon business combinations
34 Estia Health | 2022-23 Annual Report
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
TAx RECONCILIATIONS AND CONTRIBuTIONS (Continued)
Of the amount charged to the consolidated statement of profit or loss, $23,481,000 mainly arises from
the amortisation charge of $80,466,000 relating to bed licences. This amortisation is as a result of the
Government’s decision to abolish the Aged Care Approvals Round which will be effective on 30 June 2024,
with bed licences ceasing to exist at this date. Under tax legislation, bed licences are classified as capital assets,
therefore the related depreciation is not deductible for tax purposes in the years when it occurs. However, a
capital loss should become available to be carried forward when the abolition of bed licences becomes effective
on 30 June 2024. This capital loss could be utilised against future capital gains of the Group, subject to
prevailing tax legislation and tax loss recoupment tests.
SUMMARY OF TAx CONTRIBUTIONS
Taxes paid / (refunded) by type
Income tax, net
Payroll tax
Fringe benefits tax
Council rates
Land tax
Stamp duties, net1
Total taxes paid, net
Taxes collected and remitted by type
Employee PAYG withholding
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
1 Included in the prior year was a refund of stamp duties of $977,000 from the NSW State Revenue Office.
2023
$’000
(8,870)
23,983
137
2,019
349
415
2022
$’000
7,584
20,715
70
2,077
653
(531)
18,033
30,568
85,495
186
81,388
629
(20,759)
(15,670)
64,922
66,347
56,189
24,747
2,019
82,955
74,001
20,837
2,077
96,915
2022-23 Annual Report | Estia Health 35
36 Estia Health | 2022-23 Annual Report
Annual
Financial
Report
For the year ended 30 June 2023
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
Notes to the Consolidated Financial Statements
A About this Report
B Our Performance
C Assets and Liabilities
D Capital, Financing, RADs and Risk
E Other Information
Directors’ Declaration
Independent Auditor’s Report
Additional Information
38
39
93
94
95
96
97
98
98
101
114
133
144
149
150
158
2022-23 Annual Report | Estia Health 37
Corporate Information
ABN 37 160 986 201
DIRECTORS
Dr. Gary H Weiss, AM
Chairman
Sean Bilton
Managing Director and CEO
(Appointed 11 July 2022)
Norah Barlow, ONZM
Property and Investment Committee Chair
Paul Foster
Nomination and Remuneration Committee Chair
Helen Kurincic
Risk Management Committee Chair
Karen Penrose
Audit Committee Chair
Professor Simon Willcock, AM
(Commenced 1 September 2022)
Ian Thorley
Managing Director and CEO
(Resigned 13 July 2022)
COMPANy SECRETARy
Leanne Ralph
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
King Wood & Mallesons
Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Thomson Geer
Rialto South Tower
525 Collins Street
Melbourne VIC 3000
BANKERS
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
DIRECTORS’ REPORT
The names and qualifications of the Directors of Estia Health Limited (“the Company”) and its subsidiaries
(collectively the “Group” or “Estia Health”) 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 year unless otherwise stated.
DIRECTORS
The names and qualifications of the Directors of Estia Health Limited (“the Company”) and its subsidiaries
(collectively the “Group” or “Estia Health”) 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 year 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 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.
SEAN BILTON (MANAGING DIRECTOR AND CEO)
Sean was appointed as the Managing Director and CEO on 11 July 2022. Sean held the roles of Chief Operating
Officer and Deputy CEO prior to the appointment.
Sean holds a Bachelor of Economics from UNSW, is a Fellow of the Financial Services Institute of Australia and a
graduate of the Advanced Management Program at INSEAD.
NORAH BARLOW ONZM (PROPERTY AND INVESTMENT COMMITTEE CHAIR)
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.
University of NSW.
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 (with Merit) from the University of Wollongong and a Master of Arts from the
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.
PROFESSOR SIMON WILLCOCK AM
Simon was appointed to the Board on 1 September 2022 as an Independent Non-executive Director.
Simon has been the independent chair of the Group’s Clinical Governance Committee since 2019 and has an
extensive academic and clinical career including a number of Commonwealth and State Ministerial appointments.
He is a Director of Sydney North Primary Health Network and was previously a Director and Chair of Avant Mutual
Group. Simon is currently Program Director for Primary Care and Wellbeing Services at MQ Health, a subsidiary
of Macquarie University.
IAN THORLEY (FORMER 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 retired from the role of Managing Director
and CEO with effect from 11 July 2022, resigned as a director on 13 July 2022 and remained with the Company
until 29 July 2022.
Ian holds a Bachelor of Health Administration and a Master of Commerce from the University of NSW.
38 Estia Health | 2022-23 Annual Report
Estia Health Limited
4
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Directors’ Report
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
The names and qualifications of the Directors of Estia Health Limited (“the Company”) and its subsidiaries
(collectively the “Group” or “Estia Health”) 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 year unless otherwise stated.
DIRECTORS
The names and qualifications of the Directors of Estia Health Limited (“the Company”) and its subsidiaries
(collectively the “Group” or “Estia Health”) 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 year 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 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.
SEAN BILTON (MANAGING DIRECTOR AND CEO)
Sean was appointed as the Managing Director and CEO on 11 July 2022. Sean held the roles of Chief Operating
Officer and Deputy CEO prior to the appointment.
Sean holds a Bachelor of Economics from UNSW, is a Fellow of the Financial Services Institute of Australia and a
graduate of the Advanced Management Program at INSEAD.
NORAH BARLOW ONZM (PROPERTY AND INVESTMENT COMMITTEE CHAIR)
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 (with Merit) from the University of Wollongong and a Master of Arts from the
University of NSW.
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.
PROFESSOR SIMON WILLCOCK AM
Simon was appointed to the Board on 1 September 2022 as an Independent Non-executive Director.
Simon has been the independent chair of the Group’s Clinical Governance Committee since 2019 and has an
extensive academic and clinical career including a number of Commonwealth and State Ministerial appointments.
He is a Director of Sydney North Primary Health Network and was previously a Director and Chair of Avant Mutual
Group. Simon is currently Program Director for Primary Care and Wellbeing Services at MQ Health, a subsidiary
of Macquarie University.
IAN THORLEY (FORMER 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 retired from the role of Managing Director
and CEO with effect from 11 July 2022, resigned as a director on 13 July 2022 and remained with the Company
until 29 July 2022.
Ian holds a Bachelor of Health Administration and a Master of Commerce from the University of NSW.
Estia Health Limited
2022-23 Annual Report | Estia Health 39
4
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
Chair
Audit Committee
Karen Penrose
Nomination &
Remuneration
Committee
Paul Foster
Risk Management
Committee
Helen Kurincic
Property &
Investment
Committee
Norah Barlow ONZM
Member
Member
Member
Dr. Gary H Weiss AM Dr. Gary H Weiss AM
Paul Foster
Dr. Gary H Weiss AM
Helen Kurincic
Helen Kurincic
Karen Penrose
Paul Foster
Professor
Simon Willcock AM1
1 Appointed 1 September 2022.
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
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
Directors.
Dr. Gary H Weiss AM
Sean Bilton1
Norah Barlow ONZM
Paul Foster
Helen Kurincic
28
28
28
28
28
Karen Penrose
28
Professor Simon Wilcock AM2 25
Ian Thorley3
-
28
28
28
27
28
27
20
-
8
-
-
-
8
8
-
-
8
-
-
-
8
8
-
-
5
-
-
5
5
-
-
-
5
-
-
5
5
-
-
-
-
-
-
5
5
5
5
-
-
-
-
5
5
5
5
-
4
-
4
4
-
-
-
-
4
-
4
4
-
-
-
-
(A) Number of meetings eligible to attend.
(B) Number of meetings attended.
1 Appointed 11 July 2022
2 Appointed 1 September 2022
3 Resigned 11 July 2022
All Directors have a standing invitation to attend Committee meetings and regularly attend meetings of
Committees for which they are not members. Such attendance is not reflected in the above tables.
The Board may establish other sub-committees, from time to time, as and when required.
DIRECTORS’ REPORT
DIRECTORS’ HOLDINGS
Dr. Gary H Weiss AM
Sean Bilton1
Norah Barlow ONZM
Paul Foster
Helen Kurincic
Karen Penrose
Professor Simon Willcock AM2
1 Appointed 11 July 2022
2 Appointed 1 September 2022
COMPANY SECRETARY
LEANNE RALPH
Number of
ordinary
shares
103,312
184,191
129,474
24,000
50,000
44,071
-
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 2023 continued to be the provision of services
in residential aged care homes in Australia as an Approved Provider under the Aged Care Act 1997 (“the Act”).
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, developing and commissioning new
homes, enhancing existing homes, complementary acquisitions; and
develop additional earnings from related services within the continuum of aged care.
40 Estia Health | 2022-23 Annual Report
Estia Health Limited
5
Estia Health Limited
6
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
COMMITTEE MEMBERSHIP
DIRECTORS’ REPORT
DIRECTORS’ HOLDINGS
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:
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Membership
Audit Committee
Nomination &
Remuneration
Committee
Paul Foster
Risk Management
Committee
Property &
Investment
Committee
Karen Penrose
Helen Kurincic
Norah Barlow ONZM
Dr. Gary H Weiss AM Dr. Gary H Weiss AM
Paul Foster
Dr. Gary H Weiss AM
Helen Kurincic
Helen Kurincic
Karen Penrose
Paul Foster
Professor
Simon Willcock AM1
Chair
Member
Member
Member
1 Appointed 1 September 2022.
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
Audit
Meetings
Committee
Committee
Nomination &
Remuneration
Risk
Management
Committee
Property &
Investment
Committee
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
28
28
28
28
28
28
-
28
28
28
27
28
27
20
-
8
-
-
-
8
8
-
-
8
-
-
-
8
8
-
-
5
-
-
5
5
-
-
-
5
-
-
5
5
-
-
-
-
-
-
5
5
5
5
-
-
-
-
5
5
5
5
-
4
-
4
4
-
-
-
-
4
-
4
4
-
-
-
-
Dr. Gary H Weiss AM
Sean Bilton1
Norah Barlow ONZM
Paul Foster
Helen Kurincic
Karen Penrose
Ian Thorley3
1 Appointed 11 July 2022
2 Appointed 1 September 2022
3 Resigned 11 July 2022
Professor Simon Wilcock AM2 25
(A) Number of meetings eligible to attend.
(B) Number of meetings attended.
All Directors have a standing invitation to attend Committee meetings and regularly attend meetings of
Committees for which they are not members. Such attendance is not reflected in the above tables.
The Board may establish other sub-committees, from time to time, as and when required.
Dr. Gary H Weiss AM
Sean Bilton1
Norah Barlow ONZM
Paul Foster
Helen Kurincic
Karen Penrose
Professor Simon Willcock AM2
1 Appointed 11 July 2022
2 Appointed 1 September 2022
COMPANY SECRETARY
LEANNE RALPH
Number of
ordinary
shares
103,312
184,191
129,474
24,000
50,000
44,071
-
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 2023 continued to be the provision of services
in residential aged care homes in Australia as an Approved Provider under the Aged Care Act 1997 (“the Act”).
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, developing and commissioning new
homes, enhancing existing homes, complementary acquisitions; and
develop additional earnings from related services within the continuum of aged care.
Estia Health Limited
5
Estia Health Limited
2022-23 Annual Report | Estia Health 41
6
DIRECTORS’ REPORT
THE MARKET IN WHICH ESTIA HEALTH OPERATES
Services Provided
The Group provides permanent residential care in a safe and supportive environment for people who are no
longer able to live at their own home. Short-term respite and reablement 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.
Size of the Residential Aged Care Sector
The sector is one of the largest in Australia, employing more than 278,000 workers, and represents 0.9% of the
Australian GDP.
The Department of Health and Aged Care 2021-22 Report on the Operation of the Act disclosed the following in
relation to residential aged care:
Approved Providers
Residential aged care homes
2021/22
2020/21
805
2,671
830
2,704
Permanent residential aged care operational places at the end of the year
219,965
219,105
Number of permanent residents in residential aged care homes at the end of the year
180,750
183,894
important time in their lives.
Number of people receiving permanent care services during the year
Number of people receiving respite care services during the year
Total funding and subsidies provided to Approved Providers under the Act by the
Australian Government
245,719
243,117
70,993
67,775
$14.6 billion
$14.1 billion
Ageing Demographic
The ageing of the Australian population and the influence of the “baby boomer” generation is expected to result in
a marked increase in Australia’s aged population.
This demographic shift is expected to increase the number of Australians likely to need aged care, including
residential aged care, in coming years. The Group’s growth strategy is to provide services to meet this growing
demand.
Access to Services
Under the Act, in order to access Government supported residential aged care services, potential residents must
be assessed as qualifying for such services by an Aged Care Assessment Team ("ACAT") and may then choose
a residential aged care home that best meets their needs. Only Approved Providers are eligible to provide
services which qualify for Government funding support.
Regulatory Environment
The provision of services eligible for Government funding in residential aged care homes in Australia may only be
delivered by Approved Providers and is highly regulated under the Act. The Royal Commission into Aged Care
Quality and Safety (“Royal Commission”) delivered its final report in March 2021 which contained multiple
recommendations intended to lead to a higher quality sector with greater choice and transparency available to
residents and their families. The majority of these recommendations have now been implemented by Government
with the intention of securing a higher level of confidence in the use of taxpayer-funded Government subsidies to
the sector. Further reference to these changes is made later in this report.
DIRECTORS’ REPORT
THE GROUP'S PORTFOLIO
The Group is one of the largest Approved Providers in Australia with 73 homes operating across four states.
Number of
Number of
Average
homes
places
home size
Significantly
refurbished
homes
New South Wales
Queensland
South Australia
Victoria
Group
18
10
19
26
73
1,975
1,104
1,535
2,106
6,720
110
110
81
81
92
CARE AND SERVICES PROVIDED
Number of
places in
Approximate
number of
single
rooms
1,303
1,035
1,481
1,842
5,661
18
10
19
26
73
staff
2,240
1,330
1,860
2,790
8,220
The quality of care and services provided to residents is the foremost priority of the Group. The Group is
committed to delivering the highest quality care to people who choose to place their trust in Estia Health at an
Each Estia Health home provides care, accommodation, hotel and lifestyle services, led by a Residential Aged
Care Manager, supported by a team of nurses, clinical support staff, personal care assistants, lifestyle, allied
health, chefs, cleaning, laundry and maintenance staff. 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 Professor Simon Willcock AM, who joined the Board
of Directors on 1 September 2022.
The application of these policies and procedures at a home level is managed by the Residential Aged Care
Manager and Care Director of each home supported by regional teams. Quality of care is monitored against
uniform clinical quality indicators, which are measured and reviewed by the Quality Improvement Committee.
Internal reviews of quality of care are regularly undertaken by the Group’s Quality Team and key clinical
performance data is assessed against industry benchmarks.
Upon entry to a home, the specific needs of new residents are assessed, in conjunction with families or carers in
order to develop personalised clinical care, nutrition and lifestyle plans.
Food and nutrition form a critical part of the care and well-being of all residents. Menus are reviewed by
nutritionists and meals are prepared fresh on-site every day by Estia Health chefs. Wherever possible, food is
sourced from Australian producers with a focus on fresh, high-quality ingredients. All Estia Health chefs attend in-
house masterclass workshops as part of their development in line with the Group’s commitment to delivering
nutritious, high quality and enjoyable meals for all residents.
Lifestyle coordinators 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 through relationships with outside organisations including churches and schools.
Regular surveying of resident satisfaction levels is conducted. Up until 31 March 2023, this exercise was
undertaken using the same criteria originally developed by the Aged Care Quality and Safety Commission
(“ACQSC”) using Consumer Experience Reports (“CER”) during inspection visits to homes, which ask residents to
respond to a series of question on a five-point scale. The Group achieved an overall average 92% (2022: 93%)
satisfaction rating during the 9 months to 31 March 2023, based on the number of respondents that reported they
were satisfied with services "most of the time" or "always".
The ACQSC introduced an expansion of the National Quality Indicator Program (“NQIP”) program from April 2023
to require mandatory quarterly surveying of all residents asking them to report against a new series of questions
relating to Consumer experience and Quality of life, with results to be publicly available.
The Group is re-establishing its internal customer satisfaction reporting to align with the new ACQSC program to
avoid duplication and ensure consistency in future reporting.
In addition, the Group regularly assesses performance of homes based on the new Star Ratings system, which
was introduced in December 2022 across four measures. More information on Star Ratings is shown on page 47.
42 Estia Health | 2022-23 Annual Report
Estia Health Limited
7
Estia Health Limited
8
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
THE MARKET IN WHICH ESTIA HEALTH OPERATES
Services Provided
The Group provides permanent residential care in a safe and supportive environment for people who are no
longer able to live at their own home. Short-term respite and reablement 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.
Size of the Residential Aged Care Sector
The sector is one of the largest in Australia, employing more than 278,000 workers, and represents 0.9% of the
The Department of Health and Aged Care 2021-22 Report on the Operation of the Act disclosed the following in
Australian GDP.
relation to residential aged care:
Approved Providers
Residential aged care homes
Australian Government
Ageing Demographic
demand.
Access to Services
Permanent residential aged care operational places at the end of the year
219,965
219,105
Number of permanent residents in residential aged care homes at the end of the year
180,750
183,894
Number of people receiving permanent care services during the year
Number of people receiving respite care services during the year
Total funding and subsidies provided to Approved Providers under the Act by the
2021/22
2020/21
805
2,671
830
2,704
245,719
243,117
70,993
67,775
$14.6 billion
$14.1 billion
The ageing of the Australian population and the influence of the “baby boomer” generation is expected to result in
a marked increase in Australia’s aged population.
This demographic shift is expected to increase the number of Australians likely to need aged care, including
residential aged care, in coming years. The Group’s growth strategy is to provide services to meet this growing
Under the Act, in order to access Government supported residential aged care services, potential residents must
be assessed as qualifying for such services by an Aged Care Assessment Team ("ACAT") and may then choose
a residential aged care home that best meets their needs. Only Approved Providers are eligible to provide
services which qualify for Government funding support.
Regulatory Environment
The provision of services eligible for Government funding in residential aged care homes in Australia may only be
delivered by Approved Providers and is highly regulated under the Act. The Royal Commission into Aged Care
Quality and Safety (“Royal Commission”) delivered its final report in March 2021 which contained multiple
recommendations intended to lead to a higher quality sector with greater choice and transparency available to
residents and their families. The majority of these recommendations have now been implemented by Government
with the intention of securing a higher level of confidence in the use of taxpayer-funded Government subsidies to
the sector. Further reference to these changes is made later in this report.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
THE GROUP'S PORTFOLIO
The Group is one of the largest Approved Providers in Australia with 73 homes operating across four states.
New South Wales
Queensland
South Australia
Victoria
Group
Number of
homes
18
Number of
places
1,975
Average
home size
110
10
19
26
73
1,104
1,535
2,106
6,720
110
81
81
92
CARE AND SERVICES PROVIDED
Significantly
refurbished
homes
18
Number of
places in
single
rooms
1,303
Approximate
number of
staff
2,240
10
19
26
73
1,035
1,481
1,842
5,661
1,330
1,860
2,790
8,220
The quality of care and services provided to residents is the foremost priority of the Group. The Group is
committed to delivering the highest quality care to people who choose to place their trust in Estia Health at an
important time in their lives.
Each Estia Health home provides care, accommodation, hotel and lifestyle services, led by a Residential Aged
Care Manager, supported by a team of nurses, clinical support staff, personal care assistants, lifestyle, allied
health, chefs, cleaning, laundry and maintenance staff. 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 Professor Simon Willcock AM, who joined the Board
of Directors on 1 September 2022.
The application of these policies and procedures at a home level is managed by the Residential Aged Care
Manager and Care Director of each home supported by regional teams. Quality of care is monitored against
uniform clinical quality indicators, which are measured and reviewed by the Quality Improvement Committee.
Internal reviews of quality of care are regularly undertaken by the Group’s Quality Team and key clinical
performance data is assessed against industry benchmarks.
Upon entry to a home, the specific needs of new residents are assessed, in conjunction with families or carers in
order to develop personalised clinical care, nutrition and lifestyle plans.
Food and nutrition form a critical part of the care and well-being of all residents. Menus are reviewed by
nutritionists and meals are prepared fresh on-site every day by Estia Health chefs. Wherever possible, food is
sourced from Australian producers with a focus on fresh, high-quality ingredients. All Estia Health chefs attend in-
house masterclass workshops as part of their development in line with the Group’s commitment to delivering
nutritious, high quality and enjoyable meals for all residents.
Lifestyle coordinators 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 through relationships with outside organisations including churches and schools.
Regular surveying of resident satisfaction levels is conducted. Up until 31 March 2023, this exercise was
undertaken using the same criteria originally developed by the Aged Care Quality and Safety Commission
(“ACQSC”) using Consumer Experience Reports (“CER”) during inspection visits to homes, which ask residents to
respond to a series of question on a five-point scale. The Group achieved an overall average 92% (2022: 93%)
satisfaction rating during the 9 months to 31 March 2023, based on the number of respondents that reported they
were satisfied with services "most of the time" or "always".
The ACQSC introduced an expansion of the National Quality Indicator Program (“NQIP”) program from April 2023
to require mandatory quarterly surveying of all residents asking them to report against a new series of questions
relating to Consumer experience and Quality of life, with results to be publicly available.
The Group is re-establishing its internal customer satisfaction reporting to align with the new ACQSC program to
avoid duplication and ensure consistency in future reporting.
In addition, the Group regularly assesses performance of homes based on the new Star Ratings system, which
was introduced in December 2022 across four measures. More information on Star Ratings is shown on page 47.
Estia Health Limited
7
Estia Health Limited
2022-23 Annual Report | Estia Health 43
8
The Group continues to adopt a disciplined and carefully managed program of protective and preventative
measures in accordance with local health authorities and its own risk assessments. These measures have varied
throughout the year as external circumstances have evolved.
The impact of COVID-19 on the sector continued to reduce in the early part of the period, in line with the reduced
impact in the wider Australian community and reduced Public Health settings. This saw a reduction in outbreaks,
exposures and costs associated with Personal Protective Equipment (“PPE”), cleaning and waste disposal, as
well as a reduction in enforced staff absences through sickness.
The ‘Fourth Wave’, which escalated in the community during November and into January 2023, resulted in a
partial reversal of this decline, which was repeated during the ‘Fifth Wave’ in May and June 2023. Nevertheless,
the high level of vaccination rates and the effectiveness of anti-viral medications is frequently resulting in
shortened periods of infection and lower levels of impact on the health of residents and staff compared to prior
periods. This has resulted in the direct operational and financial impacts of COVID-19 continuing to reduce,
supported by the extension of Government grant schemes to recover the majority of costs associated with
managing outbreaks.
At other times during the year, the extent of COVID-19 in the wider community has been reflected in lower
frequency and impact of outbreaks in the whole sector, including the Group’s homes.
The Group has ensured that all staff without medical exemption have had at least three doses of an approved
COVID-19 vaccine, and mandates participation in the annual influenza vaccine program. In addition, the Group
has strongly encouraged and facilitated vaccination of residents.
More than three years since the pandemic was declared, the Group’s frontline staff continue to demonstrate
extraordinary support and care for residents and families at a time when many are also experiencing the
consequences of COVID-19 within their own families and communities. Their dedication and commitment to
supporting residents in such difficult circumstances has been remarkable.
GRANT RECOVERY OF ELIGIBLE COVID-19 RELATED COSTS
Approved Providers are able to apply to recover some of the costs associated with COVID-19 outbreaks through
Government grant schemes. These grants do not cover preventative measures taken by the Group outside of
outbreak periods in specific homes. The period covered by grant schemes has been extended on multiple
occasions, including a new scheme covering costs up to 31 December 2023. The grant schemes are demand-
driven and amounts allocated to the schemes have been increased on several occasions consistent with that
definition.
Details of the amounts claimed, received and the financial impact of the long delays associated with the
Government’s processing of claims is shown on page 51 of this Report. Notwithstanding the processing delays
occurring within the Department of Health and Aged Care, directors are confident based on experience to date
that at least 95% by value of all claims submitted but not yet paid will be accepted by the Department and
subsequently paid by Government.
The Government has indicated that in the medium-term it would expect cost impacts of COVID-19 to be
incorporated into the recommendations of IHACPA for recurrent funding.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REGULATORY ENVIRONMENT AND REFORM POST ROYAL COMMISSION
COVID-19
The Royal Commission was established on 8 October 2018 and delivered its final report in March 2021.
The Government’s response has seen multiple reforms to the Residential Aged Care sector, the majority of which
have now been legislated, including changes to funding models, introducing the Independent Health and Aged
Care Pricing Authority (“IHACPA”), removing capacity constraints on bed licenses, mandating minimum care
minutes and increased transparency, reporting and governance.
It is anticipated that these changes will lead to a better quality sector with greater choice and transparency
available to residents, leading to a higher level of confidence in the use of taxpayer-funded Government subsidies
to the sector.
The Group already operated in accordance with many of the proposed changes to Governance, Quality and
Safety and does not currently expect to require further significant investment in order to meet the governance and
prudential requirements.
The most significant changes which have now been enacted which impact future financial performance relate to:
completion of the abolition of the Aged Care Approval Rounds (“ACAR”) restrictive licensing regime from
30 June 2024;
the replacement of the Aged Care Funding Instrument (“ACFI”) with an alternative case-mix model
(referred to as AN-ACC) in October 2022;
the introduction of a publicly available 5 Star Rating system for all homes from December 2022;
the creation of IHACPA to provide cost and pricing advice and recommendations to the Government in
relation to the funding of aged care services, with its first advice recently made to take effect from 1July
2023;
24/7 attendance by a Registered Nurse; and
mandated minimum care minutes from 1 October 2023, increasing from 200 to 215 per day from 1
October 2024.
SECTOR FINANCIAL SUSTAINABILITY
The Group has previously highlighted the critical role to be played by IHACPA in maintaining financial
sustainability of the sector following successive years where increases in Government funding did not keep pace
with increasing input costs.
In May 2023, the Government announced a significant increase in funding to take effect from 1 July 2023 based
on IHACPA’s initial advice and recommendations which were published shortly afterwards. These increases
followed the introduction of AN-ACC to replace ACFI in October 2022, with a significant uplift in funding to enable
Approved Providers to finance the Work Value Case decision of the Fair Work Commission (“FWC”) and
contribute to minimum mandated care minutes, amongst other costs.
The Group is encouraged by the Government’s response to follow the initial advice from IHACPA in relation to
increasing funding levels to meet the cost of service delivery as a first step in ensuring the enduring financial
sustainability of the sector.
Based on its own assessment, the Group concurs with other industry commentators in expecting that in relation to
FY24, the net effect of the following key changes is likely to be broadly neutral to the financial performance of the
sector.
Beyond FY24, future sustainability and financial performance of the sector is expected to be largely dependent on
the continued pricing advice of IHACPA and the Government’s response to that advice.
The Group also notes the establishment by Government of the Aged Care Taskforce in June 2023 to review
funding arrangements for aged care and develop options for a system that is fair and equitable for all Australians.
The taskforce will build on Royal Commission recommendations and review funding arrangements for aged care
with a focus on:
contribution arrangements that will support a sustainable system;
equity for older people needing aged care now and into the future, and for all Australians contributing to
aged care funding through their taxes;
making innovation the sector default; and
enhancing the elements of the system that Australians value, including putting people using aged care at
the centre of the funding arrangements.
The Group will continue to advocate for sector reform which will 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.
44 Estia Health | 2022-23 Annual Report
Estia Health Limited
9
Estia Health Limited
10
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REGULATORY ENVIRONMENT AND REFORM POST ROYAL COMMISSION
COVID-19
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
The Group continues to adopt a disciplined and carefully managed program of protective and preventative
measures in accordance with local health authorities and its own risk assessments. These measures have varied
throughout the year as external circumstances have evolved.
The impact of COVID-19 on the sector continued to reduce in the early part of the period, in line with the reduced
impact in the wider Australian community and reduced Public Health settings. This saw a reduction in outbreaks,
exposures and costs associated with Personal Protective Equipment (“PPE”), cleaning and waste disposal, as
well as a reduction in enforced staff absences through sickness.
The ‘Fourth Wave’, which escalated in the community during November and into January 2023, resulted in a
partial reversal of this decline, which was repeated during the ‘Fifth Wave’ in May and June 2023. Nevertheless,
the high level of vaccination rates and the effectiveness of anti-viral medications is frequently resulting in
shortened periods of infection and lower levels of impact on the health of residents and staff compared to prior
periods. This has resulted in the direct operational and financial impacts of COVID-19 continuing to reduce,
supported by the extension of Government grant schemes to recover the majority of costs associated with
managing outbreaks.
At other times during the year, the extent of COVID-19 in the wider community has been reflected in lower
frequency and impact of outbreaks in the whole sector, including the Group’s homes.
The Group has ensured that all staff without medical exemption have had at least three doses of an approved
COVID-19 vaccine, and mandates participation in the annual influenza vaccine program. In addition, the Group
has strongly encouraged and facilitated vaccination of residents.
More than three years since the pandemic was declared, the Group’s frontline staff continue to demonstrate
extraordinary support and care for residents and families at a time when many are also experiencing the
consequences of COVID-19 within their own families and communities. Their dedication and commitment to
supporting residents in such difficult circumstances has been remarkable.
GRANT RECOVERY OF ELIGIBLE COVID-19 RELATED COSTS
Approved Providers are able to apply to recover some of the costs associated with COVID-19 outbreaks through
Government grant schemes. These grants do not cover preventative measures taken by the Group outside of
outbreak periods in specific homes. The period covered by grant schemes has been extended on multiple
occasions, including a new scheme covering costs up to 31 December 2023. The grant schemes are demand-
driven and amounts allocated to the schemes have been increased on several occasions consistent with that
definition.
Details of the amounts claimed, received and the financial impact of the long delays associated with the
Government’s processing of claims is shown on page 51 of this Report. Notwithstanding the processing delays
occurring within the Department of Health and Aged Care, directors are confident based on experience to date
that at least 95% by value of all claims submitted but not yet paid will be accepted by the Department and
subsequently paid by Government.
The Government has indicated that in the medium-term it would expect cost impacts of COVID-19 to be
incorporated into the recommendations of IHACPA for recurrent funding.
The Royal Commission was established on 8 October 2018 and delivered its final report in March 2021.
The Government’s response has seen multiple reforms to the Residential Aged Care sector, the majority of which
have now been legislated, including changes to funding models, introducing the Independent Health and Aged
Care Pricing Authority (“IHACPA”), removing capacity constraints on bed licenses, mandating minimum care
minutes and increased transparency, reporting and governance.
It is anticipated that these changes will lead to a better quality sector with greater choice and transparency
available to residents, leading to a higher level of confidence in the use of taxpayer-funded Government subsidies
The Group already operated in accordance with many of the proposed changes to Governance, Quality and
Safety and does not currently expect to require further significant investment in order to meet the governance and
The most significant changes which have now been enacted which impact future financial performance relate to:
completion of the abolition of the Aged Care Approval Rounds (“ACAR”) restrictive licensing regime from
to the sector.
prudential requirements.
30 June 2024;
the replacement of the Aged Care Funding Instrument (“ACFI”) with an alternative case-mix model
(referred to as AN-ACC) in October 2022;
the introduction of a publicly available 5 Star Rating system for all homes from December 2022;
the creation of IHACPA to provide cost and pricing advice and recommendations to the Government in
relation to the funding of aged care services, with its first advice recently made to take effect from 1July
24/7 attendance by a Registered Nurse; and
mandated minimum care minutes from 1 October 2023, increasing from 200 to 215 per day from 1
2023;
October 2024.
SECTOR FINANCIAL SUSTAINABILITY
The Group has previously highlighted the critical role to be played by IHACPA in maintaining financial
sustainability of the sector following successive years where increases in Government funding did not keep pace
with increasing input costs.
In May 2023, the Government announced a significant increase in funding to take effect from 1 July 2023 based
on IHACPA’s initial advice and recommendations which were published shortly afterwards. These increases
followed the introduction of AN-ACC to replace ACFI in October 2022, with a significant uplift in funding to enable
Approved Providers to finance the Work Value Case decision of the Fair Work Commission (“FWC”) and
contribute to minimum mandated care minutes, amongst other costs.
The Group is encouraged by the Government’s response to follow the initial advice from IHACPA in relation to
increasing funding levels to meet the cost of service delivery as a first step in ensuring the enduring financial
sustainability of the sector.
sector.
Based on its own assessment, the Group concurs with other industry commentators in expecting that in relation to
FY24, the net effect of the following key changes is likely to be broadly neutral to the financial performance of the
Beyond FY24, future sustainability and financial performance of the sector is expected to be largely dependent on
the continued pricing advice of IHACPA and the Government’s response to that advice.
The Group also notes the establishment by Government of the Aged Care Taskforce in June 2023 to review
funding arrangements for aged care and develop options for a system that is fair and equitable for all Australians.
The taskforce will build on Royal Commission recommendations and review funding arrangements for aged care
with a focus on:
contribution arrangements that will support a sustainable system;
equity for older people needing aged care now and into the future, and for all Australians contributing to
aged care funding through their taxes;
making innovation the sector default; and
the centre of the funding arrangements.
enhancing the elements of the system that Australians value, including putting people using aged care at
The Group will continue to advocate for sector reform which will 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.
Estia Health Limited
9
Estia Health Limited
2022-23 Annual Report | Estia Health 45
10
DIRECTORS’ REPORT
WORKFORCE
The aged care sector is currently experiencing a significant workforce shortage, with the Committee for Economic
Development of Australia (“CEDA”) in August 2021 estimating a shortfall of 35,000 workers in 2022 and a
projected need for an additional 170,000 workers by 2030, as reported by CEDA in 2021. Over recent years, the
attractiveness of the sector for workers has been hampered by factors such as below-average pay compared to
other healthcare sectors, the lingering effects of COVID-19, negative media coverage, and adverse sentiment
resulting from the Royal Commission. Additionally, competition from other healthcare providers and the aging
global population further compounds the shortage of skilled staff.
The sector's workforce challenges are expected to intensify with the forthcoming increase in mandatory care
minutes, set to take effect from October 2023. This situation is exacerbated by the current record low levels of
unemployment within the economy, which further hinders providers' efforts in attracting workers to the sector.
Consequently, maintaining fully resourced homes to ensure continuity of care becomes challenging, driving
unsustainable levels of expensive agency labour and overtime to meet staffing needs in the sector.
To address these issues, the recent 15% increase in the Aged Care Award by the FWC, effective from 30 June
2023, will aid in making employment in the sector more competitive with other sectors. Furthermore, the
significant increase in the level of inward migration is expected to make a positive contribution to workforce
availability and stability.
Estia Health has placed a strong emphasis on staff engagement and retention initiatives, resulting in a reduction
in staff turnover during the year. The Group has made strategic investments in programs designed to attract,
retain, train, and develop employees, aiming to effectively compete with other providers while addressing the
staffing gaps exacerbated by the impact of COVID-19.
Addressing the workforce shortage in the aged care sector and successfully attracting and retaining skilled staff
will necessitate ongoing attention and collaboration between providers, the Government, and training institutions.
obligations.
ACCREDITATION CARE AND QUALITY
The Government has increased funding to the ACQSC, which in turn has increased its activity levels and visits
across the sector as the impact of COVID-19 has reduced. The ACQSC has also assumed responsibility for
prudential and regulatory oversight.
The Group has implemented and complied with increased reporting obligations for all Approved Providers during
the year, including detailed quarterly financial reporting and various clinical indicators in the NQIP.
All homes remained fully accredited at all times during the year and at the date of this report, with 42 of the
Group’s homes undergoing a full reaccreditation during the financial year. During the year and up to 18 August
2023, no home had received a Sanction or a Notice to Agree. One home entered into an Undertaking To
Remedy a Non-Compliance, which has since been satisfied.
External complaints to ACQSC were 55% below industry levels reported in the most recent ACQSC published
data. 35% of the Group’s homes did not receive an external complaint during the year.
DIRECTORS’ REPORT
ABOLITION OF ACAR AND IMPLICATIONS FOR BED LICENCE VALUATIONS
As previously reported, in September 2021, the Government affirmed its decision to abolish ACAR and
associated supply restrictions on bed licences, which is expected to take full effect on 30 June 2024. The
Directors support this move to more competitive markets as one of the most significant items within the reform
agenda to date.
Importantly, the Government introduced simple transitional arrangements prior to the full implementation date to
enable Approved Providers with homes and beds ready to operate, but without existing licences, to secure access
to subsidised fees under the Act.
As a result of the former Government’s announcement and the transitional arrangement that allows providers to
apply directly to the Department of Health and Aged Care for an allocation of places, the secondary market for
bed licences has ceased. The Group commissioned an independent assessment, which has supported its own
analysis, that the fair value of bed licences is nil.
Notwithstanding the directors’ view that the fair value of existing operational bed licences is nil, the directors have
determined that in order to comply with Accounting Standards and the Group’s accounting policy in relation to
Goodwill and Intangible Assets as set out in Note C4 to the Group’s Consolidated Financial Statements (the
“Financial Statements”), bed licences are now regarded as finite life intangible assets with the carrying value
being amortised on a straight line basis over the period from 1 October 2021 to 30 June 2024.
The Financial Statements in this Report include a bed licence amortisation charge of $57.0 million after tax. The
carrying value of bed licences in the Balance Sheet on 30 June 2023 was $80.5 million (2022: $160.9 million).
Other than the potential future tax implications explained below, the amortisation charge has no impact on the
cash flows of the Group and nor does it impact the Group’s compliance with its debt covenants or regulatory
Subject to further analysis, it is currently anticipated that the abolition of bed licences should result in a capital
loss of up to $200 million on 30 June 2024, available to be carried forward from that date which could be utilised
against future capital gains of the Group, subject to prevailing tax legislation and tax loss recoupment tests. It is
unlikely that the criteria to recognise an associated deferred tax asset in the Financial Statements will be met until
such time as future capital gains become probable.
STAR RATINGS FOR RESIDENTIAL AGED CARE
The Government commenced publishing its Star Ratings for every residential aged care home on the My Aged
Care portal in December 2022. The system provides an overall rating based on four criteria – compliance,
customer experience, quality indicators and average care minutes. The Group’s current overall ratings compared
to the sector as a whole are shown below. The Group will continue to review the ratings of each home, in
conjunction with its own pre-existing quality control and continuous improvement approach.
Overall portfolio star rating by category
Overall star rating
Proportion of homes in each category
3.4
3.5
3.3
3.2
3.6
3.3
4.5
4.3
2.5
2.2
52.9%
50.1%
44.7%
42.7%
Overall
Resident
Compliance
Staffing
Quality
experience
1 Star
2 Star
3 Star
4 Star
5 Star
Estia Health
Sector
Estia Health
Sector
4.4%
2.8%
0.0%
0.2%
2.2%
0.0%
1 The sector averages above were sourced from MyAgedCare as published on 7 August 2023.
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
5.0
4.0
3.0
2.0
1.0
-
46 Estia Health | 2022-23 Annual Report
Estia Health Limited
11
Estia Health Limited
12
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
WORKFORCE
The aged care sector is currently experiencing a significant workforce shortage, with the Committee for Economic
Development of Australia (“CEDA”) in August 2021 estimating a shortfall of 35,000 workers in 2022 and a
projected need for an additional 170,000 workers by 2030, as reported by CEDA in 2021. Over recent years, the
attractiveness of the sector for workers has been hampered by factors such as below-average pay compared to
other healthcare sectors, the lingering effects of COVID-19, negative media coverage, and adverse sentiment
resulting from the Royal Commission. Additionally, competition from other healthcare providers and the aging
global population further compounds the shortage of skilled staff.
The sector's workforce challenges are expected to intensify with the forthcoming increase in mandatory care
minutes, set to take effect from October 2023. This situation is exacerbated by the current record low levels of
unemployment within the economy, which further hinders providers' efforts in attracting workers to the sector.
Consequently, maintaining fully resourced homes to ensure continuity of care becomes challenging, driving
unsustainable levels of expensive agency labour and overtime to meet staffing needs in the sector.
To address these issues, the recent 15% increase in the Aged Care Award by the FWC, effective from 30 June
2023, will aid in making employment in the sector more competitive with other sectors. Furthermore, the
significant increase in the level of inward migration is expected to make a positive contribution to workforce
availability and stability.
Estia Health has placed a strong emphasis on staff engagement and retention initiatives, resulting in a reduction
in staff turnover during the year. The Group has made strategic investments in programs designed to attract,
retain, train, and develop employees, aiming to effectively compete with other providers while addressing the
staffing gaps exacerbated by the impact of COVID-19.
Addressing the workforce shortage in the aged care sector and successfully attracting and retaining skilled staff
will necessitate ongoing attention and collaboration between providers, the Government, and training institutions.
ACCREDITATION CARE AND QUALITY
The Government has increased funding to the ACQSC, which in turn has increased its activity levels and visits
across the sector as the impact of COVID-19 has reduced. The ACQSC has also assumed responsibility for
prudential and regulatory oversight.
The Group has implemented and complied with increased reporting obligations for all Approved Providers during
the year, including detailed quarterly financial reporting and various clinical indicators in the NQIP.
All homes remained fully accredited at all times during the year and at the date of this report, with 42 of the
Group’s homes undergoing a full reaccreditation during the financial year. During the year and up to 18 August
2023, no home had received a Sanction or a Notice to Agree. One home entered into an Undertaking To
Remedy a Non-Compliance, which has since been satisfied.
External complaints to ACQSC were 55% below industry levels reported in the most recent ACQSC published
data. 35% of the Group’s homes did not receive an external complaint during the year.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
ABOLITION OF ACAR AND IMPLICATIONS FOR BED LICENCE VALUATIONS
As previously reported, in September 2021, the Government affirmed its decision to abolish ACAR and
associated supply restrictions on bed licences, which is expected to take full effect on 30 June 2024. The
Directors support this move to more competitive markets as one of the most significant items within the reform
agenda to date.
Importantly, the Government introduced simple transitional arrangements prior to the full implementation date to
enable Approved Providers with homes and beds ready to operate, but without existing licences, to secure access
to subsidised fees under the Act.
As a result of the former Government’s announcement and the transitional arrangement that allows providers to
apply directly to the Department of Health and Aged Care for an allocation of places, the secondary market for
bed licences has ceased. The Group commissioned an independent assessment, which has supported its own
analysis, that the fair value of bed licences is nil.
Notwithstanding the directors’ view that the fair value of existing operational bed licences is nil, the directors have
determined that in order to comply with Accounting Standards and the Group’s accounting policy in relation to
Goodwill and Intangible Assets as set out in Note C4 to the Group’s Consolidated Financial Statements (the
“Financial Statements”), bed licences are now regarded as finite life intangible assets with the carrying value
being amortised on a straight line basis over the period from 1 October 2021 to 30 June 2024.
The Financial Statements in this Report include a bed licence amortisation charge of $57.0 million after tax. The
carrying value of bed licences in the Balance Sheet on 30 June 2023 was $80.5 million (2022: $160.9 million).
Other than the potential future tax implications explained below, the amortisation charge has no impact on the
cash flows of the Group and nor does it impact the Group’s compliance with its debt covenants or regulatory
obligations.
Subject to further analysis, it is currently anticipated that the abolition of bed licences should result in a capital
loss of up to $200 million on 30 June 2024, available to be carried forward from that date which could be utilised
against future capital gains of the Group, subject to prevailing tax legislation and tax loss recoupment tests. It is
unlikely that the criteria to recognise an associated deferred tax asset in the Financial Statements will be met until
such time as future capital gains become probable.
STAR RATINGS FOR RESIDENTIAL AGED CARE
The Government commenced publishing its Star Ratings for every residential aged care home on the My Aged
Care portal in December 2022. The system provides an overall rating based on four criteria – compliance,
customer experience, quality indicators and average care minutes. The Group’s current overall ratings compared
to the sector as a whole are shown below. The Group will continue to review the ratings of each home, in
conjunction with its own pre-existing quality control and continuous improvement approach.
5.0
4.0
3.0
2.0
1.0
-
Overall portfolio star rating by category
4.5
4.3
3.4
3.5
3.3
3.2
3.6
3.3
2.5
2.2
Overall
Resident
experience
Compliance
Staffing
Quality
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Overall star rating
Proportion of homes in each category
52.9%
50.1%
44.7%
42.7%
4.4%
2.8%
0.0%
0.2%
2.2%
0.0%
1 Star
2 Star
3 Star
4 Star
5 Star
Estia Health
Sector
Estia Health
Sector
1 The sector averages above were sourced from MyAgedCare as published on 7 August 2023.
Estia Health Limited
11
Estia Health Limited
2022-23 Annual Report | Estia Health 47
12
DIRECTORS’ REPORT
PROPOSED ACQUISITION OF THE COMPANY BY BAIN CAPITAL
On 23 March 2023 the Company advised the ASX that it had received a confidential, non-binding and indicative
proposal from Bain Capital to acquire all of the shares in Estia Health by way of a Scheme of Arrangement (the
“Scheme”), under which Estia Health shareholders would receive $3.00 cash per share, adjusted for any
dividends paid or payable after that date.
On 7 June 2023, the Company advised the ASX that it had received a revised non-binding and conditional
proposal from Bain Capital to acquire 100% of the issued capital of Estia Health by way of a Scheme under the
terms of which Estia Health shareholders would receive $3.20 per share in cash, less the cash amount of any
dividends declared and paid after 7 June 2023.
Following careful consideration, the Board of Estia Health determined that it was in the interests of shareholders
to progress the proposal and as such entered into a Process Deed to allow Bain Capital to undertake further due
diligence to enable it to provide a binding proposal.
On 7 August 2023 the Company advised the ASX that it had entered into a Scheme Implementation Agreement
(“SIA”) with Bain Capital for the acquisition of all of the issued shares in the Company by way of a Scheme. The
SIA was also provided to the ASX on 7 August 2023.
Implementation of the Scheme is subject to various conditions which are set out in the SIA, including an
Independent Expert’s Report concluding that the Scheme is in the best interests of Estia Health shareholders,
approval of the Foreign Investment Review Board, and no material change in financial circumstances.
The Board has concluded that the Scheme is in the best interests of shareholders and has unanimously
recommended that shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject
to an independent expert concluding that the Scheme is fair and reasonable and in the best interests of
shareholders.
A booklet explaining the details of the Scheme will be sent to shareholders, who will then be given the opportunity
to vote on the recommended Scheme at a meeting which is expected to be held in November 2023. If the
Scheme is approved and implemented, shareholders will receive total cash consideration of $3.20 per share, less
the cash amount of any dividends declared and paid after the date of entry into the SIA.
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW
REVIEW OF FINANCIAL PERFORMANCE
For the first time in many years, the decline in sector margins was halted with the introduction of increased
funding from 1 October 2022 when the new AN-ACC pricing model was introduced, with an average increase in
daily subsidy rates of approximately $36 (2022: Nil).
During the year, the Group also experienced a lesser impact from COVID-19 with a consequential reduction in the
level of incremental costs relating to the prevention and response to COVID-19 at mature homes of $24.4 million
(2022: $49.8 million). The Group also benefitted from an improved rate of processing and acceptance of grant
claims, including amounts relating to prior periods.
As a result, overall EBITDA from the Group’s mature homes, excluding the five operational homes acquired
during the period, increased to $116.0 million (2022: $37.5 million).
The loss after tax for the period, reduced to $33.9 million (2022: Loss after tax of $52.4 million).
Four Year Summary Financial Performance1,2
Government revenues – excluding temporary funding and
grants
Government temporary funding and grants
Resident and other revenues
Total operating revenues and grants
Employee benefits expenses
Non-staff expenses
COVID-19 incremental costs5
EBITDA – Mature Homes6
Other income
Net impact of new homes and home closures
Depreciation, amortisation and impairment (excluding bed
licence amortisation and goodwill impairment)
Impairment of two homes in Benalla and Bendigo
Net finance costs
Profit / (Loss) before tax and exceptional items
Associated income tax credit / (expense)
Profit / (Loss) before exceptional items
Bed licence amortisation
Business acquisition related costs
Impact of legislated change on employee leave provisions
Class action settlement
Goodwill impairment
Associated income tax credit
Profit / (Loss) for the year
2023
$’000
2022
$’000
20213
$’000
20204
$’000
520,874
51,281
166,564
738,719
472,525
7,888
149,003
629,416
443,218
21,426
147,406
612,050
426,188
7,382
146,310
579,880
(490,130)
(444,033)
(431,355)
(404,272)
(108,174)
(24,365)
(98,045)
(49,823)
116,050
37,515
102
4,205
913
455
(95,033)
(24,309)
61,353
9,487
(625)
(90,388)
(2,538)
82,682
214
491
(45,122)
(42,808)
(39,119)
(6,970)
(13,209)
3,586
(9,623)
(6,496)
20,911
(6,169)
14,742
(8,491)
35,777
(10,599)
25,178
(80,466)
(60,349)
(46,022)
(11,448)
(7,628)
55,259
(16,879)
38,380
(9,112)
(9,054)
-
-
(12,409)
26,354
17,610
(33,898)
(52,362)
3,272
5,605
(144,622)
2,535
(116,909)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 54 “Reconciliation of Non-IFRS Information” contains a reconciliation of the above table to the Financial
Statements. EBITDA and other measures are categorised as non-IFRS financial information prepared in
accordance with ASIC Regulatory Guide 230 - Disclosing non-IFRS financial information, issued in December
2011.
external auditors.
1. EBITDA and other measures have been adjusted from the reported information to assist readers to better understand the financial
performance of the business in each financial year. 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
2. All reported figures exclude Imputed DAP revenue on RADs and the equivalent Imputed Interest on RADs which have a net effect of nil on
reported profit. Note B1 of the Financial Statements provides further details.
3. In adopting the recently announced IFRIC changes for the accounting for SaaS arrangements the Group has re-stated certain previously
reported information for consistency purposes.
4. Information reported with no adjustment for the IFRIC changes for the accounting for SaaS Arrangements.
5. Refer to the section under “Incremental costs associated with COVID-19 prevention and response” for details.
6. “Mature Homes” (which exclude homes from the date of closure and homes acquired during the year and new homes in ramp-up) are homes
that have been opened for more than 12 months or if open for less than 12 months have greater than 85% occupancy at the commencement
of the financial year.
48 Estia Health | 2022-23 Annual Report
Estia Health Limited
13
Estia Health Limited
14
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
PROPOSED ACQUISITION OF THE COMPANY BY BAIN CAPITAL
On 23 March 2023 the Company advised the ASX that it had received a confidential, non-binding and indicative
proposal from Bain Capital to acquire all of the shares in Estia Health by way of a Scheme of Arrangement (the
“Scheme”), under which Estia Health shareholders would receive $3.00 cash per share, adjusted for any
dividends paid or payable after that date.
On 7 June 2023, the Company advised the ASX that it had received a revised non-binding and conditional
proposal from Bain Capital to acquire 100% of the issued capital of Estia Health by way of a Scheme under the
terms of which Estia Health shareholders would receive $3.20 per share in cash, less the cash amount of any
dividends declared and paid after 7 June 2023.
Following careful consideration, the Board of Estia Health determined that it was in the interests of shareholders
to progress the proposal and as such entered into a Process Deed to allow Bain Capital to undertake further due
diligence to enable it to provide a binding proposal.
On 7 August 2023 the Company advised the ASX that it had entered into a Scheme Implementation Agreement
(“SIA”) with Bain Capital for the acquisition of all of the issued shares in the Company by way of a Scheme. The
SIA was also provided to the ASX on 7 August 2023.
Implementation of the Scheme is subject to various conditions which are set out in the SIA, including an
Independent Expert’s Report concluding that the Scheme is in the best interests of Estia Health shareholders,
approval of the Foreign Investment Review Board, and no material change in financial circumstances.
The Board has concluded that the Scheme is in the best interests of shareholders and has unanimously
recommended that shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject
to an independent expert concluding that the Scheme is fair and reasonable and in the best interests of
shareholders.
A booklet explaining the details of the Scheme will be sent to shareholders, who will then be given the opportunity
to vote on the recommended Scheme at a meeting which is expected to be held in November 2023. If the
Scheme is approved and implemented, shareholders will receive total cash consideration of $3.20 per share, less
the cash amount of any dividends declared and paid after the date of entry into the SIA.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW
REVIEW OF FINANCIAL PERFORMANCE
For the first time in many years, the decline in sector margins was halted with the introduction of increased
funding from 1 October 2022 when the new AN-ACC pricing model was introduced, with an average increase in
daily subsidy rates of approximately $36 (2022: Nil).
During the year, the Group also experienced a lesser impact from COVID-19 with a consequential reduction in the
level of incremental costs relating to the prevention and response to COVID-19 at mature homes of $24.4 million
(2022: $49.8 million). The Group also benefitted from an improved rate of processing and acceptance of grant
claims, including amounts relating to prior periods.
As a result, overall EBITDA from the Group’s mature homes, excluding the five operational homes acquired
during the period, increased to $116.0 million (2022: $37.5 million).
The loss after tax for the period, reduced to $33.9 million (2022: Loss after tax of $52.4 million).
Four Year Summary Financial Performance1,2
Government revenues – excluding temporary funding and
grants
Government temporary funding and grants
Resident and other revenues
Total operating revenues and grants
Employee benefits expenses
Non-staff expenses
COVID-19 incremental costs5
EBITDA – Mature Homes6
Other income
Net impact of new homes and home closures
Depreciation, amortisation and impairment (excluding bed
licence amortisation and goodwill impairment)
Impairment of two homes in Benalla and Bendigo
Net finance costs
Profit / (Loss) before tax and exceptional items
Associated income tax credit / (expense)
Profit / (Loss) before exceptional items
Bed licence amortisation
Business acquisition related costs
Impact of legislated change on employee leave provisions
Class action settlement
Goodwill impairment
Associated income tax credit
Profit / (Loss) for the year
2023
$’000
2022
$’000
20213
$’000
20204
$’000
520,874
51,281
166,564
738,719
(490,130)
(108,174)
(24,365)
116,050
102
4,205
472,525
7,888
149,003
629,416
(444,033)
(98,045)
(49,823)
37,515
913
455
443,218
21,426
147,406
612,050
(431,355)
(95,033)
(24,309)
61,353
9,487
(625)
(46,022)
(11,448)
(7,628)
55,259
(16,879)
38,380
(80,466)
(9,112)
(9,054)
-
-
26,354
(33,898)
(45,122)
-
(6,970)
(13,209)
3,586
(9,623)
(60,349)
-
-
-
-
17,610
(52,362)
(42,808)
-
(6,496)
20,911
(6,169)
14,742
-
-
-
(12,409)
-
3,272
5,605
426,188
7,382
146,310
579,880
(404,272)
(90,388)
(2,538)
82,682
214
491
(39,119)
-
(8,491)
35,777
(10,599)
25,178
-
-
-
-
(144,622)
2,535
(116,909)
Page 54 “Reconciliation of Non-IFRS Information” contains a reconciliation of the above table to the Financial
Statements. EBITDA and other measures are categorised as non-IFRS financial information prepared in
accordance with ASIC Regulatory Guide 230 - Disclosing non-IFRS financial information, issued in December
2011.
1. EBITDA and other measures have been adjusted from the reported information to assist readers to better understand the financial
performance of the business in each financial year. 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.
2. All reported figures exclude Imputed DAP revenue on RADs and the equivalent Imputed Interest on RADs which have a net effect of nil on
reported profit. Note B1 of the Financial Statements provides further details.
3. In adopting the recently announced IFRIC changes for the accounting for SaaS arrangements the Group has re-stated certain previously
reported information for consistency purposes.
4. Information reported with no adjustment for the IFRIC changes for the accounting for SaaS Arrangements.
5. Refer to the section under “Incremental costs associated with COVID-19 prevention and response” for details.
6. “Mature Homes” (which exclude homes from the date of closure and homes acquired during the year and new homes in ramp-up) are homes
that have been opened for more than 12 months or if open for less than 12 months have greater than 85% occupancy at the commencement
of the financial year.
Estia Health Limited
13
Estia Health Limited
2022-23 Annual Report | Estia Health 49
14
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
Occupancy
The Group delivered 2,081,216 occupied bed days in the year (2022: 2,030,143 occupied bed days), an increase
of 51,073 days compared to the prior corresponding period. Average occupancy on its Mature Homes increased
to 92.3% compared to 91.6% in the previous year.
Average group occupancy levels on its Mature Homes (excluding the five acquisition homes) during the year have
improved as the recovery from COVID-19 continues. This recovery is taking a longer period in Victoria, where
occupancy averaged 86.8% in the year (2022: 86.4%) compared to 94.9% in the rest of the portfolio (2022:
94.1%).
New South Wales
Queensland
South Australia
Victoria
Total Group
Key Operating Metrics
Available bed days
Occupied bed days
Operating revenue per occupied bed day
Increase
Staff costs per occupied bed day (excl COVID-19)
Increase / (Decrease)
Non-staff costs per occupied bed day (excl COVID-19)
Increase / (Decrease)
Annualised EBITDA on Mature Homes per occupied bed
(excl COVID-19)
Spot
18 August
2023
93.7%
94.5%
97.9%
89.4%
Average
2023
92.9%
96.6%
96.5%
86.8%
Average
2022
91.1%
97.4%
96.3%
86.4%
93.5%
92.3%
91.6%
Average
2021
91.0%
96.1%
96.6%
85.9%
91.2%
2023
2,256,047
2,081,216
$330.3
7.9%
$235.5
7.7%
$52.0
7.6%
2022
2021
2020
2,216,782 2,256,916 2,175,868
2,030,143 2,057,794 2,026,915
$282.5
1.3%
$199.5
6.8%
$44.6
(10.8%)1
$306.2
6.8%
$218.7
4.4%
$48.3
4.5%
$287.0
1.6%
$209.6
5.1%
$46.2
3.6%
$15,632
$14,284
$11,394
$14,017
Grant recoveries
1 Decrease in FY20 followed the adoption of AASB16 impacting leasing costs.
Government Revenues
On 1 October 2022, the base ACFI subsidy and $10 per day basic daily fee supplement were replaced with the AN-
ACC subsidy. The impact of the change between the first quarter, when care fees were funded under the old ACFI
model, and the remainder of the year is shown below:
Total Government revenues (excluding grants and
temporary funding)
Occupied bed days
$123,619,000
519,826
$397,255,000
1,561,390
Average Government revenue per occupied bed day
$237.8
$254.4
$16.6
Q1
FY23
Q2-Q4
FY23
Increase/
(Decrease)
50 Estia Health | 2022-23 Annual Report
Estia Health Limited
15
Estia Health Limited
16
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
Staff costs
Staff costs at mature homes excluding the impact of the incremental costs associated with COVID outbreaks
increased by $46.1 million to $490.1 million (2022: $444.0 million). This increase arose from increasing resident
occupancy levels, Enterprise Agreement (EA) increases and a greater level of agency staff and overtime costs
associated with sector-wide staff shortages.
Impact of legislated change on employee leave provisions
Following the FWC‘s decision to increase the Aged Care Award by 15% for certain aged care workers, an
increase in annual leave and long service leave provisions for past service totalling $9.1 million was made in the
current financial year (2022: Nil). The Australian Government advised that a future grant opportunity would be
established to reimburse a proportion of eligible employees’ annual leave, personal leave and long service leave
entitlements accrued at 30 June 2023. However, no details of this scheme have been released and as such it has
not been possible to estimate the potential future financial benefits of such a grant opportunity if released.
Non-staff costs
costs.
Non-staff costs at mature homes excluding the impact of the incremental costs associated with COVID outbreaks
increased by $10.2 million to $108.2 million (2022: $98.0 million). This increase arose from increasing resident
occupancy levels, inflationary pressures on consumables including food and medical supplies, and higher utilities
Incremental costs associated with COVID-19 prevention and response
As referenced earlier in this report, the impact of COVID-19 on the sector continued to moderate in the early part
of the period in line with the reduced impact in the wider Australian community and lessened Public Health
settings. This saw a reduction in outbreaks, exposures and costs associated with Personal Protective Equipment
(PPE), cleaning and waste disposal, as well as a reduction in enforced staff absences through sickness.
Staff expenses
Non-staff expenses
Total incremental costs associated with COVID-19
prevention and response
16,220
8,145
24,365
49,823
H1
2023
$’000
10,988
5,232
H2
2023
$’000
3,813
4,332
2023
$’000
14,801
9,564
2022
$’000
36,512
13,311
Government grants primarily relate to amounts recoverable under Government grant schemes GO4863 and
GO6223 which reimburse some of the costs incurred during COVID-19 outbreaks. Non-monetary grants
represented personal protective equipment and supplies provided direct by Government. The Group has
recognised these grants where it has determined that it has reasonable assurance that they will be received. The
amount of grants recognised as income of the period is shown in the table below.
COVID-19 costs grant recoveries – All homes
COVID-19 Outbreak costs reimbursement (see further detail below)
Personal protective equipment consumed (non-monetary)
Other
Total Government grants recognised as income of the period
2023
$’000
50,604
825
199
51,628
2022
$’000
7,072
981
-
8,053
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
Occupancy
The Group delivered 2,081,216 occupied bed days in the year (2022: 2,030,143 occupied bed days), an increase
of 51,073 days compared to the prior corresponding period. Average occupancy on its Mature Homes increased
to 92.3% compared to 91.6% in the previous year.
Average group occupancy levels on its Mature Homes (excluding the five acquisition homes) during the year have
improved as the recovery from COVID-19 continues. This recovery is taking a longer period in Victoria, where
occupancy averaged 86.8% in the year (2022: 86.4%) compared to 94.9% in the rest of the portfolio (2022:
94.1%).
New South Wales
Queensland
South Australia
Victoria
Total Group
Key Operating Metrics
Available bed days
Occupied bed days
Increase
Increase / (Decrease)
Increase / (Decrease)
(excl COVID-19)
Government Revenues
Operating revenue per occupied bed day
Staff costs per occupied bed day (excl COVID-19)
Non-staff costs per occupied bed day (excl COVID-19)
Annualised EBITDA on Mature Homes per occupied bed
1 Decrease in FY20 followed the adoption of AASB16 impacting leasing costs.
18 August
Average
Average
Average
Spot
2023
93.7%
94.5%
97.9%
89.4%
93.5%
2023
92.9%
96.6%
96.5%
86.8%
92.3%
2022
91.1%
97.4%
96.3%
86.4%
91.6%
2021
91.0%
96.1%
96.6%
85.9%
91.2%
2023
2022
2021
2020
2,256,047
2,216,782 2,256,916 2,175,868
2,081,216
2,030,143 2,057,794 2,026,915
$330.3
7.9%
$235.5
7.7%
$52.0
7.6%
$306.2
6.8%
$218.7
4.4%
$48.3
4.5%
$287.0
1.6%
$209.6
5.1%
$46.2
3.6%
$282.5
1.3%
$199.5
6.8%
$44.6
(10.8%)1
On 1 October 2022, the base ACFI subsidy and $10 per day basic daily fee supplement were replaced with the AN-
ACC subsidy. The impact of the change between the first quarter, when care fees were funded under the old ACFI
model, and the remainder of the year is shown below:
Total Government revenues (excluding grants and
temporary funding)
Occupied bed days
Average Government revenue per occupied bed day
$16.6
Q1
FY23
Q2-Q4
Increase/
FY23
(Decrease)
$123,619,000
$397,255,000
519,826
$237.8
1,561,390
$254.4
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
Staff costs
Staff costs at mature homes excluding the impact of the incremental costs associated with COVID outbreaks
increased by $46.1 million to $490.1 million (2022: $444.0 million). This increase arose from increasing resident
occupancy levels, Enterprise Agreement (EA) increases and a greater level of agency staff and overtime costs
associated with sector-wide staff shortages.
Impact of legislated change on employee leave provisions
Following the FWC‘s decision to increase the Aged Care Award by 15% for certain aged care workers, an
increase in annual leave and long service leave provisions for past service totalling $9.1 million was made in the
current financial year (2022: Nil). The Australian Government advised that a future grant opportunity would be
established to reimburse a proportion of eligible employees’ annual leave, personal leave and long service leave
entitlements accrued at 30 June 2023. However, no details of this scheme have been released and as such it has
not been possible to estimate the potential future financial benefits of such a grant opportunity if released.
Non-staff costs
Non-staff costs at mature homes excluding the impact of the incremental costs associated with COVID outbreaks
increased by $10.2 million to $108.2 million (2022: $98.0 million). This increase arose from increasing resident
occupancy levels, inflationary pressures on consumables including food and medical supplies, and higher utilities
costs.
Incremental costs associated with COVID-19 prevention and response
As referenced earlier in this report, the impact of COVID-19 on the sector continued to moderate in the early part
of the period in line with the reduced impact in the wider Australian community and lessened Public Health
settings. This saw a reduction in outbreaks, exposures and costs associated with Personal Protective Equipment
(PPE), cleaning and waste disposal, as well as a reduction in enforced staff absences through sickness.
Staff expenses
Non-staff expenses
Total incremental costs associated with COVID-19
prevention and response
H1
2023
$’000
10,988
5,232
H2
2023
$’000
3,813
4,332
2023
$’000
14,801
9,564
2022
$’000
36,512
13,311
16,220
8,145
24,365
49,823
$15,632
$14,284
$11,394
$14,017
Grant recoveries
Government grants primarily relate to amounts recoverable under Government grant schemes GO4863 and
GO6223 which reimburse some of the costs incurred during COVID-19 outbreaks. Non-monetary grants
represented personal protective equipment and supplies provided direct by Government. The Group has
recognised these grants where it has determined that it has reasonable assurance that they will be received. The
amount of grants recognised as income of the period is shown in the table below.
COVID-19 costs grant recoveries – All homes
COVID-19 Outbreak costs reimbursement (see further detail below)
Personal protective equipment consumed (non-monetary)
Other
Total Government grants recognised as income of the period
2023
$’000
50,604
825
199
51,628
2022
$’000
7,072
981
-
8,053
Estia Health Limited
15
Estia Health Limited
2022-23 Annual Report | Estia Health 51
16
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
COVID-19 Outbreak Cost Grant Schemes GO4863 and GO6223
As referenced in the Group’s 2022 Annual Financial Report, delays continue in the Government’s processing of
grant applications across the whole aged care sector, including those of the Group. These delays resulted in
grants relating to FY22 costs being confirmed and received in FY23 with the potential to distort the view of the
financial performance of the Group between the two years. Since 31 December 2022, the Government has
invested additional resources in processing more than 11,000 claims made across the sector, which has resulted
in an increase in the amount and speed with which claims have been processed. The Group has experienced a
low rejection rate of some elements of its claims, with more than 95% by value accepted, and no claim has been
rejected entirely. The directors are confident that a significant majority of its lodged claims will be processed and
remitted prior to 31 December 2023.
As a result of these factors the Group has determined that the point in time when receipt becomes reasonably
assured for income recognition is the date that a properly prepared grant is lodged on the Government portal. In
prior periods, based on the limited experience of grant reimbursements at the time, the point of recognition was
determined to be the receipt of an outcome letter from the Government.
The status of claims at the date of this report is shown in the tables below.
Claims lodged
Relating to expenses incurred in FY22
Relating to expenses incurred in FY23
Total Claims lodged
Claims processed and approved
Claims submitted
Claims approved
Partially rejected claims
Claims outstanding at the end of the period
Income recognised in relation to claims outstanding at the end of the
period
Claims partially rejected subsequently
Claims outstanding at the report date, not yet recognised as
income
Income recognised
Grants Processed and Approved
Income recognised in relation to claims outstanding at the end of the
period
Total income recognised
2023
$’000
4,696
17,835
22,531
2022
$’000
37,138
-
37,138
Total
$’000
41,834
17,835
59,669
Claims relating to
expenses incurred in:
2023
$’000
17,835
(3,389)
(46)
14,400
2022
$’000
41,834
(37,170)
(1,170)
3,494
Total
claims
$’000
59,669
(40,559)
(1,216)
17,894
(13,815)
(151)
(3,302)
(104)
(17,117)
(255)
434
88
522
2023
$’000
33,487
17,117
50,604
2022
$’000
7,072
-
7,072
Total
$’000
40,559
17,117
57,676
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL POSITION AND CASH FLOWS
The Group’s balance sheet has $500.6 million (2022: $541.7 million) of equity supporting $1,869.3 million (2022:
$1,795.0 million) 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. On 30 June
2023, the Group had net bank debt of $43.8 million (2022: $79.6 million). Net operating cash inflows prior to RAD
flows were $101.8 million (2022: $32.7 million) in the period.
There has been no significant change in the Group’s financial position subsequent to 30 June 2023.
Bed Licences
Total assets include bed licences with a carrying value of $80.5 million (2022: $160.9 million) as at 30 June 2023,
less an associated deferred tax liability of $23.5 million (2022: $47.0 million), resulting in a net carrying value of
$57.0 million (2022: $113.9 million). The Directors consider that the fair value, less cost to dispose of bed
licences, is nil. However, in accordance with Australian Accounting Standards, the licences are deemed to have a
remaining value in use which requires the carrying value to be amortised over the period until formal abolition of
licences on 30 June 2024.
Goodwill
cost inflation.
RAD Balances
The carrying value of Goodwill in the Group Balance Sheet on 30 June 2023 was $717.6 million (2022: $681.0
million). Note C4 to the Financial Statements refers to the key assumptions relating to the assessment of this
value. A key assumption, consistent with the going concern concept and recent reform implementation,
particularly in relation to the operation of IHACPA, is that there will be a cessation of margin erosion in the sector
caused by historic decisions to limit increases in Government regulated fees and subsidies at a level below input
The balance of RADs (including amounts pending return to deceased resident estates, referred to as “probate
liability”) on 30 June 2023 was $1,027.5 million, compared to $884.1 million on 30 June 2022, representing an
increase of $143.4 million (2022: $20.2 million). As of 30 June 2023, RADs held on behalf of current residents
totalled $890.3 million (2022: $756.9 million), with probate liability increasing from $127.2 million to $137.2 million.
Average incoming RAD prices in the period were $461,410 (2022: $449,489) compared to outgoing RAD prices of
$437,605 (2022: $401,951) and average current RAD held of $355,058 (2022: $339,896).
Debt & Financing facilities
The Group has a $330.0 million Sustainability Linked Syndicated Financing Agreement (“SLSFA”). The SLSFA
also has an accordion feature (“Accordion”) which allows for the facility limit to be increased (subject to lender
consent and approval) by an additional $170.0 million.
Of the total debt facility available, 50% will mature in March 2025 and 50% in March 2026.
In addition, the Group has a separate additional Guarantee Facility (“Guarantee Facility”) with Westpac Banking
Corporation which permits bank guarantees to be issued up to the value of $15.1 million.
On 30 June 2023, $70.0 million of the SLSFA had been drawn (2022: $100.0 million) and Bank Guarantees on
issue totalled $15.0 million (2022: $7.7 million).
Under the SLSFA, the Group will be eligible for an interest rate margin reduction of up to five basis points per
annum dependent on the level of achievement of sustainability targets embedded in the agreement. A failure to
achieve any of the targets will result in an increased margin, up to five basis points per annum in total. These
targets include:
improving resident engagement and satisfaction
supporting employee well-being
reducing greenhouse gas emissions
portfolio energy efficiency performance
The Group’s performance against these targets during the prior year, which was independently reviewed, resulted
in an interest rate margin reduction of three basis points per annum over the current financial year (2022: nil).
52 Estia Health | 2022-23 Annual Report
Estia Health Limited
17
Estia Health Limited
18
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL PERFORMANCE (CONTINUED)
COVID-19 Outbreak Cost Grant Schemes GO4863 and GO6223
As referenced in the Group’s 2022 Annual Financial Report, delays continue in the Government’s processing of
grant applications across the whole aged care sector, including those of the Group. These delays resulted in
grants relating to FY22 costs being confirmed and received in FY23 with the potential to distort the view of the
financial performance of the Group between the two years. Since 31 December 2022, the Government has
invested additional resources in processing more than 11,000 claims made across the sector, which has resulted
in an increase in the amount and speed with which claims have been processed. The Group has experienced a
low rejection rate of some elements of its claims, with more than 95% by value accepted, and no claim has been
rejected entirely. The directors are confident that a significant majority of its lodged claims will be processed and
remitted prior to 31 December 2023.
As a result of these factors the Group has determined that the point in time when receipt becomes reasonably
assured for income recognition is the date that a properly prepared grant is lodged on the Government portal. In
prior periods, based on the limited experience of grant reimbursements at the time, the point of recognition was
determined to be the receipt of an outcome letter from the Government.
The status of claims at the date of this report is shown in the tables below.
Claims lodged
Relating to expenses incurred in FY22
Relating to expenses incurred in FY23
Total Claims lodged
Claims processed and approved
Claims submitted
Claims approved
Partially rejected claims
period
income
Income recognised
Claims outstanding at the end of the period
Income recognised in relation to claims outstanding at the end of the
Claims partially rejected subsequently
Claims outstanding at the report date, not yet recognised as
Grants Processed and Approved
Income recognised in relation to claims outstanding at the end of the
period
Total income recognised
2023
$’000
4,696
17,835
22,531
2022
$’000
37,138
-
37,138
Total
$’000
41,834
17,835
59,669
Claims relating to
expenses incurred in:
2023
$’000
17,835
(3,389)
(46)
14,400
2022
$’000
41,834
(37,170)
(1,170)
3,494
Total
claims
$’000
59,669
(40,559)
(1,216)
17,894
(13,815)
(151)
(3,302)
(104)
(17,117)
(255)
434
88
522
2023
$’000
33,487
17,117
50,604
2022
$’000
7,072
-
7,072
Total
$’000
40,559
17,117
57,676
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL POSITION AND CASH FLOWS
The Group’s balance sheet has $500.6 million (2022: $541.7 million) of equity supporting $1,869.3 million (2022:
$1,795.0 million) 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. On 30 June
2023, the Group had net bank debt of $43.8 million (2022: $79.6 million). Net operating cash inflows prior to RAD
flows were $101.8 million (2022: $32.7 million) in the period.
There has been no significant change in the Group’s financial position subsequent to 30 June 2023.
Bed Licences
Total assets include bed licences with a carrying value of $80.5 million (2022: $160.9 million) as at 30 June 2023,
less an associated deferred tax liability of $23.5 million (2022: $47.0 million), resulting in a net carrying value of
$57.0 million (2022: $113.9 million). The Directors consider that the fair value, less cost to dispose of bed
licences, is nil. However, in accordance with Australian Accounting Standards, the licences are deemed to have a
remaining value in use which requires the carrying value to be amortised over the period until formal abolition of
licences on 30 June 2024.
Goodwill
The carrying value of Goodwill in the Group Balance Sheet on 30 June 2023 was $717.6 million (2022: $681.0
million). Note C4 to the Financial Statements refers to the key assumptions relating to the assessment of this
value. A key assumption, consistent with the going concern concept and recent reform implementation,
particularly in relation to the operation of IHACPA, is that there will be a cessation of margin erosion in the sector
caused by historic decisions to limit increases in Government regulated fees and subsidies at a level below input
cost inflation.
RAD Balances
The balance of RADs (including amounts pending return to deceased resident estates, referred to as “probate
liability”) on 30 June 2023 was $1,027.5 million, compared to $884.1 million on 30 June 2022, representing an
increase of $143.4 million (2022: $20.2 million). As of 30 June 2023, RADs held on behalf of current residents
totalled $890.3 million (2022: $756.9 million), with probate liability increasing from $127.2 million to $137.2 million.
Average incoming RAD prices in the period were $461,410 (2022: $449,489) compared to outgoing RAD prices of
$437,605 (2022: $401,951) and average current RAD held of $355,058 (2022: $339,896).
Debt & Financing facilities
The Group has a $330.0 million Sustainability Linked Syndicated Financing Agreement (“SLSFA”). The SLSFA
also has an accordion feature (“Accordion”) which allows for the facility limit to be increased (subject to lender
consent and approval) by an additional $170.0 million.
Of the total debt facility available, 50% will mature in March 2025 and 50% in March 2026.
In addition, the Group has a separate additional Guarantee Facility (“Guarantee Facility”) with Westpac Banking
Corporation which permits bank guarantees to be issued up to the value of $15.1 million.
On 30 June 2023, $70.0 million of the SLSFA had been drawn (2022: $100.0 million) and Bank Guarantees on
issue totalled $15.0 million (2022: $7.7 million).
Under the SLSFA, the Group will be eligible for an interest rate margin reduction of up to five basis points per
annum dependent on the level of achievement of sustainability targets embedded in the agreement. A failure to
achieve any of the targets will result in an increased margin, up to five basis points per annum in total. These
targets include:
improving resident engagement and satisfaction
supporting employee well-being
reducing greenhouse gas emissions
portfolio energy efficiency performance
The Group’s performance against these targets during the prior year, which was independently reviewed, resulted
in an interest rate margin reduction of three basis points per annum over the current financial year (2022: nil).
Estia Health Limited
17
Estia Health Limited
2022-23 Annual Report | Estia Health 53
18
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL POSITION AND CASH FLOWS (CONTINUED)
Share Buy-Back
In November 2022, the Board resolved to extend its on-market Share Buy-Back scheme (“Buy-Back”) conducted
in accordance with the ASX rules for a further 12-month period. Directors considered that the Company’s current
share price at the time did not appropriately reflect the intrinsic value of the Group’s assets and business.
The Buy-Back is also part of the Group’s capital management strategy in maintaining a balance between
operating a high quality and sustainable business and preserving flexibility to invest capital for future value
accretive opportunities, while seeking to provide returns to shareholders through regular dividends and to remain
within a target bank debt gearing ratio of 1.4 – 1.9X EBITDA, subject to prevailing circumstances.
Any purchase of shares under the Buy-Back is permitted within the Group’s debt facilities and is funded from
existing cash reserves and undrawn debt capacity. The Buy-Back itself was not expected to impact the Group’s
ability to progress a disciplined growth strategy, nor its ability to continue to pay dividends in line with the Group’s
targeted payout ratio.
The directors determined that as a result of circumstances prevailing at various times over the course of the year,
that there were no periods when it would be appropriate within the ASX rules for the Company to undertake any
on-market purchases of its own shares.
RECONCILIATION OF NON-IFRS INFORMATION
The following tables provide a reconciliation of the non-IFRS financial information disclosed in the Four Year
Summary Financial Performance as disclosed within the Operating and Financial Review presented on page 49
of this report to the Financial Statements per ASIC Regulatory Guide 230 Disclosing non-IFRS financial
information, issued in December 2011.
Revenue
Total operating revenue and grants
Less: Government grants
Imputed DAP revenue on RAD and bond balances under AASB 16
Operating revenue from homes in ramp-up / closed homes
Total revenue
Government grants
Government grants – Mature Homes
Government grants – Homes in ramp-up
Total government grants
Employee benefit expenses
Employee benefit expenses – Mature Homes
COVID-19 incremental costs – Mature Homes
Employee benefit expenses – Homes in ramp-up / home closures
Total employee benefit expenses
Non-staff expenses2
Non-staff expenses – Mature Homes
COVID-19 incremental costs – Mature Homes
Non-staff expenses – Homes in ramp-up / home closures
Total non-staff expenses
2023
$’000
$’000
738,719
(51,281)
41,242
25,618
754,298
2022
$’000
20211
$’000
2020
$’000
629,416
(7,888)
39,328
10,211
671,067
612,050
(9,600)
42,316
1,539
646,305
579,880
-
43,407
13,621
636,908
51,281
347
51,628
7,888
165
8,053
21,426
-
21,426
7,382
-
7,382
490,130
14,801
17,560
522,491
444,033
36,512
8,228
488,773
431,355
11,198
1,555
444,108
404,272
931
10,797
416,000
108,174
9,564
4,200
121,938
98,045
13,311
1,693
113,049
95,033
13,111
609
108,753
90,388
1,607
2,334
94,329
Net finance costs
Net finance costs excluding imputed interest expense on RAD and bond balances under AASB 16
Imputed interest expense on RAD and bond balances under AASB 16
Total net finance costs
7,628
41,242
48,870
6,970
39,328
46,298
6,496
42,316
48,812
8,491
43,407
51,898
1. In adopting the IFRIC changes for the accounting for SaaS arrangements the Group has re-stated certain previously reported information for
consistency purposes.
2. Presented as administrative expenses, occupancy expenses and resident expenses in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income.
DIRECTORS’ REPORT
DEVELOPMENTS AND ACQUISITIONS
New Developments
As the COVID-19 pandemic and ACAR reforms were better understood, the Group re-commenced development
and expansion with the resumption of greenfield projects at St Ives and Aberglasslyn, both in NSW. These
developments, with a total of 236 new beds, are projected to open in FY24.
The Group is continuing to advance plans for future development in a measured way, including developing the
Group’s existing land portfolio, where expansion was previously challenged under the ACAR regime.
Capital Investment Summary
Refurbishments (including significant refurbishments)
Upgrades and enhancements to the nurse call and CCTV systems
Asset life-cycle replacements, improvements and sustainability initiatives
Planning, design/ tendering and construction of Greenfield development projects
Planning, design/ tendering and construction of Brownfield development projects
Acquisition of Residential Aged Care facilities
IT and systems improvements
Trademark
Total
Divestments
Acquisitions
Premier Health Acquisition
The Group made no divestments during the period.
2023
$’000
1,217
1,199
16,517
37,825
5,228
76,400
-
-
2022
$’000
2,077
4,688
15,138
4,922
4,954
-
1,276
400
138,386
33,455
On 1 December 2022, the Group acquired the freehold sites and operations of four residential aged care homes
from Premier Health Care comprising two homes in South Australia and two homes in Queensland for a cash
consideration of $60.5 million. The homes align with the Group’s existing operating clusters and added 409
resident places in high quality aged care homes. The acquisition aligns with the Group’s growth strategy and
enhances the existing portfolio.
Goodwill of $27.3 million arising from the acquisition represents the excess of the cost of the acquisition over the
net fair value of the identifiable assets and liabilities acquired. The acquired homes performed in line with
expectations and contributed $23.6 million of revenue and $1.9 million to profit before tax for the Group from the
date of acquisition to 30 June 2023. RAD balances increased by $12.0 million over the same period. If the
acquisition had taken place at the beginning of the period, 1 July 2022, revenue and profit before tax from Premier
Health Care homes for the Group would have been $38.5 million and $3.3 million, respectively.
Mount Clear Acquisition
On 1 May 2023 the Group acquired a fully operational home situated in Mount Clear, Victoria, with 120 operating
places for a provisional cash consideration of $15.9 million. The acquisition aligns with the Group’s growth
strategy and enhances the existing portfolio.
Goodwill of $9.3 million arising from the acquisition represented the excess of the cost of the acquisition over the
net fair value of the identifiable assets and liabilities acquired. The acquisition performed in line with expectations
and contributed $2.0 million of revenue and $0.3 million to profit before tax for the Group from the date of
acquisition to 30 June 2023. If the acquisition had taken place at the beginning of the period, 1 July 2022, revenue
and profit before tax from Mount Clear for the Group would have been $11.9 million and $1.0 million, respectively.
54 Estia Health | 2022-23 Annual Report
Estia Health Limited
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Estia Health Limited
20
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
REVIEW OF FINANCIAL POSITION AND CASH FLOWS (CONTINUED)
Share Buy-Back
In November 2022, the Board resolved to extend its on-market Share Buy-Back scheme (“Buy-Back”) conducted
in accordance with the ASX rules for a further 12-month period. Directors considered that the Company’s current
share price at the time did not appropriately reflect the intrinsic value of the Group’s assets and business.
The Buy-Back is also part of the Group’s capital management strategy in maintaining a balance between
operating a high quality and sustainable business and preserving flexibility to invest capital for future value
accretive opportunities, while seeking to provide returns to shareholders through regular dividends and to remain
within a target bank debt gearing ratio of 1.4 – 1.9X EBITDA, subject to prevailing circumstances.
Any purchase of shares under the Buy-Back is permitted within the Group’s debt facilities and is funded from
existing cash reserves and undrawn debt capacity. The Buy-Back itself was not expected to impact the Group’s
ability to progress a disciplined growth strategy, nor its ability to continue to pay dividends in line with the Group’s
targeted payout ratio.
The directors determined that as a result of circumstances prevailing at various times over the course of the year,
that there were no periods when it would be appropriate within the ASX rules for the Company to undertake any
on-market purchases of its own shares.
RECONCILIATION OF NON-IFRS INFORMATION
The following tables provide a reconciliation of the non-IFRS financial information disclosed in the Four Year
Summary Financial Performance as disclosed within the Operating and Financial Review presented on page 49
of this report to the Financial Statements per ASIC Regulatory Guide 230 Disclosing non-IFRS financial
information, issued in December 2011.
Revenue
Total operating revenue and grants
Less: Government grants
Imputed DAP revenue on RAD and bond balances under AASB 16
Operating revenue from homes in ramp-up / closed homes
Total revenue
Government grants
Government grants – Mature Homes
Government grants – Homes in ramp-up
Total government grants
Employee benefit expenses
Employee benefit expenses – Mature Homes
COVID-19 incremental costs – Mature Homes
Employee benefit expenses – Homes in ramp-up / home closures
Total employee benefit expenses
Non-staff expenses2
Non-staff expenses – Mature Homes
COVID-19 incremental costs – Mature Homes
Non-staff expenses – Homes in ramp-up / home closures
2023
$’000
$’000
2022
$’000
20211
$’000
2020
$’000
738,719
(51,281)
41,242
25,618
629,416
612,050
579,880
(7,888)
39,328
10,211
(9,600)
42,316
1,539
-
43,407
13,621
754,298
671,067
646,305
636,908
51,281
347
51,628
7,888
165
8,053
21,426
7,382
-
-
21,426
7,382
490,130
444,033
431,355
404,272
14,801
17,560
36,512
8,228
11,198
1,555
931
10,797
522,491
488,773
444,108
416,000
108,174
9,564
4,200
98,045
13,311
1,693
95,033
13,111
609
121,938
113,049
108,753
90,388
1,607
2,334
94,329
7,628
41,242
48,870
6,970
39,328
46,298
6,496
42,316
48,812
8,491
43,407
51,898
Total non-staff expenses
Net finance costs
Total net finance costs
consistency purposes.
Net finance costs excluding imputed interest expense on RAD and bond balances under AASB 16
Imputed interest expense on RAD and bond balances under AASB 16
1. In adopting the IFRIC changes for the accounting for SaaS arrangements the Group has re-stated certain previously reported information for
2. Presented as administrative expenses, occupancy expenses and resident expenses in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
DEVELOPMENTS AND ACQUISITIONS
New Developments
As the COVID-19 pandemic and ACAR reforms were better understood, the Group re-commenced development
and expansion with the resumption of greenfield projects at St Ives and Aberglasslyn, both in NSW. These
developments, with a total of 236 new beds, are projected to open in FY24.
The Group is continuing to advance plans for future development in a measured way, including developing the
Group’s existing land portfolio, where expansion was previously challenged under the ACAR regime.
Capital Investment Summary
Refurbishments (including significant refurbishments)
Upgrades and enhancements to the nurse call and CCTV systems
Asset life-cycle replacements, improvements and sustainability initiatives
Planning, design/ tendering and construction of Greenfield development projects
Planning, design/ tendering and construction of Brownfield development projects
Acquisition of Residential Aged Care facilities
IT and systems improvements
Trademark
Total
Divestments
The Group made no divestments during the period.
Acquisitions
Premier Health Acquisition
2023
$’000
1,217
1,199
16,517
37,825
5,228
76,400
-
-
2022
$’000
2,077
4,688
15,138
4,922
4,954
-
1,276
400
138,386
33,455
On 1 December 2022, the Group acquired the freehold sites and operations of four residential aged care homes
from Premier Health Care comprising two homes in South Australia and two homes in Queensland for a cash
consideration of $60.5 million. The homes align with the Group’s existing operating clusters and added 409
resident places in high quality aged care homes. The acquisition aligns with the Group’s growth strategy and
enhances the existing portfolio.
Goodwill of $27.3 million arising from the acquisition represents the excess of the cost of the acquisition over the
net fair value of the identifiable assets and liabilities acquired. The acquired homes performed in line with
expectations and contributed $23.6 million of revenue and $1.9 million to profit before tax for the Group from the
date of acquisition to 30 June 2023. RAD balances increased by $12.0 million over the same period. If the
acquisition had taken place at the beginning of the period, 1 July 2022, revenue and profit before tax from Premier
Health Care homes for the Group would have been $38.5 million and $3.3 million, respectively.
Mount Clear Acquisition
On 1 May 2023 the Group acquired a fully operational home situated in Mount Clear, Victoria, with 120 operating
places for a provisional cash consideration of $15.9 million. The acquisition aligns with the Group’s growth
strategy and enhances the existing portfolio.
Goodwill of $9.3 million arising from the acquisition represented the excess of the cost of the acquisition over the
net fair value of the identifiable assets and liabilities acquired. The acquisition performed in line with expectations
and contributed $2.0 million of revenue and $0.3 million to profit before tax for the Group from the date of
acquisition to 30 June 2023. If the acquisition had taken place at the beginning of the period, 1 July 2022, revenue
and profit before tax from Mount Clear for the Group would have been $11.9 million and $1.0 million, respectively.
Estia Health Limited
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2022-23 Annual Report | Estia Health 55
20
DIRECTORS’ REPORT
DEVELOPMENTS AND ACQUISITIONS (CONTINUED)
Royal Freemasons Homes
The Group entered into a binding contract to purchase two operational homes with a total of 264 operational
places in Bendigo and Benalla in Victoria on 1 August 2023.
Total net cash consideration for the two homes is expected to total approximately $17.3 million (excluding stamp
duty and transaction costs), which will be funded from the Group’s existing debt facilities. Final consideration will
depend on RAD balances, which are expected to be approximately $35.8 million, and employee obligations at
completion. The transactions, which are subject to customary closing conditions, are currently expected to settle
in early October 2023.
In connection with the acquisitions, the Group will be consolidating its operations in Bendigo and Benalla which
will result in the relocation of residents and employees from its existing homes in the two towns. Once the
transaction and relocations are complete, each of the acquired homes are expected to be at or close to full
occupancy and the Group intends to evaluate options for its existing sites which may include re-purposing or sale.
As a result of this, the Group has reported an impairment charge of $11.4 million before tax in the period.
DIVIDENDS
On 22 August 2023, the Directors resolved that the Company declare a fully franked final cash dividend for the
year ended 30 June 2023 of 12 cents per ordinary share totalling $31.0 million.
The record date for the dividend will be 28 August 2023, with payment being made on 15 September 2023.
Shares will trade excluding entitlement to the dividend on 25 August 2023.
Dividends paid during the year were as follows:
Interim dividend for the six months ended 31 December 2022
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Date paid
17 March 2023
Fully franked
dividend per
share
3.7
Total
dividend
paid
$9,560,000
Other than those explained in this report there were no significant changes in the state of affairs of the Group
during the financial year ended 30 June 2023.
SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
COVID-19 Grant Recoveries
$1,940,000 of COVID-19 costs reimbursement claims recognised as receivable at 30 June 2023 were
subsequently remitted as cash at the date of this report.
Proposed Acquisition of the Company by Bain Capital
As referred to in more detail on page 48 of this Report, on 7 August 2023, the Company advised the ASX that it
had entered into a SIA with Bain Capital for the acquisition of all of the issued shares in the Company by way of a
Scheme. The SIA was also provided to the ASX on 7 August 2023.
The Company’s shareholders will be given the opportunity to vote on the Scheme at a meeting which is expected
to be held in November 2023. If the Scheme is approved and implemented, shareholders will receive total cash
consideration of $3.20 per share, less the cash amount of any dividends declared and paid after the date of entry
into the SIA.
Royal Freemasons homes acquisition
As referenced in more detail on page 56 the Group entered into a binding contract with Royal Freemasons to
purchase two operational homes with a total of 264 operational places in Bendigo and Benalla in Victoria on 1
August 2023 for an estimated cash consideration of $17.3 million which is expected to settle in October 2023.
South Australia land acquisition
On 5th July 2023, the Group completed the purchase of a block of land at Findon, SA, with an approved
Development Application for a 120 bed residential aged care home from Premier Health Care for $5.4 million
cash consideration.
DIRECTORS’ REPORT
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Proposed Acquisition of the Company by Bain Capital
A Scheme Booklet containing information relating to the proposed acquisition, reasons for the Directors’
recommendation, an Independent Expert’s Report and details of the Scheme meeting will be prepared and
provided to the Australian Securities and Investments Commission for review, and subsequently sent to
shareholders.
Shareholders will then have the opportunity to vote on the Scheme at a shareholder meeting that is expected to
be held in November 2023. Subject to shareholder approval being obtained by the requisite majorities and the
other conditions of the Scheme being satisfied, the Scheme is expected to be implemented prior to the end of
2023. If the Scheme is implemented, Bain Capital would acquire 100% of the Issued Share Capital, and it is
expected that the current board of directors would resign and the Company would be de-listed from the ASX.
Financial and Operational Outlook
Sector Demand
The aging population and increasing number of people aged over 85, is likely to lead to increased demand for
residential aged care services. The industry continues to grow in complexity and the acuity of residents is
increasing as the incidence of residents presenting with dementia and extensive co-morbidities escalates. This
will see a need for a growing sophistication of aged care providers, with scale, systems, governance and
leadership likely to be key requirements in order to adapt to these changes.
The abolition of supply constraints via the ACAR bed licence process, will underpin opportunities for large, high-
quality providers with strong balance sheets, such as Estia Health, to grow and benefit through scale, higher
occupancy and attraction of workforce. The abolition of ACAR may also lead to increased competition in some
Sector Supply
areas where the Group operates.
Operating Places Increase
The acquisition of the four homes from Premier Health Care, the home at Mount Clear and the expansion of 24
places at the Group’s existing home in Burton, SA during FY23 has increased capacity to 6,720 places on 1 July
2023 (1 July 2022: 6,163 places).
The acquisition of two homes from Royal Freemasons in the early part of FY24, and the likely closure of the
Group’s existing homes in Benalla and Bendigo shortly afterwards will result in a net increase in capacity of a
further 150 operating places. The opening of new homes in St Ives and Aberglasslyn in FY24 will add a further
236 new operational places.
Subject to occupancy levels, this increase in operating places is expected to lead to higher future revenues and
earnings.
Occupancy
The introduction of publicly available Star Ratings by the Government may also impact future occupancy levels for
some, or all, of the Group’s homes. That said, increasing occupancy to pre-COVID levels, in excess of 94%,
remains a key objective and would be expected to result in increased revenues and earnings.
COVID-19 Costs and Associated Grant Recovery
The financial impacts of COVID-19 outbreaks at homes continue to lessen and the re-imbursement of some
outbreak costs under Government grant schemes has been extended to at least 31 December 2023. The scheme
is intended to assist providers to recover from the impact of COVID-19 outbreaks and as a pre-cursor to IHACPA
considering the longer term funding implications on ongoing operations. Eligible expenditure is that which is
incurred in managing direct impacts of COVID-19 to a maximum grant value per home. Therefore, the Group
expects that the net impact of COVID-19 costs will continue to diminish.
Inflation
Broad inflation indices across all areas of the Australian and global economy have increased dramatically during
FY23 and have increased, and are expected to continue to increase, many costs incurred by the Group,
particularly in relation to food, energy, and medical services. Whilst IHACPA has factored a level of cost
escalation into its pricing advice, expectations about the level of future inflation may not align with actual inflation
in FY24 and beyond.
56 Estia Health | 2022-23 Annual Report
Estia Health Limited
21
Estia Health Limited
22
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
DEVELOPMENTS AND ACQUISITIONS (CONTINUED)
Royal Freemasons Homes
The Group entered into a binding contract to purchase two operational homes with a total of 264 operational
places in Bendigo and Benalla in Victoria on 1 August 2023.
Total net cash consideration for the two homes is expected to total approximately $17.3 million (excluding stamp
duty and transaction costs), which will be funded from the Group’s existing debt facilities. Final consideration will
depend on RAD balances, which are expected to be approximately $35.8 million, and employee obligations at
completion. The transactions, which are subject to customary closing conditions, are currently expected to settle
in early October 2023.
In connection with the acquisitions, the Group will be consolidating its operations in Bendigo and Benalla which
will result in the relocation of residents and employees from its existing homes in the two towns. Once the
transaction and relocations are complete, each of the acquired homes are expected to be at or close to full
occupancy and the Group intends to evaluate options for its existing sites which may include re-purposing or sale.
As a result of this, the Group has reported an impairment charge of $11.4 million before tax in the period.
DIVIDENDS
On 22 August 2023, the Directors resolved that the Company declare a fully franked final cash dividend for the
year ended 30 June 2023 of 12 cents per ordinary share totalling $31.0 million.
The record date for the dividend will be 28 August 2023, with payment being made on 15 September 2023.
Shares will trade excluding entitlement to the dividend on 25 August 2023.
Dividends paid during the year were as follows:
Interim dividend for the six months ended 31 December 2022
17 March 2023
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than those explained in this report there were no significant changes in the state of affairs of the Group
Date paid
Fully franked
dividend per
share
3.7
Total
dividend
paid
$9,560,000
during the financial year ended 30 June 2023.
SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
COVID-19 Grant Recoveries
$1,940,000 of COVID-19 costs reimbursement claims recognised as receivable at 30 June 2023 were
subsequently remitted as cash at the date of this report.
Proposed Acquisition of the Company by Bain Capital
As referred to in more detail on page 48 of this Report, on 7 August 2023, the Company advised the ASX that it
had entered into a SIA with Bain Capital for the acquisition of all of the issued shares in the Company by way of a
Scheme. The SIA was also provided to the ASX on 7 August 2023.
The Company’s shareholders will be given the opportunity to vote on the Scheme at a meeting which is expected
to be held in November 2023. If the Scheme is approved and implemented, shareholders will receive total cash
consideration of $3.20 per share, less the cash amount of any dividends declared and paid after the date of entry
into the SIA.
Royal Freemasons homes acquisition
As referenced in more detail on page 56 the Group entered into a binding contract with Royal Freemasons to
purchase two operational homes with a total of 264 operational places in Bendigo and Benalla in Victoria on 1
August 2023 for an estimated cash consideration of $17.3 million which is expected to settle in October 2023.
South Australia land acquisition
On 5th July 2023, the Group completed the purchase of a block of land at Findon, SA, with an approved
Development Application for a 120 bed residential aged care home from Premier Health Care for $5.4 million
cash consideration.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Proposed Acquisition of the Company by Bain Capital
A Scheme Booklet containing information relating to the proposed acquisition, reasons for the Directors’
recommendation, an Independent Expert’s Report and details of the Scheme meeting will be prepared and
provided to the Australian Securities and Investments Commission for review, and subsequently sent to
shareholders.
Shareholders will then have the opportunity to vote on the Scheme at a shareholder meeting that is expected to
be held in November 2023. Subject to shareholder approval being obtained by the requisite majorities and the
other conditions of the Scheme being satisfied, the Scheme is expected to be implemented prior to the end of
2023. If the Scheme is implemented, Bain Capital would acquire 100% of the Issued Share Capital, and it is
expected that the current board of directors would resign and the Company would be de-listed from the ASX.
Financial and Operational Outlook
Sector Demand
The aging population and increasing number of people aged over 85, is likely to lead to increased demand for
residential aged care services. The industry continues to grow in complexity and the acuity of residents is
increasing as the incidence of residents presenting with dementia and extensive co-morbidities escalates. This
will see a need for a growing sophistication of aged care providers, with scale, systems, governance and
leadership likely to be key requirements in order to adapt to these changes.
Sector Supply
The abolition of supply constraints via the ACAR bed licence process, will underpin opportunities for large, high-
quality providers with strong balance sheets, such as Estia Health, to grow and benefit through scale, higher
occupancy and attraction of workforce. The abolition of ACAR may also lead to increased competition in some
areas where the Group operates.
Operating Places Increase
The acquisition of the four homes from Premier Health Care, the home at Mount Clear and the expansion of 24
places at the Group’s existing home in Burton, SA during FY23 has increased capacity to 6,720 places on 1 July
2023 (1 July 2022: 6,163 places).
The acquisition of two homes from Royal Freemasons in the early part of FY24, and the likely closure of the
Group’s existing homes in Benalla and Bendigo shortly afterwards will result in a net increase in capacity of a
further 150 operating places. The opening of new homes in St Ives and Aberglasslyn in FY24 will add a further
236 new operational places.
Subject to occupancy levels, this increase in operating places is expected to lead to higher future revenues and
earnings.
Occupancy
The introduction of publicly available Star Ratings by the Government may also impact future occupancy levels for
some, or all, of the Group’s homes. That said, increasing occupancy to pre-COVID levels, in excess of 94%,
remains a key objective and would be expected to result in increased revenues and earnings.
COVID-19 Costs and Associated Grant Recovery
The financial impacts of COVID-19 outbreaks at homes continue to lessen and the re-imbursement of some
outbreak costs under Government grant schemes has been extended to at least 31 December 2023. The scheme
is intended to assist providers to recover from the impact of COVID-19 outbreaks and as a pre-cursor to IHACPA
considering the longer term funding implications on ongoing operations. Eligible expenditure is that which is
incurred in managing direct impacts of COVID-19 to a maximum grant value per home. Therefore, the Group
expects that the net impact of COVID-19 costs will continue to diminish.
Inflation
Broad inflation indices across all areas of the Australian and global economy have increased dramatically during
FY23 and have increased, and are expected to continue to increase, many costs incurred by the Group,
particularly in relation to food, energy, and medical services. Whilst IHACPA has factored a level of cost
escalation into its pricing advice, expectations about the level of future inflation may not align with actual inflation
in FY24 and beyond.
Estia Health Limited
21
Estia Health Limited
2022-23 Annual Report | Estia Health 57
22
DIRECTORS’ REPORT
DIRECTORS’ REPORT
LIKELY DEVELOPMENTS AND EXPECTED RESULTS (CONTINUED)
KEY BUSINESS RISKS
Financial and Operational Outlook (Continued)
Workforce
The competition for talent and the ability to attract, develop and retain a skilled workforce, remains one of the
greatest challenges facing the aged care sector and the Group which may impact future financial performance.
The FWC 15% increase in the Award for Aged Care workers in direct care roles, which came into effect on 30
June 2023, will assist in retaining and attracting workers to the sector. Addressing the workforce shortage in the
aged care sector and successfully attracting and retaining skilled staff will necessitate ongoing attention and
collaboration between providers, the Government, and training institutions.
Interest rates
Interest rates on the Group’s borrowings have increased compared to prior periods and are expected to remain
higher for some time. Whilst the Group undertakes interest rate hedging activities, finance charges are expected
to be higher than seen in prior periods. Higher interest rates have also resulted in an increase in the Maximum
Permissible Interest Rate (MPIR) used to calculated Daily Accommodation Payments (“DAPs”), which was 7.90%
at 1 July 2023, compared to 4.07% in April 2022, and 5.00% on 1 July 2022. This leads to higher DAP payments
for incoming residents.
Funding increases, FWC 15% Award increase, cost and wage inflation, mandated care minutes
In May 2023, the Government announced significant increases in funding to take effect from 1 July 2023 based
on IHACPA’s initial advice and recommendations which were published shortly afterwards.
Based on its own assessment, the Group concurs with other industry commentators in expecting that in relation to
FY24, the net effect of the following key changes is likely to be broadly neutral to the financial performance of the
sector:
the funding increases to take effect from 1 July 2023;
the impact of the FWC 15% increase in the Aged Care Award from 30 June 2023;
the impact of meeting mandated minimum care minutes from 1 October 2023; and
general wage and CPI inflation.
Overall Outlook
For the first time in many years, there is an increased degree of certainty surrounding the regulatory framework.
This level of regulatory reform, which has been implemented with the intention of increasing quality and
performance in the sector, is creating significant barriers to entry and new supply and is encouraging smaller
providers without the ability to manage increasing administrative, compliance and governance requirements to
consider exiting the sector, which is reflected in the reducing number of residential aged care providers.
The Group has previously highlighted the critical role to be played by IHACPA in maintaining financial
sustainability of the sector following successive years where increases in Government funding did not keep pace
with increasing input costs. The Group is encouraged by the Government’s response in following the initial advice
from IHACPA in relation to increasing funding levels to meet the cost of service delivery, as a first step in ensuring
the enduring financial sustainability of the sector.
Beyond FY24, the Group’s financial performance and the broader financial sustainability of the sector, will
continue to be largely dependent on the continued pricing advice of IHACPA and the Government’s response to
that advice.
In the face of these uncertainties, the Group will continue to deploy capital cautiously to take advantage of growth
opportunities with the objective of delivering earnings growth and increasing shareholder value.
The following business risks are considered to be some of the more significant to the Group’s performance and
growth. Risks continue to evolve and as such these should not be regarded as exhaustive nor are they reported in
any order of relative importance or potential impact.
Risk
Potential Impact
Response Strategy
Estia Health operates in a
Change in financial profitability and/or
Ongoing monitoring and
REGULATORY CHANGE
highly regulated
environment. The Group is
exposed to failures to
anticipate, respond to and
manage material changes in
regulation.
viability.
Increased cost of compliance.
Inability to adequately deliver the
required volume of operational
change.
Instances of non-compliance such as
meeting accreditation requirements
for residential homes.
Costs associated with remediating
lack of compliance and/or penalties.
Change in competitive position of
Estia Health’s services.
GOVERNMENT FUNDING
Estia Health relies on
funding regulated by the Act,
of which approximately 72%
(2022: 71%) is paid directly
from the Federal
Government. The Federal
Government has also
provided significant direct
financial support to the
sector during the COVID-19
pandemic as referenced
elsewhere in this Report.
Any regulatory change or changes in
Government policies in relation to
existing funding legislation for the
industry may have an adverse impact
on the way the Group manages and
operates its homes, its resultant
financial performance and the
carrying value of its tangible and
intangible assets.
assessment of regulatory change
enables the Group to prioritise
changes that have the greatest
impact. This process of continual
review is undertaken with short,
medium and long-term planning
cycles. Regulatory changes are also
considered in the strategic planning
process.
The Group seeks to proactively
engage with Government and
industry to advocate for a regulatory
environment which supports a
strong and financially sustainable
aged care sector.
Project management capability is
used to facilitate the delivery of
large regulatory change initiatives.
This is further supported by targeted
training, education and technology
changes.
The creation of IHACPA will be a
critical mitigation in maintaining
financial sustainability of the sector.
IHACPA is expected to advise
Government on setting funding
levels at an appropriate level to
meet the cost of service delivery.
The Group monitors and assesses
changes to the regulatory and
funding environment which may
require adapting and changing its
operations to continue to provide
high quality services to residents
and generate appropriate returns on
the 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.
58 Estia Health | 2022-23 Annual Report
Estia Health Limited
23
Estia Health Limited
24
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
LIKELY DEVELOPMENTS AND EXPECTED RESULTS (CONTINUED)
Financial and Operational Outlook (Continued)
Workforce
The competition for talent and the ability to attract, develop and retain a skilled workforce, remains one of the
greatest challenges facing the aged care sector and the Group which may impact future financial performance.
The FWC 15% increase in the Award for Aged Care workers in direct care roles, which came into effect on 30
June 2023, will assist in retaining and attracting workers to the sector. Addressing the workforce shortage in the
aged care sector and successfully attracting and retaining skilled staff will necessitate ongoing attention and
collaboration between providers, the Government, and training institutions.
Interest rates
Interest rates on the Group’s borrowings have increased compared to prior periods and are expected to remain
higher for some time. Whilst the Group undertakes interest rate hedging activities, finance charges are expected
to be higher than seen in prior periods. Higher interest rates have also resulted in an increase in the Maximum
Permissible Interest Rate (MPIR) used to calculated Daily Accommodation Payments (“DAPs”), which was 7.90%
at 1 July 2023, compared to 4.07% in April 2022, and 5.00% on 1 July 2022. This leads to higher DAP payments
for incoming residents.
Funding increases, FWC 15% Award increase, cost and wage inflation, mandated care minutes
In May 2023, the Government announced significant increases in funding to take effect from 1 July 2023 based
on IHACPA’s initial advice and recommendations which were published shortly afterwards.
Based on its own assessment, the Group concurs with other industry commentators in expecting that in relation to
FY24, the net effect of the following key changes is likely to be broadly neutral to the financial performance of the
sector:
general wage and CPI inflation.
Overall Outlook
the funding increases to take effect from 1 July 2023;
the impact of the FWC 15% increase in the Aged Care Award from 30 June 2023;
the impact of meeting mandated minimum care minutes from 1 October 2023; and
For the first time in many years, there is an increased degree of certainty surrounding the regulatory framework.
This level of regulatory reform, which has been implemented with the intention of increasing quality and
performance in the sector, is creating significant barriers to entry and new supply and is encouraging smaller
providers without the ability to manage increasing administrative, compliance and governance requirements to
consider exiting the sector, which is reflected in the reducing number of residential aged care providers.
The Group has previously highlighted the critical role to be played by IHACPA in maintaining financial
sustainability of the sector following successive years where increases in Government funding did not keep pace
with increasing input costs. The Group is encouraged by the Government’s response in following the initial advice
from IHACPA in relation to increasing funding levels to meet the cost of service delivery, as a first step in ensuring
the enduring financial sustainability of the sector.
Beyond FY24, the Group’s financial performance and the broader financial sustainability of the sector, will
continue to be largely dependent on the continued pricing advice of IHACPA and the Government’s response to
that advice.
In the face of these uncertainties, the Group will continue to deploy capital cautiously to take advantage of growth
opportunities with the objective of delivering earnings growth and increasing shareholder value.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
KEY BUSINESS RISKS
The following business risks are considered to be some of the more significant to the Group’s performance and
growth. Risks continue to evolve and as such these should not be regarded as exhaustive nor are they reported in
any order of relative importance or potential impact.
Risk
Potential Impact
Response Strategy
REGULATORY CHANGE
Estia Health operates in a
highly regulated
environment. The Group is
exposed to failures to
anticipate, respond to and
manage material changes in
regulation.
Change in financial profitability and/or
viability.
Increased cost of compliance.
Inability to adequately deliver the
required volume of operational
change.
Instances of non-compliance such as
meeting accreditation requirements
for residential homes.
Costs associated with remediating
lack of compliance and/or penalties.
Change in competitive position of
Estia Health’s services.
GOVERNMENT FUNDING
Estia Health relies on
funding regulated by the Act,
of which approximately 72%
(2022: 71%) is paid directly
from the Federal
Government. The Federal
Government has also
provided significant direct
financial support to the
sector during the COVID-19
pandemic as referenced
elsewhere in this Report.
Any regulatory change or changes in
Government policies in relation to
existing funding legislation for the
industry may have an adverse impact
on the way the Group manages and
operates its homes, its resultant
financial performance and the
carrying value of its tangible and
intangible assets.
Ongoing monitoring and
assessment of regulatory change
enables the Group to prioritise
changes that have the greatest
impact. This process of continual
review is undertaken with short,
medium and long-term planning
cycles. Regulatory changes are also
considered in the strategic planning
process.
The Group seeks to proactively
engage with Government and
industry to advocate for a regulatory
environment which supports a
strong and financially sustainable
aged care sector.
Project management capability is
used to facilitate the delivery of
large regulatory change initiatives.
This is further supported by targeted
training, education and technology
changes.
The creation of IHACPA will be a
critical mitigation in maintaining
financial sustainability of the sector.
IHACPA is expected to advise
Government on setting funding
levels at an appropriate level to
meet the cost of service delivery.
The Group monitors and assesses
changes to the regulatory and
funding environment which may
require adapting and changing its
operations to continue to provide
high quality services to residents
and generate appropriate returns on
the 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.
Estia Health Limited
23
Estia Health Limited
2022-23 Annual Report | Estia Health 59
24
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
Risk
WORKFORCE
The Group’s staff are critical
in the delivery of quality care
and services. A growing
demand for care workers
along with mandated staffing
requirements is presenting
significant challenges across
the sector in identifying,
recruiting and retaining
sufficient personnel with the
suitable skills and capabilities
to carry out operations.
There is also a high level of
external competition for
senior leadership and
management expertise
across the broader health
sector.
Potential Impact
Response Strategy
Risk
Potential Impact
Response Strategy
Operational disruption and/or
reduced business resilience.
Technical, operational or business
knowledge loss due to resignation
or departure of key employees.
Increased fatigue amongst staff
and the potential for errors.
Reduced productivity and lower
quality of care.
Non-compliance with regulatory
requirements, including meeting
mandatory staffing requirements
Reduced occupancy.
Inability to deliver on strategic
objectives.
Lower Star ratings of homes.
Brand and reputational damage.
Estia Health is working through
multiple strategies to manage this risk
including:
maintaining a strong leadership
team,
improved employee benefits,
reviewing hiring strategies and
streamlining recruitment processes,
seeking to attract suitable talent
from broader pools,
investing in staff development
including a graduate program,
focussing on training, induction and
orientation for new hires
Career pathways and succession
planning are refreshed annually. Staff
safety and wellbeing remains a top
priority with ongoing focus on fatigue
management, personal development
initiatives and engagement programs.
If many departing RAD payers are
The Group aims to maintain overall
subsequently replaced by non-RAD
paying residents, or not replaced at
all, the Group may need to draw
RAD balances by regularly
monitoring and analysis of RAD
movements and trends across its
down higher levels of bank or other
portfolio of homes.
debt, 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.
If the Government replaces the
RAD scheme, the Group will need
to replace RAD balances with
alternative funding sources
consistent with any transitional
depart.
In accordance with the 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
$330.0 million (2022: $330.0 million),
was undrawn as of 30 June 2023,
providing a significant capacity to
manage a potential reduction in RAD
balances.
The Group will monitor and seek to
contribute to any industry
consultation or engagement in the
event the Government proceeds with
a review of RADs.
arrangements as existing residents
$260.0 million (2022: $230.0 million)
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
REFUNDABLE ACCOMMODATION DEPOSITS
The Group has $1,027.5
million (2022: $884.1 million)
of funding provided in the
form of Refundable
Accommodation Deposits
(RADs) from residents,
which have been deployed in
accordance with the 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 incoming RADs
from new residents.
Reductions 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.
At the present time there is
no proposed legislation or
indication from Government
that RAD regulations will be
amended. Nevertheless, it is
possible that future regulatory
change may be made
resulting in the need to
replace RADs with alternative
sources of capital.
60 Estia Health | 2022-23 Annual Report
Estia Health Limited
25
Estia Health Limited
26
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
Risk
WORKFORCE
The Group’s staff are critical
in the delivery of quality care
Operational disruption and/or
reduced business resilience.
Estia Health is working through
multiple strategies to manage this risk
Technical, operational or business
including:
and services. A growing
demand for care workers
along with mandated staffing
requirements is presenting
significant challenges across
the sector in identifying,
recruiting and retaining
sufficient personnel with the
suitable skills and capabilities
to carry out operations.
There is also a high level of
external competition for
senior leadership and
management expertise
across the broader health
sector.
knowledge loss due to resignation
or departure of key employees.
Increased fatigue amongst staff
and the potential for errors.
Reduced productivity and lower
quality of care.
Non-compliance with regulatory
requirements, including meeting
mandatory staffing requirements
Reduced occupancy.
Inability to deliver on strategic
objectives.
Lower Star ratings of homes.
Brand and reputational damage.
maintaining a strong leadership
team,
improved employee benefits,
reviewing hiring strategies and
streamlining recruitment processes,
seeking to attract suitable talent
from broader pools,
investing in staff development
including a graduate program,
focussing on training, induction and
orientation for new hires
Career pathways and succession
planning are refreshed annually. Staff
safety and wellbeing remains a top
priority with ongoing focus on fatigue
management, personal development
initiatives and engagement programs.
Potential Impact
Response Strategy
Risk
Potential Impact
Response Strategy
REFUNDABLE ACCOMMODATION DEPOSITS
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
If many 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, 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.
If the Government replaces the
RAD scheme, the Group will need
to replace RAD balances with
alternative funding sources
consistent with any transitional
arrangements as existing residents
depart.
The Group aims to maintain overall
RAD balances by regularly
monitoring and analysis of RAD
movements and trends across its
portfolio of homes.
In accordance with the 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
$330.0 million (2022: $330.0 million),
$260.0 million (2022: $230.0 million)
was undrawn as of 30 June 2023,
providing a significant capacity to
manage a potential reduction in RAD
balances.
The Group will monitor and seek to
contribute to any industry
consultation or engagement in the
event the Government proceeds with
a review of RADs.
The Group has $1,027.5
million (2022: $884.1 million)
of funding provided in the
form of Refundable
Accommodation Deposits
(RADs) from residents,
which have been deployed in
accordance with the 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 incoming RADs
from new residents.
Reductions 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.
At the present time there is
no proposed legislation or
indication from Government
that RAD regulations will be
amended. Nevertheless, it is
possible that future regulatory
change may be made
resulting in the need to
replace RADs with alternative
sources of capital.
Estia Health Limited
25
Estia Health Limited
2022-23 Annual Report | Estia Health 61
26
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
Risk
Potential Impact
Response Strategy
Risk
Potential Impact
Response Strategy
OCCUPANCY LEVELS
Occupancy levels at the
Group’s homes may fall as a
result of increased
competition, changing
consumer trends, disrupted
resident referral patterns,
consumer preference for
home care services,
pandemic or epidemic, and
capacity constraints from a
shortage of skilled workers.
Reduced occupancy levels will
adversely affect the Group’s
financial performance leading to
reduced revenues, and costs may
not be able to be reduced in line
with the lower occupancy.
Reduced occupancy levels may
also result in lower RAD balances
requiring replacement by
alternative financing sources.
CLINICAL & QUALITY CARE
Failure to provide person
centred care. A failure to keep
residents safe from potentially
preventable risk of injury or
harm.
Loss of trust from residents and
their families.
Reputational damage from poor
clinical outcomes and/or
decreasing quality of life for
residents.
Instances of non-compliance such
as meeting accreditation
requirements for residential homes.
Costs associated with remediating
lack of compliance and/or
penalties.
Financial loss from potential
medical malpractice and public
liability claims.
Lower Star rating of homes.
Lower occupancy.
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.
A dedicated occupancy team is
focused on attracting new residents
to the Group’s homes supported by
home-specific customer service
resources and marketing.
Staff actively engage with referrers,
local hospitals, health clinics and
General Practitioners to promote and
encourage enquiries and admission.
Resident satisfaction levels and
preferences are assessed through
ongoing feedback and formal
surveying.
The Group invests in digital
engagement strategies and systems
including, Estia Health Connect, an
application for families to stay
connected with their loved ones.
A system of clinical governance and
a person-centred care framework is
maintained to promote and support
the health, safety and quality of care
to residents. Quality systems and
processes drive clinical monitoring,
evaluation and corrective actions
when needed. Quality and risk
management frameworks are
established to increase assurance
that clinical care standards are at
appropriate levels and any decline is
addressed in a timely manner. The
Clinical Governance Committee, led
by an independent medical specialist
Chairperson, provides clinical
oversight and evaluation of clinical
improvement strategies and
performance.
Estia Health continually reviews
clinical governance health standards,
guidelines, regulatory requirements
and best practice. Supported by
ongoing clinical education and
development of employees.
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
CYBER SECURITY & PRIVACY
Estia Health handles and
stores personal and health
information of residents and
employees. The Group is
exposed to an increase in
the prevalence and severity
of cyber security incidents
and/or privacy breaches.
Operational disruption.
Significant brand and reputational
damage.
Adverse regulatory outcomes.
Financial impacts from potential
incidents, remediation and
penalties.
Loss of trust.
Estia Health has an information
security management program in
place which includes a range of
controls from prevention, detection
and recovery.
Employees are provided with training
on information security practices and
privacy obligations.
The Group continues to invest in
systems and processes over
responsible use of data and security of
information.
The strength and effectiveness of the
Group’s privacy and information
security management is regularly
assessed, including by external
experts.
Reporting and management of
privacy, IT and cybersecurity risk are
embedded in the Group’s risk
management practices with oversight
from Board Risk and Audit
Committees.
In accordance with the Act, each
home has the required level of IPC
personnel who undertake training,
monitoring and review of IPC
processes at each home, supported
by an independent audit process.
COVID-19 response plans are
established at each home and are
implemented in the event of
outbreaks. The maintenance of
adequate levels of PPE inventory at
each home, supported by buffer
stocks at regional warehouses is
centrally monitored.
Monitoring of outbreaks is undertaken
Critical Incident Management Teams
established if appropriate.
The Group has a vaccination program
for residents and staff in accordance
with the requirements of the Act.
Where possible, anti-viral treatment is
provided for residents infected with
COVID-19.
PANDEMIC OR EPIDEMIC
A pandemic or epidemic,
such as COVID-19 can have
a local, regional or national
impact on Estia Health.
Aged Care residents are more
likely to be vulnerable to the
serious effects of infection, which
may result in unexpected death.
Estia Health has established Infection
Prevention Control (“IPC”) processes
and protocols, in which staff are
trained.
Reduced occupancy.
Reduced ability to secure sufficient
suitably trained staff.
Change in work practices.
Operational disruption, including
supply chains which may impact
provision of medical supplies,
including PPE.
Increased operating costs.
Brand and reputational damage.
62 Estia Health | 2022-23 Annual Report
Estia Health Limited
27
Estia Health Limited
28
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Risk
Potential Impact
Response Strategy
Risk
Potential Impact
Response Strategy
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
CYBER SECURITY & PRIVACY
Estia Health handles and
stores personal and health
information of residents and
employees. The Group is
exposed to an increase in
the prevalence and severity
of cyber security incidents
and/or privacy breaches.
Operational disruption.
Significant brand and reputational
damage.
Adverse regulatory outcomes.
Financial impacts from potential
incidents, remediation and
penalties.
Loss of trust.
PANDEMIC OR EPIDEMIC
A pandemic or epidemic,
such as COVID-19 can have
a local, regional or national
impact on Estia Health.
Aged Care residents are more
likely to be vulnerable to the
serious effects of infection, which
may result in unexpected death.
Reduced occupancy.
Reduced ability to secure sufficient
suitably trained staff.
Change in work practices.
Operational disruption, including
supply chains which may impact
provision of medical supplies,
including PPE.
Increased operating costs.
Brand and reputational damage.
Estia Health has an information
security management program in
place which includes a range of
controls from prevention, detection
and recovery.
Employees are provided with training
on information security practices and
privacy obligations.
The Group continues to invest in
systems and processes over
responsible use of data and security of
information.
The strength and effectiveness of the
Group’s privacy and information
security management is regularly
assessed, including by external
experts.
Reporting and management of
privacy, IT and cybersecurity risk are
embedded in the Group’s risk
management practices with oversight
from Board Risk and Audit
Committees.
Estia Health has established Infection
Prevention Control (“IPC”) processes
and protocols, in which staff are
trained.
In accordance with the Act, each
home has the required level of IPC
personnel who undertake training,
monitoring and review of IPC
processes at each home, supported
by an independent audit process.
COVID-19 response plans are
established at each home and are
implemented in the event of
outbreaks. The maintenance of
adequate levels of PPE inventory at
each home, supported by buffer
stocks at regional warehouses is
centrally monitored.
Monitoring of outbreaks is undertaken
Critical Incident Management Teams
established if appropriate.
The Group has a vaccination program
for residents and staff in accordance
with the requirements of the Act.
Where possible, anti-viral treatment is
provided for residents infected with
COVID-19.
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
OCCUPANCY LEVELS
Occupancy levels at the
Group’s homes may fall as a
Reduced occupancy levels will
adversely affect the Group’s
result of increased
competition, changing
consumer trends, disrupted
resident referral patterns,
consumer preference for
home care services,
pandemic or epidemic, and
capacity constraints from a
shortage of skilled workers.
financial performance leading to
reduced revenues, and costs may
not be able to be reduced in line
with the lower occupancy.
Reduced occupancy levels may
also result in lower RAD balances
requiring replacement by
alternative financing sources.
CLINICAL & QUALITY CARE
Failure to provide person
centred care. A failure to keep
residents safe from potentially
preventable risk of injury or
harm.
Loss of trust from residents and
their families.
Reputational damage from poor
clinical outcomes and/or
decreasing quality of life for
residents.
Instances of non-compliance such
as meeting accreditation
requirements for residential homes.
Costs associated with remediating
lack of compliance and/or
penalties.
Financial loss from potential
medical malpractice and public
liability claims.
Lower Star rating of homes.
Lower occupancy.
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.
A dedicated occupancy team is
focused on attracting new residents
to the Group’s homes supported by
home-specific customer service
resources and marketing.
Staff actively engage with referrers,
local hospitals, health clinics and
General Practitioners to promote and
encourage enquiries and admission.
Resident satisfaction levels and
preferences are assessed through
ongoing feedback and formal
surveying.
The Group invests in digital
engagement strategies and systems
including, Estia Health Connect, an
application for families to stay
connected with their loved ones.
A system of clinical governance and
a person-centred care framework is
maintained to promote and support
the health, safety and quality of care
to residents. Quality systems and
processes drive clinical monitoring,
evaluation and corrective actions
when needed. Quality and risk
management frameworks are
established to increase assurance
that clinical care standards are at
appropriate levels and any decline is
addressed in a timely manner. The
Clinical Governance Committee, led
by an independent medical specialist
Chairperson, provides clinical
oversight and evaluation of clinical
improvement strategies and
performance.
Estia Health continually reviews
clinical governance health standards,
guidelines, regulatory requirements
and best practice. Supported by
ongoing clinical education and
development of employees.
Estia Health Limited
27
Estia Health Limited
2022-23 Annual Report | Estia Health 63
28
DIRECTORS’ REPORT
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 24% (2022: 19%) of the total fees received by the firm.
2023
$’000
255
16
21
292
2022
$’000
159
20
18
197
The amounts contained in this report and in the financial report have been rounded to the nearest thousand
dollars ($’000), under the option available to the Group under ASIC Corporations (Rounding in Financial or
Director’ Reports) Instrument 2016/191. Estia Health Limited is an entity to which the class order applies.
Signed in accordance with a resolution of Directors on 22 August 2023.
Tax compliance services
Sustainability Linked Loan assurance
Other
Total Non-audit services
ROUNDING
Dr. Gary H Weiss AM
Chairman
Sydney
22 August 2023
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
Risk
Potential Impact
Response Strategy
CLIMATE CHANGE
Estia Health’s operations are
potentially exposed to
physical risks and transition
risks associated with climate
change.
Homes may be susceptible to
physical risks associated with
climate change including supply
chain.
Higher operational costs may result
from the impacts of climate change
and the transition to a low-carbon
economy.
The TCFD (“Taskforce on Climate
Related Financial Disclosures”) Report
on pages 83 to 92 of this Report
provides more detail on our exposure
and approach to managing climate
risk.
ENVIRONMENTAL REGULATION
The Group is not subject to significant environmental legislation under either Commonwealth or State legislation.
This Report contains the Group’s TCFD Report on pages 83 to 92, setting out the Group’s assessment of the
risks and opportunities posed by climate change.
The Group also publishes a separate annual ESG report detailing its approach to Environmental, Social and
Governance Issues. Directors recognise that the long-term viability and profitability of the Group depends on the
wellbeing of staff, residents, integrating its homes within their local communities and the continued health of the
natural environment. The Group’s 2020-2024 Sustainability Strategy and Framework provides focus areas and
associated targets to help mitigate any negative impacts, and to identify potential positive value creation activities
across three core areas:
supporting our people;
enhancing our community; and
respecting our environment.
PERFORMANCE RIGHTS
UNISSUED SHARES
As at the date of this report, there were 3,401,143 unissued ordinary shares under performance rights (2022:
3,709,553).
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) liabilities incurred by the person in the capacity as an officer where permitted under section 199A(2) of the
Corporations Act 2001;
(b) legal costs incurred in relation to civil or criminal proceedings in which the officer becomes involved because
of that capacity;
(c) legal costs incurred in connection with any investigation or inquiry of any nature because of that capacity;
and
(d) 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.
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.
64 Estia Health | 2022-23 Annual Report
Estia Health Limited
29
Estia Health Limited
30
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
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 24% (2022: 19%) of the total fees received by the firm.
Tax compliance services
Sustainability Linked Loan assurance
Other
Total Non-audit services
2023
$’000
255
16
21
292
2022
$’000
159
20
18
197
The Group is not subject to significant environmental legislation under either Commonwealth or State legislation.
This Report contains the Group’s TCFD Report on pages 83 to 92, setting out the Group’s assessment of the
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest thousand
dollars ($’000), under the option available to the Group under ASIC Corporations (Rounding in Financial or
Director’ Reports) Instrument 2016/191. Estia Health Limited is an entity to which the class order applies.
Signed in accordance with a resolution of Directors on 22 August 2023.
Dr. Gary H Weiss AM
Chairman
Sydney
22 August 2023
29
Estia Health Limited
2022-23 Annual Report | Estia Health 65
30
DIRECTORS’ REPORT
KEY BUSINESS RISKS (CONTINUED)
CLIMATE CHANGE
potentially exposed to
physical risks and transition
risks associated with climate
change.
ENVIRONMENTAL REGULATION
Risk
Potential Impact
Response Strategy
Estia Health’s operations are
Homes may be susceptible to
physical risks associated with
climate change including supply
chain.
Higher operational costs may result
from the impacts of climate change
and the transition to a low-carbon
risk.
economy.
The TCFD (“Taskforce on Climate
Related Financial Disclosures”) Report
on pages 83 to 92 of this Report
provides more detail on our exposure
and approach to managing climate
risks and opportunities posed by climate change.
The Group also publishes a separate annual ESG report detailing its approach to Environmental, Social and
Governance Issues. Directors recognise that the long-term viability and profitability of the Group depends on the
wellbeing of staff, residents, integrating its homes within their local communities and the continued health of the
natural environment. The Group’s 2020-2024 Sustainability Strategy and Framework provides focus areas and
associated targets to help mitigate any negative impacts, and to identify potential positive value creation activities
across three core areas:
supporting our people;
enhancing our community; and
respecting our environment.
PERFORMANCE RIGHTS
UNISSUED SHARES
3,709,553).
As at the date of this report, there were 3,401,143 unissued ordinary shares under performance rights (2022:
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) liabilities incurred by the person in the capacity as an officer where permitted under section 199A(2) of the
(b) legal costs incurred in relation to civil or criminal proceedings in which the officer becomes involved because
(c) legal costs incurred in connection with any investigation or inquiry of any nature because of that capacity;
Corporations Act 2001;
of that capacity;
and
(d) 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.
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.
Estia Health Limited
DIRECTORS’ REPORT
REMUNERATION REPORT
The FY23 LTI opportunity for the Company’s KMP, with a three year performance period to 30 June 2025,
continued to be subject to two, equally weighted, performance measures, comprising target EPS growth over the
three year period, as well as a relative TSR measure Given the decreasing number of directly comparable listed
peer companies operating in the aged care industry, with the delisting of Japara Healthcare and Aveo Group in
recent years, from FY22 onwards LTI TSR performance measures reference the performance of the ASX300
Index (excluding mining and energy).
From FY23, in addition to these measures, the Board will overlay a qualitative assessment, which will involve it
reviewing whether the LTI vesting outcome is appropriate having regard to a number of factors over the
performance period, including the Group’s environmental impact, quality of care, reputation and employee
experience, further strengthening the link between remuneration outcomes and ESG performance.
On behalf of the Board, I am pleased to present to you the FY23 Remuneration Report for Estia Health and we
look forward to welcoming you at the 2023 AGM.
Yours sincerely
Paul Foster
Chair of the Nomination and Remuneration Committee
DIRECTORS’ REPORT
REMUNERATION REPORT
Dear Shareholders,
The Estia Health Limited (‘Estia Health’, the ‘Company’ or the ‘Group’) Board is pleased to present the
Remuneration Report for the year ended 30 June 2023 (‘FY23’).
The environment in which the Company operates continued to be impacted by periodic COVID-19 outbreaks,
persistently tight labour markets and high inflation during FY23. These challenges were magnified by the
demands placed upon the aged care sector and the people who work within it to adapt to new regulatory, funding
and quality regimes introduced by the Government following the Aged Care Royal Commission.
The ability to attract, recruit and retain high quality talent across all levels of the Group whilst maintaining clinical
quality has never been more critical. Given this, the Company’s remuneration framework continued its long-
standing practice of requiring the successful achievement of a resident-centric, clinical quality “gateway” as a pre-
determinant to eligibility for the award and payment of short term incentive entitlements during FY23, irrespective
of operational and financial performance.
Sean Bilton, previously the Company’s Chief Operating Officer (“COO”) and Deputy CEO was promoted to the
role of Chief Executive Officer (“CEO”) and Managing Director with effect from 11 July 2022, succeeding Ian
Thorley. This succession planning process and announcement also resulted in Damian Hiser, previously the
Company’s Chief Customer Officer, being announced as the successor to Sean as COO. Damian has been
included in the Company’s Key Management Personnel (“KMP”), also effective 11 July 2022.
In October 2022, Steve Lemlin advised the Board of his intention to retire after almost six years in the role of Chief
Financial Officer to pursue other interests and opportunities outside of full-time executive positions. Steve
committed to remain with the Company until such time as a successor was appointed and fully transitioned into
the role. Anthony Rice was appointed as the Company’s new Chief Financial Officer and commenced in the role
on 17 July 2023, with Steve remaining with the Company until 31 August 2023.
FY23 Remuneration Outcomes
In order for the FY23 short-term incentive (“STI”) to be eligible to vest, a resident quality gateway hurdle must be
successfully achieved. This requires a range of ongoing regulatory compliance and accreditation targets to be met
as a precondition for any of the STI to be eligible to vest, irrespective of individual and Company-wide financial
and operational performance.
The Board is pleased to confirm that this gateway was achieved in FY23, and that FY23 STI vesting outcomes for
KMP ranged from 55-60% of their respective maximum STI opportunities, following evaluation of performance
against a “scorecard” comprised of role-specific and Company-wide financial, operational and Environmental,
Social and Governance (“ESG”) related performance measures.
The FY21 long-term incentive (“LTI”), which had a three-year performance period that ended on 30 June 2023,
fully vested. Given the challenges of setting earnings per share (“EPS”) targets at the time of the FY21 LTI grant
due to uncertainties over the impact of COVID-19 on the Company’s financial performance, the FY21 LTI
performance conditions comprised two equally weighted relative Total Shareholder Return (“TSR”) targets. One
of these TSR targets measured the performance of the Group’s TSR relative to the ASX300 Index (excluding
mining and energy), whilst the other measured TSR relative to a customised weighted index of Australian and NZ-
listed aged care stocks. Both of these TSR targets were met over the three year performance period to 30 June
2023.
As disclosed at our 2020 Annual General Meeting (“AGM”), and in our 2021 and 2022 annual reports, we
awarded a once-off retention-based grant of performance rights (“FY21 Retention Incentive”) to our executive
KMP (awarded due to COVID-19 disruption and in the absence of an STI plan in FY21), which vested on 1 July
2022.
66 Estia Health | 2022-23 Annual Report
31
32
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
REMUNERATION REPORT
The FY23 LTI opportunity for the Company’s KMP, with a three year performance period to 30 June 2025,
continued to be subject to two, equally weighted, performance measures, comprising target EPS growth over the
three year period, as well as a relative TSR measure Given the decreasing number of directly comparable listed
peer companies operating in the aged care industry, with the delisting of Japara Healthcare and Aveo Group in
recent years, from FY22 onwards LTI TSR performance measures reference the performance of the ASX300
Index (excluding mining and energy).
From FY23, in addition to these measures, the Board will overlay a qualitative assessment, which will involve it
reviewing whether the LTI vesting outcome is appropriate having regard to a number of factors over the
performance period, including the Group’s environmental impact, quality of care, reputation and employee
experience, further strengthening the link between remuneration outcomes and ESG performance.
On behalf of the Board, I am pleased to present to you the FY23 Remuneration Report for Estia Health and we
look forward to welcoming you at the 2023 AGM.
Yours sincerely
Paul Foster
Chair of the Nomination and Remuneration Committee
DIRECTORS’ REPORT
REMUNERATION REPORT
Dear Shareholders,
The Estia Health Limited (‘Estia Health’, the ‘Company’ or the ‘Group’) Board is pleased to present the
Remuneration Report for the year ended 30 June 2023 (‘FY23’).
The environment in which the Company operates continued to be impacted by periodic COVID-19 outbreaks,
persistently tight labour markets and high inflation during FY23. These challenges were magnified by the
demands placed upon the aged care sector and the people who work within it to adapt to new regulatory, funding
and quality regimes introduced by the Government following the Aged Care Royal Commission.
The ability to attract, recruit and retain high quality talent across all levels of the Group whilst maintaining clinical
quality has never been more critical. Given this, the Company’s remuneration framework continued its long-
standing practice of requiring the successful achievement of a resident-centric, clinical quality “gateway” as a pre-
determinant to eligibility for the award and payment of short term incentive entitlements during FY23, irrespective
of operational and financial performance.
Sean Bilton, previously the Company’s Chief Operating Officer (“COO”) and Deputy CEO was promoted to the
role of Chief Executive Officer (“CEO”) and Managing Director with effect from 11 July 2022, succeeding Ian
Thorley. This succession planning process and announcement also resulted in Damian Hiser, previously the
Company’s Chief Customer Officer, being announced as the successor to Sean as COO. Damian has been
included in the Company’s Key Management Personnel (“KMP”), also effective 11 July 2022.
In October 2022, Steve Lemlin advised the Board of his intention to retire after almost six years in the role of Chief
Financial Officer to pursue other interests and opportunities outside of full-time executive positions. Steve
committed to remain with the Company until such time as a successor was appointed and fully transitioned into
the role. Anthony Rice was appointed as the Company’s new Chief Financial Officer and commenced in the role
on 17 July 2023, with Steve remaining with the Company until 31 August 2023.
FY23 Remuneration Outcomes
In order for the FY23 short-term incentive (“STI”) to be eligible to vest, a resident quality gateway hurdle must be
successfully achieved. This requires a range of ongoing regulatory compliance and accreditation targets to be met
as a precondition for any of the STI to be eligible to vest, irrespective of individual and Company-wide financial
and operational performance.
The Board is pleased to confirm that this gateway was achieved in FY23, and that FY23 STI vesting outcomes for
KMP ranged from 55-60% of their respective maximum STI opportunities, following evaluation of performance
against a “scorecard” comprised of role-specific and Company-wide financial, operational and Environmental,
Social and Governance (“ESG”) related performance measures.
The FY21 long-term incentive (“LTI”), which had a three-year performance period that ended on 30 June 2023,
fully vested. Given the challenges of setting earnings per share (“EPS”) targets at the time of the FY21 LTI grant
due to uncertainties over the impact of COVID-19 on the Company’s financial performance, the FY21 LTI
performance conditions comprised two equally weighted relative Total Shareholder Return (“TSR”) targets. One
of these TSR targets measured the performance of the Group’s TSR relative to the ASX300 Index (excluding
mining and energy), whilst the other measured TSR relative to a customised weighted index of Australian and NZ-
listed aged care stocks. Both of these TSR targets were met over the three year performance period to 30 June
As disclosed at our 2020 Annual General Meeting (“AGM”), and in our 2021 and 2022 annual reports, we
awarded a once-off retention-based grant of performance rights (“FY21 Retention Incentive”) to our executive
KMP (awarded due to COVID-19 disruption and in the absence of an STI plan in FY21), which vested on 1 July
2023.
2022.
31
2022-23 Annual Report | Estia Health 67
32
DIRECTORS’ REPORT
REMUNERATION REPORT - audited
This report for the year ended 30 June 2023 (FY23) outlines the remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001(Cth) (the Act) and its regulations. This
information has been audited as required by section 308(3C) of the Act.
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
2. Remuneration governance
2.1 Nomination and Remuneration Committee
This report is presented under the following sections:
1.
Introduction
2. Remuneration governance
3. Group performance
4. Remuneration principles and strategy
5. Executive remuneration
6. Executive remuneration outcomes
7. Executive employment contracts
8. Non-executive director fee arrangements
9. 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.
Key Management Personnel
Dr. Gary H Weiss AM
Non-Executive Chairman
Paul Foster
Helen Kurincic
Karen Penrose
Non-Executive Director
Non-Executive Director
Non-Executive Director
Norah Barlow ONZM
Non-Executive Director
Full year
Full year
Full year
Full year
Full year
Professor Simon Willcock AM
Non-Executive Director
From 1 September 2022
Ian Thorley1
Sean Bilton2
Steve Lemlin3
Damian Hiser4
Chief Executive Officer and Managing Director
Until 11 July 2022
remuneration.
Chief Executive Officer and Managing Director
From 11 July 2022
Chief Financial Officer (CFO)
Full year
Chief Operating Officer (COO)
From 11 July 2022
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 five times in FY23. The Chief Executive Officer and Managing Director (CEO & MD) attends
certain Committee meetings by invitation, where management input is required. The CEO & MD is not present
during any discussions related to his 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 2023, the Nomination and Remuneration Committee engaged KPMG to
provide advice regarding a range of remuneration related matters.
The services provided by KPMG did 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.
policy requires that:
The Board recognises the importance of ensuring that the interests of its leaders are aligned with the long-
In 2019, Estia Health’s Senior Executive and Board Minimum Shareholding Policy was introduced. The
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 CEO and Executive-level direct reports to the CEO) accumulate and
maintain a minimum holding in Estia Health shares equivalent to at least 50% of one year’s fixed annual
Board members and the CEO are required to achieve the minimum target shareholding by the later of:
The 3rd anniversary of the commencement of the policy; or
The 3rd anniversary of the NED’s or CEO’s commencement date (the Measurement Date).
Other Senior Executives have 5 years from the above dates.
All members of KMP are in compliance with the policy as at 30 June 2023.
The full policy, including definitions and calculation methodology, can be viewed at:
http://www.estiahealth.com.au/investor-centre/corporate-governance.
1 Ian Thorley retired from the role of CEO and Managing Director with effect from 11 July 2022, resigned as a director on 13 July 2022 and
remained with the Company until 29 July 2022.
2 Sean Bilton held the positions of Chief Operating Officer and Deputy Chief Executive Officer from the start of FY23 until he assumed the role of
Chief Executive Officer and Managing Director of the Company, succeeding Ian Thorley, on 11 July 2022.
3 Steve Lemlin announced his intention to retire in October 2022 and will remain with the company until 31 August 2023. He was succeeded by
Anthony Rice on 17 July 2023.
4 Damian Hiser held the position of Chief Customer Officer and was appointed Chief Operating Officer effective 11 July 2022 and is considered
KMP from that date.
68 Estia Health | 2022-23 Annual Report
Estia Health Limited
33
Estia Health Limited
34
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
This report for the year ended 30 June 2023 (FY23) outlines the remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001(Cth) (the Act) and its regulations. This
information has been audited as required by section 308(3C) of the Act.
DIRECTORS’ REPORT
REMUNERATION REPORT - audited
This report is presented under the following sections:
1.
Introduction
2. Remuneration governance
3. Group performance
4. Remuneration principles and strategy
5. Executive remuneration
6. Executive remuneration outcomes
7. Executive employment contracts
8. Non-executive director fee arrangements
9. 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.
Key Management Personnel
Dr. Gary H Weiss AM
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Paul Foster
Helen Kurincic
Karen Penrose
Ian Thorley1
Sean Bilton2
Steve Lemlin3
Damian Hiser4
Norah Barlow ONZM
Non-Executive Director
Professor Simon Willcock AM
Non-Executive Director
From 1 September 2022
Chief Executive Officer and Managing Director
Until 11 July 2022
Chief Executive Officer and Managing Director
From 11 July 2022
Chief Financial Officer (CFO)
Full year
Chief Operating Officer (COO)
From 11 July 2022
Full year
Full year
Full year
Full year
Full year
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
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 five times in FY23. The Chief Executive Officer and Managing Director (CEO & MD) attends
certain Committee meetings by invitation, where management input is required. The CEO & MD is not present
during any discussions related to his 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 2023, the Nomination and Remuneration Committee engaged KPMG to
provide advice regarding a range of remuneration related matters.
The services provided by KPMG did 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 Health’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 CEO and Executive-level direct reports to the CEO) 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 CEO are required to achieve the minimum target shareholding by the later of:
The 3rd anniversary of the commencement of the policy; or
The 3rd anniversary of the NED’s or CEO’s commencement date (the Measurement Date).
Other Senior Executives have 5 years from the above dates.
All members of KMP are in compliance with the policy as at 30 June 2023.
The full policy, including definitions and calculation methodology, can be viewed at:
http://www.estiahealth.com.au/investor-centre/corporate-governance.
1 Ian Thorley retired from the role of CEO and Managing Director with effect from 11 July 2022, resigned as a director on 13 July 2022 and
remained with the Company until 29 July 2022.
2 Sean Bilton held the positions of Chief Operating Officer and Deputy Chief Executive Officer from the start of FY23 until he assumed the role of
Chief Executive Officer and Managing Director of the Company, succeeding Ian Thorley, on 11 July 2022.
3 Steve Lemlin announced his intention to retire in October 2022 and will remain with the company until 31 August 2023. He was succeeded by
4 Damian Hiser held the position of Chief Customer Officer and was appointed Chief Operating Officer effective 11 July 2022 and is considered
Anthony Rice on 17 July 2023.
KMP from that date.
Estia Health Limited
33
Estia Health Limited
2022-23 Annual Report | Estia Health 69
34
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
3. Group performance
The table below illustrates Estia Health’s historic performance against the key metrics upon which the Group
performance is measured.
Revenue - $’000
30 June
2023
$754,298
30 June
2022
$671,067
30 June
2021
$646,305
30 June
2020
$636,908
30 June
2019
$585,985
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
5. Executive remuneration
5.1 Remuneration Framework and Link to Strategy
In FY23, the executive remuneration framework comprised a mix of fixed annual remuneration, the short-term
incentive plan and the long-term incentive plan. The Group aims to reward executives with a level and mix of
remuneration appropriate to their position and responsibilities, while being market competitive and delivering
outcomes that are aligned to the experience of Estia Health’s shareholders.
Net (loss) / profit after tax - $’000
($33,898)
($52,362)
$5,605
($116,909)
$41,290
Component
Approach
Link to business and remuneration
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
$1.91
$2.96
15.7
(13.13)
(13.13)
60%
100%
$2.47
$1.91
2.4
(20.10)
(20.10)
45%
Nil
$1.53
$2.47
0.0
2.15
2.12
n/a
Nil
$2.64
$1.53
13.2
(44.8)
(44.8)
Nil
Nil
$3.29
$2.64
16.0
15.8
15.8
Nil
Nil
4. Remuneration principles and strategy
The remuneration strategy and framework set by the Committee is designed to support and drive the
achievement of Estia Health’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.
As stated in the Diversity, Equity Inclusion and Belonging Policy1, Estia Health is committed to embracing
diversity and fostering an inclusive and equitable working environment across the organisation.
Estia Health 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 Health’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, our residents and 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.
strategy
Fixed Annual
Remuneration
FAR is set with reference to role, capability and
Competitive remuneration packages that
experience of the employee with reference to
attract and retain high calibre employees
external benchmarking data, particularly looking at
from a diverse talent pool.
(FAR)
competition in the same sector, both public and
private.
Group and individual performance are considered
during the annual remuneration review.
Short-Term
Incentive Plan
In FY23, the STI was measured against group-
Short term incentives align the interests of
wide
targets comprising
financial, customer,
executives with achievement of business
people and safety, as well as individual strategic
strategic objectives over
the short
to
(STI)
measures.
In addition, a resident care and compliance
gateway hurdle remained in place, requiring a
range of ongoing compliance and accreditation
employees.
medium term and place important focus on
the
inter-related
interests
of
our
shareholders,
residents/customers and
targets to be met as a precondition for any of the
Deferral of 25% of any STI award into
STI to be eligible to vest, irrespective of financial
equity
increases
alignment
with
and operational performance.
shareholder interests.
For executive KMP, the STI award is delivered in
a mix of cash and equity. 75% of the award is
delivered
in cash, with
the remaining 25%
delivered in performance rights subject to 12-
month deferral.
Long-term
Incentive Plan
The FY23 LTI was delivered in the form of
The LTI is designed to drive sustainable
performance rights subject
to
the
following
value creation for shareholders, encourage
performance conditions, measured over a three-
retention, with a multi-year performance
(LTI)
year period:
focus.
Total shareholder return (TSR) (50%) relative to
The combination of EPS and relative TSR
constituents of the ASX300 excluding mining and
reflects internal and external performance
energy companies; and
Earnings Per Share (EPS) (50%).
measures and provides alignment with
shareholder outcomes.
Once-off Awards
The Company may grant once-off
incentive
Once-off awards may be approved by the
awards, approved by the Board, where the
Board in order to retain or attract key
circumstances warrant it. This may include the
talent, to ensure the achievement of Estia
grant of retention incentives.
No such awards were granted to KMP in FY23.
Health’s business strategy, and
to
long
term
shareholder
maximise
outcomes.
Total
Remuneration
Health’s business strategy:
The overall remuneration framework is designed to support and drive the achievement of Estia
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, selective
acquisitions, refurbishment opportunities and through maximising the performance of
our core assets.
Senior Executives.
A minimum shareholding policy is also in place to drive share ownership amongst NEDs and
Board discretion The Board also has a broad discretion to vary incentives, including their withdrawal, in a range of
circumstances where the Board considers appropriate.
1 The full policy can be viewed at http://www.estiahealth.com.au/investor-centre/corporate-governance.
70 Estia Health | 2022-23 Annual Report
Estia Health Limited
35
Estia Health Limited
36
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
3. Group performance
performance is measured.
The table below illustrates Estia Health’s historic performance against the key metrics upon which the Group
Revenue - $’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
2023
30 June
2022
30 June
2021
30 June
2020
$754,298
$671,067
$646,305
$636,908
30 June
2019
$585,985
$1.91
$2.96
15.7
(13.13)
(13.13)
60%
100%
$2.47
$1.91
2.4
(20.10)
(20.10)
45%
Nil
$1.53
$2.47
0.0
2.15
2.12
n/a
Nil
$2.64
$1.53
13.2
(44.8)
(44.8)
Nil
Nil
$3.29
$2.64
16.0
15.8
15.8
Nil
Nil
4. Remuneration principles and strategy
The remuneration strategy and framework set by the Committee is designed to support and drive the
achievement of Estia Health’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.
As stated in the Diversity, Equity Inclusion and Belonging Policy1, Estia Health is committed to embracing
diversity and fostering an inclusive and equitable working environment across the organisation.
Estia Health 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 Health’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, our residents and 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.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
5. Executive remuneration
5.1 Remuneration Framework and Link to Strategy
In FY23, the executive remuneration framework comprised a mix of fixed annual remuneration, the short-term
incentive plan and the long-term incentive plan. The Group aims to reward executives with a level and mix of
remuneration appropriate to their position and responsibilities, while being market competitive and delivering
outcomes that are aligned to the experience of Estia Health’s shareholders.
Net (loss) / profit after tax - $’000
($33,898)
($52,362)
$5,605
($116,909)
$41,290
Component
Approach
Link to business and remuneration
Fixed Annual
Remuneration
(FAR)
FAR is set with reference to role, capability and
experience of the employee with reference to
external benchmarking data, particularly looking at
competition in the same sector, both public and
private.
Group and individual performance are considered
during the annual remuneration review.
strategy
Competitive remuneration packages that
attract and retain high calibre employees
from a diverse talent pool.
Short-Term
Incentive Plan
(STI)
Long-term
Incentive Plan
(LTI)
Once-off Awards
targets comprising
In FY23, the STI was measured against group-
wide
financial, customer,
people and safety, as well as individual strategic
measures.
In addition, a resident care and compliance
gateway hurdle remained in place, requiring a
range of ongoing compliance and accreditation
targets to be met as a precondition for any of the
STI to be eligible to vest, irrespective of financial
and operational performance.
For executive KMP, the STI award is delivered in
a mix of cash and equity. 75% of the award is
delivered
the remaining 25%
delivered in performance rights subject to 12-
month deferral.
in cash, with
The FY23 LTI was delivered in the form of
performance rights subject
following
performance conditions, measured over a three-
year period:
the
to
Total shareholder return (TSR) (50%) relative to
constituents of the ASX300 excluding mining and
energy companies; and
Earnings Per Share (EPS) (50%).
incentive
The Company may grant once-off
awards, approved by the Board, where the
circumstances warrant it. This may include the
grant of retention incentives.
No such awards were granted to KMP in FY23.
Short term incentives align the interests of
executives with achievement of business
strategic objectives over
to
medium term and place important focus on
our
the
shareholders,
residents/customers and
employees.
inter-related
the short
interests
of
Deferral of 25% of any STI award into
equity
with
shareholder interests.
alignment
increases
The LTI is designed to drive sustainable
value creation for shareholders, encourage
retention, with a multi-year performance
focus.
The combination of EPS and relative TSR
reflects internal and external performance
measures and provides alignment with
shareholder outcomes.
Once-off awards may be approved by the
Board in order to retain or attract key
talent, to ensure the achievement of Estia
Health’s business strategy, and
to
maximise
shareholder
outcomes.
term
long
1 The full policy can be viewed at http://www.estiahealth.com.au/investor-centre/corporate-governance.
Estia Health Limited
35
Estia Health Limited
2022-23 Annual Report | Estia Health 71
36
Total
Remuneration
The overall remuneration framework is designed to support and drive the achievement of Estia
Health’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, selective
acquisitions, 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.
Board discretion The Board also has a broad discretion to vary incentives, including their withdrawal, in a range of
circumstances where the Board considers appropriate.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
REMUNERATION REPORT – audited (continued)
5.2 Fixed Annual Remuneration
5.4 STI Outcomes
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.
In setting FAR, 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.
5.3 Short Term Incentive
The Group provides an annual STI opportunity to executives and awards a cash and deferred equity incentive
subject to the attainment of clearly defined Group and role specific measures.
Participation
All executive KMP participated in the FY23 STI plan1.
STI value
Performance
conditions
In FY23, all executive KMP had an STI opportunity of 50% of FAR.
An overview of executive KMP performance under the FY23 STI scorecard is detailed in the table below.
Estia Health is committed to delivering safe, high-quality and sustainable aged care services for all
Australians.
Estia Health’s STI scorecard reflects this commitment.
The STI is subject to a resident care and compliance gateway hurdle which requires ongoing
compliance and accreditation targets to be met in order for any STI awards to be made. This is a
reflection of the importance Estia Health places on compliance and quality of care.
The balance of the STI scorecard assesses performance against a balanced scorecard of measures
including financial, customer, people and safety as well as individual strategic measures.
The collective use of these performance measures highlights an appropriate balance on
shareholder, resident/customer and workforce outcomes, all of which are inter-related.
Delivery of STI
Performance against the measures is tested annually after the end of the financial year. All
payments under the STI plan are determined and approved by the Committee and the Board.
Once STI payments have been approved, they are delivered in cash and equity. For senior
executives (including all executive KMP), 25% of any payment is deferred for a period of 12 months
in the form of performance rights. The quantity of performance rights granted is determined using
face value allocation methodology, using the volume weighted average price (VWAP) for the 10
trading days immediately following the release of results (i.e. deferred STI amount divided by share
price).
Cessation of
employment
For “Bad Leavers” (defined by the Group as resignation or termination for cause), any unpaid or
deferred STI is forfeited, unless otherwise determined by the Board.
For any other reason, the Board has discretion to award STI on a pro-rata basis taking into account
time and the current level of performance against performance hurdles
Clawback policy
The Board has the discretion to reduce, cancel or clawback any unvested performance-based
remuneration (including deferred STI) in the event of serious misconduct or a material misstatement
in the Group’s financial statements.
Board discretion
The Board also has a broad discretion to vary incentives, including their withdrawal, in a range of
circumstances where the Board considers appropriate.
In FY23, Estia Health met the resident quality gateway hurdle, which created eligibility for STI payments to be
made subject to the achievement of STI scorecard measures. The gateway required that Estia Health must
maintain approved provider status and accreditation at all facilities throughout the period and any sanction or
variation to accreditation received during the period would also prevent the STI from vesting. A single occurrence
of any of the following category of events would warrant the forfeiture of the STI:
the accreditation of a home is revoked or not renewed;
the approved provider status of Estia Investments Pty Ltd is revoked; and/or
a notice of Decision to Impose Sanctions is issued.
The table below outlines the vesting outcome of STI measures, including group-wide KPIs and role specific
measures applied to KMP during FY23.
Weighting1
Outcome
Performance
measure
Resident
Care and
Compliance
Gateway
Resident care and compliance gateway met
Financial
20% - 30%
above threshold – full vesting (100%).
Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) was
Customer
20%
FY23 occupancy of 92.3% was within target range – partial vesting (50%)
People
20%
FY23 employee turnover rate did not meet threshold – no vesting (0%)
Safety
20%
vesting (50%)
FY23 Lost Time Injury Frequency Rates was within target range - partial
Role specific
measures
10% - 20%
A variety of role specific measures were used for different members of the
executive KMP, including the implementation of AN-ACC, a review of the
sustainability strategy and execution of selective acquisition opportunities.
These measures partially vested.
These outcomes resulted in STI vesting outcomes for the Group’s Executive KMP ranging from 55% to 60% of
maximum STI opportunities as shown below.
STI opportunity
STI awarded
STI awarded
STI foregone
Executive2
Sean Bilton
Steve Lemlin
Damian Hiser
($)
370,000
265,000
250,000
($)
222,000
145,750
143,750
(%)
60
55
58
(%)
40
45
42
1 This excluded:
•
•
Ian Thorley whose employment ended in early FY23; and
Anthony Rice, whose employment did not commence until early FY24.
1 Sean Bilton has a 30% weighting for the financial component and a 10% weighting for the role-specific component. The other executive KMP
have 20% weighting against all measures.
2 Neither Ian Thorley nor Anthony Rice participated in the STI for this period.
72 Estia Health | 2022-23 Annual Report
Estia Health Limited
37
Estia Health Limited
38
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
REMUNERATION REPORT – audited (continued)
5.2 Fixed Annual Remuneration
5.4 STI Outcomes
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
In FY23, all executive KMP had an STI opportunity of 50% of FAR.
An overview of executive KMP performance under the FY23 STI scorecard is detailed in the table below.
In FY23, Estia Health met the resident quality gateway hurdle, which created eligibility for STI payments to be
made subject to the achievement of STI scorecard measures. The gateway required that Estia Health must
maintain approved provider status and accreditation at all facilities throughout the period and any sanction or
variation to accreditation received during the period would also prevent the STI from vesting. A single occurrence
of any of the following category of events would warrant the forfeiture of the STI:
the accreditation of a home is revoked or not renewed;
the approved provider status of Estia Investments Pty Ltd is revoked; and/or
a notice of Decision to Impose Sanctions is issued.
The table below outlines the vesting outcome of STI measures, including group-wide KPIs and role specific
measures applied to KMP during FY23.
Performance
measure
Resident
Care and
Compliance
Weighting1
Outcome
Gateway
Resident care and compliance gateway met
Financial
20% - 30%
Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) was
above threshold – full vesting (100%).
Customer
20%
FY23 occupancy of 92.3% was within target range – partial vesting (50%)
People
20%
FY23 employee turnover rate did not meet threshold – no vesting (0%)
Safety
20%
FY23 Lost Time Injury Frequency Rates was within target range - partial
vesting (50%)
Role specific
measures
10% - 20%
A variety of role specific measures were used for different members of the
executive KMP, including the implementation of AN-ACC, a review of the
sustainability strategy and execution of selective acquisition opportunities.
These measures partially vested.
These outcomes resulted in STI vesting outcomes for the Group’s Executive KMP ranging from 55% to 60% of
maximum STI opportunities as shown below.
Executive2
STI opportunity
($)
STI awarded
($)
STI awarded
(%)
STI foregone
(%)
Sean Bilton
Steve Lemlin
Damian Hiser
370,000
265,000
250,000
222,000
145,750
143,750
60
55
58
40
45
42
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.
In setting FAR, 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.
5.3 Short Term Incentive
STI value
Performance
conditions
The Group provides an annual STI opportunity to executives and awards a cash and deferred equity incentive
subject to the attainment of clearly defined Group and role specific measures.
Participation
All executive KMP participated in the FY23 STI plan1.
Estia Health is committed to delivering safe, high-quality and sustainable aged care services for all
Australians.
Estia Health’s STI scorecard reflects this commitment.
The STI is subject to a resident care and compliance gateway hurdle which requires ongoing
compliance and accreditation targets to be met in order for any STI awards to be made. This is a
reflection of the importance Estia Health places on compliance and quality of care.
The balance of the STI scorecard assesses performance against a balanced scorecard of measures
including financial, customer, people and safety as well as individual strategic measures.
The collective use of these performance measures highlights an appropriate balance on
shareholder, resident/customer and workforce outcomes, all of which are inter-related.
Delivery of STI
Performance against the measures is tested annually after the end of the financial year. All
payments under the STI plan are determined and approved by the Committee and the Board.
Once STI payments have been approved, they are delivered in cash and equity. For senior
executives (including all executive KMP), 25% of any payment is deferred for a period of 12 months
in the form of performance rights. The quantity of performance rights granted is determined using
face value allocation methodology, using the volume weighted average price (VWAP) for the 10
trading days immediately following the release of results (i.e. deferred STI amount divided by share
price).
Cessation of
employment
For “Bad Leavers” (defined by the Group as resignation or termination for cause), any unpaid or
deferred STI is forfeited, unless otherwise determined by the Board.
For any other reason, the Board has discretion to award STI on a pro-rata basis taking into account
time and the current level of performance against performance hurdles
Clawback policy
The Board has the discretion to reduce, cancel or clawback any unvested performance-based
remuneration (including deferred STI) in the event of serious misconduct or a material misstatement
in the Group’s financial statements.
Board discretion
circumstances where the Board considers appropriate.
The Board also has a broad discretion to vary incentives, including their withdrawal, in a range of
1 This excluded:
•
•
Ian Thorley whose employment ended in early FY23; and
Anthony Rice, whose employment did not commence until early FY24.
1 Sean Bilton has a 30% weighting for the financial component and a 10% weighting for the role-specific component. The other executive KMP
have 20% weighting against all measures.
2 Neither Ian Thorley nor Anthony Rice participated in the STI for this period.
Estia Health Limited
37
Estia Health Limited
2022-23 Annual Report | Estia Health 73
38
5.6 LTI Vesting Outcomes
The FY21 LTI performance rights, which had a three-year performance period that ended on 30 June 2023,
vested as the relative total shareholder return performance targets were achieved.
Executive
Performance Rights
Number of
Ian Thorley
Sean Bilton
Steve Lemlin
Damian Hiser
325,521
325,520
318,384
74,609
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
REMUNERATION REPORT – audited (continued)
5.5 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 FY23.
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 FY23, 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).
Performance
conditions
The FY23 LTI award is subject to two equally weighted performance measures: relative total
shareholder return (TSR) and earnings per share (EPS), as defined below:
•
•
50% relative to the ASX300 excluding mining and energy companies; and
50% relative to Earnings Per Share (EPS).
TSR vesting and EPS schedules are provided below:
Estia Health’s TSR relative to constituents of the
ASX300 (excluding mining and energy
companies)
Percentage of performance
rights that vest
Less than median of comparator group
At median of comparator group
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 Health’s FY25 EPS ($)
Less than 0.091
Equal to 0.091
Percentage of performance
rights that vest
Nil
25%
Greater than 0.091 up to 0.109
Straight line pro-rata 25% to 100%
At or above 0.109
100%
Performance period The performance rights granted in FY23 have a performance period of three years.
Lapse of
performance rights
Any performance rights that remain unvested at the end of the performance period will lapse
immediately.
Total shares issued
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
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 FY23 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 FY23
LTI Incentive will immediately lapse.
Notwithstanding the above, the Board may, subject to any requirement for shareholder
approval, determine to treat any of the FY23 LTI in a different manner to that set out above
upon participants ceasing to be an employee of the Group.
Change of control
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.
Clawback policy
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.
74 Estia Health | 2022-23 Annual Report
Estia Health Limited
39
Estia Health Limited
40
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT – audited (continued)
REMUNERATION REPORT – audited (continued)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
5.6 LTI Vesting Outcomes
The FY21 LTI performance rights, which had a three-year performance period that ended on 30 June 2023,
vested as the relative total shareholder return performance targets were achieved.
Executive
Ian Thorley
Sean Bilton
Steve Lemlin
Damian Hiser
Number of
Performance Rights
325,521
325,520
318,384
74,609
5.5 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 FY23.
Delivery of LTI
the holders to ordinary shares.
LTIs are delivered in the form of performance rights. On vesting, performance rights entitle
LTI opportunity
In FY23, 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).
Performance
conditions
The FY23 LTI award is subject to two equally weighted performance measures: relative total
shareholder return (TSR) and earnings per share (EPS), as defined below:
50% relative to the ASX300 excluding mining and energy companies; and
•
•
50% relative to Earnings Per Share (EPS).
TSR vesting and EPS schedules are provided below:
Estia Health’s TSR relative to constituents of the
ASX300 (excluding mining and energy
companies)
Less than median of comparator group
At median of comparator group
Nil
50%
Percentage of performance
rights that vest
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 Health’s FY25 EPS ($)
Percentage of performance
rights that vest
Less than 0.091
Equal to 0.091
At or above 0.109
Nil
25%
100%
Greater than 0.091 up to 0.109
Straight line pro-rata 25% to 100%
Performance period The performance rights granted in FY23 have a performance period of three years.
Lapse of
Any performance rights that remain unvested at the end of the performance period will lapse
performance rights
immediately.
Total shares issued
the total number of shares on issue at the time of the offer.
The number of shares allocated on the vesting of all outstanding rights may not exceed 5% of
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 FY23 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 FY23
LTI Incentive will immediately lapse.
Notwithstanding the above, the Board may, subject to any requirement for shareholder
approval, determine to treat any of the FY23 LTI in a different manner to that set out above
upon participants ceasing to be an employee of the Group.
Change of control
of control event occurs, having regard for the performance of the Group during the vesting
The Board may exercise its discretion to allow all or some unvested rights to vest if a change
period up to the date of a change of control event.
Clawback policy
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.
Estia Health Limited
39
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2022-23 Annual Report | Estia Health 75
40
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DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
7. Executive employment contracts
Remuneration arrangements for executives are formalised in ongoing employment agreements as follows:
Name
FY23 FAR
Commencement
in current role
by Group
Notice of termination
Employee notice
Sean Bilton
$740,000
11 July 2022
Steve Lemlin
$530,000
1 February 2017
Damian Hiser
$500,000
11 July 2022
Anthony Rice*
$540,000
17 July 2023
6 months (or payment in
lieu of notice)
6 months
6 months (or payment in
lieu of notice)
6 months
6 months (or payment in
lieu of notice)
6 months
6 months (or payment in
lieu of notice)
6 months
Note that Ian Thorley’s (former CEO &MD) employment ceased due to retirement on 29 July 2022. His FY22 FAR was $780,000
and he was employed on an ongoing executive employment agreement commencing 23 October 2018, which was subject to 6
months’ notice of termination by either party (or payment in lieu of notice).
*Employment commenced 17 July 2023.
7.1 Ian Thorley
As noted in last year’s report, Ian Thorley stepped down from the role of CEO & MD effective 11 July 2022 and
remained with the Company until 29 July 2022 to ensure a comprehensive and smooth transition to his
successor, Sean Bilton.
Ian’s unvested equity-based LTI incentives in connection with his role as MD and CEO will remain on foot on a
pro-rata basis and be subject to performance testing in line with the ordinary terms of the plan.
As noted in last year’s report, Ian received 25% of his FY22 STI as deferred share rights, which remained subject
to forfeiture in line with the ordinary terms of the plan. Ian did not participate in the FY23 STI or LTI.
As outlined in last year’s report, Sean Bilton formally assumed the role of CEO & MD of Estia Health on 11 July
From this date, his fixed remuneration was increased to $740,000 per annum, inclusive of superannuation. His
STI opportunity is 50% of this amount, and his LTI opportunity has a face value of 100% of this amount.
Sean’s notice period was also increased from 3 to 6 months.
Sean received 25% of his FY22 STI as deferred share rights, which remained subject to forfeiture in line with the
7.2 Sean Bilton
2022.
ordinary terms of the plan.
7.3 Steve Lemlin
Steve Lemlin announced his intention to retire from the role of CFO in October 2022. However, he is expected to
remain with Estia Health until 31 August 2023, to allow a smooth handover with his successor, Anthony Rice, who
assumed the role of CFO on 17 July 2023.
Subject to certain performance conditions and undertakings, Steve’s unvested FY22 and FY23 LTI awards are
expected to remain on foot on a pro-rata basis in line with the ordinary terms of the plan, including the exercise of
board discretion.
76 Estia Health | 2022-23 Annual Report
Estia Health Limited
42
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
7. Executive employment contracts
Remuneration arrangements for executives are formalised in ongoing employment agreements as follows:
Name
FY23 FAR
Commencement
in current role
Notice of termination
by Group
Employee notice
Sean Bilton
$740,000
11 July 2022
Steve Lemlin
$530,000
1 February 2017
Damian Hiser
$500,000
11 July 2022
Anthony Rice*
$540,000
17 July 2023
6 months (or payment in
lieu of notice)
6 months
6 months (or payment in
lieu of notice)
6 months
6 months (or payment in
lieu of notice)
6 months
6 months (or payment in
lieu of notice)
6 months
Note that Ian Thorley’s (former CEO &MD) employment ceased due to retirement on 29 July 2022. His FY22 FAR was $780,000
and he was employed on an ongoing executive employment agreement commencing 23 October 2018, which was subject to 6
months’ notice of termination by either party (or payment in lieu of notice).
*Employment commenced 17 July 2023.
7.1 Ian Thorley
As noted in last year’s report, Ian Thorley stepped down from the role of CEO & MD effective 11 July 2022 and
remained with the Company until 29 July 2022 to ensure a comprehensive and smooth transition to his
successor, Sean Bilton.
Ian’s unvested equity-based LTI incentives in connection with his role as MD and CEO will remain on foot on a
pro-rata basis and be subject to performance testing in line with the ordinary terms of the plan.
As noted in last year’s report, Ian received 25% of his FY22 STI as deferred share rights, which remained subject
to forfeiture in line with the ordinary terms of the plan. Ian did not participate in the FY23 STI or LTI.
7.2 Sean Bilton
As outlined in last year’s report, Sean Bilton formally assumed the role of CEO & MD of Estia Health on 11 July
2022.
From this date, his fixed remuneration was increased to $740,000 per annum, inclusive of superannuation. His
STI opportunity is 50% of this amount, and his LTI opportunity has a face value of 100% of this amount.
Sean’s notice period was also increased from 3 to 6 months.
Sean received 25% of his FY22 STI as deferred share rights, which remained subject to forfeiture in line with the
ordinary terms of the plan.
7.3 Steve Lemlin
Steve Lemlin announced his intention to retire from the role of CFO in October 2022. However, he is expected to
remain with Estia Health until 31 August 2023, to allow a smooth handover with his successor, Anthony Rice, who
assumed the role of CFO on 17 July 2023.
Subject to certain performance conditions and undertakings, Steve’s unvested FY22 and FY23 LTI awards are
expected to remain on foot on a pro-rata basis in line with the ordinary terms of the plan, including the exercise of
board discretion.
Estia Health Limited
2022-23 Annual Report | Estia Health 77
42
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
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).
Effective 1 July 2021, the NED base member fees increased from $100,000 p.a. to $110,000 p.a. This
represented the first NED base fee increase since the Group's IPO in 2014 and was made following a
detailed NED fee benchmarking exercise.
8.1 Directors’ FY23 Fee Structure
The table below summarises the annual Base NED fees, inclusive of superannuation:
Board
Audit Committee
Nomination & Remuneration Committee
Risk Management Committee
Property & Investment Committee
Description
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Fees
$250,000
$110,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
NEDs may be reimbursed for expenses reasonably incurred in attending to the Group’s affairs. NEDs do not
participate in any incentive programs.
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
8.2 Non-Executive director remuneration
The table below outlines NED remuneration for FY23 in accordance with statutory rules and applicable
accounting standards.
Non-Executive Directors
Dr. Gary H Weiss AM
Paul Foster
Professor Simon Willcock AM
Helen Kurincic
Karen Penrose
Norah Barlow ONZM
Warwick Smith
Total
Year
Board fees
Superannuation
Total fees
$
$
$
2023
2022
2023
2022
20231
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
273,677
256,432
131,222
131,818
90,498
-
131,230
125,000
122,172
122,727
125,000
121,250
-
98,182
873,799
855,409
6,323
23,568
13,778
13,182
9,502
13,770
12,500
12,828
12,273
-
-
-
-
3,068
56,201
64,591
280,000
280,000
145,000
145,000
100,000
-
145,000
137,500
135,000
135,000
125,000
121,250
-
101,250
930,000
920,000
78 Estia Health | 2022-23 Annual Report
Estia Health Limited
43
Estia Health Limited
44
1 Represents Professor Simon Willcock’s remuneration for the year from his commencement effective 1 September 2022.
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
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).
Effective 1 July 2021, the NED base member fees increased from $100,000 p.a. to $110,000 p.a. This
represented the first NED base fee increase since the Group's IPO in 2014 and was made following a
detailed NED fee benchmarking exercise.
8.1 Directors’ FY23 Fee Structure
The table below summarises the annual Base NED fees, inclusive of superannuation:
Board
Audit Committee
Nomination & Remuneration Committee
Risk Management Committee
Property & Investment Committee
Description
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Fees
$250,000
$110,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
8.2 Non-Executive director remuneration
The table below outlines NED remuneration for FY23 in accordance with statutory rules and applicable
accounting standards.
Non-Executive Directors
Dr. Gary H Weiss AM
Paul Foster
Professor Simon Willcock AM
Helen Kurincic
Karen Penrose
Norah Barlow ONZM
Warwick Smith
NEDs may be reimbursed for expenses reasonably incurred in attending to the Group’s affairs. NEDs do not
Total
participate in any incentive programs.
Year
Board fees
$
Superannuation
$
Total fees
$
2023
2022
2023
2022
20231
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
273,677
256,432
131,222
131,818
90,498
-
131,230
125,000
122,172
122,727
125,000
121,250
-
98,182
873,799
855,409
6,323
23,568
13,778
13,182
9,502
-
13,770
12,500
12,828
12,273
-
-
-
3,068
56,201
64,591
280,000
280,000
145,000
145,000
100,000
-
145,000
137,500
135,000
135,000
125,000
121,250
-
101,250
930,000
920,000
Estia Health Limited
43
Estia Health Limited
2022-23 Annual Report | Estia Health 79
44
1 Represents Professor Simon Willcock’s remuneration for the year from his commencement effective 1 September 2022.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
REMUNERATION REPORT - audited (continued)
9. Additional disclosures relating to performance rights and shares
9.3 Value of performance rights awarded, exercised and lapsed during the year
9.1 Performance rights granted during the year
The table below discloses the value of performance rights granted, exercised or lapsed during the year.
Value of rights
granted during
the year a
Value of rights
exercised during
the year b
Value of rights
lapsed during
the year c
$
$
$
Remuneration
consisting of
rights for the
year
%
Executive director
Sean Bilton
Senior executive
Damian Hiser
Steve Lemlin
Former executive
Ian Thorley
Total
650,702
227,457
383,353
429,884
45,941
1,509,880
128,327
222,469
324,491
902,744
-
-
-
714,578
714,578
50
49
46
17
a Determined at the time of grant per the AASB 2.
b Determined at the time of exercise.
c Determined at the time of lapse.
There were no alterations to the terms and conditions of options awarded since their award date other than
application of discretion regarding good leavers which is accounted for as a modification.
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 FY23.
Number
of rights
granted
during
the year
Fair value
per right at
grant date
Vesting
date
Exercise
price per
option
Grant date
Executive director
Sean Bilton
Senior Executives
Damian Hiser
Steve Lemlin
Former Executives
Ian Thorley
183,614
183,613
17,741
21/11/2022
21/11/2022
21/11/2022
124,063
124,063
8,228
19/09/2022
19/09/2022
19/09/2022
131,507
131,507
20,726
19/09/2022
19/09/2022
19/09/2022
1.40
1.94
2.11
1.18
1.78
1.96
1.18
1.78
1.96
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
21,773
15/11/2022
2.11
22/08/2023
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Expiry date
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
22/08/2023
Total
946,835
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.
Number
of rights at
1 July 2022
or
commencement
of employment
Granted as
remunera-
tion
Rights
exercised
Rights
Forfeited
Vested at 30 June
2023
Number of
rights at
30 June 2023
or
cessation of
employment
Exercise-
able
Not
exercise-
able
Executive director
Sean Bilton
654,681
384,968
(105,794)
Senior Executive
Damian Hiser1
186,1001
256,354
(59,687)
Steve Lemlin
642,664
283,740
(103,474)
-
-
-
933,855
325,520
382,767
74,609
822,930
318,384
Former Executive
Ian Thorley2
956,143
21,773
(152,343)
(357,289)
468,2842
325,521
Total
2,439,588
946,835
(421,298)
(357,289)
2,607,836 1,044,034
-
-
-
-
-
1 Damian Hiser was appointed as the Chief Operating Officer on 11 July 2022.
2 Ian Thorley retired from the role of CEO and Managing Director with effect from 11 July 2022, resigned as a director on 13 July 2022 and
remained with the Company until 29 July 2022.
80 Estia Health | 2022-23 Annual Report
Estia Health Limited
45
Estia Health Limited
46
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
REMUNERATION REPORT - audited (continued)
9. Additional disclosures relating to performance rights and shares
9.3 Value of performance rights awarded, exercised and lapsed during the year
9.1 Performance rights granted during the year
The table below discloses the value of performance rights granted, exercised or lapsed during the year.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Value of rights
granted during
the year a
$
Value of rights
exercised during
the year b
$
Value of rights
lapsed during
the year c
$
Remuneration
consisting of
rights for the
year
%
Executive director
Sean Bilton
Senior executive
Damian Hiser
Steve Lemlin
Former executive
Ian Thorley
Total
650,702
227,457
383,353
429,884
45,941
1,509,880
128,327
222,469
324,491
902,744
-
-
-
714,578
714,578
50
49
46
17
a Determined at the time of grant per the AASB 2.
b Determined at the time of exercise.
c Determined at the time of lapse.
There were no alterations to the terms and conditions of options awarded since their award date other than
application of discretion regarding good leavers which is accounted for as a modification.
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 FY23.
Number
of rights
granted
during
the year
Fair value
per right at
grant date
Vesting
date
Exercise
price per
option
Expiry date
Grant date
Executive director
Sean Bilton
Senior Executives
Damian Hiser
Steve Lemlin
Former Executives
Ian Thorley
183,614
183,613
21/11/2022
21/11/2022
17,741
21/11/2022
124,063
124,063
19/09/2022
19/09/2022
8,228
19/09/2022
131,507
131,507
20,726
19/09/2022
19/09/2022
19/09/2022
1.40
1.94
2.11
1.18
1.78
1.96
1.18
1.78
1.96
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
30/06/2025
30/06/2025
22/08/2023
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
21,773
15/11/2022
2.11
22/08/2023
22/08/2023
Total
946,835
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.
Number
of rights at
1 July 2022
Vested at 30 June
2023
Number of
rights at
30 June 2023
or
or
Granted as
Not
commencement
remunera-
Rights
Rights
cessation of
Exercise-
exercise-
of employment
tion
exercised
Forfeited
employment
able
able
Sean Bilton
654,681
384,968
(105,794)
933,855
325,520
Damian Hiser1
186,1001
256,354
(59,687)
Steve Lemlin
642,664
283,740
(103,474)
382,767
74,609
822,930
318,384
-
-
-
Executive director
Senior Executive
Former Executive
Ian Thorley2
956,143
21,773
(152,343)
(357,289)
468,2842
325,521
Total
2,439,588
946,835
(421,298)
(357,289)
2,607,836 1,044,034
-
-
-
-
-
1 Damian Hiser was appointed as the Chief Operating Officer on 11 July 2022.
2 Ian Thorley retired from the role of CEO and Managing Director with effect from 11 July 2022, resigned as a director on 13 July 2022 and
remained with the Company until 29 July 2022.
Estia Health Limited
45
Estia Health Limited
2022-23 Annual Report | Estia Health 81
46
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
9.4 Shareholdings of KMP and related parties
KMP or their related parties directly, indirectly or beneficially held a number of shares in Estia Health Group as
detailed in the table below:
Number of
shares at 1
July 2022 or
commence-
ment of
employment
Granted as
remunera-
tion
Exercise
of rights
Number of
shares at
30 June
2023 or
cessation
of employ-
ment
On-Market
trades
Held
nominally
78,312
24,000
-
50,000
36,833
129,474
-
-
-
-
-
-
-
-
-
-
-
-
25,000
103,312
103,312
-
-
-
24,000
-
-
-
50,000
25,000
7,238
44,071
44,071
-
129,474
129,474
29,774
-
105,794
48,623
184,191
55,432
134,904
138,001
676,730
-
-
-
-
115,119
238,378
59,687
103,474
152,343
-
-
-
421,298
80,861 1,178,889
355,169
-
-
-
290,344
53,312
residents and staff, and maintain business continuity.
Non-executive directors
Dr. Gary H Weiss AM
Paul Foster
Professor Simon Willcock AM
Helen Kurincic
Karen Penrose
Norah Barlow ONZM
Executive director
Sean Bilton
Senior executives
Damian Hiser1
Steve Lemlin
Former executive
Ian Thorley2
Total
All equity transactions with KMP have been entered into under terms and conditions no more favourable than those
the Group would have adopted if dealing at arm's length.
10. Other transactions and balances with KMP and their related parties
There were no other transactions with KMP or their related parties during the year.
1 Damian Hiser was appointed as the Chief Operating Officer on 11 July 2022.
2 Ian Thorley retired from the role of CEO and Managing Director with effect from 11 July 2022, resigned as a director on 13 July 2022 and
remained with the Company until 29 July 2022.
82 Estia Health | 2022-23 Annual Report
Estia Health Limited
47
Estia Health Limited
48
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT
Chief Executive Officer’s Message
Contents
1.
Introduction
Overview
TCFD Roadmap
2. Governance
Board oversight
Management’s role
3. Strategy
4. Risk Management
5. Metrics and targets
1.
INTRODUCTION
Overview
This report is prepared in accordance with the recommendations of the Task Force on Climate-Related Financial
Disclosures (“TCFD”) and covers the Estia Health Group and its entities during the financial year 2023.
Chief Executive Officer’s Message
As part of our commitment to sustainability and addressing climate-related risks and opportunities, we recognise
the importance of meeting the recommendations of the TCFD. Estia Health acknowledges the potential impacts of
climate change on the aged care sector. Potential risks related to extreme weather events, changing climatic
conditions, evolving health risks, and regulatory changes are considered, while also evaluating opportunities to
enhance resilience and contribute to a more sustainable future.
Our approach to sustainability is dynamic, we continue to monitor the external environment and adjust our
Sustainability Strategy and targets, ensuring appropriateness and relevance to the future sustainability of the
Group. We understand that in identifying and managing climate-related risks, we are ultimately safeguarding the
wellbeing of our residents and staff and the longevity of our operations. Our risk assessment processes have
enabled us to identify vulnerabilities associated with extreme weather events and evolving health risks. We are
implementing risk management strategies and measures to enhance preparedness, ensure the safety of our
The impact of the COVID-19 pandemic on the residential aged care sector has been well-documented, resulting
in adverse health outcomes, elevated costs, staffing shortages, increased consumption of medical supplies, and
increased waste disposal volumes and costs. This also resulted in strategic decisions to ensure resources and
management time were solely focused on the immediate care and well-being of residents and staff during the
three year crisis, sometimes in priority to longer-term objectives. This impacted all areas of the business, including
climate resilience activities. Nonetheless, I am pleased with our progress and with the passing of the pandemic I
look forward to the establishment of a new sustainability strategy in FY24 in line with emerging community and
regulatory expectations.
Targets.
This report presents a summary of our progress made to date, outlining our commitment to addressing climate
change, and is structured around the core elements of Governance, Strategy, Risk Management, Metrics and
Sean Bilton
Chief Executive Officer
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
REMUNERATION REPORT - audited (continued)
9.4 Shareholdings of KMP and related parties
KMP or their related parties directly, indirectly or beneficially held a number of shares in Estia Health Group as
detailed in the table below:
Number of
shares at 1
July 2022 or
commence-
Granted as
Number of
shares at
30 June
2023 or
cessation
ment of
remunera-
Exercise
On-Market
of employ-
Held
employment
tion
of rights
trades
ment
nominally
Non-executive directors
Dr. Gary H Weiss AM
Paul Foster
Professor Simon Willcock AM
Helen Kurincic
Karen Penrose
Norah Barlow ONZM
Executive director
Sean Bilton
Senior executives
Damian Hiser1
Steve Lemlin
Former executive
Ian Thorley2
Total
78,312
24,000
-
50,000
36,833
129,474
55,432
134,904
138,001
676,730
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
103,312
103,312
24,000
-
50,000
25,000
7,238
44,071
44,071
129,474
129,474
-
-
-
-
-
59,687
103,474
115,119
238,378
152,343
290,344
53,312
421,298
80,861 1,178,889
355,169
-
-
-
-
-
-
-
29,774
-
105,794
48,623
184,191
All equity transactions with KMP have been entered into under terms and conditions no more favourable than those
the Group would have adopted if dealing at arm's length.
10. Other transactions and balances with KMP and their related parties
There were no other transactions with KMP or their related parties during the year.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT
Contents
1.
Introduction
Overview
Chief Executive Officer’s Message
TCFD Roadmap
2. Governance
Board oversight
Management’s role
3. Strategy
4. Risk Management
5. Metrics and targets
1.
INTRODUCTION
Overview
This report is prepared in accordance with the recommendations of the Task Force on Climate-Related Financial
Disclosures (“TCFD”) and covers the Estia Health Group and its entities during the financial year 2023.
Chief Executive Officer’s Message
As part of our commitment to sustainability and addressing climate-related risks and opportunities, we recognise
the importance of meeting the recommendations of the TCFD. Estia Health acknowledges the potential impacts of
climate change on the aged care sector. Potential risks related to extreme weather events, changing climatic
conditions, evolving health risks, and regulatory changes are considered, while also evaluating opportunities to
enhance resilience and contribute to a more sustainable future.
Our approach to sustainability is dynamic, we continue to monitor the external environment and adjust our
Sustainability Strategy and targets, ensuring appropriateness and relevance to the future sustainability of the
Group. We understand that in identifying and managing climate-related risks, we are ultimately safeguarding the
wellbeing of our residents and staff and the longevity of our operations. Our risk assessment processes have
enabled us to identify vulnerabilities associated with extreme weather events and evolving health risks. We are
implementing risk management strategies and measures to enhance preparedness, ensure the safety of our
residents and staff, and maintain business continuity.
The impact of the COVID-19 pandemic on the residential aged care sector has been well-documented, resulting
in adverse health outcomes, elevated costs, staffing shortages, increased consumption of medical supplies, and
increased waste disposal volumes and costs. This also resulted in strategic decisions to ensure resources and
management time were solely focused on the immediate care and well-being of residents and staff during the
three year crisis, sometimes in priority to longer-term objectives. This impacted all areas of the business, including
climate resilience activities. Nonetheless, I am pleased with our progress and with the passing of the pandemic I
look forward to the establishment of a new sustainability strategy in FY24 in line with emerging community and
regulatory expectations.
This report presents a summary of our progress made to date, outlining our commitment to addressing climate
change, and is structured around the core elements of Governance, Strategy, Risk Management, Metrics and
Targets.
Sean Bilton
Chief Executive Officer
1 Damian Hiser was appointed as the Chief Operating Officer on 11 July 2022.
2 Ian Thorley retired from the role of CEO and Managing Director with effect from 11 July 2022, resigned as a director on 13 July 2022 and
remained with the Company until 29 July 2022.
Estia Health Limited
47
Estia Health Limited
2022-23 Annual Report | Estia Health 83
48
DIRECTORS’ REPORT
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
FY22 – FY24 TCFD Roadmap
The FY22 to FY24 TCFD roadmap outlines the Company strategy and serves as a structured framework which
guides company efforts in assessing climate-related risks and opportunities. Forming part of an ongoing process,
the activities reported are tailored to the specific circumstances and objectives of Estia Health in implementing the
TCFD recommendations.
2. GOVERNANCE
opportunities
Recommended disclosures:
Core element
Roadmap objective
Required activities
FY22
FY23
FY24
Governance
Disclose the
organisation’s
governance around
climate-related risks and
opportunities.
The Board has appropriate
oversight and understanding
of climate risks and
opportunities through
appropriate governance
structures, education and
engagement.
Strengthen Board and management
oversight of climate-related risks through
appropriate reporting.
Establish cross-functional management
committee with explicit ownership and
oversight of climate-related risks and
opportunities.
Strategy
Disclose the actual and
potential impacts of
climate-related risks and
opportunities on the
organisation’s business
strategy and financial
planning.
Risk management
Disclose how the
organisation identifies,
assesses, and manages
climate-related risks.
Incorporate climate scenario
analysis into strategy and
financial planning.
Define short, medium, long-term
periods
Identify material risks and opportunities
Assess impact in the:
-
Short-term
- Medium-term
-
Long-term
In identifying impacts and opportunities,
establish the impact on strategy and
financial planning, including resilience of
physical and transitional risk impacts under
different climate scenarios.
Integrate climate-related risks
within the existing company-
wide risk management
framework.
Integrate climate-related risks into risk
management processes to assess the
significance of climate risks alongside
other risks.
Integrate climate-related risk assessments
into the Risk Committee, and Development
Committee decisions on investments and
capital spending.
Establish target and metrics for managing
climate-related risks and opportunities.
Metrics and targets
Disclose metrics and
targets used to assess
and manage climate-
related risks and
opportunities.
Disclose metrics and set
targets in line with TCFD
cross-industry standard
metrics.
Complete
Commenced
Planned
Figure 1: Estia Health’s TCFD roadmap
84 Estia Health | 2022-23 Annual Report
Estia Health Limited
49
Estia Health Limited
50
TCFD recommendation: Disclose the organisation’s governance around climate-related risks and
a) Describe the board’s oversight of climate-related risks and opportunities
b) Describe management’s role in assessing and managing climate-related risks and opportunities
Board oversight of climate-related risks and
opportunities
The Board oversees progress against targets through
the Board level Risk Management Committee. The
Board receives regular reports from key personnel
regarding climate-related matters, initiatives and
activity aimed at reducing the Company’s
environmental impact, and the assessment of homes’
resilience to physical climate-related risks. The
Company has assigned responsibility for climate-
related issues with the Board and Executive.
Management’s role assessing and managing
Figure 2: Governance structure as of 30 June 2023
climate-related risks and opportunities
The role of assessing and managing climate-related risks and opportunities is a shared responsibility. Designated
roles and committee ensure oversight, assessment and management of climate-related risks and opportunities
within the business. This includes integrating climate considerations into strategy and managing climate-related
risks and assessing potential opportunities.
Sustainability Committee:
In FY23, the Sustainability Committee, comprised of senior leaders and subject matter experts, led Estia Health’s
environmental, social and governance (ESG) agenda. This included overseeing and reviewing the implementation
of sustainability strategies, activities and initiatives, reviewing targets and monitoring performance. The
Sustainability Committee meets near monthly and is comprised of the key Executive, the Head of Sustainability,
and other senior managers across the Group.
Risk Management Committee:
The Risk Management Committee is responsible for assessing and ensuring that there are internal controls for
determining and managing key risk areas such as non-compliance with laws, regulations, standards, and best
practice guidelines including environmental laws, and the economic, environmental, (including climate risk), social
sustainability and governance risks.
Property and Investment Committee:
The Property and Investment Committee ensures that appropriate programs are in place for the maintenance and
renewal of aged care facilities, including for the restoration, repair, replacement and/or modernisation of existing
facilities, including programs to improve the climate change resilience of the Company’s real estate assets.
The Audit Committee is responsible for corporate reporting, including the review of climate-related financial
Audit Committee:
disclosures in the Annual Report.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee considers the inclusion in executive remuneration schemes of
appropriate measures relating to ESG matters, including responding to the risks and opportunities presented by
climate change.
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
FY22 – FY24 TCFD Roadmap
The FY22 to FY24 TCFD roadmap outlines the Company strategy and serves as a structured framework which
guides company efforts in assessing climate-related risks and opportunities. Forming part of an ongoing process,
the activities reported are tailored to the specific circumstances and objectives of Estia Health in implementing the
TCFD recommendations.
Core element
Roadmap objective
Required activities
FY22
FY23
FY24
Governance
Disclose the
organisation’s
governance around
climate-related risks and
opportunities.
The Board has appropriate
Strengthen Board and management
oversight and understanding
oversight of climate-related risks through
of climate risks and
opportunities through
appropriate governance
structures, education and
engagement.
appropriate reporting.
Establish cross-functional management
committee with explicit ownership and
oversight of climate-related risks and
opportunities.
Strategy
Incorporate climate scenario
Define short, medium, long-term
analysis into strategy and
periods
financial planning.
Identify material risks and opportunities
Disclose the actual and
potential impacts of
climate-related risks and
opportunities on the
organisation’s business
strategy and financial
planning.
Assess impact in the:
-
Short-term
- Medium-term
-
Long-term
In identifying impacts and opportunities,
establish the impact on strategy and
financial planning, including resilience of
physical and transitional risk impacts under
different climate scenarios.
Risk management
Integrate climate-related risks
Integrate climate-related risks into risk
within the existing company-
management processes to assess the
wide risk management
significance of climate risks alongside
framework.
other risks.
Disclose how the
organisation identifies,
assesses, and manages
climate-related risks.
Integrate climate-related risk assessments
into the Risk Committee, and Development
Committee decisions on investments and
capital spending.
Metrics and targets
Disclose metrics and set
Establish target and metrics for managing
targets in line with TCFD
climate-related risks and opportunities.
Disclose metrics and
targets used to assess
and manage climate-
related risks and
opportunities.
cross-industry standard
metrics.
Complete
Commenced
Planned
Figure 1: Estia Health’s TCFD roadmap
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
2. GOVERNANCE
TCFD recommendation: Disclose the organisation’s governance around climate-related risks and
opportunities
Recommended disclosures:
a) Describe the board’s oversight of climate-related risks and opportunities
b) Describe management’s role in assessing and managing climate-related risks and opportunities
Board oversight of climate-related risks and
opportunities
The Board oversees progress against targets through
the Board level Risk Management Committee. The
Board receives regular reports from key personnel
regarding climate-related matters, initiatives and
activity aimed at reducing the Company’s
environmental impact, and the assessment of homes’
resilience to physical climate-related risks. The
Company has assigned responsibility for climate-
related issues with the Board and Executive.
Management’s role assessing and managing
climate-related risks and opportunities
Figure 2: Governance structure as of 30 June 2023
The role of assessing and managing climate-related risks and opportunities is a shared responsibility. Designated
roles and committee ensure oversight, assessment and management of climate-related risks and opportunities
within the business. This includes integrating climate considerations into strategy and managing climate-related
risks and assessing potential opportunities.
Sustainability Committee:
In FY23, the Sustainability Committee, comprised of senior leaders and subject matter experts, led Estia Health’s
environmental, social and governance (ESG) agenda. This included overseeing and reviewing the implementation
of sustainability strategies, activities and initiatives, reviewing targets and monitoring performance. The
Sustainability Committee meets near monthly and is comprised of the key Executive, the Head of Sustainability,
and other senior managers across the Group.
Risk Management Committee:
The Risk Management Committee is responsible for assessing and ensuring that there are internal controls for
determining and managing key risk areas such as non-compliance with laws, regulations, standards, and best
practice guidelines including environmental laws, and the economic, environmental, (including climate risk), social
sustainability and governance risks.
Property and Investment Committee:
The Property and Investment Committee ensures that appropriate programs are in place for the maintenance and
renewal of aged care facilities, including for the restoration, repair, replacement and/or modernisation of existing
facilities, including programs to improve the climate change resilience of the Company’s real estate assets.
Audit Committee:
The Audit Committee is responsible for corporate reporting, including the review of climate-related financial
disclosures in the Annual Report.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee considers the inclusion in executive remuneration schemes of
appropriate measures relating to ESG matters, including responding to the risks and opportunities presented by
climate change.
Estia Health Limited
49
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2022-23 Annual Report | Estia Health 85
50
DIRECTORS’ REPORT
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
3. STRATEGY
Transition Risks
TCFD recommendation: Disclose the actual and potential impacts of climate-related risks and
opportunities on the organisation’s businesses, strategy, and financial planning where such
information is material.
Recommended disclosures
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium,
and long-term
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy
and financial planning
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
The Estia Health 2020-2024 Sustainability Strategy is based on the foundations of Supporting our People,
Respecting our Environment, and Enhancing our Community. Focus areas and targets define metrics to track
progress in the reduction of greenhouse gas emissions, energy consumption, water usage, and waste. By
monitoring performance, we also manage climate-related risks and opportunities, enabling visibility in our
environmental performance and sustainable outcomes.
The financial impacts of climate-related issues
on Estia Health are driven by specific climate-
related risks and opportunities to which the
Company is exposed. The approach undertaken
by Estia Health in identifying physical and
transition climate-related risks and opportunities
is aligned with TCFD recommendations outlined
in figure 3. As part of this, risk identification
forms part of determining potential financial
implications.
Climate-related risks and opportunities
Figure 3: TCFD Climate-Related Risks and Opportunities
Climate-related risks and opportunities can arise in the short term, medium term, or long term. When assessing
climate related risk, Estia Health has determined the time periods of short-term as up to 3 years, medium-term as
3 to 15 years, and long-term as more than 15 years, in which climate risks and opportunities may affect the
business.
Impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial
planning
In 2021, Estia Health assessed all homes for exposure and vulnerability to climate change. In 2022 we identified
key focus areas for transition climate-related risks and opportunities which may impact operations, strategy, and
financial planning of the Group in the short-term, across the geographic locations in which Estia Health operates,
and identified the extent to which the geographic locations may be subject to both acute and chronic physical
risks.
The Group has undertaken an assessment of the potential impact of transition risks in the short-term, being in the next 3 years.
This will be extended to an assessment of medium-term impacts in future years. Risks continue to evolve and as such these
should not be regarded as exhaustive nor are they reported in any order of relative importance or potential impact.
Risk
Policy and Legal.
These are risks to the business
as a result of legislative
response to climate change
through regulations by
increasing efficiency
standards, capping supply or
a carbon price.
use of resources, or the use of
The Group uses significant amounts of electricity with usage varying over the
Assessed short-
term impact
Assessment of the impact to the Group
The Group generates modest emissions through its operations, primarily
through the use of gas in some of its homes to power laundry driers, kitchen
stoves or water heating. If legislation were passed to require the replacement
of gas in homes this may result in the need for capital investment to replace
equipment in such homes. The Group’s total spend on gas during FY23 was
$2.9m. Total CO2 emissions resulting from gas use during FY23 was 6,498
mtons CO2-e, equating to 3kg per occupied bed day.
course of a year to manage the temperature of its homes in order to provide
safe and comfortable conditions for its elderly and vulnerable residents, as
well as for staff and visitors. The potential introduction of efficiency standards
or the use of a carbon price may require capital investment to replace items
such as air-conditioning units or result in increased operating expenses
through the purchase of electricity from renewable sources. The Group’s total
spend on electricity usage during FY23 was $6.6m.
The Group operates a small fleet of 36 petrol or diesel powered mini-buses
and vehicles which support lifestyle activities and operations at each home.
The impact of potential legislation to replace these with electric vehicles
would require capital investment. The running costs of the fleet are minimal in
relation to the Group’s total cost base.
Potential future changes to building regulations relating to energy and water
efficiency, or climate-change resilience may increase the cost of constructing
new homes, or require rectification work to existing homes.
It would be expected that to the extent to which such cost increases impacted
the whole residential aged care sector, they would be incorporated into
funding recommendations made by the IHACPA. In which case, this would
further reduce any impact on the Group’s financial performance.
To the extent to which the Group can provision such services at a lower cost
than sector averages, this would therefore have the potential to deliver
improved relative financial performance.
Other than as referenced above, the Group has not identified specific areas
where technology change may significantly impact the competitiveness or
marketability of its services provided to residents.
Low
Low
Low
Low
Low
Low
Low
Technology
Technology may allow existing
products and services to be
replaced with ones that are
more energy efficient and
deliver lower emissions. This
will have increased research
costs and impact demand for
existing products.
Market
There may be a significant
change in consumer behaviour
and expectations with
consumers looking for low
The Group provides care to elderly and vulnerable residents at a critical stage
in their lives. The Group’s own research and the requirements of the Aged
Care Act place primary importance on the quality of care above other matters.
Aged care is needs-driven and there few alternatives available to people
Low
when they reach this stage in life.
carbon goods and services.
The prime onus and opportunity for the Group is to ensure it delivers high
This could lead to risks of
quality care to attract residents in a competitive market. Monitoring and
reduced demand for existing
benchmarking of the importance attached to the Group’s sustainability
products (as green products
performance in residents or staff making choices about care providers will be
become more attractive),
required to ensure high occupancy levels and required staffing levels are
uncertainty in the market, and
maintained.
increased cost of raw materials
and production.
86 Estia Health | 2022-23 Annual Report
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About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Transition Risks
The Group has undertaken an assessment of the potential impact of transition risks in the short-term, being in the next 3 years.
This will be extended to an assessment of medium-term impacts in future years. Risks continue to evolve and as such these
should not be regarded as exhaustive nor are they reported in any order of relative importance or potential impact.
Risk
Policy and Legal.
These are risks to the business
as a result of legislative
response to climate change
through regulations by
increasing efficiency
standards, capping supply or
use of resources, or the use of
a carbon price.
Technology
Technology may allow existing
products and services to be
replaced with ones that are
more energy efficient and
deliver lower emissions. This
will have increased research
costs and impact demand for
existing products.
Market
There may be a significant
change in consumer behaviour
and expectations with
consumers looking for low
carbon goods and services.
This could lead to risks of
reduced demand for existing
products (as green products
become more attractive),
uncertainty in the market, and
increased cost of raw materials
and production.
Assessed short-
term impact
Assessment of the impact to the Group
The Group generates modest emissions through its operations, primarily
through the use of gas in some of its homes to power laundry driers, kitchen
stoves or water heating. If legislation were passed to require the replacement
of gas in homes this may result in the need for capital investment to replace
equipment in such homes. The Group’s total spend on gas during FY23 was
$2.9m. Total CO2 emissions resulting from gas use during FY23 was 6,498
mtons CO2-e, equating to 3kg per occupied bed day.
The Group uses significant amounts of electricity with usage varying over the
course of a year to manage the temperature of its homes in order to provide
safe and comfortable conditions for its elderly and vulnerable residents, as
well as for staff and visitors. The potential introduction of efficiency standards
or the use of a carbon price may require capital investment to replace items
such as air-conditioning units or result in increased operating expenses
through the purchase of electricity from renewable sources. The Group’s total
spend on electricity usage during FY23 was $6.6m.
The Group operates a small fleet of 36 petrol or diesel powered mini-buses
and vehicles which support lifestyle activities and operations at each home.
The impact of potential legislation to replace these with electric vehicles
would require capital investment. The running costs of the fleet are minimal in
relation to the Group’s total cost base.
Potential future changes to building regulations relating to energy and water
efficiency, or climate-change resilience may increase the cost of constructing
new homes, or require rectification work to existing homes.
It would be expected that to the extent to which such cost increases impacted
the whole residential aged care sector, they would be incorporated into
funding recommendations made by the IHACPA. In which case, this would
further reduce any impact on the Group’s financial performance.
To the extent to which the Group can provision such services at a lower cost
than sector averages, this would therefore have the potential to deliver
improved relative financial performance.
Other than as referenced above, the Group has not identified specific areas
where technology change may significantly impact the competitiveness or
marketability of its services provided to residents.
The Group provides care to elderly and vulnerable residents at a critical stage
in their lives. The Group’s own research and the requirements of the Aged
Care Act place primary importance on the quality of care above other matters.
Aged care is needs-driven and there few alternatives available to people
when they reach this stage in life.
The prime onus and opportunity for the Group is to ensure it delivers high
quality care to attract residents in a competitive market. Monitoring and
benchmarking of the importance attached to the Group’s sustainability
performance in residents or staff making choices about care providers will be
required to ensure high occupancy levels and required staffing levels are
maintained.
Low
Low
Low
Low
Low
Low
Low
Low
3. STRATEGY
information is material.
Recommended disclosures
and long-term
and financial planning
TCFD recommendation: Disclose the actual and potential impacts of climate-related risks and
opportunities on the organisation’s businesses, strategy, and financial planning where such
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium,
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
The Estia Health 2020-2024 Sustainability Strategy is based on the foundations of Supporting our People,
Respecting our Environment, and Enhancing our Community. Focus areas and targets define metrics to track
progress in the reduction of greenhouse gas emissions, energy consumption, water usage, and waste. By
monitoring performance, we also manage climate-related risks and opportunities, enabling visibility in our
environmental performance and sustainable outcomes.
The financial impacts of climate-related issues
on Estia Health are driven by specific climate-
related risks and opportunities to which the
Company is exposed. The approach undertaken
by Estia Health in identifying physical and
transition climate-related risks and opportunities
is aligned with TCFD recommendations outlined
in figure 3. As part of this, risk identification
forms part of determining potential financial
implications.
Climate-related risks and opportunities
Figure 3: TCFD Climate-Related Risks and Opportunities
Climate-related risks and opportunities can arise in the short term, medium term, or long term. When assessing
climate related risk, Estia Health has determined the time periods of short-term as up to 3 years, medium-term as
3 to 15 years, and long-term as more than 15 years, in which climate risks and opportunities may affect the
business.
planning
risks.
Impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial
In 2021, Estia Health assessed all homes for exposure and vulnerability to climate change. In 2022 we identified
key focus areas for transition climate-related risks and opportunities which may impact operations, strategy, and
financial planning of the Group in the short-term, across the geographic locations in which Estia Health operates,
and identified the extent to which the geographic locations may be subject to both acute and chronic physical
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2022-23 Annual Report | Estia Health 87
52
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Transition Risks (continued)
Risk
Assessment of the impact to the Group
Lenders and investors continue to attach an increased importance to the
Group’s approach to climate change issues. These expectations are
assessed by management to identify any emerging risk or potential
withdrawal of support.
The Royal Commission recommendations and subsequent (or proposed)
legislation has not identified climate change response as a key area of
concern for the sector.
Reputation
Stakeholders have higher
expectations of how
businesses respond to climate
change issues. Risks in this
area can lead to loss of
revenue or market share if
these expectations are not
addressed.
Physical risks
Assessed short-
term impact
Low
The Group has undertaken an assessment of the potential impact of physical risks in the short-term, being in the next 3 years.
This will be extended to an assessment of medium-term impacts in future years. Risks continue to evolve and as such these
should not be regarded as exhaustive nor are they reported in any order of relative importance or potential impact.
Risk
Acute
Acute risks include one off
disruptions such as hurricanes,
floods and fire.
Assessment
A formal assessment of all the Group’s homes’ exposure and vulnerability to
physical climate change was undertaken in 2021, supported by external
experts. This exercise was internally reviewed and re-assessed in FY23 for
any substantive changes in light of more recent climate related disruptions
and events.
The wide geographical dispersion of the Group’s 73 homes, with the majority
being located within large metropolitan areas, reduces the Group’s total
potential financial exposure to any single extreme weather. The Group’s
homes are built and maintained in accordance with building codes and
legislation appropriate to their location and use. The Group maintains a
comprehensive insurance policy over the cost of building repair and
replacement, as well as business interruption cover.
The fire season in 2019/20 and extensive rain and flooding events over the
last 3 years associated with an extended La Nina weather pattern, presented
operational challenges for many homes on multiple occasions but did not
result in significant financial loss or enduring damage to the Group’s
operations.
Chronic
Chronic risks are more gradual
changes such as higher
temperatures, changing rain
patterns, rising sea levels,
reduced air quality.
The formal assessment of all the Group’s homes’ exposure and vulnerability
to physical climate change did not identify any home as being at significant
risk of either obsolescence, shortened useful life, or requiring significant
incremental investment in order to preserve its operational functionality or
earnings capacity as a result of chronic risks associated with climate change
in the short-term.
Chronic risk may also increase the cost of food provided to residents. The
cost of food provided in FY23 was $23.2m. It would be expected that to the
extent to which such cost increases impacted the whole residential aged care
sector, they would be incorporated into funding recommendations made by
the IHACPA. In this case, this may further reduce any impact on the Group’s
financial performance. To the extent to which the Group can purchase and
provide food at a lower cost than sector averages, this would therefore have
the potential to deliver improved relative financial performance.
Short term
Impact
Low
Low
Low
DIRECTORS’ REPORT
Opportunities
The Group has undertaken an assessment of the potential impact of climate change related opportunities in the short-term,
being in the next 3 years. This will be extended to an assessment of medium-term impacts in future years. Opportunities
continue to evolve and as such these should not be regarded as exhaustive nor are they reported in any order of relative
importance or potential impact.
Opportunity
Assessment
Resource efficiency
Since 2018, the Group has invested $9.5m in energy efficiency projects
Short term
Impact
Low
Reducing costs relating to
energy, water and waste
management by improving
efficiency across service
delivery
across its portfolio of homes, of which $4.5m was invested in solar electricity
generation and the remainder across lighting, water heating, HVAC systems
and laundry services. Considered assessment of high consumption
appliances and equipment is undertaken on each new development project
the Group undertakes.
The Group has a single waste management contract across its 73 homes
with KPIs and service levels in place to monitor and improve waste efficiency.
Waste disposal costs in FY23 were $4.6m, a reduction of $2.4m from FY22,
which was heavily impacted by COVID-19 related clinical waste.
A water usage monitoring project commenced during FY23 with an external
expert to identify water usage patterns to seek opportunities for reducing
usage. Water usage costs in FY23 were $2.5m.
Achieving resource efficiency that is greater than sector averages and
benchmarks presents the opportunity to deliver improved financial
performance relative to the sector given the role of IHACPA in recommending
funding in line with sector averages.
Energy source
Shifting energy usage to low
emission sources, or investing
in self-generation
The Group’s investment in solar generation has resulted in 12.5% of its
electricity consumption in FY23 being generated from the 51 sites with solar
installations. An externally supported review commenced in FY23 to review
the Group’s solar installations with a view to improving and increasing
generation levels.
In FY23, 12.5% of total electricity consumption was from renewable energy,
generated through onsite PV solar systems. The Group determined not to
purchase Green Power or LGC’s in FY23 but will review this in line with
industry benchmarks and overall funding outcomes.
Products/Services
Develop and deliver low-
emission products and
services with greater consumer
appeal under a lower-carbon
The Group has not to date identified opportunities within its stated strategy of
delivering residential aged care services to deliver alternative low emission
products or services which may benefit from increased demand under a
lower-carbon economy. The Group intends to continue to review future
opportunities through the function of the Sustainability Committee.
economy
Markets
Diversify into new markets or
asset classes which may
benefit from increased demand
under a lower-carbon economy
The Group has not to date identified opportunities within its stated strategy of
delivering residential aged care services to diversify into new markets or
asset classes which may benefit from increased demand under a lower-
carbon economy. The Group intends to continue to review future
opportunities through the function of the Sustainability Committee.
Resilience
The Group has an established management Sustainability Committee to
regularly monitor and assess the Group’s response to climate change driven
Developing capacity and
capability to better respond to
risks and opportunities.
evolving climate change driven
A new sustainability strategy will be developed beyond FY24 to be integrated
risks and opportunities
within the Group’s overall business strategy and the evolving regulatory
environment.
Low
Low
Low
Low
Higher temperatures may increase the demand on air-conditioning usage
and resultant increase in electricity consumption. As noted earlier, the
Group’s total spend on electricity usage during FY23 was $6.6m.
Low
88 Estia Health | 2022-23 Annual Report
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Estia Health Limited
54
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Transition Risks (continued)
Risk
Reputation
Assessment of the impact to the Group
Stakeholders have higher
expectations of how
businesses respond to climate
withdrawal of support.
Lenders and investors continue to attach an increased importance to the
Group’s approach to climate change issues. These expectations are
assessed by management to identify any emerging risk or potential
Low
change issues. Risks in this
The Royal Commission recommendations and subsequent (or proposed)
legislation has not identified climate change response as a key area of
concern for the sector.
Assessed short-
term impact
area can lead to loss of
revenue or market share if
these expectations are not
addressed.
Physical risks
The Group has undertaken an assessment of the potential impact of physical risks in the short-term, being in the next 3 years.
This will be extended to an assessment of medium-term impacts in future years. Risks continue to evolve and as such these
should not be regarded as exhaustive nor are they reported in any order of relative importance or potential impact.
Risk
Acute
Acute risks include one off
disruptions such as hurricanes,
floods and fire.
A formal assessment of all the Group’s homes’ exposure and vulnerability to
physical climate change was undertaken in 2021, supported by external
experts. This exercise was internally reviewed and re-assessed in FY23 for
any substantive changes in light of more recent climate related disruptions
Assessment
and events.
Short term
Impact
Low
The wide geographical dispersion of the Group’s 73 homes, with the majority
being located within large metropolitan areas, reduces the Group’s total
potential financial exposure to any single extreme weather. The Group’s
homes are built and maintained in accordance with building codes and
legislation appropriate to their location and use. The Group maintains a
comprehensive insurance policy over the cost of building repair and
replacement, as well as business interruption cover.
The fire season in 2019/20 and extensive rain and flooding events over the
last 3 years associated with an extended La Nina weather pattern, presented
operational challenges for many homes on multiple occasions but did not
result in significant financial loss or enduring damage to the Group’s
operations.
Chronic
The formal assessment of all the Group’s homes’ exposure and vulnerability
Chronic risks are more gradual
to physical climate change did not identify any home as being at significant
Low
changes such as higher
temperatures, changing rain
patterns, rising sea levels,
reduced air quality.
risk of either obsolescence, shortened useful life, or requiring significant
incremental investment in order to preserve its operational functionality or
earnings capacity as a result of chronic risks associated with climate change
in the short-term.
Chronic risk may also increase the cost of food provided to residents. The
cost of food provided in FY23 was $23.2m. It would be expected that to the
extent to which such cost increases impacted the whole residential aged care
sector, they would be incorporated into funding recommendations made by
the IHACPA. In this case, this may further reduce any impact on the Group’s
financial performance. To the extent to which the Group can purchase and
provide food at a lower cost than sector averages, this would therefore have
the potential to deliver improved relative financial performance.
Low
Higher temperatures may increase the demand on air-conditioning usage
and resultant increase in electricity consumption. As noted earlier, the
Group’s total spend on electricity usage during FY23 was $6.6m.
Low
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Opportunities
The Group has undertaken an assessment of the potential impact of climate change related opportunities in the short-term,
being in the next 3 years. This will be extended to an assessment of medium-term impacts in future years. Opportunities
continue to evolve and as such these should not be regarded as exhaustive nor are they reported in any order of relative
importance or potential impact.
Short term
Impact
Low
Opportunity
Assessment
Resource efficiency
Reducing costs relating to
energy, water and waste
management by improving
efficiency across service
delivery
Since 2018, the Group has invested $9.5m in energy efficiency projects
across its portfolio of homes, of which $4.5m was invested in solar electricity
generation and the remainder across lighting, water heating, HVAC systems
and laundry services. Considered assessment of high consumption
appliances and equipment is undertaken on each new development project
the Group undertakes.
The Group has a single waste management contract across its 73 homes
with KPIs and service levels in place to monitor and improve waste efficiency.
Waste disposal costs in FY23 were $4.6m, a reduction of $2.4m from FY22,
which was heavily impacted by COVID-19 related clinical waste.
A water usage monitoring project commenced during FY23 with an external
expert to identify water usage patterns to seek opportunities for reducing
usage. Water usage costs in FY23 were $2.5m.
Achieving resource efficiency that is greater than sector averages and
benchmarks presents the opportunity to deliver improved financial
performance relative to the sector given the role of IHACPA in recommending
funding in line with sector averages.
Energy source
Shifting energy usage to low
emission sources, or investing
in self-generation
The Group’s investment in solar generation has resulted in 12.5% of its
electricity consumption in FY23 being generated from the 51 sites with solar
installations. An externally supported review commenced in FY23 to review
the Group’s solar installations with a view to improving and increasing
generation levels.
In FY23, 12.5% of total electricity consumption was from renewable energy,
generated through onsite PV solar systems. The Group determined not to
purchase Green Power or LGC’s in FY23 but will review this in line with
industry benchmarks and overall funding outcomes.
The Group has not to date identified opportunities within its stated strategy of
delivering residential aged care services to deliver alternative low emission
products or services which may benefit from increased demand under a
lower-carbon economy. The Group intends to continue to review future
opportunities through the function of the Sustainability Committee.
Products/Services
Develop and deliver low-
emission products and
services with greater consumer
appeal under a lower-carbon
economy
Markets
Diversify into new markets or
asset classes which may
benefit from increased demand
under a lower-carbon economy
The Group has not to date identified opportunities within its stated strategy of
delivering residential aged care services to diversify into new markets or
asset classes which may benefit from increased demand under a lower-
carbon economy. The Group intends to continue to review future
opportunities through the function of the Sustainability Committee.
Resilience
Developing capacity and
capability to better respond to
evolving climate change driven
risks and opportunities
The Group has an established management Sustainability Committee to
regularly monitor and assess the Group’s response to climate change driven
risks and opportunities.
A new sustainability strategy will be developed beyond FY24 to be integrated
within the Group’s overall business strategy and the evolving regulatory
environment.
Low
Low
Low
Low
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53
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2022-23 Annual Report | Estia Health 89
54
DIRECTORS’ REPORT
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
4. RISK MANAGEMENT
5. METRICS AND TARGETS
TCFD recommendation: Disclose how the organisation identifies, assesses, and manages climate-
related risks
Recommended disclosures
a) Describe the organisation’s processes for identifying and assessing climate-related risks
b) Describe the organisation’s processes for managing climate-related risks
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into
the organisation’s overall risk management
Process for identifying climate-related risks and opportunities
Estia Health has conducted assessments across the Group to identify the likelihood of climate hazards at a
physical asset level, to better understand potential impacts on homes, operations, and on the safety and
wellbeing of our residents and staff. The three-stage climate risk assessment framework approach was applied to
evaluate exposure and vulnerability to extreme weather events. The systematic risk assessment was applied to
homes with a first pass qualitative regional hazard screening, and a second pass portfolio risk assessment.
Process for managing climate-related risks
A prioritisation process is used to identify the most at-risk properties across the portfolio. The second stage
portfolio climate exposure and vulnerability assessment screening used climate data and qualitative survey data
from Estia Health’s Property Service Managers, to understand the climate related vulnerability on property assets.
This approach informs planning and prioritisation of site-specific climate change risk and mitigation planning in the
short term.
Integrating climate-related risk into Estia Health’s risk management framework
Climate change assessment is reflected within the Group’s
corporate risk profile relative to other risks that could prevent
the achievement of strategic objectives. Priorities are
established based on ‘plausible’ events, with consideration
given to the current operating and control environment as
identified by Executive Management, Board, and subject
matter experts.
Figure 4: Estia Health’s risk Management
Process and Framework
TCFD recommendation: Disclose the metrics and targets used to assess and manage relevant climate-
related risks and opportunities where such information is material.
Recommended disclosures
its strategy and risk management process
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and
risks
performance against targets
Metric Category
Target
Status
Greenhouse Gas (GHG)
FY23: no target
emissions
FY24: 20% reduction in
Absolute Scope 1, Scope 2 and
carbon emissions
Scope 3; emissions intensity (MT
intensity (Scope 1 and
of CO2e).
2) from FY19 baseline.
19% reduction in FY23 in carbon emissions intensity (scope 1
and scope 2) from FY19 baseline. Scope 1 and 2 emissions
were calculated in accordance with the Australian Government
National Greenhouse Account Factors.
Transition risks
FY23: no target
Initial assessment has focused on the potential financial
Amount and extent of assets of
FY24:
business activities vulnerable to
transition risks
(amount or percentage).
Quantification of
potential financial
exposure associated
with transition risks in
short and medium term
costs.
impact of cost increases related to direct energy consumption.
The total costs associated with energy consumption were
$12.05m in FY23, which represents approximately 0.95% of
the Group’s total recurring costs excluding depreciation and
amortisation. A significant increase in prices or consumption
would therefore have a limited impact on the Group’s total
Future exercises are expected to extend the analysis to
medium- and long-term impacts under different climate
scenarios and to consider any potential indirect impact of
higher energy prices on other costs such as food and travel.
It would be expected that to the extent to which such cost
increases impacted the whole residential aged care sector,
they would be incorporated into funding recommendations
made by the IHACPA. In which case, this may further reduce
any impact on the Group’s financial performance.
Physical risks
FY23: no target
Amount and extent of assets or
FY24: 100% of portfolio
68 homes have been subject to a detailed assessed for
exposure and vulnerability to physical climate change.
business activities vulnerable to
assessed for climate
Physical risk for the 5 homes acquired during FY23 was
physical risks
resilience.
considered as part of the due diligence prior to acquisition.
(amount or percentage).
No home was identified as being at significant risk of either
obsolescence, shortened useful life, or requiring significant
incremental investment in order to preserve its operational
functionality or earnings capacity as a result of short-term
physical risks associated with climate change.
Climate-related opportunities
FY23: no target
Proportion of revenue, assets or
FY24:
other business activities aligned
with climate-related opportunities
(amount or percentage).
Other than the investment in solar electricity generation and
other energy efficiency initiatives referred to elsewhere in this
report, the Group has not to date identified opportunities within
its stated strategy of delivering residential aged care services
to diversify into new markets or asset classes which may
benefit from increased demand under a lower-carbon
Quantification of
potential financial
benefits associated with
climate-related
opportunities.
economy.
Capital deployment
FY23: no target
Amount of capital expenditure,
FY24:
financing or investment deployed
toward climate-related risks and
opportunities (reporting currency).
years.
Assessment of potential
capital investment to be
deployed toward
climate-related
adaptation measures.
strategy.
Capital investment of $4.07m has been made in energy
efficiency projects across the Group’s homes in the last 5
In FY22, the Group committed to a $330m Sustainability
Linked Loan with embedded targets aligned to sustainability
90 Estia Health | 2022-23 Annual Report
Estia Health Limited
55
Estia Health Limited
56
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
4. RISK MANAGEMENT
related risks
Recommended disclosures
TCFD recommendation: Disclose how the organisation identifies, assesses, and manages climate-
a) Describe the organisation’s processes for identifying and assessing climate-related risks
b) Describe the organisation’s processes for managing climate-related risks
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into
the organisation’s overall risk management
Process for identifying climate-related risks and opportunities
Estia Health has conducted assessments across the Group to identify the likelihood of climate hazards at a
physical asset level, to better understand potential impacts on homes, operations, and on the safety and
wellbeing of our residents and staff. The three-stage climate risk assessment framework approach was applied to
evaluate exposure and vulnerability to extreme weather events. The systematic risk assessment was applied to
homes with a first pass qualitative regional hazard screening, and a second pass portfolio risk assessment.
Process for managing climate-related risks
A prioritisation process is used to identify the most at-risk properties across the portfolio. The second stage
portfolio climate exposure and vulnerability assessment screening used climate data and qualitative survey data
from Estia Health’s Property Service Managers, to understand the climate related vulnerability on property assets.
This approach informs planning and prioritisation of site-specific climate change risk and mitigation planning in the
short term.
Integrating climate-related risk into Estia Health’s risk management framework
Climate change assessment is reflected within the Group’s
corporate risk profile relative to other risks that could prevent
the achievement of strategic objectives. Priorities are
established based on ‘plausible’ events, with consideration
given to the current operating and control environment as
identified by Executive Management, Board, and subject
matter experts.
Figure 4: Estia Health’s risk Management
Process and Framework
5. METRICS AND TARGETS
TCFD recommendation: Disclose the metrics and targets used to assess and manage relevant climate-
related risks and opportunities where such information is material.
Recommended disclosures
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with
its strategy and risk management process
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related
risks
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and
performance against targets
Metric Category
Target
Status
Greenhouse Gas (GHG)
emissions
Absolute Scope 1, Scope 2 and
Scope 3; emissions intensity (MT
of CO2e).
FY23: no target
FY24: 20% reduction in
carbon emissions
intensity (Scope 1 and
2) from FY19 baseline.
19% reduction in FY23 in carbon emissions intensity (scope 1
and scope 2) from FY19 baseline. Scope 1 and 2 emissions
were calculated in accordance with the Australian Government
National Greenhouse Account Factors.
Transition risks
Amount and extent of assets of
business activities vulnerable to
transition risks
(amount or percentage).
FY23: no target
FY24:
Quantification of
potential financial
exposure associated
with transition risks in
short and medium term
Initial assessment has focused on the potential financial
impact of cost increases related to direct energy consumption.
The total costs associated with energy consumption were
$12.05m in FY23, which represents approximately 0.95% of
the Group’s total recurring costs excluding depreciation and
amortisation. A significant increase in prices or consumption
would therefore have a limited impact on the Group’s total
costs.
Future exercises are expected to extend the analysis to
medium- and long-term impacts under different climate
scenarios and to consider any potential indirect impact of
higher energy prices on other costs such as food and travel.
It would be expected that to the extent to which such cost
increases impacted the whole residential aged care sector,
they would be incorporated into funding recommendations
made by the IHACPA. In which case, this may further reduce
any impact on the Group’s financial performance.
68 homes have been subject to a detailed assessed for
exposure and vulnerability to physical climate change.
Physical risk for the 5 homes acquired during FY23 was
considered as part of the due diligence prior to acquisition.
No home was identified as being at significant risk of either
obsolescence, shortened useful life, or requiring significant
incremental investment in order to preserve its operational
functionality or earnings capacity as a result of short-term
physical risks associated with climate change.
Other than the investment in solar electricity generation and
other energy efficiency initiatives referred to elsewhere in this
report, the Group has not to date identified opportunities within
its stated strategy of delivering residential aged care services
to diversify into new markets or asset classes which may
benefit from increased demand under a lower-carbon
economy.
Capital investment of $4.07m has been made in energy
efficiency projects across the Group’s homes in the last 5
years.
In FY22, the Group committed to a $330m Sustainability
Linked Loan with embedded targets aligned to sustainability
strategy.
Physical risks
Amount and extent of assets or
business activities vulnerable to
physical risks
FY23: no target
FY24: 100% of portfolio
assessed for climate
resilience.
(amount or percentage).
Climate-related opportunities
Proportion of revenue, assets or
other business activities aligned
with climate-related opportunities
(amount or percentage).
Capital deployment
Amount of capital expenditure,
financing or investment deployed
toward climate-related risks and
opportunities (reporting currency).
FY23: no target
FY24:
Quantification of
potential financial
benefits associated with
climate-related
opportunities.
FY23: no target
FY24:
Assessment of potential
capital investment to be
deployed toward
climate-related
adaptation measures.
Estia Health Limited
55
Estia Health Limited
2022-23 Annual Report | Estia Health 91
56
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Metric Category
Target
Status
Internal carbon prices
Prices on each ton of GHG
emissions used internally by an
organisation (price in reporting
currency).
Remuneration
Proportion of executive
management remuneration
linked to climate considerations
(percentage, weighting,
description, or amount in
reporting currency).
Based on the industry and scale of the group, there are no immediate plans to develop
and disclose internal carbon pricing.
Sustainability and
climate-related
incentive
compensation of
Executive to be
considered as an
element of
performance
management.
From FY23 onwards, in relation to executive remuneration
derived from Long Term Incentive (LTI) opportunities, the Board
will overlay a qualitative assessment, which will involve it
reviewing whether the LTI vesting outcome is appropriate having
regard to a number of factors over the performance period,
including the Group’s environmental impact, quality of care,
reputational impact and employee experience, further
strengthening the link between remuneration outcomes and
Environmental, Social and Governance (“ESG”) performance.
Ernst & Young
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
Auditor’s Independence Declaration to the Directors of Estia Health
Limited
As lead auditor for the audit of the financial report of Estia Health Limited for the financial year ended 30
June 2023, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Estia Health Limited and the entities it controlled during the financial
year.
Ernst & Young
Paul Gower
Partner
22 August 2023
92 Estia Health | 2022-23 Annual Report
Estia Health Limited
57
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
DIRECTORS’ REPORT
CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT (continued)
Metric Category
Target
Status
Internal carbon prices
Based on the industry and scale of the group, there are no immediate plans to develop
and disclose internal carbon pricing.
Prices on each ton of GHG
emissions used internally by an
organisation (price in reporting
currency).
Remuneration
Proportion of executive
management remuneration
linked to climate considerations
(percentage, weighting,
description, or amount in
reporting currency).
Sustainability and
climate-related
incentive
compensation of
Executive to be
considered as an
element of
performance
management.
From FY23 onwards, in relation to executive remuneration
derived from Long Term Incentive (LTI) opportunities, the Board
will overlay a qualitative assessment, which will involve it
reviewing whether the LTI vesting outcome is appropriate having
regard to a number of factors over the performance period,
including the Group’s environmental impact, quality of care,
reputational impact and employee experience, further
strengthening the link between remuneration outcomes and
Environmental, Social and Governance (“ESG”) performance.
Auditor’s Independence Declaration
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Ernst & Young
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
Ernst & Young
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
Auditor’s Independence Declaration to the Directors of Estia Health
Report on the Audit of the Financial Report
Limited
Opinion
As lead auditor for the audit of the financial report of Estia Health Limited for the financial year ended 30
June 2023, I declare to the best of my knowledge and belief, there have been:
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
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
30 June 2023, the consolidated statement of profit or loss and other 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.
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
relation to the audit;
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
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 2023
This declaration is in respect of Estia Health Limited and the entities it controlled during the financial
year.
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
Ernst & Young
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.
Paul Gower
Partner
22 August 2023
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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.
Estia Health Limited
57
2022-23 Annual Report | Estia Health 93
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Consolidated Statement of Profit or Loss and Other Comprehensive Income
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Revenue
Other income excluding Government grants
Government grants
Expenses
Employee benefits and agency staff expense
Increase in leave liabilities arising from the 15% legislated increase to the
Aged Care Award
Administrative expenses
Occupancy expenses
Resident expenses
Amortisation of bed licences
Depreciation, impairment and amortisation of other assets
Business acquisition related costs
Operating profit / (loss) for the year
Net finance costs
Loss before income tax
Income tax benefit
Loss for the year
Notes
B1
B1
B2
2023
$’000
754,298
102
51,628
2022
$’000
671,067
913
8,053
B3
C7
B4
B5
C4
522,491
488,773
9,054
29,870
25,637
66,431
80,466
57,470
9,112
5,497
-
27,729
21,087
64,233
60,349
45,122
-
(27,260)
B6
48,870
46,298
(43,373)
(73,558)
B7
(9,475)
(21,196)
(33,898)
(52,362)
Other comprehensive income, net of tax
Other comprehensive income to be reclassified to profit or loss in
subsequent periods, net of tax:
- Net gain / (loss) on cash flow hedges, net of tax
C8
Other comprehensive income not to be reclassified to profit or loss in
subsequent periods, net of tax
Other comprehensive income for the year, net of tax
801
-
801
-
-
-
Total comprehensive loss for the year, net of tax
(33,097)
(52,362)
(Loss) / earnings per share
Basic
Diluted
Cents per
share
Cents per
share
B8
B8
(13.13)
(13.13)
(20.10)
(20.10)
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments and other assets
Consumable supplies
Income tax receivable
Derivative financial instruments
Total current assets
Non-current assets
Property, plant, equipment
Investment properties
Goodwill
Bed licences and other intangible assets
Right of use assets
Prepayments
Derivative financial instruments
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other financial liabilities
Provisions
Income tax payable
Lease liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Loans and borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Hedging reserve
Accumulated losses
Total equity
Refundable accommodation deposits and bonds
Notes
C1
C2
C8
C3
C4
C4
C5
C8
C6
C7
C5
D1
C5
C7
D2
B7
D3
D4
2023
$’000
26,200
27,073
4,645
2,190
-
485
2022
$’000
20,411
10,261
5,031
4,714
11,960
-
60,593
52,377
951,309
840,343
850
717,614
82,959
54,446
881
659
750
681,014
164,209
56,367
1,426
-
1,808,718
1,744,109
1,869,311
1,796,486
55,946
52,135
596
73,425
12,422
3,724
466
63,126
-
3,686
1,027,537
884,069
1,173,650
1,003,482
57,336
9,320
70,000
58,449
58,766
8,542
100,000
83,959
195,105
251,267
1,368,755
1,254,749
500,556
541,737
796,473
795,748
4,234
801
3,483
-
(300,952)
(257,494)
500,556
541,737
The accompanying notes form part of these Consolidated Financial Statements.
The accompanying notes form part of these Consolidated Financial Statements.
Estia Health Limited
94 Estia Health | 2022-23 Annual Report
59
Estia Health Limited
60
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Consolidated Statement of Financial Position
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Employee benefits and agency staff expense
522,491
488,773
Increase in leave liabilities arising from the 15% legislated increase to the
Revenue
Other income excluding Government grants
Government grants
Expenses
Aged Care Award
Administrative expenses
Occupancy expenses
Resident expenses
Amortisation of bed licences
Net finance costs
Loss before income tax
Income tax benefit
Loss for the year
Depreciation, impairment and amortisation of other assets
Business acquisition related costs
Operating profit / (loss) for the year
Notes
754,298
671,067
B1
B1
B2
B3
C7
B4
B5
C4
2023
$’000
102
51,628
9,054
29,870
25,637
66,431
80,466
57,470
9,112
5,497
2022
$’000
913
8,053
-
27,729
21,087
64,233
60,349
45,122
-
(27,260)
B6
48,870
46,298
(43,373)
(73,558)
B7
(9,475)
(21,196)
(33,898)
(52,362)
Other comprehensive income, net of tax
Other comprehensive income to be reclassified to profit or loss in
subsequent periods, net of tax:
- Net gain / (loss) on cash flow hedges, net of tax
C8
Other comprehensive income not to be reclassified to profit or loss in
subsequent periods, net of tax
Other comprehensive income for the year, net of tax
801
-
801
-
-
-
Total comprehensive loss for the year, net of tax
(33,097)
(52,362)
(Loss) / earnings per share
Basic
Diluted
Cents per
Cents per
share
share
B8
B8
(13.13)
(13.13)
(20.10)
(20.10)
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments and other assets
Consumable supplies
Income tax receivable
Derivative financial instruments
Total current assets
Non-current assets
Property, plant, equipment
Investment properties
Goodwill
Bed licences and other intangible assets
Right of use assets
Prepayments
Derivative financial instruments
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other financial liabilities
Provisions
Income tax payable
Lease liabilities
Refundable accommodation deposits and bonds
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Loans and borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Hedging reserve
Accumulated losses
Total equity
Notes
C1
C2
C8
C3
C4
C4
C5
C8
C6
C7
C5
D1
C5
C7
D2
B7
D3
D4
2023
$’000
26,200
27,073
4,645
2,190
-
485
60,593
951,309
850
717,614
82,959
54,446
881
659
2022
$’000
20,411
10,261
5,031
4,714
11,960
-
52,377
840,343
750
681,014
164,209
56,367
1,426
-
1,808,718
1,744,109
1,869,311
1,796,486
55,946
596
73,425
12,422
3,724
1,027,537
52,135
466
63,126
-
3,686
884,069
1,173,650
1,003,482
57,336
9,320
70,000
58,449
58,766
8,542
100,000
83,959
195,105
251,267
1,368,755
1,254,749
500,556
541,737
796,473
4,234
801
(300,952)
795,748
3,483
-
(257,494)
500,556
541,737
The accompanying notes form part of these Consolidated Financial Statements.
The accompanying notes form part of these Consolidated Financial Statements.
Estia Health Limited
59
Estia Health Limited
60
2022-23 Annual Report | Estia Health 95
Consolidated Statement of Changes in Equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Notes
Issued
capital
$’000
Share-based
payments
reserve
$’000
Hedging
reserve
$’000
Accumulated
losses
$’000
Total
equity
$’000
Balance as at 1 July 2021
803,459
2,629
Loss for the year
Other comprehensive income
Total comprehensive loss
-
-
-
Transactions with shareholders:
Shares repurchased
Transfer from share-based payments
D3
(7,956)
reserve
D3
Share-based payments
D4
Repayment of management equity plan D4
D3
Dividends
As at 30 June 2022
244
-
1
-
795,748
-
-
-
-
(244)
1,086
12
-
3,483
Balance as at 1 July 2022
795,748
3,483
-
-
-
-
-
-
-
-
-
-
-
(192,995)
613,093
(52,362)
-
(52,362)
(52,362)
-
(52,362)
-
(7,956)
-
-
-
(12,137)
-
1,086
13
(12,137)
(257,494)
541,737
(257,494)
541,737
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with shareholders:
D4
Share-based payments
Repayment of management equity plan D4
Transfer from share-based payments
reserve
Dividends
D3
D3
-
-
-
-
51
674
-
-
-
-
-
801
801
(33,898)
-
(33,898)
801
(33,898)
(33,097)
1,402
23
(674)
-
-
-
-
-
-
-
1,402
74
-
(9,560)
-
(9,560)
As at 30 June 2023
796,473
4,234
801
(300,952)
500,556
Notes
2023
$’000
2022
$’000
Net cash flows from operating activities
B9
187,493
55,532
Receipts from government excluding Government grants received
Cash flows from operating activities
Receipts from residents
Government grants received
Payments to suppliers and employees
Net operating cash flows before interest, income tax and RAD,
accommodation bond and ILU entry contributions
Interest received
Income taxes refunded / (paid)
Finance costs paid
Interest expense on lease liabilities
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
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
Business combinations, net of cash acquired
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
Payments for shares repurchased on-market and incremental costs
C9
D3
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
C1
166,029
523,447
31,528
145,005
470,806
7,049
(621,192)
(575,983)
99,812
644
8,100
(4,925)
(1,812)
46,877
18
(7,584)
(4,669)
(1,911)
101,819
363,684
32,731
268,430
(278,010)
(245,629)
-
1
(210)
(1,676)
-
-
(61,777)
(76,400)
64
3,550
(31,780)
(138,387)
(29,842)
51
80,000
125,000
(110,000)
(139,500)
-
(9,560)
(3,808)
(7,956)
(12,137)
(4,115)
(43,317)
(38,707)
5,789
20,411
26,200
(13,017)
33,428
20,411
The accompanying notes form part of these Consolidated Financial Statements.
The accompanying notes form part of these Consolidated Financial Statements.
Estia Health Limited
96 Estia Health | 2022-23 Annual Report
61
Estia Health Limited
62
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Consolidated Statement of Cash Flows
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Share-based
Notes
Issued
capital
$’000
payments
Hedging
Accumulated
reserve
reserve
$’000
$’000
losses
$’000
Total
equity
$’000
Balance as at 1 July 2021
803,459
2,629
(192,995)
613,093
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with shareholders:
Shares repurchased
Transfer from share-based payments
reserve
Share-based payments
Repayment of management equity plan D4
D3
D3
D4
D3
(7,956)
244
-
1
-
Dividends
As at 30 June 2022
-
-
-
-
-
-
(244)
1,086
12
-
-
-
-
-
-
-
-
795,748
3,483
(12,137)
(12,137)
(257,494)
541,737
Balance as at 1 July 2022
795,748
3,483
(257,494)
541,737
Loss for the year
Other comprehensive income
Total comprehensive loss
801
801
(33,898)
(33,898)
801
(33,898)
(33,097)
Transactions with shareholders:
Share-based payments
Repayment of management equity plan D4
Transfer from share-based payments
reserve
Dividends
D4
D3
D3
-
51
674
-
1,402
23
(674)
-
1,402
74
-
(9,560)
(9,560)
As at 30 June 2023
796,473
4,234
801
(300,952)
500,556
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(52,362)
(52,362)
-
(52,362)
(52,362)
(7,956)
-
1,086
13
-
-
-
-
-
-
-
-
-
Cash flows from operating activities
Receipts from residents
Receipts from government excluding Government grants received
Government grants received
Payments to suppliers and employees
Net operating cash flows before interest, income tax and RAD,
accommodation bond and ILU entry contributions
Interest received
Income taxes refunded / (paid)
Finance costs paid
Interest expense on lease liabilities
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
Notes
2023
$’000
2022
$’000
166,029
523,447
31,528
(621,192)
145,005
470,806
7,049
(575,983)
99,812
644
8,100
(4,925)
(1,812)
46,877
18
(7,584)
(4,669)
(1,911)
101,819
363,684
(278,010)
32,731
268,430
(245,629)
Net cash flows from operating activities
B9
187,493
55,532
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
Business combinations, net of cash acquired
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from repayment of MEP loans
Proceeds from borrowings
Repayment of borrowings
Payments for shares repurchased on-market and incremental costs
Dividends paid
Repayment of lease liabilities
Net cash flows used in financing activities
C9
D3
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
C1
(210)
-
-
(61,777)
(76,400)
(1,676)
64
3,550
(31,780)
-
(138,387)
(29,842)
51
80,000
(110,000)
-
(9,560)
(3,808)
1
125,000
(139,500)
(7,956)
(12,137)
(4,115)
(43,317)
(38,707)
5,789
20,411
26,200
(13,017)
33,428
20,411
The accompanying notes form part of these Consolidated Financial Statements.
The accompanying notes form part of these Consolidated Financial Statements.
Estia Health Limited
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2022-23 Annual Report | Estia Health 97
Notes to the Consolidated Financial Statements
A About this Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION A: ABOUT THIS REPORT
This section sets out the basis on which the Group’s financial report is prepared as a whole. Where a
significant accounting policy is specific to a note, the policy is described within that note.
SECTION A: ABOUT THIS REPORT
A4
CURRENT OR NON-CURRENT CLASSIFICATION
A1
CORPORATE INFORMATION
The Consolidated Financial Statements of Estia Health Limited (the “Company” or the “Parent”) and its
subsidiaries (collectively, the “Group” or “Estia Health”) for the year ended 30 June 2023 were authorised for
issue in accordance with a resolution of the Directors on 22 August 2023.
The Company is a for-profit company limited by shares incorporated in Australia and whose shares are publicly
traded on the Australian Securities Exchange under the code 'EHE'.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
A2
BASIS OF PREPARATION
This general purpose financial report:
has been prepared in accordance with the Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001;
has been prepared on the basis of historical cost, except for investment properties and derivative financial
instruments which have been measured at fair value;
complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board;
presents all values as rounded to the nearest thousand dollars unless otherwise stated under the option
available under ASIC Corporations (Rounding in Financial / Directors’ Reports) Instrument 2016/191;
does not early adopt any Australian Accounting Standards and Interpretations issued or amended but are
not yet effective.
Note E4 for information related to the Group’s accounting policies.
A3
BASIS OF CONSOLIDATION
The Consolidated Financial Statements comprise the financial statements of the Company and its controlled
subsidiaries as at and for the year ended 30 June 2023 (Note E6 on page 146 contains further information about
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.
The Group presents assets and liabilities in the Consolidated Statement of Financial Position based on current/
non-current classification. An asset is current when it is:
Expected to be realised or intended to be sold or consumed in the normal operating cycle,
Expected to be realised within twelve months after the reporting period,
Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least
Held primarily for trading, or
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
It is expected to be settled in the normal operating cycle,
It is due to be settled within twelve months after the reporting period,
Held primarily for trading, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the
The Group classified all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-
reporting period.
current assets and liabilities.
A5
GOING CONCERN
The financial report has been prepared on a going concern basis which assumes that the Group will be able to
meet its obligations as and when they fall due. The Group’s current liabilities exceed current assets by
$1,113,057,000 as at 30 June 2023 (2022: $951,105,000) resulting in a net deficiency of current assets. This
mainly arises because of the requirement to classify Refundable Accommodation Deposits (“RADs”) of
$1,027,537,000 (2022: $884,069,000) as current liabilities.
RADs and Bonds are classified as a current liability because 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 may be 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 (Note D1 on page 133 contains further details).
The Group has a syndicated financing facility of $330,000,000 of which $260,000,000 remains undrawn as at 30
June 2023 (2022: $230,000,000). This debt facility can be drawn down to repay RAD and bond refunds should
the Group experience significant RAD and bond net outflows. The Group also has a guarantee facility of
$15,100,000 (2022: $8,000,000) of which $91,000 remains unused as at 30 June 2023 (2022: $326,000).
Estia Health Limited
98 Estia Health | 2022-23 Annual Report
63
Estia Health Limited
64
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION A: ABOUT THIS REPORT
This section sets out the basis on which the Group’s financial report is prepared as a whole. Where a
significant accounting policy is specific to a note, the policy is described within that note.
SECTION A: ABOUT THIS REPORT
A4
CURRENT OR NON-CURRENT CLASSIFICATION
The Group presents assets and liabilities in the Consolidated Statement of Financial Position based on current/
non-current classification. An asset is current when it is:
Expected to be realised or intended to be sold or consumed in the normal operating cycle,
Expected to be realised within twelve months after the reporting period,
Held primarily for trading, or
Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
A1
CORPORATE INFORMATION
The Consolidated Financial Statements of Estia Health Limited (the “Company” or the “Parent”) and its
subsidiaries (collectively, the “Group” or “Estia Health”) for the year ended 30 June 2023 were authorised for
issue in accordance with a resolution of the Directors on 22 August 2023.
The Company is a for-profit company limited by shares incorporated in Australia and whose shares are publicly
traded on the Australian Securities Exchange under the code 'EHE'.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
A2
BASIS OF PREPARATION
This general purpose financial report:
has been prepared in accordance with the Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001;
has been prepared on the basis of historical cost, except for investment properties and derivative financial
instruments which have been measured at fair value;
complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting
presents all values as rounded to the nearest thousand dollars unless otherwise stated under the option
available under ASIC Corporations (Rounding in Financial / Directors’ Reports) Instrument 2016/191;
does not early adopt any Australian Accounting Standards and Interpretations issued or amended but are
Standards Board;
not yet effective.
Note E4 for information related to the Group’s accounting policies.
A3
BASIS OF CONSOLIDATION
The Consolidated Financial Statements comprise the financial statements of the Company and its controlled
subsidiaries as at and for the year ended 30 June 2023 (Note E6 on page 146 contains further information about
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.
reporting period.
The Group classified all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-
current assets and liabilities.
A5
GOING CONCERN
The financial report has been prepared on a going concern basis which assumes that the Group will be able to
meet its obligations as and when they fall due. The Group’s current liabilities exceed current assets by
$1,113,057,000 as at 30 June 2023 (2022: $951,105,000) resulting in a net deficiency of current assets. This
mainly arises because of the requirement to classify Refundable Accommodation Deposits (“RADs”) of
$1,027,537,000 (2022: $884,069,000) as current liabilities.
RADs and Bonds are classified as a current liability because 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 may be 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 (Note D1 on page 133 contains further details).
The Group has a syndicated financing facility of $330,000,000 of which $260,000,000 remains undrawn as at 30
June 2023 (2022: $230,000,000). This debt facility can be drawn down to repay RAD and bond refunds should
the Group experience significant RAD and bond net outflows. The Group also has a guarantee facility of
$15,100,000 (2022: $8,000,000) of which $91,000 remains unused as at 30 June 2023 (2022: $326,000).
Estia Health Limited
63
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2022-23 Annual Report | Estia Health 99
64
Held primarily for trading, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the
It is due to be settled within twelve months after the reporting period,
It is expected to be settled in the normal operating cycle,
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION A: ABOUT THIS REPORT
SECTION B: OUR PERFORMANCE
A6
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 associated with 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 are material to the financial statements
relate to the following areas:
Significant accounting judgements, estimates and assumptions
Note B1
Note B2
Revenue and other income excluding Government grants
Government grants
Finance costs
Property, plant and equipment impairment test
Intangible assets impairment test
Leases
Provisions
Derivative financial instruments
Business combinations
Share-based payments
Note B6
Note C3
Note C4
Note C5
Note C7
Note C8
Note C9
Note D4
This section provides additional information on the Group results for the year, including detail on revenue,
expenses, earnings per share.
REVENUE AND OTHER INCOME EXCLUDING GOVERNMENT GRANTS
B1
Revenue
ACFI subsidies (ceased from 1 October 2022)
AN-ACC subsidies (effective from 1 October 2022)
Accommodation supplements
Basic daily fee supplement (ceased from 1 October 2022)
Total government funded subsidies & supplements
Other supplements
Resident daily care fees
Other resident fees
Total resident fees
Total revenue
Imputed DAP revenue on RAD and bond balances under AASB 16
Net gain on disposals of assets held for sale
Net gain on disposals of property, plant and equipment
Other
Total other income excluding government grants
Note
2023
$’000
2022
$’000
(a)
(b)
(c)
107,447
376,433
47,615
5,195
3,468
540,158
122,695
50,203
172,898
41,242
754,298
-
-
102
102
414,142
-
43,098
20,569
1,842
479,651
110,411
41,677
152,088
39,328
671,067
848
64
1
913
The Group recognises revenue from residential aged care services over time as performance obligations are
satisfied, which is as the services are rendered. Services provided by the Group include provision of
accommodation, use of common areas or facilities, and the ongoing daily delivery of care. The Group has
disaggregated revenue based on the source of the funding for the provision of residential aged care.
(a) Government Funded Subsidies & Supplements
The Australian Government (the “Government”) determines the amount of subsidies and supplements in
accordance with the provisions of the Aged Care Act 1997 (the “Act”). In accordance with the Act the level of
subsidy or supplement is dependent on a range of factors, including a resident’s care needs, supported resident
ratios in a particular home and whether a home has been newly built or significantly refurbished on or after 20
April 2012. The subsidies and supplements are calculated as a daily rate 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 $21,538,000 for the year ended 30 June
2023 (2022: $16,808,000).
On 1 October 2022, the Australian National Aged Care Classification (“AN-ACC”) care funding model replaced the
Aged Care Funding Instrument (“ACFI”). The transition to the new funding model did not impact the Group's
accounting policy for recognising Government-funded subsidies and supplements.
Basic Daily Fee Supplement
The Group received the Basic Daily Fee supplement from the Government which was introduced with effect from
1 July 2021. The supplement was paid at the rate of $10/day per resident and ceased under the transition to AN-
ACC funding as at 1 October 2022.
Estia Health Limited
100 Estia Health | 2022-23 Annual Report
65
Estia Health Limited
66
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
B Our Performance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION A: ABOUT THIS REPORT
SECTION B: OUR PERFORMANCE
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
A6
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 associated with 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 are material to the financial statements
relate to the following areas:
Significant accounting judgements, estimates and assumptions
Revenue and other income excluding Government grants
Note B1
Note B2
Note B6
Note C3
Note C4
Note C5
Note C7
Note C8
Note C9
Note D4
Government grants
Finance costs
Property, plant and equipment impairment test
Intangible assets impairment test
Leases
Provisions
Derivative financial instruments
Business combinations
Share-based payments
This section provides additional information on the Group results for the year, including detail on revenue,
expenses, earnings per share.
B1
REVENUE AND OTHER INCOME EXCLUDING GOVERNMENT GRANTS
Revenue
ACFI subsidies (ceased from 1 October 2022)
AN-ACC subsidies (effective from 1 October 2022)
Accommodation supplements
Basic daily fee supplement (ceased from 1 October 2022)
Other supplements
Total government funded subsidies & supplements
Resident daily care fees
Other resident fees
Total resident fees
Imputed DAP revenue on RAD and bond balances under AASB 16
Total revenue
Net gain on disposals of assets held for sale
Net gain on disposals of property, plant and equipment
Other
Total other income excluding government grants
Note
2023
$’000
2022
$’000
(a)
(b)
(c)
107,447
376,433
47,615
5,195
3,468
540,158
122,695
50,203
172,898
41,242
754,298
-
-
102
102
414,142
-
43,098
20,569
1,842
479,651
110,411
41,677
152,088
39,328
671,067
848
64
1
913
The Group recognises revenue from residential aged care services over time as performance obligations are
satisfied, which is as the services are rendered. Services provided by the Group include provision of
accommodation, use of common areas or facilities, and the ongoing daily delivery of care. The Group has
disaggregated revenue based on the source of the funding for the provision of residential aged care.
(a) Government Funded Subsidies & Supplements
The Australian Government (the “Government”) determines the amount of subsidies and supplements in
accordance with the provisions of the Aged Care Act 1997 (the “Act”). In accordance with the Act the level of
subsidy or supplement is dependent on a range of factors, including a resident’s care needs, supported resident
ratios in a particular home and whether a home has been newly built or significantly refurbished on or after 20
April 2012. The subsidies and supplements are calculated as a daily rate 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 $21,538,000 for the year ended 30 June
2023 (2022: $16,808,000).
On 1 October 2022, the Australian National Aged Care Classification (“AN-ACC”) care funding model replaced the
Aged Care Funding Instrument (“ACFI”). The transition to the new funding model did not impact the Group's
accounting policy for recognising Government-funded subsidies and supplements.
Basic Daily Fee Supplement
The Group received the Basic Daily Fee supplement from the Government which was introduced with effect from
1 July 2021. The supplement was paid at the rate of $10/day per resident and ceased under the transition to AN-
ACC funding as at 1 October 2022.
Estia Health Limited
65
Estia Health Limited
2022-23 Annual Report | Estia Health 101
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
B1
REVENUE AND OTHER INCOME EXCLUDING GOVERNMENT GRANTS
REVENUE AND OTHER INCOME EXCLUDING GOVERNMENT GRANTS
(CONTINUED)
(b) Resident fees
Resident Daily Care Fees
The Group receives Basic Daily Fees which are set by the Government in accordance with the Act and funded
directly by the resident. The Basic Daily Fee is calculated as a daily rate payable for each day that a resident is in
a home.
Other Resident Fees
The Group provides additional services and accommodation to residents that are funded directly by the resident,
under the mutually agreed terms and conditions.
(c) Imputed revenue on RAD and bond balances under AASB 16 Leases (“AASB 16”)
Accommodation services provided to residents who have elected to pay a RAD or accommodation bond are
accounted for as a lease under AASB 16. Details in relation to the recognition policy can be found under
Significant Accounting Policy below.
B1
(CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
The Group recognises revenue under AASB 15 Revenue from Contracts with Customers (“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 as those performance obligations are fulfilled over time on a daily basis as the
customer 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.
The following recognition criteria must also be met before revenue is recognised:
Government fees and subsidies
Revenue from the rendering of services is recognised upon delivery of the performance obligations to the
residents, which is based on daily services for daily fees.
Resident fees
Revenue from the rendering of a service or supply of goods to residents is recognised upon delivery of the
performance obligations to the residents, which is based on daily services for daily fees.
Other resident fees include income arising from provision of accommodation is accounted for in accordance with
AASB 16 Leases on a straight-line basis over the length of stay.
Imputed revenue on RAD and bond balances
The Group has determined that the arrangement in which residents who choose to pay a RAD or a bond for
their accommodation services meet the definition of a lease under AASB 16. 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 results in a non-cash increase in revenue for accommodation
and a non-cash increase in finance costs on the outstanding RAD and bond balance, with no net impact on
profit and loss for the year.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Imputed Daily Accommodation Payment (“DAP") Revenue on RAD and Bond Balances
The Group has determined the use of the Maximum Permissible Interest Rate ("MPIR") prevailing at the date of
admission 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 DAP to applicable residents.
Estia Health Limited
102 Estia Health | 2022-23 Annual Report
67
Estia Health Limited
68
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
REVENUE AND OTHER INCOME EXCLUDING GOVERNMENT GRANTS
B1
(CONTINUED)
(b) Resident fees
Resident Daily Care Fees
a home.
Other Resident Fees
The Group receives Basic Daily Fees which are set by the Government in accordance with the Act and funded
directly by the resident. The Basic Daily Fee is calculated as a daily rate payable for each day that a resident is in
The Group provides additional services and accommodation to residents that are funded directly by the resident,
under the mutually agreed terms and conditions.
(c) Imputed revenue on RAD and bond balances under AASB 16 Leases (“AASB 16”)
Accommodation services provided to residents who have elected to pay a RAD or accommodation bond are
accounted for as a lease under AASB 16. Details in relation to the recognition policy can be found under
Significant Accounting Policy below.
B1
REVENUE AND OTHER INCOME EXCLUDING GOVERNMENT GRANTS
(CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
The Group recognises revenue under AASB 15 Revenue from Contracts with Customers (“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 as those performance obligations are fulfilled over time on a daily basis as the
customer 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.
The following recognition criteria must also be met before revenue is recognised:
Government fees and subsidies
Revenue from the rendering of services is recognised upon delivery of the performance obligations to the
residents, which is based on daily services for daily fees.
Resident fees
Revenue from the rendering of a service or supply of goods to residents is recognised upon delivery of the
performance obligations to the residents, which is based on daily services for daily fees.
Other resident fees include income arising from provision of accommodation is accounted for in accordance with
AASB 16 Leases on a straight-line basis over the length of stay.
Imputed revenue on RAD and bond balances
The Group has determined that the arrangement in which residents who choose to pay a RAD or a bond for
their accommodation services meet the definition of a lease under AASB 16. 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 results in a non-cash increase in revenue for accommodation
and a non-cash increase in finance costs on the outstanding RAD and bond balance, with no net impact on
profit and loss for the year.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Imputed Daily Accommodation Payment (“DAP") Revenue on RAD and Bond Balances
The Group has determined the use of the Maximum Permissible Interest Rate ("MPIR") prevailing at the date of
admission 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 DAP to applicable residents.
Estia Health Limited
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2022-23 Annual Report | Estia Health 103
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
B2
GOVERNMENT GRANTS
B2
GOVERNMENT GRANTS (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
COVID-19 costs reimbursement
Income associated with COVID-19 costs reimbursement claims submitted under the Aged Care Support
Programs (GO4863 and GO6223) are recognised in accordance with AASB 120 Accounting for Government
Grants and Disclosure of Government Assistance when the Group obtains reasonable assurance that the grants
will be received.
The Group has determined, based on the experience from the high volume and value of COVID-19 costs
reimbursement claims processed to date, that the point in time when receipt becomes reasonably assured for
income recognition of COVID-19 cost reimbursement grants is the date that a properly prepared grant
application claimed is lodged on the Government portal.
The Group has recognised $9,947,000 (2022: nil) as income, reflecting 95% of the total amount of grant
applications that were submitted but not yet approved to the date of this report. This recognition reflects the
Group's estimation of the minimum portion of grant applications that is expected to be approved by the
Government.
COVID-19 costs reimbursement
Personal protective equipment received and consumed
Other
Total Government grants recognised as income of the period
COVID costs reimbursement
2023
$’000
50,604
825
199
51,628
2022
$’000
7,072
981
-
8,053
Government grants primarily relate to claims disbursed from the Government which reimburse some of the costs
incurred during COVID-19 outbreaks. The Group has recognised these grants where it has determined that it has
reasonable assurance that they will be received. The status of the claims as at 30 June 2023 is shown in the table
below.
Claims approved
Claims submitted, not yet approved and recognised as income1
Grant income recognised as income during the year
Unapproved claims not yet recognised as income2
Claims recognised as income in prior period
Partially declined claims
Total claims submitted
2023
$’000
33,487
17,117
50,604
523
7,072
1,470
59,669
2022
$’000
7,072
-
7,072
29,298
-
233
36,603
1 To the date of this report, claims totalling $7,170,000 which were unapproved at 30 June 2023 have subsequently been approved (2022: Nil). As
a result, the amount of claims not yet approved at the date of this report is $9,947,000 (2022: Nil).
2 Of the claims submitted but not recognised as income in the prior financial year, $28,241,000 has been recognised in the year ended 30 June
2023.
SIGNIFICANT ACCOUNTING POLICY
Government grants are recognised where there is reasonable assurance that the grant will be received and all
attached conditions have been complied with. Monetary grants relating to compensation for expenses already
incurred or for the purpose of giving immediate financial support with no future related costs, which are
recognised in the profit or loss of the period in which the Group determines receipt is reasonably assured in
accordance with AASB120.
Other monetary grants, where there is no such lengthy experience of performance, are recognised when an
approval letter is issued by the Government.
For non-monetary assets received from the Government, the replacement cost of the underlying assets received
are initially recognised as assets and deferred grant income, which is subsequently released to profit or loss
based on the pattern of consumption of the benefits of the underlying asset. Government grants are classified as
Other Income.
Estia Health Limited
104 Estia Health | 2022-23 Annual Report
69
Estia Health Limited
70
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
B2
GOVERNMENT GRANTS
B2
GOVERNMENT GRANTS (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
COVID-19 costs reimbursement
Income associated with COVID-19 costs reimbursement claims submitted under the Aged Care Support
Programs (GO4863 and GO6223) are recognised in accordance with AASB 120 Accounting for Government
Grants and Disclosure of Government Assistance when the Group obtains reasonable assurance that the grants
will be received.
The Group has determined, based on the experience from the high volume and value of COVID-19 costs
reimbursement claims processed to date, that the point in time when receipt becomes reasonably assured for
income recognition of COVID-19 cost reimbursement grants is the date that a properly prepared grant
application claimed is lodged on the Government portal.
The Group has recognised $9,947,000 (2022: nil) as income, reflecting 95% of the total amount of grant
applications that were submitted but not yet approved to the date of this report. This recognition reflects the
Group's estimation of the minimum portion of grant applications that is expected to be approved by the
Government.
2023
$’000
50,604
825
199
51,628
2022
$’000
7,072
981
-
8,053
2023
$’000
33,487
17,117
50,604
523
7,072
1,470
2022
$’000
7,072
-
7,072
29,298
-
233
59,669
36,603
COVID-19 costs reimbursement
Personal protective equipment received and consumed
Total Government grants recognised as income of the period
COVID costs reimbursement
Other
below.
Government grants primarily relate to claims disbursed from the Government which reimburse some of the costs
incurred during COVID-19 outbreaks. The Group has recognised these grants where it has determined that it has
reasonable assurance that they will be received. The status of the claims as at 30 June 2023 is shown in the table
Claims approved
Claims submitted, not yet approved and recognised as income1
Grant income recognised as income during the year
Unapproved claims not yet recognised as income2
Claims recognised as income in prior period
Partially declined claims
Total claims submitted
1 To the date of this report, claims totalling $7,170,000 which were unapproved at 30 June 2023 have subsequently been approved (2022: Nil). As
a result, the amount of claims not yet approved at the date of this report is $9,947,000 (2022: Nil).
2 Of the claims submitted but not recognised as income in the prior financial year, $28,241,000 has been recognised in the year ended 30 June
2023.
SIGNIFICANT ACCOUNTING POLICY
Government grants are recognised where there is reasonable assurance that the grant will be received and all
attached conditions have been complied with. Monetary grants relating to compensation for expenses already
incurred or for the purpose of giving immediate financial support with no future related costs, which are
recognised in the profit or loss of the period in which the Group determines receipt is reasonably assured in
accordance with AASB120.
Other monetary grants, where there is no such lengthy experience of performance, are recognised when an
approval letter is issued by the Government.
For non-monetary assets received from the Government, the replacement cost of the underlying assets received
are initially recognised as assets and deferred grant income, which is subsequently released to profit or loss
based on the pattern of consumption of the benefits of the underlying asset. Government grants are classified as
Other Income.
Estia Health Limited
69
Estia Health Limited
2022-23 Annual Report | Estia Health 105
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
B3
EMPLOYEE BENEFITS AND AGENCY STAFF EXPENSES
Salaries and wages expense
Superannuation expense
Other employee expenses including agency staff expenses
Total employee benefits and agency staff expenses
Aged care retention bonus payments
2023
$’000
391,077
39,342
92,072
522,491
2022
$’000
382,129
34,651
71,993
488,773
The Group administered and disbursed aged care retention bonus payments to certain employees of $3,011,000
(2022: $4,385,000) on behalf of the Australian Government during the financial year. These payments were
treated as a disbursement and presented as a pass-through in the financial statements.
Interest expense on RAD and bond balances for departed residents
Interest expense on leases under AASB 16
Interest expense on bank loans
B4
ADMINISTRATIVE EXPENSES
Advertising and marketing expenses
Information technology and telephone expenses
Travelling expenses
Printing and stationery expenses
Professional services expenses
Insurance premiums
Recruitment expenses
Other administrative expenses
Total administrative expenses
2023
$’000
1,502
5,649
5,145
1,034
5,634
4,237
1,650
5,019
2022
$’000
1,313
5,258
2,735
1,190
6,609
5,241
1,142
4,241
29,870
27,729
The costs included in administrative expenses have been reviewed during the year to reflect the nature of this
cost category more closely. As a result the prior year value has been reclassified.
B5
OCCUPANCY EXPENSES
Repairs and maintenance expense
Other occupancy expenses
Total occupancy expenses
2023
$’000
10,702
14,935
25,637
2022
$’000
8,199
12,888
21,087
SECTION B: OUR PERFORMANCE (CONTINUED)
B6
NET FINANCE COSTS
Finance income
Interest income from cash at banks
Total finance income
Finance costs
Other finance costs
Total finance costs
Net finance costs
SIGNIFICANT ACCOUNTING POLICY
Interest income
2023
$’000
644
644
2,853
1,812
1,546
2,061
2022
$’000
19
19
2,654
1,911
469
1,955
49,514
46,317
48,870
46,298
Imputed interest expense on RAD and bond balances
41,242
39,328
Interest income is recognised using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the net carrying amount of the financial asset.
Borrowing costs
Borrowing costs comprise 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. Note C5 on page
122 contains further details relating to interest expenses recognised under AASB 16 and Note D2 on page 134
contains information relating to loans and borrowings.
Imputed interest on RAD and bond balances
Note B1 on page 101 contains details in relation to Imputed DAP revenue on RAD and bond balances under
AASB 16.
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 DAP 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.
Estia Health Limited
106 Estia Health | 2022-23 Annual Report
71
Estia Health Limited
72
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
B3
EMPLOYEE BENEFITS AND AGENCY STAFF EXPENSES
Salaries and wages expense
Superannuation expense
Other employee expenses including agency staff expenses
Total employee benefits and agency staff expenses
522,491
488,773
Aged care retention bonus payments
The Group administered and disbursed aged care retention bonus payments to certain employees of $3,011,000
(2022: $4,385,000) on behalf of the Australian Government during the financial year. These payments were
treated as a disbursement and presented as a pass-through in the financial statements.
391,077
382,129
2023
$’000
39,342
92,072
2022
$’000
34,651
71,993
B4
ADMINISTRATIVE EXPENSES
Advertising and marketing expenses
Information technology and telephone expenses
Travelling expenses
Printing and stationery expenses
Professional services expenses
Insurance premiums
Recruitment expenses
Other administrative expenses
Total administrative expenses
B5
OCCUPANCY EXPENSES
Repairs and maintenance expense
Other occupancy expenses
Total occupancy expenses
2023
$’000
1,502
5,649
5,145
1,034
5,634
4,237
1,650
5,019
2022
$’000
1,313
5,258
2,735
1,190
6,609
5,241
1,142
4,241
29,870
27,729
2023
$’000
10,702
14,935
25,637
2022
$’000
8,199
12,888
21,087
The costs included in administrative expenses have been reviewed during the year to reflect the nature of this
cost category more closely. As a result the prior year value has been reclassified.
B6
NET FINANCE COSTS
Finance income
Interest income from cash at banks
Total finance income
Finance costs
Imputed interest expense on RAD and bond balances
Interest expense on RAD and bond balances for departed residents
Interest expense on leases under AASB 16
Interest expense on bank loans
Other finance costs
Total finance costs
Net finance costs
SIGNIFICANT ACCOUNTING POLICY
Interest income
2023
$’000
644
644
2022
$’000
19
19
41,242
39,328
2,853
1,812
1,546
2,061
2,654
1,911
469
1,955
49,514
46,317
48,870
46,298
Interest income is recognised using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the net carrying amount of the financial asset.
Borrowing costs
Borrowing costs comprise 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. Note C5 on page
122 contains further details relating to interest expenses recognised under AASB 16 and Note D2 on page 134
contains information relating to loans and borrowings.
Imputed interest on RAD and bond balances
Note B1 on page 101 contains details in relation to Imputed DAP revenue on RAD and bond balances under
AASB 16.
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 DAP 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.
Estia Health Limited
71
Estia Health Limited
2022-23 Annual Report | Estia Health 107
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
B7
INCOME TAX
Major components of income tax expense
Consolidated profit or loss
Current income tax
Current tax expense / (benefit)
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 benefit
Consolidated other comprehensive income
2023
$’000
2022
$’000
15,023
(2)
(3,432)
(2,106)
(24,496)
-
(17,795)
2,137
(9,475)
(21,196)
Deferred tax related to items recognised in other comprehensive income during in the year:
Net loss on derivative instruments at fair value through other comprehensive income
Deferred tax charged to other comprehensive income
Reconciliation of income tax expense and accounting profit:
2023
$’000
343
343
2022
$’000
-
-
Reflected in the Consolidated Statement of Financial Position as follows:
Accounting loss before income tax
At the Australian statutory income tax rate of 30% (2022: 30%)
Adjustments in respect of income tax of previous year
Utilisation of previously unrecognised tax losses
Expenditure not allowable for income tax purposes
- Business acquisition related costs
- Other expenditure
Income tax benefit
Reconciliation of deferred tax liabilities, net:
Balance at 1 July 2021
Income tax benefit during the year recognised in profit or loss
Adjustments in respect of income tax of previous year
Balance as at 1 July 2022
Income tax benefit during the year recognised in profit or loss
Income tax expense during the year recognised in equity
Net deferred tax assets arising from business combinations
Balance as at 30 June 2023
Estia Health Limited
108 Estia Health | 2022-23 Annual Report
2023
$’000
(43,373)
(13,012)
(2)
(166)
2,576
1,129
2022
$’000
(73,558)
(22,067)
31
-
-
840
(9,475)
(21,196)
$’000
(99,617)
17,795
(2,137)
(83,959)
24,496
(343)
1,357
(58,449)
73
B7
INCOME TAX (CONTINUED)
Major components of deferred tax
2023
Deferred tax assets / (liabilities)
Property, plant and equipment
Lease liabilities
Provisions and accruals
Right of use assets
Bed licences
Revaluation of derivative financial
instruments
Government grant income
Other
Total
Deferred tax assets
Deferred tax liabilities
Deferred tax liabilities, net
2022
Deferred tax assets / (liabilities)
Property, plant and equipment
Lease liabilities
Provisions and accruals
Right of use assets
Bed licences
Other
Total
Deferred tax assets
Deferred tax liabilities
Deferred tax liabilities, net
(61,388)
18,736
23,951
(16,910)
(46,961)
-
-
(1,387)
(83,959)
42,924
(126,883)
(83,959)
(59,849)
21,889
22,075
(17,897)
(64,571)
(1,264)
(99,617)
44,347
(143,964)
(99,617)
Charged to
Opening
consolidated
Charged to
balance
profit or loss
equity
combinations
$’000
$’000
$’000
$’000
Closing
balance
$’000
Arose from
business
3,536
(418)
2,966
576
23,481
-
(5,135)
(510)
24,496
(1,539)
(3,153)
1,876
987
17,610
(123)
15,658
(343)
(343)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
952
369
-
-
-
-
-
36
1,357
-
-
-
-
-
-
-
(56,900)
18,318
27,286
(16,334)
(23,480)
(343)
(5,135)
(1,861)
(58,449)
45,889
(104,338)
(58,449)
(61,388)
18,736
23,951
(16,910)
(46,961)
(1,387)
(83,959)
42,924
(126,883)
(83,959)
Reflected in the Consolidated Statement of Financial Position as follows:
Estia Health Limited
74
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
B7
INCOME TAX (CONTINUED)
Major components of deferred tax
Opening
balance
$’000
Charged to
consolidated
profit or loss
$’000
Charged to
equity
$’000
Arose from
business
combinations
$’000
Closing
balance
$’000
2023
Deferred tax assets / (liabilities)
Property, plant and equipment
Lease liabilities
Provisions and accruals
Right of use assets
Bed licences
Revaluation of derivative financial
instruments
Government grant income
Other
Total
(61,388)
18,736
23,951
(16,910)
(46,961)
-
-
(1,387)
(83,959)
3,536
(418)
2,966
576
23,481
-
(5,135)
(510)
24,496
Reflected in the Consolidated Statement of Financial Position as follows:
Deferred tax assets
Deferred tax liabilities
42,924
(126,883)
Deferred tax liabilities, net
(83,959)
2022
Deferred tax assets / (liabilities)
Property, plant and equipment
Lease liabilities
Provisions and accruals
Right of use assets
Bed licences
Other
Total
(59,849)
21,889
22,075
(17,897)
(64,571)
(1,264)
(99,617)
(1,539)
(3,153)
1,876
987
17,610
(123)
15,658
Reflected in the Consolidated Statement of Financial Position as follows:
Deferred tax assets
Deferred tax liabilities
44,347
(143,964)
Deferred tax liabilities, net
(99,617)
-
-
-
-
-
(343)
-
-
(343)
-
-
-
-
-
-
-
952
-
369
-
-
-
-
36
(56,900)
18,318
27,286
(16,334)
(23,480)
(343)
(5,135)
(1,861)
1,357
(58,449)
45,889
(104,338)
(58,449)
(61,388)
18,736
23,951
(16,910)
(46,961)
(1,387)
(83,959)
42,924
(126,883)
(83,959)
-
-
-
-
-
-
-
Estia Health Limited
Estia Health Limited
2022-23 Annual Report | Estia Health 109
74
Deferred tax related to items recognised in other comprehensive income during in the year:
Net loss on derivative instruments at fair value through other comprehensive income
Deferred tax charged to other comprehensive income
Reconciliation of income tax expense and accounting profit:
B7
INCOME TAX
Major components of income tax expense
Consolidated profit or loss
Current income tax
Current tax expense / (benefit)
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 benefit
Consolidated other comprehensive income
Accounting loss before income tax
At the Australian statutory income tax rate of 30% (2022: 30%)
Adjustments in respect of income tax of previous year
Utilisation of previously unrecognised tax losses
Expenditure not allowable for income tax purposes
- Business acquisition related costs
- Other expenditure
Income tax benefit
Reconciliation of deferred tax liabilities, net:
Balance at 1 July 2021
Income tax benefit during the year recognised in profit or loss
Adjustments in respect of income tax of previous year
Balance as at 1 July 2022
Income tax benefit during the year recognised in profit or loss
Income tax expense during the year recognised in equity
Net deferred tax assets arising from business combinations
Balance as at 30 June 2023
2023
$’000
2022
$’000
15,023
(2)
(3,432)
(2,106)
(24,496)
(17,795)
-
2,137
(9,475)
(21,196)
2023
$’000
343
343
2022
$’000
-
-
2023
$’000
2022
$’000
(43,373)
(73,558)
(13,012)
(22,067)
(2)
(166)
2,576
1,129
31
-
-
840
(9,475)
(21,196)
$’000
(99,617)
17,795
(2,137)
(83,959)
24,496
(343)
1,357
(58,449)
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
B7
INCOME TAX (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be
recovered from or paid to the Australian Taxation Office (“ATO”). 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, the Group 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.
B8
EARNINGS PER SHARE
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
2023
cents
(13.13)
(13.13)
2022
cents
(20.10)
(20.10)
2023
$’000
2022
$’000
(33,898)
(52,362)
2023
Number
2022
Number
2,634,576
2,559,858
Basic Earnings Per Share (“EPS”) are calculated as net profit or loss after tax divided by the weighted average
number of ordinary shares outstanding during the year.
Diluted EPS is calculated on the same basis as basic EPS except that it reflects the impact of any potential
commitments the Group has to issue shares in the future, for example shares to be issued upon vesting of
performance rights.
Due to the loss for the year, the diluted earnings per share is the same as the basic earnings per share.
Earnings used in calculation of EPS
Loss attributable to owners of the Company
Weighted average number of shares used in calculating EPS
Weighted average number of ordinary shares used in calculating basic EPS
258,163,624 260,519,150
Adjustment for calculation of diluted EPS:
-
Performance rights1, 2
Weighted average number of ordinary shares adjusted for the effect of dilution 260,798,200 263,079,008
1. Performance rights granted to participants are considered to be potential ordinary shares and have been included in the
determination of diluted EPS to the extent to which they are dilutive.
2. The performance rights used in the calculation of diluted earnings per share were anti-dilutive for the years ended 30 June
2023 and 30 June 2022 due to the financial loss reported in each year and as a result were not included in the calculation of
diluted earnings per share.
Estia Health Limited
110 Estia Health | 2022-23 Annual Report
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Estia Health Limited
76
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
B7
INCOME TAX (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be
recovered from or paid to the Australian Taxation Office (“ATO”). 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, the Group 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.
B8
EARNINGS PER SHARE
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
2023
cents
(13.13)
(13.13)
2022
cents
(20.10)
(20.10)
Basic Earnings Per Share (“EPS”) are calculated as net profit or loss after tax divided by the weighted average
number of ordinary shares outstanding during the year.
Diluted EPS is calculated on the same basis as basic EPS except that it reflects the impact of any potential
commitments the Group has to issue shares in the future, for example shares to be issued upon vesting of
performance rights.
Due to the loss for the year, the diluted earnings per share is the same as the basic earnings per share.
Earnings used in calculation of EPS
Loss attributable to owners of the Company
Weighted average number of shares used in calculating EPS
Weighted average number of ordinary shares used in calculating basic EPS
Adjustment for calculation of diluted EPS:
-
Performance rights1, 2
2023
$’000
(33,898)
2022
$’000
(52,362)
2023
Number
2022
Number
258,163,624 260,519,150
2,634,576
2,559,858
Weighted average number of ordinary shares adjusted for the effect of dilution 260,798,200 263,079,008
1. Performance rights granted to participants are considered to be potential ordinary shares and have been included in the
determination of diluted EPS to the extent to which they are dilutive.
2. The performance rights used in the calculation of diluted earnings per share were anti-dilutive for the years ended 30 June
2023 and 30 June 2022 due to the financial loss reported in each year and as a result were not included in the calculation of
diluted earnings per share.
Estia Health Limited
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2022-23 Annual Report | Estia Health 111
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION B: OUR PERFORMANCE (CONTINUED)
B9
CASH FLOW RECONCILIATION
(a) Reconciliation of net loss after income tax to net cash flows from operations
Loss for the year
Adjustments to reconcile profit after income tax to net cash flows:
Depreciation of property, plant and equipment
Depreciation on right of use assets
Amortisation of bed licences and other intangible assets
Impairment of property, plant and equipment
Write off of capitalised construction costs
Gain arising from change in fair value of investment properties
Net loss / (gain) on disposal of property, plant and equipment
Net gain on sale of assets held for sale
Accommodation bond retentions
Imputed revenue on RAD and bond balances
Imputed interest cost on RAD and bond balances
Income tax benefit
Finance costs
Share-based payments
Movement in allowance for expected credit losses
(Increase) / Decrease in:
Trade and other receivables
Prepayments and other assets
(Decrease) / Increase in:
Trade and other payables
Receipts in advance
Provisions
Refundable accommodation deposits and bonds
Less: Income tax refunded / (paid), net
Net cash flows from operating activities
2023
$’000
(33,898)
2022
$’000
(52,362)
40,127
4,336
81,471
11,448
554
(100)
-
-
(2,399)
41,242
(41,242)
(9,475)
-
1,426
34
40,031
4,142
61,180
118
-
-
(64)
(848)
(2,661)
39,328
(39,328)
(21,196)
409
1,097
(328)
(16,363)
2,981
(2,864)
(1,447)
3,085
647
9,845
85,674
9,462
-
5,646
22,801
8,100
187,493
(7,584)
55,532
SECTION B: OUR PERFORMANCE (CONTINUED)
B9
CASH FLOW RECONCILIATION (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Operating cash flow
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 by the Group within the guidelines set out by the
Prudential Compliance Standards and are therefore classified as an operating activity for the purposes of cash
flow reporting.
(b) Reconciliation of liabilities arising from financing activities
2023
Non-current loans and borrowings
Lease liabilities
Dividends payable
Net
2022
$’000
cash flows
$’000
100,000
62,452
-
(30,000)
(3,808)
(9,560)
Other
$’000
-
2,416
9,560
2023
$’000
70,000
61,060
-
Total liabilities from financing activities
162,452
(43,368)
11,976
131,060
2022
Non-current loans and borrowings
Lease liabilities
Dividends payable
Total liabilities from financing activities
114,500
65,122
(14,500)
(5,987)
-
(12,137)
179,622
(32,624)
-
3,317
12,137
15,454
100,000
62,452
-
162,452
Estia Health Limited
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Estia Health Limited
78
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
SECTION B: OUR PERFORMANCE (CONTINUED)
B9
CASH FLOW RECONCILIATION
(a) Reconciliation of net loss after income tax to net cash flows from operations
Loss for the year
Adjustments to reconcile profit after income tax to net cash flows:
Depreciation of property, plant and equipment
Depreciation on right of use assets
Amortisation of bed licences and other intangible assets
Impairment of property, plant and equipment
Write off of capitalised construction costs
Gain arising from change in fair value of investment properties
Net loss / (gain) on disposal of property, plant and equipment
Net gain on sale of assets held for sale
Accommodation bond retentions
Imputed revenue on RAD and bond balances
Imputed interest cost on RAD and bond balances
Income tax benefit
Finance costs
Share-based payments
Movement in allowance for expected credit losses
(Increase) / Decrease in:
Trade and other receivables
Prepayments and other assets
(Decrease) / Increase in:
Trade and other payables
Receipts in advance
Provisions
Refundable accommodation deposits and bonds
Less: Income tax refunded / (paid), net
Net cash flows from operating activities
2023
$’000
2022
$’000
(33,898)
(52,362)
40,127
4,336
81,471
11,448
554
(100)
-
-
(2,399)
41,242
(41,242)
(9,475)
-
1,426
34
40,031
4,142
61,180
118
-
-
(64)
(848)
(2,661)
39,328
(39,328)
(21,196)
409
1,097
(328)
(16,363)
2,981
(2,864)
(1,447)
3,085
647
9,845
85,674
9,462
-
5,646
22,801
8,100
187,493
(7,584)
55,532
SECTION B: OUR PERFORMANCE (CONTINUED)
B9
CASH FLOW RECONCILIATION (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Operating cash flow
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 by the Group within the guidelines set out by the
Prudential Compliance Standards and are therefore classified as an operating activity for the purposes of cash
flow reporting.
(b) Reconciliation of liabilities arising from financing activities
2023
Non-current loans and borrowings
Lease liabilities
Dividends payable
2022
$’000
Net
cash flows
$’000
100,000
62,452
-
(30,000)
(3,808)
(9,560)
Other
$’000
-
2,416
9,560
2023
$’000
70,000
61,060
-
Total liabilities from financing activities
162,452
(43,368)
11,976
131,060
2022
Non-current loans and borrowings
Lease liabilities
Dividends payable
114,500
65,122
-
(14,500)
(5,987)
(12,137)
Total liabilities from financing activities
179,622
(32,624)
-
3,317
12,137
15,454
100,000
62,452
-
162,452
Estia Health Limited
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2022-23 Annual Report | Estia Health 113
78
C Assets and Liabilities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS AND LIABLITIES
This section outlines the assets and liabilities held by the Group as at 30 June each year.
C1
CASH AND CASH EQUIVALENTS
Cash at bank
Cash on hand
Total cash and cash equivalents
Cash at bank earns interest at floating rates based on daily bank deposit rates.
2023
$’000
26,136
64
26,200
2022
$’000
20,357
54
20,411
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 any outstanding bank overdrafts where offset is within the terms of the facility.
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C2
TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for expected credit losses
Net trade receivables
Other receivables
COVID grants receivable1
Total trade and other receivables
2023
$’000
7,182
(1,001)
6,181
1,793
19,099
27,073
2022
$’000
8,290
(967)
7,323
2,915
23
10,261
1 Of the COVID grants receivable outstanding as at 30 June 2023, $1,940,000 has been received to the date of this report.
As at 30 June 2023, the Group recognised $19,099,000 (2022: $23,000) of COVID-19 costs reimbursement
income as receivables, reflecting the balance of funding to be received from the Australian Government in relation
to the COVID-19 costs reimbursement claims submitted under the Aged Care Support Programs (GO4863 and
GO6223). In accordance with the Government guidelines, Approved Providers as defined under the Aged Care
Act are able to claim for COVID-19 costs in accordance with the eligible criteria. Due to the volume of claims from
across the sector, there is a backlog of pending claims awaiting Government review. The Group has determined,
based on experience to date and the terms of the grant schemes that it is reasonably assured that properly
prepared claims lodged with the Government for eligible COVID-19 costs will be recovered. Note B2 on page 104
contains further details on the significant accounting judgement exercised in relation to the recognition of the grant
income.
Allowance for expected credit loss
Net remeasurement of allowance for expected credit losses
As at 1 July
Utilised
As at 30 June
2023
$’000
967
49
(15)
1,001
2022
$’000
1,295
(20)
(308)
967
SIGNIFICANT ACCOUNTING POLICY
lifetime credit losses.
Trade receivables are recognised and carried at original invoice amount less an allowance for estimated future
The Group uses a provision matrix based on days past due for categories of receivables with similar credit risk
characteristics, adjusted for any material expected changes to the future credit risk of that category to
determine the lifetime expected credit losses at the reporting date.
Estia Health Limited
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Estia Health Limited
80
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
SECTION C: ASSETS AND LIABLITIES
This section outlines the assets and liabilities held by the Group as at 30 June each year.
C1
CASH AND CASH EQUIVALENTS
Cash at bank
Cash on hand
Total cash and cash equivalents
Cash at bank earns interest at floating rates based on daily bank deposit rates.
2023
$’000
26,136
64
2022
$’000
20,357
54
26,200
20,411
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 any outstanding bank overdrafts where offset is within the terms of the facility.
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C2
TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for expected credit losses
Net trade receivables
Other receivables
COVID grants receivable1
2023
$’000
7,182
(1,001)
6,181
1,793
19,099
Total trade and other receivables
1 Of the COVID grants receivable outstanding as at 30 June 2023, $1,940,000 has been received to the date of this report.
27,073
2022
$’000
8,290
(967)
7,323
2,915
23
10,261
As at 30 June 2023, the Group recognised $19,099,000 (2022: $23,000) of COVID-19 costs reimbursement
income as receivables, reflecting the balance of funding to be received from the Australian Government in relation
to the COVID-19 costs reimbursement claims submitted under the Aged Care Support Programs (GO4863 and
GO6223). In accordance with the Government guidelines, Approved Providers as defined under the Aged Care
Act are able to claim for COVID-19 costs in accordance with the eligible criteria. Due to the volume of claims from
across the sector, there is a backlog of pending claims awaiting Government review. The Group has determined,
based on experience to date and the terms of the grant schemes that it is reasonably assured that properly
prepared claims lodged with the Government for eligible COVID-19 costs will be recovered. Note B2 on page 104
contains further details on the significant accounting judgement exercised in relation to the recognition of the grant
income.
Allowance for expected credit loss
As at 1 July
Net remeasurement of allowance for expected credit losses
Utilised
As at 30 June
2023
$’000
967
49
(15)
1,001
2022
$’000
1,295
(20)
(308)
967
SIGNIFICANT ACCOUNTING POLICY
Trade receivables are recognised and carried at original invoice amount less an allowance for estimated future
lifetime credit losses.
The Group uses a provision matrix based on days past due for categories of receivables with similar credit risk
characteristics, adjusted for any material expected changes to the future credit risk of that category to
determine the lifetime expected credit losses at the reporting date.
Estia Health Limited
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2022-23 Annual Report | Estia Health 115
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C3
PROPERTY, PLANT AND EQUIPMENT
Reconciliation of property, plant and equipment
Note
Land
$’000
Buildings
$’000
Property
improve-
ments
$’000
Furniture,
fixtures &
equipment
$’000
Motor
vehicles
$’000
Construction
in progress
$’000
Total
$’000
Cost
Balance at 1 July 2021
Additions
Transfers
Disposals
Transfer to assets held for sale
190,065
-
-
-
378
567,238
-
-
-
(3,323)
88,852
2,745
3,331
(631)
(737)
137,665
9,400
7,803
(2,455)
(787)
Balance at 30 June 2022
190,443
563,915
93,560
151,626
992
79
-
(89)
-
982
12,492 997,304
35,067
22,843
-
(11,134)
(3,180)
(5)
(4,469)
-
24,196 1,024,722
Additions
Acquisitions through
business combinations
C9
Transfers
Disposals
2,975
14,222
4,556
15,145
-
46,645
83,543
Motor vehicles
25,100
449
-
43,934
-
-
-
7,950
(397)
10,565
3,177
(3,013)
157
-
-
-
(11,576)
(554)
79,756
-
(3,964)
appropriate, at each reporting period end.
De-recognition & Disposal
Balance at 30 June 2023
218,967
622,071
105,669
177,500
1,139
58,711 1,184,057
Accumulated depreciation and impairment
821
Balance at 1 July 2021
Depreciation expense
-
Impairment expense
Reversal of impairment expense
Disposals
Transfer to assets held for sale
569
(456)
-
-
67,148
13,275
-
-
-
(3,154)
14,296
6,378
-
-
(603)
(694)
68,914
20,308
-
-
(2,384)
(679)
660
70
-
-
(90)
-
- 151,839
40,031
-
5
-
(5)
-
574
(456)
(3,082)
(4,527)
Balance at 30 June 2022
934
77,269
19,377
86,159
640
- 184,379
Depreciation expense
Impairment expense
Disposals
Balance at 30 June 2023
-
428
-
13,557
8,762
-
6,864
1,013
(356)
19,530
1,245
(2,850)
1,362
99,588
26,898
104,084
176
-
-
816
-
-
-
40,127
11,448
(3,206)
- 232,748
Net book value
As at 30 June 2022
As at 30 June 2023
189,509
486,646
74,183
217,605
522,483
78,771
65,467
73,416
342
323
24,196 840,343
58,711 951,309
C3
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses. Land is not depreciated. Such cost includes the cost of replacing parts 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 acquired through business combination are initially measured at fair value at the
Depreciation is calculated on a straight-line or written down value basis over the estimated useful life of the
date on which control is obtained.
asset as follows:
Buildings and property improvements
Furniture, fittings and equipment
4 - 50 years
3 - 20 years
4 - 8 years
Assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively, if
An item of property, plant and equipment and any significant part initially recognised is de-recognised 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 Consolidated Statement of Profit or Loss and Other Comprehensive
Income when the asset is de-recognised.
Impairment
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 reporting period 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 or 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
Estia Health Limited
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Estia Health Limited
82
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C3
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses. Land is not depreciated. Such cost includes the cost of replacing parts 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 acquired through business combination 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:
2,975
14,222
4,556
15,145
46,645
83,543
Motor vehicles
Buildings and property improvements
Furniture, fittings and equipment
4 - 50 years
3 - 20 years
4 - 8 years
Assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively, if
appropriate, at each reporting period end.
De-recognition & Disposal
An item of property, plant and equipment and any significant part initially recognised is de-recognised 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 Consolidated Statement of Profit or Loss and Other Comprehensive
Income when the asset is de-recognised.
Impairment
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 reporting period 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 or 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
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C3
PROPERTY, PLANT AND EQUIPMENT
Reconciliation of property, plant and equipment
Property
improve-
Furniture,
fixtures &
Motor
Construction
Land
Buildings
ments
equipment
vehicles
in progress
Note
$’000
$’000
$’000
$’000
$’000
$’000
Total
$’000
Cost
Additions
Transfers
Disposals
Balance at 1 July 2021
190,065
567,238
88,852
137,665
2,745
3,331
(631)
(737)
9,400
7,803
(2,455)
(787)
992
79
(89)
12,492 997,304
22,843
35,067
(11,134)
-
(5)
-
(3,180)
(4,469)
Transfer to assets held for sale
378
(3,323)
Balance at 30 June 2022
190,443
563,915
93,560
151,626
982
24,196 1,024,722
business combinations
C9
25,100
43,934
Additions
Acquisitions through
Transfers
Disposals
-
7,950
(397)
10,565
3,177
(3,013)
157
-
79,756
(11,576)
-
(554)
(3,964)
Balance at 30 June 2023
218,967
622,071
105,669
177,500
1,139
58,711 1,184,057
Accumulated depreciation and impairment
Balance at 1 July 2021
Depreciation expense
Impairment expense
Reversal of impairment expense
Disposals
Transfer to assets held for sale
(3,154)
67,148
13,275
14,296
6,378
68,914
20,308
660
70
-
-
(603)
(694)
-
-
(2,384)
(679)
Depreciation expense
Impairment expense
Disposals
13,557
8,762
428
6,864
1,013
(356)
19,530
1,245
(2,850)
Balance at 30 June 2023
1,362
99,588
26,898
104,084
816
- 151,839
-
5
-
(5)
-
40,031
574
(456)
(3,082)
(4,527)
-
-
-
40,127
11,448
(3,206)
- 232,748
Balance at 30 June 2022
934
77,269
19,377
86,159
640
- 184,379
-
-
-
-
-
-
-
-
449
-
821
569
(456)
-
-
-
-
-
-
-
-
-
-
(90)
176
-
-
-
-
-
-
-
-
-
Net book value
As at 30 June 2022
As at 30 June 2023
189,509
486,646
74,183
217,605
522,483
78,771
65,467
73,416
342
323
24,196 840,343
58,711 951,309
Estia Health Limited
81
Estia Health Limited
2022-23 Annual Report | Estia Health 117
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C3
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C4
GOODWILL AND OTHER INTANGIBLE ASSETS
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Mature homes impairment assessment
Due to the Group’s decision to relocate its operations from the mature homes in Benalla and Bendigo to the
neighbouring operational homes, which are to be acquired from Royal Freemasons under a binding contract
executed as at 1 August 2023 (Note E9 contains further details), and subsequently close the existing mature
homes in the region, impairment indicators have been identified in relation to these two homes.
Consequently, an impairment assessment was conducted, which determined that the carrying values of the
mature home CGUs exceeded the recoverable amounts, being $887,000 for Benalla and $1,822,000 for
Bendigo, respectively . The recoverable amount was determined as the fair value of the mature home CGU, less
any cost of disposal, utilising a valuation technique that predominantly incorporates the price per square metre
for comparable properties derived from observable market data (classified as level 3 in the fair value hierarchy),
which is the most sensitive assumption applied in the valuation technique.
Therefore, total non-cash impairment charges of $11,448,000 have been recognised during the current financial
year (2022: Nil) against the carrying value of the depreciable assets associated with the mature homes.
Capitalisation of costs
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 re-assesses on a
regular basis whether projects are still sufficiently probable of completion and expected to deliver desired
economic benefits.
Acquisition through business combinations
C9
36,600
Balance at 30 June 2023
853,674
221,281
10,743
1,085,698
Accumulated amortisation and impairment
Balance at 1 July 2021
Cost
Additions
Transfer to assets held for sale
Balance at 30 June 2022
Additions
Balance at 1 July 2021
Amortisation expense
Transfer to assets held for sale
Balance at 30 June 2022
Amortisation expense
Balance at 30 June 2023
Net book value
As at 30 June 2022
As at 30 June 2023
Notes
Goodwill
$’000
Bed
licences
$’000
817,074
221,281
Others
$’000
Total
$’000
8,957
1,575
(10)
1,047,312
1,575
(10)
221
-
221
36,600
817,074
221,281
10,522
1,048,877
-
-
-
-
-
-
-
-
-
-
-
-
136,060
60,349
6,423
831
(9)
142,483
61,180
(9)
136,060
60,349
7,245
203,654
80,466
136,060
140,815
1,005
8,250
81,471
285,125
681,014
717,614
160,932
80,466
3,277
2,493
845,223
800,573
Estia Health Limited
118 Estia Health | 2022-23 Annual Report
83
Estia Health Limited
84
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C3
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Mature homes impairment assessment
Due to the Group’s decision to relocate its operations from the mature homes in Benalla and Bendigo to the
neighbouring operational homes, which are to be acquired from Royal Freemasons under a binding contract
executed as at 1 August 2023 (Note E9 contains further details), and subsequently close the existing mature
homes in the region, impairment indicators have been identified in relation to these two homes.
Consequently, an impairment assessment was conducted, which determined that the carrying values of the
mature home CGUs exceeded the recoverable amounts, being $887,000 for Benalla and $1,822,000 for
Bendigo, respectively . The recoverable amount was determined as the fair value of the mature home CGU, less
any cost of disposal, utilising a valuation technique that predominantly incorporates the price per square metre
for comparable properties derived from observable market data (classified as level 3 in the fair value hierarchy),
which is the most sensitive assumption applied in the valuation technique.
Therefore, total non-cash impairment charges of $11,448,000 have been recognised during the current financial
year (2022: Nil) against the carrying value of the depreciable assets associated with the mature homes.
Capitalisation of costs
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 re-assesses on a
regular basis whether projects are still sufficiently probable of completion and expected to deliver desired
economic benefits.
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C4
GOODWILL AND OTHER INTANGIBLE ASSETS
Notes
Goodwill
$’000
Cost
Balance at 1 July 2021
Additions
Transfer to assets held for sale
Balance at 30 June 2022
Additions
Acquisition through business combinations
C9
817,074
-
-
817,074
-
36,600
Bed
licences
$’000
221,281
-
-
221,281
Others
$’000
Total
$’000
8,957
1,575
(10)
1,047,312
1,575
(10)
10,522
1,048,877
-
-
221
-
221
36,600
Balance at 30 June 2023
853,674
221,281
10,743
1,085,698
Accumulated amortisation and impairment
Balance at 1 July 2021
Amortisation expense
Transfer to assets held for sale
Balance at 30 June 2022
Amortisation expense
Balance at 30 June 2023
Net book value
As at 30 June 2022
As at 30 June 2023
136,060
-
-
136,060
-
60,349
-
60,349
6,423
831
(9)
7,245
142,483
61,180
(9)
203,654
-
80,466
136,060
140,815
1,005
8,250
81,471
285,125
681,014
717,614
160,932
80,466
3,277
2,493
845,223
800,573
Estia Health Limited
83
Estia Health Limited
2022-23 Annual Report | Estia Health 119
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C4
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C4
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Bed licences
Bed licences 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.
Subsequently, the Group’s bed licences, which were previously carried at cost less any accumulated
impairment losses, are now measured at cost less accumulated amortisation and any accumulated impairment
losses following the decision by the Australian Government to abolish bed licences with effect from 1 July
2024.
Impairment testing for bed licences is performed in line with the procedures noted below under Goodwill.
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
group of CGUs to which the goodwill relates. When the recoverable amount of the group of CGUs is less than
its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be
reversed in future periods.
Other intangible assets
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 recognised in 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 life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired.
Software costs are amortised over the estimated useful life of 3 - 5 years.
The amortisation period and the amortisation method for an intangible asset with a finite useful life are
reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation
period or method, as appropriate, which is a change in accounting estimates and are applied prospectively.
De-recognition and disposal
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 de-recognised.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Impairment of goodwill and other intangible assets
The Group performs impairment testing on goodwill and other intangible assets to ensure they are not carried
above their recoverable amounts at least annually (for goodwill and other intangible assets with an indefinite
useful life) and where there is an indication that assets may be impaired, which is assessed at least at each
reporting date.
For impairment testing purposes, goodwill, bed licences and other intangible assets are allocated to the Group
of CGUs, which is consistent with the operating segment identified in Note E6 and which represents the lowest
level within the Group at which these assets are monitored. The carrying value of the CGU was compared
against the recoverable amount which was determined on a value-in-use calculation basis by discounting cash
flow projections for a five year period 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 future impacts of mandated care minutes, the 15% increase in the Aged Care Award, potential costs
associated with managing COVID-19 outbreaks, the activity of Independent Health and Aged Care Pricing
Authority (“IHACPA"), announced changes to Government funding, existing grant schemes and climate related
risks.
The most sensitive assumptions used in the calculation of the value in use are the discount rate, long term growth
rate, and the assumption that margin deterioration driven by successive years of failure of Government funding
increases to keep pace with increased input costs will cease following the appointment of IHACPA to monitor
costs and make appropriate recommendations to Government. Sensitivity analysis on reasonably likely changes
to these assumptions did not result in an outcome where impairment would be required.
A discount rate was applied to the cash flow forecasts, including the terminal value. This rate reflects the
current market assessments of the risks specific to the industry the Group operates in and takes 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.
A long term growth rate reflects the Group’s assessment of inflation and perpetual growth using market and
economic data.
The discount and growth rates used at 30 June 2023 in assessing the recoverable amount are as follows:
Post-tax discount rate
Pre-tax discount rate
Long term growth rate
2023
%
9.0
12.1
2.3
2022
%
9.0
12.1
2.3
Estia Health Limited
120 Estia Health | 2022-23 Annual Report
85
Estia Health Limited
86
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C4
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C4
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Bed licences
Bed licences 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.
Subsequently, the Group’s bed licences, which were previously carried at cost less any accumulated
impairment losses, are now measured at cost less accumulated amortisation and any accumulated impairment
losses following the decision by the Australian Government to abolish bed licences with effect from 1 July
Impairment testing for bed licences is performed in line with the procedures noted below under Goodwill.
2024.
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
group of CGUs to which the goodwill relates. When the recoverable amount of the group of CGUs is less than
its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be
reversed in future periods.
Other intangible assets
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 recognised in 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 life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired.
Software costs are amortised over the estimated useful life of 3 - 5 years.
The amortisation period and the amortisation method for an intangible asset with a finite useful life are
reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation
period or method, as appropriate, which is a change in accounting estimates and are applied prospectively.
De-recognition and disposal
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 de-recognised.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Impairment of goodwill and other intangible assets
The Group performs impairment testing on goodwill and other intangible assets to ensure they are not carried
above their recoverable amounts at least annually (for goodwill and other intangible assets with an indefinite
useful life) and where there is an indication that assets may be impaired, which is assessed at least at each
reporting date.
For impairment testing purposes, goodwill, bed licences and other intangible assets are allocated to the Group
of CGUs, which is consistent with the operating segment identified in Note E6 and which represents the lowest
level within the Group at which these assets are monitored. The carrying value of the CGU was compared
against the recoverable amount which was determined on a value-in-use calculation basis by discounting cash
flow projections for a five year period 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 future impacts of mandated care minutes, the 15% increase in the Aged Care Award, potential costs
associated with managing COVID-19 outbreaks, the activity of Independent Health and Aged Care Pricing
Authority (“IHACPA"), announced changes to Government funding, existing grant schemes and climate related
risks.
The most sensitive assumptions used in the calculation of the value in use are the discount rate, long term growth
rate, and the assumption that margin deterioration driven by successive years of failure of Government funding
increases to keep pace with increased input costs will cease following the appointment of IHACPA to monitor
costs and make appropriate recommendations to Government. Sensitivity analysis on reasonably likely changes
to these assumptions did not result in an outcome where impairment would be required.
A discount rate was applied to the cash flow forecasts, including the terminal value. This rate reflects the
current market assessments of the risks specific to the industry the Group operates in and takes 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.
A long term growth rate reflects the Group’s assessment of inflation and perpetual growth using market and
economic data.
The discount and growth rates used at 30 June 2023 in assessing the recoverable amount are as follows:
Post-tax discount rate
Pre-tax discount rate
Long term growth rate
2023
%
9.0
12.1
2.3
2022
%
9.0
12.1
2.3
Estia Health Limited
85
Estia Health Limited
2022-23 Annual Report | Estia Health 121
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C5
LEASES
The Group has lease agreements for various residential aged care homes, office space and office equipment with
varying lease terms.
Carrying amounts of right-of-use assets and associated lease liabilities and the movements during the year are
shown below:
C5
LEASES (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
Lease liabilities
As at 1 July 2021
Additions
Depreciation expense
Interest expense
Lease payments
Remeasurement of leases
As at 30 June 2022
Additions
Depreciation expense
Interest expense
Lease payments
Remeasurement of leases
As at 30 June 2023
Right of use assets
Lease
liabilities
Property
leases
$’000
58,717
-
(3,999)
-
-
1,111
55,829
-
(4,126)
-
-
2,028
53,731
Other
equipment
$’000
503
196
(143)
-
-
(18)
538
388
(210)
-
-
(1)
715
Total
right of use
assets
$’000
59,220
196
(4,142)
-
-
1,093
56,367
388
(4,336)
-
-
2,027
54,446
$’000
65,122
196
-
1,911
(5,987)
1,210
62,452
388
-
1,812
(5,619)
2,027
61,060
The Group had low-value leases relating to office equipment such as printers and photocopiers. An amount of
$455,000 (2022: $90,000) was recognised as an expense during the year. Under its lease agreements, the Group
incurs expenditure in relation to insurance, council and water rates, and water consumption. The Group
recognised an amount of $417,000 (2022: $447,000) as an expense during the year.
SIGNIFICANT ACCOUNTING POLICY
When a contract is entered into, the Group assesses whether a contract is, or contains, a lease. A lease arises
when 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.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease which is when 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 the estimated useful
life of the assets and the lease term. Right-of-use assets are subject to impairment testing.
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 using the Group’s incremental borrowing rate (“IBR”) if the
rate implicit in the lease cannot be readily determined. 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.
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 to be 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.
Interest expense on lease liabilities
Interest expense on lease liabilities is reported as a component of total finance costs, which is recognised over
the term of the lease using the Group’s IBR.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Lease term
The Group determines the lease term as the non-cancellable term of a lease, together with any periods covered
by an option to extend if it is reasonably certain to be exercised.
Where the Group has the option to extend a lease for additional terms, judgement is applied in evaluating
whether it is reasonably certain to exercise the option to renew, taking into account relevant factors that create
an economic incentive to exercise the renewal option. After commencement date, the Group reassesses the
lease term if there is a significant event or change in circumstances that is within its control and affects it ability
to exercise (or not exercise) the option to renew.
Discount rates
Where the Group cannot readily determine the interest rate implicit in the lease, it uses its IBR to calculate the
present value of future lease payments. The Group estimates the IBR using market interest rates and adjusts
these rates to include the effect of its own stand-alone credit rating.
Estia Health Limited
122 Estia Health | 2022-23 Annual Report
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Estia Health Limited
88
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
The Group has lease agreements for various residential aged care homes, office space and office equipment with
C5
LEASES (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
Carrying amounts of right-of-use assets and associated lease liabilities and the movements during the year are
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 using the Group’s incremental borrowing rate (“IBR”) if the
rate implicit in the lease cannot be readily determined. 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.
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 to be 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.
Interest expense on lease liabilities
Interest expense on lease liabilities is reported as a component of total finance costs, which is recognised over
the term of the lease using the Group’s IBR.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Lease term
The Group determines the lease term as the non-cancellable term of a lease, together with any periods covered
by an option to extend if it is reasonably certain to be exercised.
Where the Group has the option to extend a lease for additional terms, judgement is applied in evaluating
whether it is reasonably certain to exercise the option to renew, taking into account relevant factors that create
an economic incentive to exercise the renewal option. After commencement date, the Group reassesses the
lease term if there is a significant event or change in circumstances that is within its control and affects it ability
to exercise (or not exercise) the option to renew.
Discount rates
Where the Group cannot readily determine the interest rate implicit in the lease, it uses its IBR to calculate the
present value of future lease payments. The Group estimates the IBR using market interest rates and adjusts
these rates to include the effect of its own stand-alone credit rating.
C5
LEASES
varying lease terms.
shown below:
As at 1 July 2021
Additions
Depreciation expense
Interest expense
Lease payments
Remeasurement of leases
As at 30 June 2022
Additions
Depreciation expense
Interest expense
Lease payments
Remeasurement of leases
As at 30 June 2023
Right of use assets
Lease
liabilities
Property
Other
right of use
equipment
leases
$’000
58,717
(3,999)
1,111
55,829
(4,126)
-
-
-
-
-
-
2,028
53,731
Total
assets
$’000
59,220
196
(4,142)
1,093
56,367
388
(4,336)
-
-
-
-
2,027
54,446
$’000
503
196
(143)
(18)
538
388
(210)
-
-
-
-
(1)
715
$’000
65,122
196
-
1,911
(5,987)
1,210
62,452
388
-
1,812
(5,619)
2,027
61,060
The Group had low-value leases relating to office equipment such as printers and photocopiers. An amount of
$455,000 (2022: $90,000) was recognised as an expense during the year. Under its lease agreements, the Group
incurs expenditure in relation to insurance, council and water rates, and water consumption. The Group
recognised an amount of $417,000 (2022: $447,000) as an expense during the year.
SIGNIFICANT ACCOUNTING POLICY
When a contract is entered into, the Group assesses whether a contract is, or contains, a lease. A lease arises
when the contract conveys the right to control the use of an identified asset for a period of time in exchange for
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
consideration.
and leases of low-value assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease which is when 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 the estimated useful
life of the assets and the lease term. Right-of-use assets are subject to impairment testing.
Estia Health Limited
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2022-23 Annual Report | Estia Health 123
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C6
TRADE AND OTHER PAYABLES
Trade creditors
Payroll liabilities
Sundry creditors and accruals
Total trade and other payables
C7
PROVISIONS
Current
Workcover provision
Annual leave provision
Long service leave provision
Total current provisions
Non-current
Workcover provision
Long service leave provision
Total non-current provisions
Total provisions
2023
$’000
14,806
17,923
23,217
55,946
2022
$’000
14,719
16,466
20,950
52,135
2023
$’000
1,610
46,148
25,667
73,425
3,807
5,513
9,320
2022
$’000
1,929
40,139
21,058
63,126
3,773
4,769
8,542
82,745
71,668
Long service leave
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
An increase in annual leave and long service leave provisions totalling $9,054,000 was made in the current
financial year (2022: Nil) following the Fair Work Commission‘s decision to increase the Aged Care Award by 15%
for certain aged care workers. Note E2 on page 144 contains details relating to a potential future Australian
Government grant opportunity which may be used to partially offset future cash settlements of this provision.
Movements in self-insured Workcover provisions
The provision for long service leave is measured based on the relevant regulations of each State. Judgement is
required in determining the following key assumptions used in the calculation of the long service leave provision
at the balance sheet date:
• future increases in salaries and wages;
• future probability of employee departures and periods of service; and
At 1 July
Transfer during the year
Net charge during the year
Utilised during the year
Balance at 30 June
Estia Health Limited
124 Estia Health | 2022-23 Annual Report
2023
$’000
5,702
55
3,289
(3,629)
5,417
2022
$’000
1,400
3,384
2,524
(1,606)
5,702
89
Estia Health Limited
90
C7
PROVISIONS (CONTINUED)
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
Long service leave or annual leave entitlements are not expected to be settled fully within the next 12 months
but are 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 of Australian corporate bonds
at the reporting date, with terms to maturity and currencies that match, as closely as possible, the estimated
future cash outflows.
Workcover provision
The Group operates as an approved self-insured for worker’s compensation in New South Wales and South
Australia. Provisions are recognised based on claims reported and an estimate of claims which may have
incurred but may not yet have been reported. These provisions are measured at present value using
independent actuarial valuations performed at each reporting date.
The workcover provision represents a self-insured risk liability based on a number of estimates and assumptions
• an appropriate discount rate
Workcover provision
including, but not limited to:
• ultimate number of reported claims;
• discount rate;
• wage inflation;
• average claim size;
• superimposed inflation (i.e., Inflation above wage inflation) and
• claims administration expenses
These assumptions are reviewed periodically and any reassessment of these assumptions may impact the size
of the provision required.
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
C7
PROVISIONS (CONTINUED)
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
Long service leave or annual leave entitlements are not expected to be settled fully within the next 12 months
but are 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 of Australian corporate bonds
at the reporting date, with terms to maturity and currencies that match, as closely as possible, the estimated
future cash outflows.
Workcover provision
The Group operates as an approved self-insured for worker’s compensation in New South Wales and South
Australia. Provisions are recognised based on claims reported and an estimate of claims which may have
incurred but may not yet have been reported. These provisions are measured at present value using
independent actuarial valuations performed at each reporting date.
An increase in annual leave and long service leave provisions totalling $9,054,000 was made in the current
financial year (2022: Nil) following the Fair Work Commission‘s decision to increase the Aged Care Award by 15%
for certain aged care workers. Note E2 on page 144 contains details relating to a potential future Australian
Government grant opportunity which may be used to partially offset future cash settlements of this provision.
Movements in self-insured Workcover provisions
82,745
71,668
Long service leave
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The provision for long service leave is measured based on the relevant regulations of each State. Judgement is
required in determining the following key assumptions used in the calculation of the long service leave provision
at the balance sheet date:
• future increases in salaries and wages;
• future probability of employee departures and periods of service; and
• an appropriate discount rate
Workcover provision
The workcover provision represents a self-insured risk liability based on a number of estimates and assumptions
including, but not limited to:
• ultimate number of reported claims;
• discount rate;
• wage inflation;
• average claim size;
• superimposed inflation (i.e., Inflation above wage inflation) and
• claims administration expenses
These assumptions are reviewed periodically and any reassessment of these assumptions may impact the size
of the provision required.
Estia Health Limited
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2022-23 Annual Report | Estia Health 125
90
C6
TRADE AND OTHER PAYABLES
Trade creditors
Payroll liabilities
Sundry creditors and accruals
Total trade and other payables
C7
PROVISIONS
Current
Workcover provision
Annual leave provision
Long service leave provision
Total current provisions
Non-current
Workcover provision
Long service leave provision
Total non-current provisions
Total provisions
At 1 July
Transfer during the year
Net charge during the year
Utilised during the year
Balance at 30 June
2023
$’000
14,806
17,923
23,217
55,946
2022
$’000
14,719
16,466
20,950
52,135
2023
$’000
1,610
46,148
25,667
73,425
3,807
5,513
9,320
2022
$’000
1,929
40,139
21,058
63,126
3,773
4,769
8,542
2023
$’000
5,702
55
3,289
(3,629)
5,417
2022
$’000
1,400
3,384
2,524
(1,606)
5,702
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C8
DERIVATIVE FINANCIAL INSTRUMENTS
Interest rate swaps - current
Interest rate swaps – non-current
Total derivative financial assets
2023
$’000
485
659
1,144
2022
$’000
-
-
-
The effect of the above derivative financial instruments in the consolidated statement of profit or loss and other
comprehensive income is, as follows:
Total hedging gains / (loss) recognised in other comprehensive income
Less: Deferred tax charged to other comprehensive income
Total hedging gains / (loss) recognised in other comprehensive
income, net of tax
Amount reclassified to profit or loss
Instruments used by the Group
2023
$’000
1,144
(343)
801
-
2022
$’000
-
-
-
-
Derivative financial instruments are used by the Group in the normal course of business as part of its risk
management relating to fluctuations in future interest rates.
Floating rate interest bearing loans that the Group has entered into and those that are considered highly probable
to be entered in the future are exposed to future interest rate changes that could ultimately affect the cost of
funding which in turn could impact both the future profit and loss and cash flows.
In order to reduce the exposure of future interest payments in relation to the floating rate interest bearing loans,
the Group has entered into forward interest rate swaps contracts under which it has a right to receive interest at
variable rates and to pay interest at fixed rates. These interest rate swaps require settlement of the resulting net
interest receivable or payable as designated under the swap contracts with the transaction counterparty.
The following table sets out the start dates, maturity dates and interest rate risk profiles of the Group’s hedging
instruments as at 30 June 2023 (2022: Nil):
In $ thousand
As at 30 June 2023
Notional principal
- Starting in
- Maturing in
Average fixed rate
Commenced
but not yet
matured
Less than
3 months
3 to 12
months
1 to 2
years
2 to 5
years
Total
20,000
3.71%
60,000
-
3.90%
10,000
10,000
3.65%
40,000
80,000
3.78%
-
40,000
3.78%
130,000
130,000
As at 30 June 2023, the interest rate swaps were considered highly effective hedges as defined in AASB 9
Financial Instruments, as the terms of the interest rate swap materially aligned with the terms of the floating
interest bearing loans (i.e., notional amount, maturity, payment and reset dates).
C8
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
The Group uses derivative financial instruments, namely interest rate swaps to partly hedge risks associated
with interest rate movements. Such derivative financial instruments are initially recognised at fair value on the
date on which a derivative contract is entered into and are subsequently re-measured to fair value. Derivatives
are carried as assets when the fair value is positive and as a liability when the fair value is negative.
For the purposes of hedge accounting, hedges are classified as:
fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or
liability;
cash flow hedges when they hedge exposure to variability in cash flows that is attributable either to a
particular risk associated with a recognised asset or liability or to a highly probable forecast transaction
or the foreign currency risk in an unrecognised firm commitment; or
hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to
which the Group wishes to apply hedge accounting and the risk management objective and strategy for
undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk
being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness
requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is
determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness
requirements:
and
Cash flow hedges
there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship;
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged
item that the Group actually hedges and the quantity of the hedging instrument that the Group actually
uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described follows:
The effective portion of the gain or loss on the hedging instrument is recognised directly in Other
Comprehensive Income within equity (hedging reserve), while any ineffective portion is recognised immediately
in the Consolidated Statement of Profit and Loss.
The Hedging reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the
cumulative change in fair value of the hedged item. The amount accumulated in the hedging reserve is then
reclassified to profit or loss in the same period or periods during which the hedged cash flows affect profit or
loss. If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain
in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be
immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged
cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of
the underlying transaction as described above.
The Group uses interest rate swap contracts as hedges of its exposure to fluctuations in interest rates. There is
an economic relationship between the hedged item and the hedging instrument as the term of the interest rate
swap matches the terms of the variable rate loan (that is, notional amount, maturity, base rate, payment and
reset dates). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying
risk of the interest rate swap is identical to the hedged risk component. To test the hedge effectiveness, the
Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging
instrument against the changes in fair value of the hedged item attributable to the hedged risk.
Estia Health Limited
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About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C8
DERIVATIVE FINANCIAL INSTRUMENTS
2023
$’000
485
659
1,144
2023
$’000
1,144
(343)
801
-
2022
$’000
-
-
-
2022
$’000
-
-
-
-
Interest rate swaps - current
Interest rate swaps – non-current
Total derivative financial assets
The effect of the above derivative financial instruments in the consolidated statement of profit or loss and other
comprehensive income is, as follows:
Total hedging gains / (loss) recognised in other comprehensive income
Less: Deferred tax charged to other comprehensive income
Total hedging gains / (loss) recognised in other comprehensive
income, net of tax
Amount reclassified to profit or loss
Instruments used by the Group
Derivative financial instruments are used by the Group in the normal course of business as part of its risk
management relating to fluctuations in future interest rates.
Floating rate interest bearing loans that the Group has entered into and those that are considered highly probable
to be entered in the future are exposed to future interest rate changes that could ultimately affect the cost of
funding which in turn could impact both the future profit and loss and cash flows.
In order to reduce the exposure of future interest payments in relation to the floating rate interest bearing loans,
the Group has entered into forward interest rate swaps contracts under which it has a right to receive interest at
variable rates and to pay interest at fixed rates. These interest rate swaps require settlement of the resulting net
interest receivable or payable as designated under the swap contracts with the transaction counterparty.
The following table sets out the start dates, maturity dates and interest rate risk profiles of the Group’s hedging
instruments as at 30 June 2023 (2022: Nil):
In $ thousand
As at 30 June 2023
Notional principal
- Starting in
- Maturing in
Average fixed rate
Commenced
but not yet
matured
Less than
3 months
3 to 12
months
1 to 2
years
2 to 5
years
Total
20,000
3.71%
60,000
-
3.90%
10,000
10,000
3.65%
40,000
80,000
3.78%
-
40,000
3.78%
130,000
130,000
As at 30 June 2023, the interest rate swaps were considered highly effective hedges as defined in AASB 9
Financial Instruments, as the terms of the interest rate swap materially aligned with the terms of the floating
interest bearing loans (i.e., notional amount, maturity, payment and reset dates).
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C8
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
The Group uses derivative financial instruments, namely interest rate swaps to partly hedge risks associated
with interest rate movements. Such derivative financial instruments are initially recognised at fair value on the
date on which a derivative contract is entered into and are subsequently re-measured to fair value. Derivatives
are carried as assets when the fair value is positive and as a liability when the fair value is negative.
For the purposes of hedge accounting, hedges are classified as:
fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or
liability;
cash flow hedges when they hedge exposure to variability in cash flows that is attributable either to a
particular risk associated with a recognised asset or liability or to a highly probable forecast transaction
or the foreign currency risk in an unrecognised firm commitment; or
hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to
which the Group wishes to apply hedge accounting and the risk management objective and strategy for
undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk
being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness
requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is
determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness
requirements:
there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship;
and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged
item that the Group actually hedges and the quantity of the hedging instrument that the Group actually
uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described follows:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised directly in Other
Comprehensive Income within equity (hedging reserve), while any ineffective portion is recognised immediately
in the Consolidated Statement of Profit and Loss.
The Hedging reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the
cumulative change in fair value of the hedged item. The amount accumulated in the hedging reserve is then
reclassified to profit or loss in the same period or periods during which the hedged cash flows affect profit or
loss. If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain
in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be
immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged
cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of
the underlying transaction as described above.
The Group uses interest rate swap contracts as hedges of its exposure to fluctuations in interest rates. There is
an economic relationship between the hedged item and the hedging instrument as the term of the interest rate
swap matches the terms of the variable rate loan (that is, notional amount, maturity, base rate, payment and
reset dates). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying
risk of the interest rate swap is identical to the hedged risk component. To test the hedge effectiveness, the
Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging
instrument against the changes in fair value of the hedged item attributable to the hedged risk.
Estia Health Limited
91
Estia Health Limited
2022-23 Annual Report | Estia Health 127
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C8
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
Cash flow hedges (Continued)
The hedge ineffectiveness can arise from:
• Different interest rate curves applied to discount the hedged item and hedging instrument
• Differences in timing of cash flows of the hedged item and hedging instrument
• The counterparties’ credit risk differently impacting the fair value movements of the hedging instrument and
hedged item
• Changes to the forecasted amount of cash flows of hedged items and hedging instruments
Subsequent measurement
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation
techniques. Such techniques may include:
• Using recent arm’s length market transaction;
• Reference to the current fair value of another instrument that is substantially the same; or
• A discounted cash flow analysis or other valuation models.
Fair value of derivative financial instruments
The Group measures financial instruments, such as, derivatives, at fair value at each reporting date.
Fair value is the price that would be received to sell 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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
When the fair values of financial assets and financial liabilities recorded in the statement of financial position
cannot be derived from active markets, they are determined using a variety of valuation techniques that include
the use of valuation models. The inputs to these models are taken from observable markets where possible, but
where this is not feasible, estimation is required in establishing fair values (Note C10 contains further details of
the methodology used).
Judgements and estimates include considerations of liquidity and model inputs related to items such as credit
risk (both own and counterparty), interest rate curves and forward rate curves. These assumptions are reviewed
periodically and any reassessment of these assumptions may impact the carrying value of the assets or
liabilities recognised.
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C9
BUSINESS COMBINATIONS
Premier Health Acquisition
On 1 December 2022, the Group acquired the freehold sites and operations (“Premier Health Acquisition”) of four
residential aged care homes from Premier Health Care comprising two homes in South Australia and two homes
in Queensland (the “Premier Homes”). The homes align with the Group’s existing operating clusters and added
409 resident places in high quality aged care homes. The acquisition provides a number of strategic benefits
consistent with the Group’s growth strategy.
The amounts for the Premier Health Acquisition have been finalised and are disclosed as follows:
Property, plant and equipment
Deferred tax assets, net1
Consumable supplies
Other current assets
Refundable accommodation deposits and bonds
Employee liabilities (current)
Employee liabilities (non-current)
Other current liabilities
Fair value of identifiable net assets
Goodwill arising
Cost of the combination:
Purchase consideration paid in cash
Business acquisition related costs
Total cost of the combination
Business combination date fair value of consideration transferred
$’000
79,756
933
250
210
(46,883)
(903)
(80)
(99)
33,184
27,289
60,473
60,473
6,490
66,963
1 The finalised deferred tax asset related to the transferred assets and liabilities was $933,000, a decrease of $2,000,000 from the provisional
value relating to the transferred property, plant and equipment. Consequently, there was corresponding an increase in goodwill of $2,000,000.
Goodwill of $27,289,000 arising from the Premier Health Acquisition represents the excess of the cost of the
acquisition over the net fair value of the identifiable assets and liabilities acquired. None of the goodwill
recognised is expected to be deductible for income tax purposes.
At the date of the acquisition, the carrying value and the fair value of trade receivables were both $99,000. It is
expected that the full contractual amounts can be collected.
Premier Homes contributed $23,601,000 to revenue and $1,947,000 to profit before tax for the Group from the
date of acquisition to 30 June 2023. If the acquisition had taken place at the beginning of the period, 1 July 2022,
the Group’s revenue and loss before tax would have been $769,193,000 and $42,024,000, respectively.
Transactions separate to the Premier Health Acquisition
Separate to the Premier Health Acquisition, the Group has entered into contractual agreements to acquire two
additional development sites located in South Australia from Premier Health Care for considerations totalling
$10,000,000 exclusive of GST. The acquisition of the two additional sites was assessed to be a separate
transaction from the Premier Health Acquisition.
The acquisition of the first site ($5,355,000) was completed in July 2023 with the second still subject to the closing
conditions contained within the contract. Note E2 contains further details on the capital commitments concerning
the transactions.
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Estia Health Limited
94
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
C8
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
Cash flow hedges (Continued)
The hedge ineffectiveness can arise from:
• Different interest rate curves applied to discount the hedged item and hedging instrument
• Differences in timing of cash flows of the hedged item and hedging instrument
• The counterparties’ credit risk differently impacting the fair value movements of the hedging instrument and
hedged item
Subsequent measurement
• Changes to the forecasted amount of cash flows of hedged items and hedging instruments
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation
techniques. Such techniques may include:
• Using recent arm’s length market transaction;
• Reference to the current fair value of another instrument that is substantially the same; or
• A discounted cash flow analysis or other valuation models.
Fair value of derivative financial instruments
The Group measures financial instruments, such as, derivatives, at fair value at each reporting date.
Fair value is the price that would be received to sell 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.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
When the fair values of financial assets and financial liabilities recorded in the statement of financial position
cannot be derived from active markets, they are determined using a variety of valuation techniques that include
the use of valuation models. The inputs to these models are taken from observable markets where possible, but
where this is not feasible, estimation is required in establishing fair values (Note C10 contains further details of
the methodology used).
liabilities recognised.
Judgements and estimates include considerations of liquidity and model inputs related to items such as credit
risk (both own and counterparty), interest rate curves and forward rate curves. These assumptions are reviewed
periodically and any reassessment of these assumptions may impact the carrying value of the assets or
C9
BUSINESS COMBINATIONS
Premier Health Acquisition
On 1 December 2022, the Group acquired the freehold sites and operations (“Premier Health Acquisition”) of four
residential aged care homes from Premier Health Care comprising two homes in South Australia and two homes
in Queensland (the “Premier Homes”). The homes align with the Group’s existing operating clusters and added
409 resident places in high quality aged care homes. The acquisition provides a number of strategic benefits
consistent with the Group’s growth strategy.
The amounts for the Premier Health Acquisition have been finalised and are disclosed as follows:
Property, plant and equipment
Deferred tax assets, net1
Consumable supplies
Other current assets
Refundable accommodation deposits and bonds
Employee liabilities (current)
Employee liabilities (non-current)
Other current liabilities
Fair value of identifiable net assets
Goodwill arising
Business combination date fair value of consideration transferred
Cost of the combination:
Purchase consideration paid in cash
Business acquisition related costs
$’000
79,756
933
250
210
(46,883)
(903)
(80)
(99)
33,184
27,289
60,473
60,473
6,490
Total cost of the combination
1 The finalised deferred tax asset related to the transferred assets and liabilities was $933,000, a decrease of $2,000,000 from the provisional
66,963
value relating to the transferred property, plant and equipment. Consequently, there was corresponding an increase in goodwill of $2,000,000.
Goodwill of $27,289,000 arising from the Premier Health Acquisition represents the excess of the cost of the
acquisition over the net fair value of the identifiable assets and liabilities acquired. None of the goodwill
recognised is expected to be deductible for income tax purposes.
At the date of the acquisition, the carrying value and the fair value of trade receivables were both $99,000. It is
expected that the full contractual amounts can be collected.
Premier Homes contributed $23,601,000 to revenue and $1,947,000 to profit before tax for the Group from the
date of acquisition to 30 June 2023. If the acquisition had taken place at the beginning of the period, 1 July 2022,
the Group’s revenue and loss before tax would have been $769,193,000 and $42,024,000, respectively.
Transactions separate to the Premier Health Acquisition
Separate to the Premier Health Acquisition, the Group has entered into contractual agreements to acquire two
additional development sites located in South Australia from Premier Health Care for considerations totalling
$10,000,000 exclusive of GST. The acquisition of the two additional sites was assessed to be a separate
transaction from the Premier Health Acquisition.
The acquisition of the first site ($5,355,000) was completed in July 2023 with the second still subject to the closing
conditions contained within the contract. Note E2 contains further details on the capital commitments concerning
the transactions.
Estia Health Limited
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2022-23 Annual Report | Estia Health 129
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C9
BUSINESS COMBINATIONS (CONTINUED)
Mount Clear Acquisition
On 1 May 2023 the Group completed the acquisition of a freehold site, residential aged care home, and 100% of
the equity interest in OC Health Ballarat Pty Limited from OC Health Pty Limited. The acquisition, referred to as
the Mount Clear Acquisition, encompasses a fully operational home situated in Mount Clear, Victoria, which
includes 120 operating places. This acquisition aligns with the Group's growth strategy and presents several
strategic advantages.
The recognised amounts for the business combination are outlined below. Accounting for the business
combination is based on information available at reporting date and is provisional because the identification and
fair value measurement of the assets and liabilities remains ongoing.
C9
BUSINESS COMBINATIONS (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group recognises the identifiable assets and liabilities of businesses acquired based on fair values at the
date of acquisition. Where a significant amount of properties, plant and equipment are recognised in the
business combination, the fair value determination is supported by an independent external valuer using the
Income method for real properties and the direct costs approach for plant and equipment.
Cash and cash equivalents
Property, plant and equipment
Deferred tax assets, net
Consumable supplies
Other current assets
Refundable accommodation deposits and bonds
Employee liabilities (current)
Employee liabilities (non-current)
Income tax liabilities
Other current liabilities
Fair value of identifiable net assets
Goodwill arising
Business combination date fair value of consideration transferred
Cost of the combination:
Purchase consideration paid in cash
Less: Net cash acquired with the acquiree
Net cash outflow as a result of the business combination
Additional consideration payable
Total provisional purchase consideration
Acquisition costs
Total cost of the combination
$’000
11,302
20,482
423
33
59
(13,311)
(234)
(14)
(491)
(150)
18,099
9,311
27,410
27,229
(11,302)
15,927
181
16,108
2,055
18,163
At the date of the acquisition, the carrying value and the fair value of trade receivables were $151,000 and
$32,000. The difference between the fair value and the carrying value is the result of adjusting for counterparty
credit risk. It is expected that the full contractual amounts can be collected.
Provisional goodwill of $9,311,000 arising from the Mount Clear acquisition represents the excess of the cost of
the acquisition over the net fair value of the identifiable assets and liabilities acquired. None of the goodwill
recognised is expected to be deductible for income tax purposes.
Mount Clear contributed $2,017,000 to revenue and $259,000 to profit before tax for the Group from the date of
acquisition to 30 June 2023. If the acquisition had taken place at the beginning of the period, 1 July 2022, the
Group’s revenue and loss before tax would have been $764,137,000 and $42,625,000, respectively.
Estia Health Limited
130 Estia Health | 2022-23 Annual Report
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Estia Health Limited
96
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C9
BUSINESS COMBINATIONS (CONTINUED)
Mount Clear Acquisition
On 1 May 2023 the Group completed the acquisition of a freehold site, residential aged care home, and 100% of
the equity interest in OC Health Ballarat Pty Limited from OC Health Pty Limited. The acquisition, referred to as
the Mount Clear Acquisition, encompasses a fully operational home situated in Mount Clear, Victoria, which
includes 120 operating places. This acquisition aligns with the Group's growth strategy and presents several
strategic advantages.
The recognised amounts for the business combination are outlined below. Accounting for the business
combination is based on information available at reporting date and is provisional because the identification and
fair value measurement of the assets and liabilities remains ongoing.
C9
BUSINESS COMBINATIONS (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Group recognises the identifiable assets and liabilities of businesses acquired based on fair values at the
date of acquisition. Where a significant amount of properties, plant and equipment are recognised in the
business combination, the fair value determination is supported by an independent external valuer using the
Income method for real properties and the direct costs approach for plant and equipment.
Cash and cash equivalents
Property, plant and equipment
Deferred tax assets, net
Consumable supplies
Other current assets
Refundable accommodation deposits and bonds
Employee liabilities (current)
Employee liabilities (non-current)
Income tax liabilities
Other current liabilities
Fair value of identifiable net assets
Goodwill arising
Business combination date fair value of consideration transferred
Cost of the combination:
Purchase consideration paid in cash
Less: Net cash acquired with the acquiree
Net cash outflow as a result of the business combination
Additional consideration payable
Total provisional purchase consideration
Acquisition costs
Total cost of the combination
$’000
11,302
20,482
423
33
59
(13,311)
(234)
(14)
(491)
(150)
18,099
9,311
27,410
27,229
(11,302)
15,927
181
16,108
2,055
18,163
At the date of the acquisition, the carrying value and the fair value of trade receivables were $151,000 and
$32,000. The difference between the fair value and the carrying value is the result of adjusting for counterparty
credit risk. It is expected that the full contractual amounts can be collected.
Provisional goodwill of $9,311,000 arising from the Mount Clear acquisition represents the excess of the cost of
the acquisition over the net fair value of the identifiable assets and liabilities acquired. None of the goodwill
recognised is expected to be deductible for income tax purposes.
Mount Clear contributed $2,017,000 to revenue and $259,000 to profit before tax for the Group from the date of
acquisition to 30 June 2023. If the acquisition had taken place at the beginning of the period, 1 July 2022, the
Group’s revenue and loss before tax would have been $764,137,000 and $42,625,000, respectively.
Estia Health Limited
95
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2022-23 Annual Report | Estia Health 131
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK
C10
FAIR VALUE MEASUREMENT
Investment properties
Derivative financial assets
Total
Note
(a)
(b)
2023
$’000
850
1,144
1,994
2022
$’000
750
-
750
There were no transfers between levels during the financial year.
(a) The Group’s investment properties represent Independent Living Units (“ILUs”) which are occupied by
residents who have contributed a non-interest-bearing loan to occupy the ILUs. The resident vacates the
property based on the applicable State-based Retirement Village Acts. These investment properties are
measured at fair value, which is determined based on a valuation model recommended by the
International Valuation Standards Committee that uses unobservable inputs (level 3 in fair value
hierarchy) at the reporting date:
Unobservable inputs
Discount rate
Growth rate
Cash flow term
2023
2022
16.50%
4.30%
50 years
16.50%
2.46%
50 years
(b) Derivative financial assets represent interest rate swap contracts which were valued using the income
approach which utilises a combination of short and long term market observed inputs such as BBSW,
LIBOR, and Money Market Basis Swap rates (level 1 in fair value hierarchy) to generate various curves
across multiple products for valuation purposes. The inputs are then bootstrapped using cubic spline
interpolation method to generate yield curves. The valuation curve is then adjusted for an appropriate
credit spread associated with the counterparty Bank and then a notional BBB curve adjustment is applied
for the Group (level 2 in fair value hierarchy) as proxy via a parallel shift in the yield curve as derived in the
valuation approach.
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
The Group measures financial instruments such as derivatives, and non-financial assets such as investment
properties, at fair value at each balance sheet date. All other financial instruments on the balance sheet are
measured at amortised cost.
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.
This section provides additional information on the Group’s capital structure, including RADs, bank
borrowings and access to capital market and a summary of the Group’s exposure to key financial risks,
including interest rate, credit and liquidity risks, along with the Group’s policies and strategies to mitigate
these risks.
D1
Current residents
Departed residents
REFUNDABLE ACCOMODATION DEPOSITS AND BONDS
2023
$’000
890,292
137,245
2022
$’000
756,894
127,175
884,069
Total refundable accommodation deposits and bonds – amounts received
1,027,537
RADs and bonds are paid at the choice of residents upon their admission to homes and are refunded after a
resident departs a home in accordance with the Act. Providers must pay a Government set 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 refunds and other financial obligations as or when they fall due.
To ensure that funds are readily available when required, the minimum level of funds chosen by the Group are
met by undrawn lines of credit under its existing financing facilities.
RADs and bonds are classified as a current liability as the Group does not have an unconditional right to defer
settlement for at least twelve months after the reporting date. The total RAD and bond liability represents the sum
of separate payments from a significant number of individual residents in different locations with differing
circumstances and frequently a departing RAD- or Bond-paying resident is replaced shortly afterwards with a new
RAD-paying resident. The repayment of individual balances that make up the total current balance will be
dependent upon the actual tenure of individual residents, which can be more than ten years but averages
approximately 2 -2.5 years.
Estia Health Limited
132 Estia Health | 2022-23 Annual Report
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Estia Health Limited
98
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
D Capital, Financing, RADs and Risk
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK
C10
FAIR VALUE MEASUREMENT
Investment properties
Derivative financial assets
Total
Note
(a)
(b)
2023
$’000
850
1,144
1,994
2022
$’000
750
-
750
There were no transfers between levels during the financial year.
(a) The Group’s investment properties represent Independent Living Units (“ILUs”) which are occupied by
residents who have contributed a non-interest-bearing loan to occupy the ILUs. The resident vacates the
property based on the applicable State-based Retirement Village Acts. These investment properties are
measured at fair value, which is determined based on a valuation model recommended by the
International Valuation Standards Committee that uses unobservable inputs (level 3 in fair value
hierarchy) at the reporting date:
Unobservable inputs
Discount rate
Growth rate
Cash flow term
2023
2022
16.50%
4.30%
16.50%
2.46%
50 years
50 years
(b) Derivative financial assets represent interest rate swap contracts which were valued using the income
approach which utilises a combination of short and long term market observed inputs such as BBSW,
LIBOR, and Money Market Basis Swap rates (level 1 in fair value hierarchy) to generate various curves
across multiple products for valuation purposes. The inputs are then bootstrapped using cubic spline
interpolation method to generate yield curves. The valuation curve is then adjusted for an appropriate
credit spread associated with the counterparty Bank and then a notional BBB curve adjustment is applied
for the Group (level 2 in fair value hierarchy) as proxy via a parallel shift in the yield curve as derived in the
valuation approach.
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
The Group measures financial instruments such as derivatives, and non-financial assets such as investment
properties, at fair value at each balance sheet date. All other financial instruments on the balance sheet are
measured at amortised cost.
unobservable inputs.
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
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.
Estia Health Limited
This section provides additional information on the Group’s capital structure, including RADs, bank
borrowings and access to capital market and a summary of the Group’s exposure to key financial risks,
including interest rate, credit and liquidity risks, along with the Group’s policies and strategies to mitigate
these risks.
D1
REFUNDABLE ACCOMODATION DEPOSITS AND BONDS
Current residents
Departed residents
2023
$’000
890,292
137,245
Total refundable accommodation deposits and bonds – amounts received
1,027,537
2022
$’000
756,894
127,175
884,069
RADs and bonds are paid at the choice of residents upon their admission to homes and are refunded after a
resident departs a home in accordance with the Act. Providers must pay a Government set 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 refunds and other financial obligations as or when they fall due.
To ensure that funds are readily available when required, the minimum level of funds chosen by the Group are
met by undrawn lines of credit under its existing financing facilities.
RADs and bonds are classified as a current liability as the Group does not have an unconditional right to defer
settlement for at least twelve months after the reporting date. The total RAD and bond liability represents the sum
of separate payments from a significant number of individual residents in different locations with differing
circumstances and frequently a departing RAD- or Bond-paying resident is replaced shortly afterwards with a new
RAD-paying resident. The repayment of individual balances that make up the total current balance will be
dependent upon the actual tenure of individual residents, which can be more than ten years but averages
approximately 2 -2.5 years.
97
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2022-23 Annual Report | Estia Health 133
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D2
LOANS AND BORROWINGS
D3
ISSUED CAPITAL AND RESERVES
Secured bank loans – Syndicated debt facility
Total loans and borrowings
1 Comparative has been restated to present the capitalised facility costs as prepayments.
2023
$’000
70,000
70,000
20221
$’000
100,000
100,000
Issued and fully paid
Ordinary shares1
Total share capital
At 30 June 2023, the Group had available $260,000,000 (2022: $230,000,000) of undrawn committed borrowing
facilities, and $91,000 (2022: $326,000) of unutilised guarantee facility.
(a) Movements in ordinary shares on issue
Syndicated debt facility
The Group has a $330,000,000 Sustainability Linked Syndicated Financing Agreement (“SLSFA”). The SLSFA
has an accordion feature (“Accordion”) which allows for the facility limit to be increased (subject to lender consent
and approval) by an additional $170,000,000.
Of the total debt facility available, 50% will mature in March 2025 and 50% in March 2026.
Under the SLSFA, the Group will be eligible for an interest rate margin reduction of up to five basis points per
annum dependent on the level of achievement of sustainability targets embedded in the agreement. A lower level
of achievement may result in a similar sized increase in margins. These targets include:
- improving resident engagement and satisfaction
- supporting employee well-being
- reducing greenhouse gas emissions
- property portfolio energy efficiency
The Group’s performance against these targets during the prior year, which was independently reviewed, resulted
in an interest rate margin reduction of three basis points per annum over the current financial year (2022: nil).
Bank guarantee facility
In addition, the Group has a separate additional Guarantee Facility (“Guarantee Facility”) with Westpac Banking
Corporation for the issuance of bank guarantees up to the value of $15,100,000. Note E2 on page 144 contains
further details in relation to the amount of utilised bank guarantees.
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 de-
recognised as well as through the EIR amortisation process. Amortised cost is calculated by considering 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.
2023
$’000
2022
$’000
796,473
796,473
795,748
795,748
2023
2022
Numbers of
shares
Numbers of
$’000
shares
$’000
257,802,471
795,748 261,294,969
803,459
558,563
674
146,673
-
-
-
(3,639,171)
51
-
244
(7,956)
1
Beginning of the financial year
Vesting of employee performance rights
Shares repurchased and incremental costs
Movement in management equity plan
1. Ordinary shares have no par value per share.
(b) Share-based payments reserve
End of the financial year
258,361,034
796,473 257,802,471
795,748
The share-based payments reserve arises from performance rights granted to certain employees, including key
management personnel, as part of their remuneration. Upon vesting, the rights are equity settled by the issuance
of ordinary shares in Estia Health Ltd. Further information about share based payments is set out in Note D4.
The franking credit balance of Estia Health Limited as at 30 June 2023 is $13,965,000 (2022: $26,162,000).
(c) Franking credits
(d) Dividends paid and proposed
On 23 August 2022, the Directors determined not to declare a final dividend for the year end 30 June 2022.
On 21 February 2023, the Directors declared a fully franked interim dividend for the six months ended 31
December 2022 of 3.7 cents per share totalling $9,560,000 (December 2021: $6,124,000).
On 22 August 2023, the Directors declared a fully franked final dividend for the year ended 30 June 2023 of 12
cents per share totalling $31,003,000. The record date for the dividend will be 28 August 2023, with payment
being made on 15 September 2023. Shares will trade excluding entitlement to the dividend on 25 August 2023.
Estia Health Limited
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100
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D2
LOANS AND BORROWINGS
D3
ISSUED CAPITAL AND RESERVES
Secured bank loans – Syndicated debt facility
Total loans and borrowings
1 Comparative has been restated to present the capitalised facility costs as prepayments.
Issued and fully paid
Ordinary shares1
Total share capital
At 30 June 2023, the Group had available $260,000,000 (2022: $230,000,000) of undrawn committed borrowing
facilities, and $91,000 (2022: $326,000) of unutilised guarantee facility.
(a) Movements in ordinary shares on issue
2023
$’000
70,000
70,000
20221
$’000
100,000
100,000
2023
$’000
2022
$’000
796,473
796,473
795,748
795,748
2023
2022
Numbers of
shares
795,748 261,294,969
146,673
(3,639,171)
-
Beginning of the financial year
Vesting of employee performance rights
Shares repurchased and incremental costs
Movement in management equity plan
Numbers of
shares
257,802,471
558,563
-
-
Syndicated debt facility
The Group has a $330,000,000 Sustainability Linked Syndicated Financing Agreement (“SLSFA”). The SLSFA
has an accordion feature (“Accordion”) which allows for the facility limit to be increased (subject to lender consent
and approval) by an additional $170,000,000.
Of the total debt facility available, 50% will mature in March 2025 and 50% in March 2026.
Under the SLSFA, the Group will be eligible for an interest rate margin reduction of up to five basis points per
annum dependent on the level of achievement of sustainability targets embedded in the agreement. A lower level
of achievement may result in a similar sized increase in margins. These targets include:
- improving resident engagement and satisfaction
- supporting employee well-being
- reducing greenhouse gas emissions
- property portfolio energy efficiency
The Group’s performance against these targets during the prior year, which was independently reviewed, resulted
in an interest rate margin reduction of three basis points per annum over the current financial year (2022: nil).
In addition, the Group has a separate additional Guarantee Facility (“Guarantee Facility”) with Westpac Banking
Corporation for the issuance of bank guarantees up to the value of $15,100,000. Note E2 on page 144 contains
further details in relation to the amount of utilised bank guarantees.
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 de-
recognised as well as through the EIR amortisation process. Amortised cost is calculated by considering 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.
Bank guarantee facility
(c) Franking credits
End of the financial year
258,361,034
796,473 257,802,471
795,748
1. Ordinary shares have no par value per share.
(b) Share-based payments reserve
The share-based payments reserve arises from performance rights granted to certain employees, including key
management personnel, as part of their remuneration. Upon vesting, the rights are equity settled by the issuance
of ordinary shares in Estia Health Ltd. Further information about share based payments is set out in Note D4.
The franking credit balance of Estia Health Limited as at 30 June 2023 is $13,965,000 (2022: $26,162,000).
(d) Dividends paid and proposed
On 23 August 2022, the Directors determined not to declare a final dividend for the year end 30 June 2022.
On 21 February 2023, the Directors declared a fully franked interim dividend for the six months ended 31
December 2022 of 3.7 cents per share totalling $9,560,000 (December 2021: $6,124,000).
On 22 August 2023, the Directors declared a fully franked final dividend for the year ended 30 June 2023 of 12
cents per share totalling $31,003,000. The record date for the dividend will be 28 August 2023, with payment
being made on 15 September 2023. Shares will trade excluding entitlement to the dividend on 25 August 2023.
Estia Health Limited
99
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2022-23 Annual Report | Estia Health 135
100
$’000
803,459
244
(7,956)
1
674
-
51
$’000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D4
SHARE-BASED PAYMENTS
At 30 June 2023, the Group had the following share-based payments arrangements:
(a) Long-Term Incentive Plan (“LTIP”)
Under the LTIP, awards are made to executives who are in a position to make a significant contribution to the
Group’s financial and operational performance. LTIP awards are delivered in the form of performance rights
entitling the holder to shares in Estia Health Ltd which vest following a period of three years subject to meeting
performance measures.
Details of performance rights granted prior to 1 July 2022 are disclosed in the relevant annual reports.
The FY23 LTI award is subject to the following performance conditions:
-
-
50% of the performance rights will vest subject to Estia Health Ltd shares achieving a Total Shareholder
Return (“TSR”) hurdle, measured over a three-year period compared to a comparator group comprising the
ASX300 Index excluding mining and energy companies
50% of the performance rights will vest subject to achieving an Earnings Per Share hurdle in the year ending
30 June 2025.
The weighted average fair value of performance rights granted during the year was $1.33 (2022: $1.34). The
weighted average share price at the exercise dates for the performance rights exercised during the year was
The Group granted a total of 1,148,067 rights (2022: 1,009,506) during the year.
(b) Short-Term Incentive Plan (STIP)
Under the STIP, awards are made to key managers and executives who are in a position to make a significant
contribution to the Group’s financial and operational 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 performance rights to vest.
The STIP performance criteria represent a combination of Group-wide financial and operational targets and other
role specific measures. Other role specific measures may include Lost Time injury Frequency Rate reduction
targets, organisational culture measures, key project deliverables, and improvements in connection with clinical
governance and risk management process.
89,375 performance rights were granted under the STIP during the year (2022: nil).
Share-based payments and MEP expense
1,427
1,097
(c) Retention Plan (RP)
No further performance rights were granted under the retention plan during the years ended 30 June 2022 and 30
June 2023. 558,563 retention performance rights issued in prior years vested during the year ended 30 June
2023 (2022: 146,673).
Details of performance rights granted prior to 1 July 2022 under the retention plan are disclosed in the relevant
annual reports.
(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:
D4
SHARE-BASED PAYMENTS (CONTINUED)
(e) Movements during the year
price (2022: nil), during the year:
The following tables illustrate the number and movements in performance rights, which does not have an exercise
Performance rights only
Outstanding as at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Exercisable as at 30 June
$2.13 (2022: $2.44).
(f) Expense recognised in profit or loss
following table:
Long-term incentive plan expense
Short-term incentive plan expense
MEP expense
2023
2022
Numbers of
rights
Numbers
of rights
3,079,553
3,220,383
1,237,442
1,009,506
(357,289)
(1,003,663)
(558,563)
(146,673)
3,401,143
3,079,553
2023
$’000
1,116
286
25
2022
$’000
995
90
12
The share-based payments expense recognised for employee services received during the year is shown in the
SIGNIFICANT ACCOUNTING POLICY
The cost of equity-settled transactions is measured by reference to the fair value at the date at which the grant is
made. The fair value is determined by an external valuer using the Binomial model for the EPS performance
hurdles and the Monte Carlo simulation for the TSR performance hurdles, taking into account the terms and
conditions on which underlying equity instruments were granted, historical and expected dividends, and the
share price volatility of the Group relative to that of its competitors so as to predict the share performance.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (Share-
based payments reserve), over the period in which the service and 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 movement in cumulative expense is recognised in
employee benefit expense.
Service and non-market performance conditions are not taken into account when determining the fair value of
awards at the date of grant, but the likelihood of the conditions being met is assessed as part of the best
estimate of the number of equity instruments that will ultimately vest. Market performance conditions are
reflected within the fair value at the date of grant. 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.
30 June 2023
30 June 2022
All MEP shares listed above were released from escrow on 11 December 2017.
% of MEP shares
funded through
MEP loans
100%
100%
Interest rate on
MEP
loan
4.52%
4.52%
Total amount
subscribed
$’000
50
100
Number of MEP
shares
25,000
50,000
Estia Health Limited
136 Estia Health | 2022-23 Annual Report
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About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
D4
SHARE-BASED PAYMENTS
At 30 June 2023, the Group had the following share-based payments arrangements:
(a) Long-Term Incentive Plan (“LTIP”)
Under the LTIP, awards are made to executives who are in a position to make a significant contribution to the
Group’s financial and operational performance. LTIP awards are delivered in the form of performance rights
entitling the holder to shares in Estia Health Ltd which vest following a period of three years subject to meeting
performance measures.
Details of performance rights granted prior to 1 July 2022 are disclosed in the relevant annual reports.
The FY23 LTI award is subject to the following performance conditions:
-
50% of the performance rights will vest subject to Estia Health Ltd shares achieving a Total Shareholder
Return (“TSR”) hurdle, measured over a three-year period compared to a comparator group comprising the
ASX300 Index excluding mining and energy companies
-
50% of the performance rights will vest subject to achieving an Earnings Per Share hurdle in the year ending
30 June 2025.
The Group granted a total of 1,148,067 rights (2022: 1,009,506) during the year.
(b) Short-Term Incentive Plan (STIP)
Under the STIP, awards are made to key managers and executives who are in a position to make a significant
contribution to the Group’s financial and operational 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 performance rights to vest.
The STIP performance criteria represent a combination of Group-wide financial and operational targets and other
role specific measures. Other role specific measures may include Lost Time injury Frequency Rate reduction
targets, organisational culture measures, key project deliverables, and improvements in connection with clinical
governance and risk management process.
89,375 performance rights were granted under the STIP during the year (2022: nil).
No further performance rights were granted under the retention plan during the years ended 30 June 2022 and 30
June 2023. 558,563 retention performance rights issued in prior years vested during the year ended 30 June
Details of performance rights granted prior to 1 July 2022 under the retention plan are disclosed in the relevant
(c) Retention Plan (RP)
2023 (2022: 146,673).
annual reports.
(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:
30 June 2023
30 June 2022
Total amount
% of MEP shares
Interest rate on
Number of MEP
subscribed
funded through
shares
25,000
50,000
$’000
50
100
MEP loans
100%
100%
MEP
loan
4.52%
4.52%
All MEP shares listed above were released from escrow on 11 December 2017.
D4
SHARE-BASED PAYMENTS (CONTINUED)
(e) Movements during the year
The following tables illustrate the number and movements in performance rights, which does not have an exercise
price (2022: nil), during the year:
Performance rights only
Outstanding as at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Exercisable as at 30 June
2023
2022
Numbers of
rights
3,079,553
1,237,442
(357,289)
(558,563)
Numbers
of rights
3,220,383
1,009,506
(1,003,663)
(146,673)
3,401,143
3,079,553
The weighted average fair value of performance rights granted during the year was $1.33 (2022: $1.34). The
weighted average share price at the exercise dates for the performance rights exercised during the year was
$2.13 (2022: $2.44).
(f) Expense recognised in profit or loss
The share-based payments expense recognised for employee services received during the year is shown in the
following table:
Long-term incentive plan expense
Short-term incentive plan expense
MEP expense
Share-based payments and MEP expense
SIGNIFICANT ACCOUNTING POLICY
2023
$’000
1,116
286
25
1,427
2022
$’000
995
90
12
1,097
The cost of equity-settled transactions is measured by reference to the fair value at the date at which the grant is
made. The fair value is determined by an external valuer using the Binomial model for the EPS performance
hurdles and the Monte Carlo simulation for the TSR performance hurdles, taking into account the terms and
conditions on which underlying equity instruments were granted, historical and expected dividends, and the
share price volatility of the Group relative to that of its competitors so as to predict the share performance.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (Share-
based payments reserve), over the period in which the service and 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 movement in cumulative expense is recognised in
employee benefit expense.
Service and non-market performance conditions are not taken into account when determining the fair value of
awards at the date of grant, but the likelihood of the conditions being met is assessed as part of the best
estimate of the number of equity instruments that will ultimately vest. Market performance conditions are
reflected within the fair value at the date of grant. 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.
Estia Health Limited
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2022-23 Annual Report | Estia Health 137
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D4
SHARE-BASED PAYMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which
vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of
whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or
service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the fair value of
the unmodified award at the grant date, provided the original vesting terms of the award are met. An additional
expense, measured as at the date of modification, is recognised for any modification that increases the total fair
value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is
cancelled any remaining element of the fair value of the award is expensed immediately through profit or loss.
To the extent that the outstanding performance rights are dilutive, the effect of which is reflected in the
computation of diluted earnings per share.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Recognition and measurement of fair value
Long-Term Incentive Plan (LTIP)
As the exercise price is NIL upon vesting, the fair value of the performance rights issued under the LTIP is
determined 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.
Inputs to the models used for the valuation of the LTIPs:
Share price at grant date
Dividend yield
Expected volatility1
Risk free rate
Fair value of right – TSR
Fair value of right – EPS
Fair value of right – RP
FY23 Plan
FY22 Plan
$2.03 and $2.17
4.43% and 4.16%
37% and 38%
3.3% and 3.4%
$1.18 - $1.40
$1.78 - $1.94
$2.20 and $2.32
4.0%
50%
0.2% - 1.0%
$0.60 - $0.70
$1.98 - $2.07
FY21 Plan
$1.29
4.0%
47%
0.8%
$0.35 - $0.70
N/A
$1.21
1Expected volatility is determined based on annualised historical daily volatility over the three year period to the valuation date, exclusive of
any abnormal returns
Short-Term Incentive Plan
The fair value of the performance rights issued under the STIP is determined at grant date. The number of
shares issued are determined by the volume weight average share price of the Group in the 10 trading days
following the release of the Group's annual results. The performance rights are deferred for a 12 month period
and are settled in the Group's equity if the participants remain employed by the Group at the end of the 12
month period.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s financial liabilities consist of interest-bearing loans and borrowings, trade and other payables,
refundable accommodation deposits and lease liabilities which finance the Group’s operations. The Group’s
financial assets include trade receivables, derivative financial instruments 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.
D5
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 2023 and 30 June 2022.
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 2023 and 30 June 2022. Furthermore, it is assumed
that 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 2023 and 30
June 2022.
Interest rate risk
interest rates.
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 which are exposed to floating
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.
Fixed or Floating
Weighted average
effective interest
rates
2022
%
0.6 Floating
2.3 Floating
1.4 Floating
2023
%
0.5
2.3
4.6
Cash and liquid assets
Refundable accommodation deposits – departed residents
Derivative financial instruments
3.8 / 4.4
- Pay fixed / receive floating
Bank loans
notional principal amount.
statements, respectively.
The Group seeks to reduce interest rate risk arising from the Group’s operations and its sources of finance by
entering into interest rate swap contracts (cash flow hedges) in which it agrees to exchange, at specified intervals,
the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon
The details of debt and interest rate swap contracts are disclosed in Note D2 and Note C9 to the financial
Estia Health Limited
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About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
D4
SHARE-BASED PAYMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY (CONTINUED)
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which
vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of
whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or
service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the fair value of
the unmodified award at the grant date, provided the original vesting terms of the award are met. An additional
expense, measured as at the date of modification, is recognised for any modification that increases the total fair
value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is
cancelled any remaining element of the fair value of the award is expensed immediately through profit or loss.
To the extent that the outstanding performance rights are dilutive, the effect of which is reflected in the
computation of diluted earnings per share.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Recognition and measurement of fair value
Long-Term Incentive Plan (LTIP)
As the exercise price is NIL upon vesting, the fair value of the performance rights issued under the LTIP is
determined 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.
Inputs to the models used for the valuation of the LTIPs:
Share price at grant date
$2.03 and $2.17
$2.20 and $2.32
FY23 Plan
FY22 Plan
FY21 Plan
4.43% and 4.16%
37% and 38%
3.3% and 3.4%
$1.18 - $1.40
$1.78 - $1.94
4.0%
50%
0.2% - 1.0%
$0.60 - $0.70
$1.98 - $2.07
$1.29
4.0%
47%
0.8%
N/A
$1.21
$0.35 - $0.70
1Expected volatility is determined based on annualised historical daily volatility over the three year period to the valuation date, exclusive of
Dividend yield
Expected volatility1
Risk free rate
Fair value of right – TSR
Fair value of right – EPS
Fair value of right – RP
any abnormal returns
Short-Term Incentive Plan
The fair value of the performance rights issued under the STIP is determined at grant date. The number of
shares issued are determined by the volume weight average share price of the Group in the 10 trading days
following the release of the Group's annual results. The performance rights are deferred for a 12 month period
and are settled in the Group's equity if the participants remain employed by the Group at the end of the 12
month period.
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s financial liabilities consist of interest-bearing loans and borrowings, trade and other payables,
refundable accommodation deposits and lease liabilities which finance the Group’s operations. The Group’s
financial assets include trade receivables, derivative financial instruments 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 2023 and 30 June 2022.
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 2023 and 30 June 2022. Furthermore, it is assumed
that 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 2023 and 30
June 2022.
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 which are exposed to 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
Refundable accommodation deposits – departed residents
Derivative financial instruments
Bank loans
Weighted average
effective interest
rates
Fixed or Floating
2023
%
0.5
2.3
3.8 / 4.4
4.6
2022
%
0.6 Floating
2.3 Floating
- Pay fixed / receive floating
1.4 Floating
The Group seeks to reduce interest rate risk arising from the Group’s operations and its sources of finance by
entering into interest rate swap contracts (cash flow hedges) in which it agrees to exchange, at specified intervals,
the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon
notional principal amount.
The details of debt and interest rate swap contracts are disclosed in Note D2 and Note C9 to the financial
statements, respectively.
Estia Health Limited
103
Estia Health Limited
2022-23 Annual Report | Estia Health 139
104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Interest rate sensitivity
The following table demonstrates the sensitivity to reasonably likely changes in interest rates on its cash, cash
equivalents, loans and borrowings after the impact of hedge accounting, assuming all other variables remain
constant, on Group’s profit before tax and equity through the impact on floating rate financial instruments:
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
D5
Credit risk (continued)
The following table provides information about the expected credit losses for trade receivables, excluding the
Australian Government balance of $3,333,000 as at 30 June 2023 (2022: $5,060,000):
+ 100 basis points
- 100 basis points
Credit risk
Effect on profit before tax
Higher / (Lower)
Effect on equity
Higher / (Lower)
2023
$’000
262
(262)
2022
$’000
(547)
547
2023
$’000
563
(563)
2022
$’000
(383)
383
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 72% (2022: 71%) of the revenue of the Group is obtained from Australian Government funding.
This funding is maintained for providers as long as they continue to comply with Accreditation standards and other
requirements per the Act.
Trade receivables
Customer credit risk is managed subject to an established Group policy, procedures and control relating to
customer credit risk management.
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 receivables.
Generally, trade and other receivables are written off only once all reasonable avenues to recover the balances
have been exhausted.
Other receivables are primarily due from the Australian Government. The Group does not believe that there is a
material credit risk for these receivables.
As at 30 June 2023
Current (not past due)
<30 days past due
30-60 days past due
61-90 days past due
>90 days past due
Total
As at 30 June 2022
Current (not past due)
<30 days past due
30-60 days past due
61-90 days past due
>90 days past due
Total
Expected
credit loss
rate
%
Gross
carrying
amount
$’000
Allowance
for
expected
credit loss
$’000
Expected
credit loss
rate
%
Gross
carrying
amount
$’000
Allowance
for
expected
credit loss
$’000
5
12
21
28
82
26
7
21
28
42
78
30
1,796
651
349
202
851
3,849
1,612
412
239
132
835
3,230
94
75
75
56
701
1,001
108
85
68
56
650
967
There has been no change to the underlying methodology or approach to the calculation of expected credit loss.
Estia Health Limited
140 Estia Health | 2022-23 Annual Report
105
Estia Health Limited
106
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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)
The following table provides information about the expected credit losses for trade receivables, excluding the
Australian Government balance of $3,333,000 as at 30 June 2023 (2022: $5,060,000):
As at 30 June 2023
Current (not past due)
<30 days past due
30-60 days past due
61-90 days past due
>90 days past due
Total
As at 30 June 2022
Current (not past due)
<30 days past due
30-60 days past due
61-90 days past due
>90 days past due
Total
Expected
credit loss
rate
%
Gross
carrying
amount
$’000
Allowance
for
expected
credit loss
$’000
5
12
21
28
82
26
1,796
651
349
202
851
3,849
94
75
75
56
701
1,001
Expected
credit loss
rate
%
Gross
carrying
amount
$’000
Allowance
for
expected
credit loss
$’000
7
21
28
42
78
30
1,612
412
239
132
835
3,230
108
85
68
56
650
967
Other receivables are primarily due from the Australian Government. The Group does not believe that there is a
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)
D5
Interest rate sensitivity
The following table demonstrates the sensitivity to reasonably likely changes in interest rates on its cash, cash
equivalents, loans and borrowings after the impact of hedge accounting, assuming all other variables remain
constant, on Group’s profit before tax and equity through the impact on floating rate financial instruments:
Effect on profit before tax
Higher / (Lower)
Effect on equity
Higher / (Lower)
2023
$’000
262
(262)
2022
$’000
(547)
547
2023
$’000
563
(563)
2022
$’000
(383)
383
+ 100 basis points
- 100 basis points
Credit risk
requirements per the Act.
Trade receivables
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 72% (2022: 71%) of the revenue of the Group is obtained from Australian Government funding.
This funding is maintained for providers as long as they continue to comply with Accreditation standards and other
Customer credit risk is managed subject to an established Group policy, procedures and control relating to
customer credit risk management.
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
Generally, trade and other receivables are written off only once all reasonable avenues to recover the balances
for all trade receivables.
have been exhausted.
material credit risk for these receivables.
Estia Health Limited
105
Estia Health Limited
2022-23 Annual Report | Estia Health 141
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Liquidity risk
The Group regularly monitors its risk to a shortage of funds. The Group maintains a balance between continuity of
funding and flexibility through its financing facilities which are available for potential acquisitions, capital
investments and working capital requirements. The Group has evaluated the risk concentration relating to the
refinancing of its debt and concluded it to be low as a result of the maturity profile further referenced as follows.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments.
On
demand
$’000
Less than
12 months
$’000
1 to 5
years
$’000
More than
5 years
$’000
Total
$’000
As at 30 June 2023
1,147
Trade and other payables
Loans and borrowings (including future interest)
-
Refundable accommodation deposits and bonds 1,027,537
596
Other financial liabilities
-
Lease liabilities
Total
1,029,280
As at 30 June 2022
Trade and other payables
Loans and borrowings (including future interest)
Refundable accommodation deposits and bonds
Other financial liabilities
Lease liabilities
Total
Capital management
1,172
-
884,069
466
-
885,707
54,152
2,423
-
-
5,458
62,033
50,963
1,691
-
-
5,497
-
77,505
-
-
20,626
98,131
-
104,529
-
-
20,193
-
-
-
-
51,316
55,299
79,928
1,027,537
596
77,400
51,316
1,240,760
-
-
-
-
55,788
52,135
106,220
884,069
466
81,478
58,151
124,722
55,788
1,124,368
The Group's capital management strategy focuses on maintaining a strong capital base to support its ongoing
operations and growth initiatives, while ensuring prudent risk management and financial stability.
The primary objective of the Group’s capital management strategy is to ensure that the Company maintains
adequate capital resources to support its business activities, enhance shareholder value, and meet regulatory
requirements. The policy aims to strike a balance between providing a competitive return to shareholders and
maintaining financial flexibility.
The Group’s capital management policy is subject to market conditions, regulatory changes, and the evolving
needs of the business. As a result, capital management is regularly reviewed in light of prevailing circumstances.
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Capital management (Continued)
Key Components of the Capital Management Policy.
Capital Structure Optimisation: The Group continuously evaluates its capital structure to ensure an optimal mix
of debt and equity. This includes monitoring the Company's leverage ratios and maintaining a sustainable level of
debt, taking into account interest costs, credit ratings, and financial covenants.
Risk Management: risks associated with its capital, such as interest rate risk, liquidity risk, and credit risk are
actively identified, assessed, and managed. Risk mitigation strategies are implemented to safeguard the
Company's financial position and ensure compliance with regulatory requirements.
Dividend Policy and Share Buybacks: the Group maintains a prudent dividend policy, considering various
factors such as profitability, cash flows, capital requirements for growth, and the need to retain sufficient earnings
to support ongoing operations and future investments. The Group may also include share buybacks as a
component of its capital management policy, subject to market conditions, and regulatory approvals. Share
buybacks can be utilised to return capital to shareholders and enhance shareholder value when deemed
appropriate and in the best interests of the Company.
Capital Expenditure and Investment Allocation: the Group allocates capital resources towards strategic
initiatives, including organic growth, acquisitions, and capital expenditure projects. Investments are assessed
based on their potential for generating long-term value and alignment with the Company's strategic objectives.
Financial Planning and Forecasting: The Group engages in detailed financial planning and forecasting
processes to assess its future capital requirements and assess future funding needs. Scenario analysis is
conducted to evaluate the potential impact of adverse economic conditions or unforeseen events on the
Company's capital position.
Compliance and Reporting: The Group adheres to relevant legal and regulatory requirements regarding capital
management. The Company discloses its capital management practices and key financial ratios in its financial
statements and periodic reports to provide transparency to stakeholders, including the Department of Health and
Aged Care.
Estia Health Limited
142 Estia Health | 2022-23 Annual Report
107
Estia Health Limited
108
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
D5
Liquidity risk
The Group regularly monitors its risk to a shortage of funds. The Group maintains a balance between continuity of
funding and flexibility through its financing facilities which are available for potential acquisitions, capital
investments and working capital requirements. The Group has evaluated the risk concentration relating to the
refinancing of its debt and concluded it to be low as a result of the maturity profile further referenced as follows.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments.
On
Less than
1 to 5
More than
demand
12 months
$’000
$’000
years
$’000
5 years
$’000
Loans and borrowings (including future interest)
Refundable accommodation deposits and bonds 1,027,537
1,147
54,152
2,423
77,505
1,029,280
62,033
5,458
20,626
98,131
51,316
77,400
51,316
1,240,760
-
-
-
-
-
-
-
-
-
-
596
-
-
-
-
466
Total
$’000
55,299
79,928
1,027,537
596
52,135
106,220
884,069
466
-
-
-
-
-
-
-
-
Loans and borrowings (including future interest)
1,691
104,529
Refundable accommodation deposits and bonds
884,069
1,172
50,963
As at 30 June 2023
Trade and other payables
Other financial liabilities
Lease liabilities
Total
As at 30 June 2022
Trade and other payables
Other financial liabilities
Lease liabilities
Total
Capital management
5,497
20,193
55,788
81,478
885,707
58,151
124,722
55,788
1,124,368
The Group's capital management strategy focuses on maintaining a strong capital base to support its ongoing
operations and growth initiatives, while ensuring prudent risk management and financial stability.
The primary objective of the Group’s capital management strategy is to ensure that the Company maintains
adequate capital resources to support its business activities, enhance shareholder value, and meet regulatory
requirements. The policy aims to strike a balance between providing a competitive return to shareholders and
maintaining financial flexibility.
The Group’s capital management policy is subject to market conditions, regulatory changes, and the evolving
needs of the business. As a result, capital management is regularly reviewed in light of prevailing circumstances.
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Capital management (Continued)
Key Components of the Capital Management Policy.
Capital Structure Optimisation: The Group continuously evaluates its capital structure to ensure an optimal mix
of debt and equity. This includes monitoring the Company's leverage ratios and maintaining a sustainable level of
debt, taking into account interest costs, credit ratings, and financial covenants.
Risk Management: risks associated with its capital, such as interest rate risk, liquidity risk, and credit risk are
actively identified, assessed, and managed. Risk mitigation strategies are implemented to safeguard the
Company's financial position and ensure compliance with regulatory requirements.
Dividend Policy and Share Buybacks: the Group maintains a prudent dividend policy, considering various
factors such as profitability, cash flows, capital requirements for growth, and the need to retain sufficient earnings
to support ongoing operations and future investments. The Group may also include share buybacks as a
component of its capital management policy, subject to market conditions, and regulatory approvals. Share
buybacks can be utilised to return capital to shareholders and enhance shareholder value when deemed
appropriate and in the best interests of the Company.
Capital Expenditure and Investment Allocation: the Group allocates capital resources towards strategic
initiatives, including organic growth, acquisitions, and capital expenditure projects. Investments are assessed
based on their potential for generating long-term value and alignment with the Company's strategic objectives.
Financial Planning and Forecasting: The Group engages in detailed financial planning and forecasting
processes to assess its future capital requirements and assess future funding needs. Scenario analysis is
conducted to evaluate the potential impact of adverse economic conditions or unforeseen events on the
Company's capital position.
Compliance and Reporting: The Group adheres to relevant legal and regulatory requirements regarding capital
management. The Company discloses its capital management practices and key financial ratios in its financial
statements and periodic reports to provide transparency to stakeholders, including the Department of Health and
Aged Care.
Estia Health Limited
107
Estia Health Limited
2022-23 Annual Report | Estia Health 143
108
E Other Information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION E: OTHER INFORMATION
SECTION E: OTHER INFORMATION (CONTINUED)
This section includes information required to be disclosed under the Australian Accounting Standards and
other pronouncements, that is not immediately related to the individual line items in the financial
statements.
E3
AUDITOR REMUNERATION
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 (d) provides the information about the MEP loans, which was a legacy plan that
offered a 10 year limited recourse loan to subscribe for MEP shares to its participants including the former
Managing Director and a number of senior employees of the Group.
The table below discloses the compensation recognised as an expense during the reporting period related to Key
Management Personnel.
Short-term employee benefits
Post-employment benefits
Share-based payments
Termination benefits
Total compensation of key management personnel
2023
$’000
3,005
155
1,061
139
4,360
2022
$’000
2,963
135
820
-
3,918
There were no other transactions and outstanding balances that have been entered into with related parties for
the relevant financial year.
E2
COMMITMENTS AND CONTINGENCIES
Capital commitments
During the year, the Group entered into contracts relating to the development of aged care homes of which there
were remaining capital commitments at 30 June 2023 of $24,495,000 (2022: $60,331,000).
The Group had also entered into contracts for the purchase of land for future development with a total value of
$13,635,000. One of these contracts, for land at Findon in South Australia, settled for a sum of $5,355,000 on 5th
July 2023 as referenced in Note E9 on page 148.
Bank guarantees
Bank guarantees totalling $15,100,000 (2022: $7,674,000) have been issued in relation to the Group's leased
properties and Workcover arrangements, under the terms of the Facility disclosed in Note D2. As at the date of
signing this report, the Directors are not aware of any situations that have arisen that would require bank
guarantees to be presented or redeemed.
Grant opportunity to reimburse increased leave entitlements
The 2023 Federal Budget measures included $98,700,000 allocated to a future grant opportunity to provide one-
off funding to assist residential aged care providers in meeting historical leave liabilities which were increased at
30 June 2023 because of the Fair Work Commission 15% increase in the Aged Care Award. The increase in the
Group’s leave provisions as a result of the Fair Work Commission 15% increase in the Aged Care Award was
approximately $9,054,000 as explained in Note C7 on page124. The Australian Government advised that the
grant opportunity would reimburse a proportion of eligible employees’ annual leave, personal leave and long
service leave entitlements accrued at 30 June 2023. No details of this scheme have been released by the
Government and therefore there can be no reasonable assurance of any amounts which may in future be
available to the Group under the grant opportunity.
Audit or review of the financial report
Tax compliance services
the auditor
Total auditor remuneration
Fees for assurance services that are not required by legislation to be provided by
The auditor of Estia Health Limited and its subsidiaries is Ernst & Young.
2023
$’000
928
255
37
1,220
2022
$’000
810
159
38
1,007
E4
CHANGES IN ACCOUNTING POLICY
Changes in accounting policy, disclosures, standards and interpretations
The accounting policies adopted in preparation of the Consolidated Financial Statements are consistent with
those followed in the preparation of the Group’s Consolidated Financial Statements for the year ended 30 June
2022, except for the adoption of amendments to standards effective as of 1 July 2022. The Group has not early
adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
New and Amended Accounting Standards and Interpretations
The amendments and interpretations apply for the first time in the current financial year do not have a significant
impact on the financial statements of the Group.
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.
E5
SEGMENT REPORTING
For management reporting purposes, the Group has identified one reportable segment. Estia Health 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.
Estia Health Limited
144 Estia Health | 2022-23 Annual Report
109
Estia Health Limited
110
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION E: OTHER INFORMATION
SECTION E: OTHER INFORMATION (CONTINUED)
This section includes information required to be disclosed under the Australian Accounting Standards and
other pronouncements, that is not immediately related to the individual line items in the financial
E3
AUDITOR REMUNERATION
statements.
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 (d) provides the information about the MEP loans, which was a legacy plan that
offered a 10 year limited recourse loan to subscribe for MEP shares to its participants including the former
Managing Director and a number of senior employees of the Group.
The table below discloses the compensation recognised as an expense during the reporting period related to Key
Management Personnel.
2023
$’000
3,005
155
1,061
139
4,360
2022
$’000
2,963
135
820
-
3,918
Short-term employee benefits
Post-employment benefits
Share-based payments
Termination benefits
Total compensation of key management personnel
the relevant financial year.
E2
Capital commitments
COMMITMENTS AND CONTINGENCIES
There were no other transactions and outstanding balances that have been entered into with related parties for
During the year, the Group entered into contracts relating to the development of aged care homes of which there
were remaining capital commitments at 30 June 2023 of $24,495,000 (2022: $60,331,000).
The Group had also entered into contracts for the purchase of land for future development with a total value of
$13,635,000. One of these contracts, for land at Findon in South Australia, settled for a sum of $5,355,000 on 5th
July 2023 as referenced in Note E9 on page 148.
Bank guarantees
Bank guarantees totalling $15,100,000 (2022: $7,674,000) have been issued in relation to the Group's leased
properties and Workcover arrangements, under the terms of the Facility disclosed in Note D2. As at the date of
signing this report, the Directors are not aware of any situations that have arisen that would require bank
guarantees to be presented or redeemed.
Grant opportunity to reimburse increased leave entitlements
The 2023 Federal Budget measures included $98,700,000 allocated to a future grant opportunity to provide one-
off funding to assist residential aged care providers in meeting historical leave liabilities which were increased at
30 June 2023 because of the Fair Work Commission 15% increase in the Aged Care Award. The increase in the
Group’s leave provisions as a result of the Fair Work Commission 15% increase in the Aged Care Award was
approximately $9,054,000 as explained in Note C7 on page124. The Australian Government advised that the
grant opportunity would reimburse a proportion of eligible employees’ annual leave, personal leave and long
service leave entitlements accrued at 30 June 2023. No details of this scheme have been released by the
Government and therefore there can be no reasonable assurance of any amounts which may in future be
available to the Group under the grant opportunity.
Audit or review of the financial report
Tax compliance services
Fees for assurance services that are not required by legislation to be provided by
the auditor
Total auditor remuneration
The auditor of Estia Health Limited and its subsidiaries is Ernst & Young.
2023
$’000
928
255
37
1,220
2022
$’000
810
159
38
1,007
E4
CHANGES IN ACCOUNTING POLICY
Changes in accounting policy, disclosures, standards and interpretations
The accounting policies adopted in preparation of the Consolidated Financial Statements are consistent with
those followed in the preparation of the Group’s Consolidated Financial Statements for the year ended 30 June
2022, except for the adoption of amendments to standards effective as of 1 July 2022. The Group has not early
adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
New and Amended Accounting Standards and Interpretations
The amendments and interpretations apply for the first time in the current financial year do not have a significant
impact on the financial statements of the Group.
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.
E5
SEGMENT REPORTING
For management reporting purposes, the Group has identified one reportable segment. Estia Health 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.
Estia Health Limited
109
Estia Health Limited
2022-23 Annual Report | Estia Health 145
110
100
100
100
Australia
Australia
Estia Health Residential Aged Care Pty Limited
OC Health Ballarat Pty Limited1
-
1 The entity’s operations, assets and liabilities were transferred to Estia Investments Pty Limited immediately after the acquisition. The entity has
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SECTION E: OTHER INFORMATION (CONTINUED)
E6
INFORMATION RELATING TO SUBSIDIARIES
The ultimate parent entity of the Group is Estia Health Limited.
The Consolidated Financial Statements incorporate the assets, liabilities and results of Estia Health Limited and
the following controlled entities, which are parties to the Deed of Cross Guarantee except for OC Health Ballarat
Pty Limited.
Estia Finance Pty Limited
Estia Investments Pty Limited
Country of
Incorporation
Australia
Australia
% Owned
2023
%
100
100
2022
%
100
100
SECTION E: OTHER INFORMATION (CONTINUED)
E7
2016/785.
PARENT ENTITY INFORMATION (CONTINUED)
Deed of cross guarantee
Each party to the deed of cross guarantee, as identified in Note E6, guarantees the debts of the others. By
entering into the deed, the subsidiaries are relieved from the requirements of preparation, audit and lodgement of
a financial report and a directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument
Together with Estia Health Limited, the entities represent a ‘Closed Group’ for the purposes of the ASIC
instrument. 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 Health consolidated group.
E8
TREATMENT OF GST
Revenue, expenses and assets are recognised net of the amount of GST, except:
• when the GST incurred on a purchase of goods or services is not recoverable from the Australian Taxation
Office, 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,
•
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the Australian Taxation Office 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.
since been dormant.
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
Accumulated losses
Total shareholders’ equity
Profit for the year
Total comprehensive profit for the year
2023
$’000
2022
$’000
371,176
570,398
941,574
11,930
229,730
241,660
331,667
570,398
902,065
-
223,634
223,634
699,914
678,431
796,473
4,234
(100,793)
795,748
3,483
(120,800)
699,914
678,431
29,567
29,567
30,806
30,806
Subsequent to the end of the financial year, a wholly owned subsidiary of the Company, Estia Finance Pty
Limited, determined that a $11,100,000 dividend (2022: $4,075,000) from its FY23 profits be paid to the
Company. As a result, the distributable profit of the Company for the period (including this dividend) is
$40,667,000 (2022: $34,881,000).
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.
Estia Health Limited
146 Estia Health | 2022-23 Annual Report
111
Estia Health Limited
112
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
SECTION E: OTHER INFORMATION (CONTINUED)
E7
PARENT ENTITY INFORMATION (CONTINUED)
Deed of cross guarantee
Each party to the deed of cross guarantee, as identified in Note E6, guarantees the debts of the others. By
entering into the deed, the subsidiaries are relieved from the requirements of preparation, audit and lodgement of
a financial report and a directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument
2016/785.
Together with Estia Health Limited, the entities represent a ‘Closed Group’ for the purposes of the ASIC
instrument. 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 Health consolidated group.
E8
TREATMENT OF GST
Revenue, expenses and assets are recognised net of the amount of GST, except:
• when the GST incurred on a purchase of goods or services is not recoverable from the Australian Taxation
Office, 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,
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the Australian Taxation Office 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.
SECTION E: OTHER INFORMATION (CONTINUED)
INFORMATION RELATING TO SUBSIDIARIES
The ultimate parent entity of the Group is Estia Health Limited.
E6
Pty Limited.
The Consolidated Financial Statements incorporate the assets, liabilities and results of Estia Health Limited and
the following controlled entities, which are parties to the Deed of Cross Guarantee except for OC Health Ballarat
Country of
Incorporation
Australia
Australia
Australia
Australia
% Owned
2023
2022
%
100
100
100
100
%
100
100
100
-
1 The entity’s operations, assets and liabilities were transferred to Estia Investments Pty Limited immediately after the acquisition. The entity has
since been dormant.
Estia Finance Pty Limited
Estia Investments Pty Limited
Estia Health Residential Aged Care Pty Limited
OC Health Ballarat Pty Limited1
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
Accumulated losses
Total shareholders’ equity
Profit for the year
Total comprehensive profit for the year
2023
$’000
2022
$’000
371,176
570,398
941,574
11,930
229,730
241,660
331,667
570,398
902,065
-
223,634
223,634
699,914
678,431
796,473
795,748
4,234
3,483
(100,793)
(120,800)
699,914
678,431
29,567
29,567
30,806
30,806
Subsequent to the end of the financial year, a wholly owned subsidiary of the Company, Estia Finance Pty
Limited, determined that a $11,100,000 dividend (2022: $4,075,000) from its FY23 profits be paid to the
Company. As a result, the distributable profit of the Company for the period (including this dividend) is
$40,667,000 (2022: $34,881,000).
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.
Estia Health Limited
111
Estia Health Limited
2022-23 Annual Report | Estia Health 147
112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
DIRECTORS' DECLARATION
SECTION E: OTHER INFORMATION (CONTINUED)
E9
SUBSEQUENT EVENTS
Government Grants
$1,940,000 of COVID-19 costs reimbursement claims recognised as receivable at 30 June 2023 were
subsequently remitted as cash at the date of this report.
Proposed Acquisition of the Company by Bain Capital
On 7 August 2023, the Company advised the ASX that it had entered into a Scheme Implementation Agreement
(“SIA”) with Bain Capital for the acquisition of all of the issued shares in the Company by way of a Scheme of
Arrangement (“Scheme”). The SIA was also provided to the ASX on 7 August 2023.
The Company’s shareholders will be given the opportunity to vote on the Scheme at a meeting which is expected
to be held in November 2023. If the Scheme is approved and implemented, shareholders will receive total cash
consideration of $3.20 per share, less the cash amount of any dividends declared and paid after the date of entry
into the SIA.
Royal Freemasons homes acquisition
The Group entered into a binding contract with Royal Freemasons to purchase two operational homes with a total
of 264 operational places in Bendigo and Benalla in Victoria on 1 August 2023 for an estimated cash
consideration of $17,300,000 which is expected to settle in October 2023.
South Australia land acquisition
On 5 July 2023, the Group completed the purchase of a block of land at Findon, SA, with an approved
Development Application for a 120 bed residential aged care home from Premier Health Care for $5,355,000 cash
consideration.
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.
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 2023
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 2023 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 Corporations (Wholly-owned Companies) Instrument 2016/785).
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 2023.
On behalf of the Board
Dr. Gary H Weiss AM
Chairman
Sydney
22 August 2023
Estia Health Limited
148 Estia Health | 2022-23 Annual Report
113
Estia Health Limited
114
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Directors’ Declaration
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
DIRECTORS' DECLARATION
SECTION E: OTHER INFORMATION (CONTINUED)
E9
SUBSEQUENT EVENTS
Government Grants
$1,940,000 of COVID-19 costs reimbursement claims recognised as receivable at 30 June 2023 were
subsequently remitted as cash at the date of this report.
Proposed Acquisition of the Company by Bain Capital
On 7 August 2023, the Company advised the ASX that it had entered into a Scheme Implementation Agreement
(“SIA”) with Bain Capital for the acquisition of all of the issued shares in the Company by way of a Scheme of
Arrangement (“Scheme”). The SIA was also provided to the ASX on 7 August 2023.
The Company’s shareholders will be given the opportunity to vote on the Scheme at a meeting which is expected
to be held in November 2023. If the Scheme is approved and implemented, shareholders will receive total cash
consideration of $3.20 per share, less the cash amount of any dividends declared and paid after the date of entry
into the SIA.
Royal Freemasons homes acquisition
The Group entered into a binding contract with Royal Freemasons to purchase two operational homes with a total
of 264 operational places in Bendigo and Benalla in Victoria on 1 August 2023 for an estimated cash
consideration of $17,300,000 which is expected to settle in October 2023.
South Australia land acquisition
On 5 July 2023, the Group completed the purchase of a block of land at Findon, SA, with an approved
Development Application for a 120 bed residential aged care home from Premier Health Care for $5,355,000 cash
consideration.
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.
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 2023
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 2023 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 Corporations (Wholly-owned Companies) Instrument 2016/785).
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 2023.
On behalf of the Board
Dr. Gary H Weiss AM
Chairman
Sydney
22 August 2023
Estia Health Limited
113
Estia Health Limited
2022-23 Annual Report | Estia Health 149
114
Independent Auditor’s Report
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Ernst & Young
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
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent auditor’s report to the members of Estia Health Limited
Independent auditor’s report to the members of Estia Health Limited
Report on the Audit of the Financial Report
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
Opinion
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
We have audited the financial report of Estia Health Limited (the Company) and its subsidiaries
consolidated statement of changes in equity and consolidated statement of cash flows for the year
(collectively the Group), which comprises the consolidated statement of financial position as at
then ended, notes to the financial statements, including a summary of significant accounting policies,
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
and the directors’ declaration.
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,
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
and the directors’ declaration.
Act 2001, including:
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
Act 2001, including:
and of its consolidated financial performance for the year ended on that date; and
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
and of its consolidated financial performance for the year ended on that date; and
Basis for opinion
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
Basis for opinion
report section of our report. We are independent of the Group in accordance with the auditor
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
independence requirements of the Corporations Act 2001 and the ethical requirements of the
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
report section of our report. We are independent of the Group in accordance with the auditor
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
the Code.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
the Code.
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Key audit matters
for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
Key audit matters
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
Key audit matters are those matters that, in our professional judgement, were of most significance in
a separate opinion on these matters. For each matter below, our description of how our audit
our audit of the financial report of the current year. These matters were addressed in the context of
addressed the matter is provided in that context.
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.
Business Combinations
Why significant
How our audit addressed the key audit matter
During the year ended 30 June 2023, the Group
Our audit procedures included the following:
undertook two acquisitions which were accounted for
• Obtained and assessed the underlying transaction
as business combinations under AASB 3 Business
agreements;
Combinations.
On 1 December 2022, the Group finalised a purchase
agreement with Premier Health Care to acquire four
homes (two homes each in South Australia and
Queensland) adding 409 resident places to
its
• Assessed that the contractual agreements to
acquire the two development sites are
independent to the Premier Health Care
acquisition;
• Evaluated the Group’s assessment that the
transactions constituted business combinations
in accordance with the requirements of AASB 3;
portfolio. Separate to the Premier Health Care
acquisition, the Group entered
into contractual
agreements to acquire two additional development
• Evaluated the Group’s determination of the
acquisition dates having regard to the date
control of the homes was obtained;
• Agreed the gross purchase price and milestone
payments included in the transaction agreements
to bank statements;
• Performed audit procedures relating to the
acquisition date balances including RAD/Bond
balances and employee provisions;
• Obtained and evaluated the Group’s calculation of
the working capital adjustments and assessed
whether these had been appropriately adjusted
from net consideration transferred;
• Assessed the competence, capabilities and
objectivity of the external valuer used by
management;
•
Involving our valuation specialists, we assessed
the key assumptions underlying the fair value of
properties, plant and equipment acquired;
• Assessed the appropriateness of transaction
costs associated with the acquisitions being
expensed in the year ended 30 June 2023; and
• Assessed the adequacy of the Group’s disclosures
in the financial statements.
sites. The acquisition of the two additional sites was
assessed to be a separate transaction from the
Premier Health Care acquisition.
On 1 May 2023, the Group finalised a purchase
agreement with OC Health Pty Ltd to acquire one home
(in Victoria) adding 120 resident places to its portfolio.
The Group determined the fair value of properties,
plant and equipment with the support of an
independent external valuer. The Group disclosed in
Note C9 to the consolidated financial report the
method of assessing the nature of the transactions,
including the significant underlying assumptions and
the results of the assessment.
Transaction costs associated with the business
combinations were expensed in profit or loss.
Business combinations were considered a key audit
matter due to the quantum of related balances and the
complexity of the accounting for these transactions,
requiring the Group to exercise
judgement
in
determining the fair value of acquired assets and
liabilities and determining the goodwill.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
150 Estia Health | 2022-23 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Independent Auditor’s Report
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Ernst & Young
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
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent auditor’s report to the members of Estia Health Limited
Independent auditor’s report to the members of Estia Health Limited
Report on the Audit of the Financial Report
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
Opinion
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
We have audited the financial report of Estia Health Limited (the Company) and its subsidiaries
consolidated statement of changes in equity and consolidated statement of cash flows for the year
(collectively the Group), which comprises the consolidated statement of financial position as at
then ended, notes to the financial statements, including a summary of significant accounting policies,
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
and the directors’ declaration.
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,
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
and the directors’ declaration.
Act 2001, including:
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
Act 2001, including:
and of its consolidated financial performance for the year ended on that date; and
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
and of its consolidated financial performance for the year ended on that date; and
Basis for opinion
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
Basis for opinion
report section of our report. We are independent of the Group in accordance with the auditor
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
independence requirements of the Corporations Act 2001 and the ethical requirements of the
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
report section of our report. We are independent of the Group in accordance with the auditor
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
the Code.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
the Code.
for our opinion.
Key audit matters
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
Key audit matters
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
Key audit matters are those matters that, in our professional judgement, were of most significance in
a separate opinion on these matters. For each matter below, our description of how our audit
our audit of the financial report of the current year. These matters were addressed in the context of
addressed the matter is provided in that context.
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.
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Ernst & Young
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
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
Report on the Audit of the Financial Report
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.
Why significant
Opinion
Business Combinations
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
Our audit procedures included the following:
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
• Obtained and assessed the underlying transaction
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.
During the year ended 30 June 2023, the Group
undertook two acquisitions which were accounted for
as business combinations under AASB 3 Business
Combinations.
How our audit addressed the key audit matter
agreements;
• Assessed that the contractual agreements to
acquire the two development sites are
independent to the Premier Health Care
acquisition;
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
• Evaluated the Group’s assessment that the
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
transactions constituted business combinations
in accordance with the requirements of AASB 3;
and of its consolidated financial performance for the year ended on that date; and
On 1 December 2022, the Group finalised a purchase
agreement with Premier Health Care to acquire four
homes (two homes each in South Australia and
Queensland) adding 409 resident places to
its
portfolio. Separate to the Premier Health Care
into contractual
acquisition, the Group entered
agreements to acquire two additional development
sites. The acquisition of the two additional sites was
assessed to be a separate transaction from the
Premier Health Care acquisition.
Basis for opinion
• Evaluated the Group’s determination of the
acquisition dates having regard to the date
control of the homes was obtained;
• Agreed the gross purchase price and milestone
payments included in the transaction agreements
to bank statements;
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
• Performed audit procedures relating to the
On 1 May 2023, the Group finalised a purchase
agreement with OC Health Pty Ltd to acquire one home
(in Victoria) adding 120 resident places to its portfolio.
The Group determined the fair value of properties,
plant and equipment with the support of an
independent external valuer. The Group disclosed in
Note C9 to the consolidated financial report the
method of assessing the nature of the transactions,
including the significant underlying assumptions and
the results of the assessment.
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
acquisition date balances including RAD/Bond
balances and employee provisions;
report section of our report. We are independent of the Group in accordance with the auditor
• Obtained and evaluated the Group’s calculation of
independence requirements of the Corporations Act 2001 and the ethical requirements of the
the working capital adjustments and assessed
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
whether these had been appropriately adjusted
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
from net consideration transferred;
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
• Assessed the competence, capabilities and
the Code.
objectivity of the external valuer used by
management;
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Involving our valuation specialists, we assessed
the key assumptions underlying the fair value of
for our opinion.
properties, plant and equipment acquired;
• Assessed the appropriateness of transaction
costs associated with the acquisitions being
Key audit matters are those matters that, in our professional judgement, were of most significance in
expensed in the year ended 30 June 2023; and
our audit of the financial report of the current year. These matters were addressed in the context of
• Assessed the adequacy of the Group’s disclosures
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
Business combinations were considered a key audit
addressed the matter is provided in that context.
matter due to the quantum of related balances and the
complexity of the accounting for these transactions,
in
requiring the Group to exercise
determining the fair value of acquired assets and
liabilities and determining the goodwill.
Transaction costs associated with the business
combinations were expensed in profit or loss.
Key audit matters
in the financial statements.
judgement
•
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A member firm of Ernst & Young Global Limited
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2022-23 Annual Report | Estia Health 151
Ernst & Young
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
Carrying Value of Goodwill
Why significant
How our audit addressed the key audit matter
At 30 June 2023 the Group’s goodwill balance was
Report on the Audit of the Financial Report
$718 million which represents 40% of total assets.
We assessed the appropriateness of the allocation of
goodwill to the group of CGUs and composition of its
carrying amount.
Construction in Progress
Why significant
How our audit addressed the key audit matter
Costs of $46 million were incurred during the year that
Our audit procedures included the following:
The Group reviews the carrying amount of goodwill
annually, or more frequently, if impairment indicators
are present.
Opinion
Involving our valuation specialists, we assessed the key
assumptions underlying the discounted cash flow
model. In doing so, we:
discounted cash flow model;
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
The group of cash generating units (CGUs) to which
• Tested the mathematical accuracy of the
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
goodwill can be allocated is consistent with the
consolidated statement of changes in equity and consolidated statement of cash flows for the year
operating segment as identified and disclosed in Note
• Assessed key assumptions adopted in the Board-
then ended, notes to the financial statements, including a summary of significant accounting policies,
E5 which is the whole Group.
approved forecast cash flows, including working
and the directors’ declaration.
capital levels, cash flows related to refundable
accommodation deposits, neutral net effect of
legislation changes, and climate related risks;
• Assessed the impact of conditions existing and
emerging at 30 June 2023 on the cash flow
forecast of revenues, operating costs and the
effect of changes in residency mix;
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
The Group 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 2023
and are developed on an underlying assumption that
adequate Government funding will continue to be
provided to cover the rising costs of providing aged
care services.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
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.
• Assessed the Group’s current year actual results
in comparison to prior year forecasts to assess
forecasting accuracy;
Basis for opinion
• Assessed the Group’s assumptions for terminal
Carrying value of goodwill was considered a key audit
matter due to the quantum of the balance and
significant judgement involved in determining future
cashflows.
growth rates in the discounted cash flow model in
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
comparison to economic and industry forecasts;
those standards are further described in the Auditor’s responsibilities for the audit of the financial
• Assessed the adequacy of the estimated
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
• Assessed the appropriateness of the discount
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
rate including comparing the weighted average
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
cost of capital of the Group with comparable
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
businesses;
the Code.
The Group has disclosed in Note C4 to the consolidated
financial report the assessment method, including the
significant underlying assumptions and the results of
the assessment.
maintenance capital expenditure with reference
to historical data;
• Considered earnings multiples of comparable
businesses as a valuation cross check to the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Group’s determination of recoverable amount;
• Performed sensitivity analysis in respect of the
for our opinion.
Key audit matters
assumptions noted above to ascertain the extent
of changes in those assumptions which either
individually or collectively would materially
Key audit matters are those matters that, in our professional judgement, were of most significance in
impact the recoverable amount of the CGU, and
assessed the likelihood of these changes in
our audit of the financial report of the current year. These matters were addressed in the context of
assumptions arising; and
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
• Assessed the adequacy of the Group’s disclosures
a separate opinion on these matters. For each matter below, our description of how our audit
of the key assumptions to which the outcome of
addressed the matter is provided in that context.
the impairment test is most sensitive; that is,
those that have the most significant effect on the
determination of the recoverable amount of
goodwill.
A member firm of Ernst & Young Global Limited
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152 Estia Health | 2022-23 Annual Report
A member firm of Ernst & Young Global Limited
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
the recoverability of costs already
incurred and
executives responsible for management of the
• Agreed a sample of additions to supporting
evidence and assessed the nature of amounts
capitalised;
• For projects in the development phase, we
evaluated key assumptions applied and estimates
made for amounts capitalised
• Assessed whether costs were transferred to
appropriate asset categories when available 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 for development projects by
taking into account the approved business case
and costs incurred to date compared to budgets
and forecasts. We also made enquiries of
projects;
• 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; and
• Assessed the adequacy of the Group’s disclosures
regarding the timing of the transfer of costs to
relevant asset categories and the deprecation
rates applied to each asset category.
were capitalised to Construction in Progress. This
primarily represents costs of development projects.
In determining whether costs incurred are capitalised
as Construction
in Progress, the Group applies
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, the Group continued to reassess whether
ongoing projects remained feasible and therefore,
likely to be completed. This resulted in assessments of
capitalised
including determining whether future
economic benefits continue to be expected from the
projects. This assessment
required additional
judgement and the use of assumptions which are
affected by future market conditions or economic
developments.
Costs are transferred to relevant asset categories
when management assesses that the asset is available
for use. Depreciation charges are then recognised
based on the asset category.
Construction in Progress was considered a key audit
matter due to the quantum of the balance and
judgement required in applying the capitalisation
criteria and whether
future economic benefits
continue to be expected from the projects under
development. The Group has disclosed
the
capitalisation policy in Note C3 to the consolidated
financial report.
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Ernst & Young
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
Ernst & Young
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
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Independent auditor’s report to the members of Estia Health Limited
Independent auditor’s report to the members of Estia Health Limited
Construction in Progress
Why significant
Report on the Audit of the Financial Report
Costs of $46 million were incurred during the year that
were capitalised to Construction in Progress. This
primarily represents costs of development projects.
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;
Opinion
evaluated key assumptions applied and estimates
made for amounts capitalised
In determining whether costs incurred are capitalised
in Progress, the Group applies
as Construction
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.
• For projects in the development phase, we
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 2023, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
appropriate asset categories when available for
then ended, notes to the financial statements, including a summary of significant accounting policies,
use on a timely basis and that the relevant
and the directors’ declaration.
depreciation or amortisation rates were applied;
• Considered whether there were any indicators of
impairment present for development projects by
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
taking into account the approved business case
Act 2001, including:
and costs incurred to date compared to budgets
and forecasts. We also made enquiries of
executives responsible for management of the
projects;
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
• Assessed whether costs were transferred to
In addition, the Group continued to reassess whether
ongoing projects remained feasible and therefore,
likely to be completed. This resulted in assessments of
the recoverability of costs already
incurred and
including determining whether future
capitalised
economic benefits continue to be expected from the
projects. This assessment
required additional
judgement and the use of assumptions which are
affected by future market conditions or economic
developments.
Basis for opinion
• 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; and
• Assessed the adequacy of the Group’s disclosures
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
regarding the timing of the transfer of costs to
those standards are further described in the Auditor’s responsibilities for the audit of the financial
relevant asset categories and the deprecation
report section of our report. We are independent of the Group in accordance with the auditor
rates applied to each asset category.
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.
Costs are transferred to relevant asset categories
when management assesses that the asset is available
for use. Depreciation charges are then recognised
based on the asset category.
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Construction in Progress was considered a key audit
matter due to the quantum of the balance and
judgement required in applying the capitalisation
criteria and whether
future economic benefits
continue to be expected from the projects under
development. The Group has disclosed
the
capitalisation policy in Note C3 to the consolidated
financial report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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.
Carrying Value of Goodwill
Why significant
How our audit addressed the key audit matter
At 30 June 2023 the Group’s goodwill balance was
Report on the Audit of the Financial Report
We assessed the appropriateness of the allocation of
$718 million which represents 40% of total assets.
goodwill to the group of CGUs and composition of its
The Group reviews the carrying amount of goodwill
carrying amount.
Opinion
are present.
annually, or more frequently, if impairment indicators
Involving our valuation specialists, we assessed the key
We have audited the financial report of Estia Health Limited (the Company) and its subsidiaries
assumptions underlying the discounted cash flow
(collectively the Group), which comprises the consolidated statement of financial position as at
The group of cash generating units (CGUs) to which
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
• Tested the mathematical accuracy of the
goodwill can be allocated is consistent with the
consolidated statement of changes in equity and consolidated statement of cash flows for the year
operating segment as identified and disclosed in Note
then ended, notes to the financial statements, including a summary of significant accounting policies,
• Assessed key assumptions adopted in the Board-
discounted cash flow model;
model. In doing so, we:
E5 which is the whole Group.
and the directors’ declaration.
approved forecast cash flows, including working
capital levels, cash flows related to refundable
accommodation deposits, neutral net effect of
The Group used a discounted cash flow model to
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
legislation changes, and climate related risks;
estimate the value in use of the assets. The estimates
Act 2001, including:
are based on conditions existing as at 30 June 2023
• Assessed the impact of conditions existing and
emerging at 30 June 2023 on the cash flow
and are developed on an underlying assumption that
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
forecast of revenues, operating costs and the
adequate Government funding will continue to be
and of its consolidated financial performance for the year ended on that date; and
effect of changes in residency mix;
provided to cover the rising costs of providing aged
• Assessed the Group’s current year actual results
care services.
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
in comparison to prior year forecasts to assess
forecasting accuracy;
Carrying value of goodwill was considered a key audit
Basis for opinion
• Assessed the Group’s assumptions for terminal
matter due to the quantum of the balance and
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
comparison to economic and industry forecasts;
significant judgement involved in determining future
those standards are further described in the Auditor’s responsibilities for the audit of the financial
• Assessed the adequacy of the estimated
growth rates in the discounted cash flow model in
report section of our report. We are independent of the Group in accordance with the auditor
maintenance capital expenditure with reference
cashflows.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
The Group has disclosed in Note C4 to the consolidated
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
• Assessed the appropriateness of the discount
to historical data;
financial report the assessment method, including the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
rate including comparing the weighted average
cost of capital of the Group with comparable
significant underlying assumptions and the results of
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
businesses;
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Group’s determination of recoverable amount;
• Considered earnings multiples of comparable
businesses as a valuation cross check to the
• 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
the assessment.
the Code.
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
impact the recoverable amount of the CGU, and
our audit of the financial report of the current year. These matters were addressed in the context of
assessed the likelihood of these changes in
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
• Assessed the adequacy of the Group’s disclosures
assumptions arising; and
addressed the matter is provided in that context.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2022-23 Annual Report | Estia Health 153
Ernst & Young
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
Revenue and Government Grants
Independent auditor’s report to the members of Estia Health Limited
Why significant
Why significant
How our audit addressed the key audit matter
We evaluated the effectiveness of key controls in
relation to the capture and measurement of revenue
Report on the Audit of the Financial Report
transactions across all material revenue streams.
Revenue is generated primarily through two sources,
being resident billings and Government subsidies. Both
sources are subject to legislation, detailing the rates
and charges that the Group receives for each resident.
Government
from Services
Australia vary depending on a number of factors,
including the resident’s financial means and level of
care.
subsidies
received
Opinion
Income derived from resident billings is recognised as
billed within the relevant month.
The Group raises a Government revenue accrual at
year-end to recognise any differences between the
monies received in advance from Services Australia 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.
The Group has applied for and recognised Government
grant income to recover incremental costs associated
with COVID-19 outbreaks in homes. Government grant
income amounted to $51 million for the year ended 30
June 2023. The Group recognised Government grant
income for claims for which approval has been
received and for claims which have been submitted and
for which there is reasonable assurance of the grant
conditions being met and the amounts being received.
Revenue and Government grants were considered key
audit matters given the effect of strict legislation,
adjustment in rates by Government from time to time,
the volume of transactions with residents and
Government, and significant judgement applied in
assessing reasonable assurance for the recognition of
government grants.
The Group’s revenue recognition and disaggregation
policies have been disclosed in Note B1 to the
consolidated financial report.
Our audit procedures included the following:
• Agreed a sample of the Group’s Government
revenue to Medicare Payment Statements,
subsequent receipt in the bank statements and
associated journal entries;
• Tested a sample of the monthly reviews
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 2023, the consolidated statement of profit or loss and other 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.
performed by the Group to assess the accuracy
of the Government revenue recorded in the
Epicor system and Medicare Payment
Statements;
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
• Tested the accuracy of updates to a sample of
the residents’ daily care and accommodation
fees;
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
• Tested the accuracy of updates to a sample of
residents’ additional services fees, assessing the
appropriateness of approval, and whether the
updated billing rate was correctly reflected in the
Epicor System;
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
• On a sample basis, with the assistance of our
Digital Assurance specialists, tested that
discharged residents were appropriately removed
from the billing process within the Epicor System;
• Evaluated the operating effectiveness of
Information Technology general and application
controls relating to the revenue process within
the Epicor System.
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.
• Assessed the accuracy of the Group’s revenue
accrual by comparing the accrual to the
Government subsidies received in July 2023;
• Performed sensitivity analysis of the revenue
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
accrual calculation by considering the difference
between the default rate and the average AN-
ACC rates for residents with existing AN-ACC
class assessments;
Key audit matters
• Applying data driven analysis, completed a three-
way correlation of revenue to receivable to cash.
We also performed testing on cash entries that
settled receivables by tracing a sample of
settlements through to bank statements; and
• Recalculated the imputed DAP revenue on RAD
Key audit matters are those matters that, in our professional judgement, 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.
and bond balances.
Government grants are disclosed in Note B2 to the
consolidated financial report.
We performed the following audit procedures in
relation to Government grant income:
• Assessed management’s position that there is
reasonable assurance that grant conditions have
been met and the grant monies will be received,
154 Estia Health | 2022-23 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
How our audit addressed the key audit matter
including considering the evidence available to
support there being sufficient Government
funding available to reimburse the grant
applications submitted for the year ended 30
June 2023;
• Agreed the amounts recognised to respective
approval letters for a sample of approved claims
and to bank statements; and
•
Inspected the underlying support for a sample of
claims to check whether the claims meet the
eligibility criteria under the grant schemes.
We also assessed the appropriateness of the financial
statement disclosures in relation to the Group’s
revenue and Government grant income.
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 Group’s 2023 annual report but does not include the financial report and
our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do 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, 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Ernst & Young
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
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Ernst & Young
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
Why significant
How our audit addressed the key audit matter
Independent auditor’s report to the members of Estia Health Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
including considering the evidence available to
support there being sufficient Government
funding available to reimburse the grant
applications submitted for the year ended 30
June 2023;
• Agreed the amounts recognised to respective
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 2023, the consolidated statement of profit or loss and other 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,
Opinion
approval letters for a sample of approved claims
and to bank statements; and
We have audited the financial report of Estia Health Limited (the Company) and its subsidiaries
Inspected the underlying support for a sample of
(collectively the Group), which comprises the consolidated statement of financial position as at
claims to check whether the claims meet the
eligibility criteria under the grant schemes.
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
We also assessed the appropriateness of the financial
then ended, notes to the financial statements, including a summary of significant accounting policies,
statement disclosures in relation to the Group’s
and the directors’ declaration.
revenue and Government grant income.
•
Opinion
and the directors’ declaration.
Act 2001, including:
Basis for opinion
the Code.
for our opinion.
Key audit matters
addressed the matter is provided in that context.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
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.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Key audit matters are those matters that, in our professional judgement, 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
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
Information other than the financial report and auditor’s report thereon
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2023 annual report but does not include the financial report and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
our auditor’s report thereon.
Basis for opinion
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
and our related assurance opinion.
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
In connection with our audit of the financial report, our responsibility is to read the other information
independence requirements of the Corporations Act 2001 and the ethical requirements of the
and, in doing so, consider whether the other information is materially inconsistent with the financial
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
report, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
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
If, based on the work we have performed, we conclude that there is a material misstatement of this
the Code.
other information, we are required to report that fact. We have nothing to report in this regard.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Responsibilities of the directors for the financial report
for our opinion.
The directors of the Company are responsible for the preparation of the financial report that gives a
Key audit matters
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
Key audit matters are those matters that, in our professional judgement, were of most significance in
financial report that gives a true and fair view and is free from material misstatement, whether due to
our audit of the financial report of the current year. These matters were addressed in the context of
fraud or error.
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
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
addressed the matter is provided in that context.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2022-23 Annual Report | Estia Health 155
Ernst & Young
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
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
Report on the Audit of the Financial Report
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
Opinion
decisions of users taken on the basis of this financial report.
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
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
judgement and maintain professional scepticism throughout the audit. We also:
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,
Identify and assess the risks of material misstatement of the financial report, whether due to
►
and the directors’ declaration.
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
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
Act 2001, including:
override of internal control.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
► Obtain an understanding of internal control relevant to the audit in order to design audit
and of its consolidated financial performance for the year ended on that date; and
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.
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
Basis for opinion
estimates and related disclosures made by the directors.
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
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
report section of our report. We are independent of the Group in accordance with the auditor
and, based on the audit evidence obtained, whether a material uncertainty exists related to
independence requirements of the Corporations Act 2001 and the ethical requirements of the
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
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
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
to the date of our auditor’s report. However, future events or conditions may cause the Group to
the Code.
cease to continue as a going concern.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
► Evaluate the overall presentation, structure and content of the financial report, including the
for our opinion.
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
our audit of the financial report of the current year. These matters were addressed in the context of
business activities within the Group to express an opinion on the financial report. We are
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
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 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
156 Estia Health | 2022-23 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
year ended 30 June 2023.
We have audited the Remuneration Report included in pages 68 to 82 of the Directors’ Report for the
In our opinion, the Remuneration Report of Estia Health Limited for the year ended 30 June 2023,
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
22 August 2023
About this reportChairman and CEO’s ReviewKey HighlightsAbout Estia HealthBoard and GovernanceCorporate Governance
Ernst & Young
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
Ernst & Young
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
Executive Leadership Team
COVID-19
Sustainability
Risk Management
Tax Transparency Report
Annual Financial Report
Independent auditor’s report to the members of Estia Health Limited
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
Report on the Audit of the Financial Report
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
Opinion
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.
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
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
judgement and maintain professional scepticism throughout the audit. We also:
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,
Identify and assess the risks of material misstatement of the financial report, whether due to
►
and the directors’ declaration.
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
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
detecting a material misstatement resulting from fraud is higher than for one resulting from
Act 2001, including:
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
► Obtain an understanding of internal control relevant to the audit in order to design audit
and of its consolidated financial performance for the year ended on that date; and
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
Basis for opinion
estimates and related disclosures made by the directors.
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
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
report section of our report. We are independent of the Group in accordance with the auditor
and, based on the audit evidence obtained, whether a material uncertainty exists related to
independence requirements of the Corporations Act 2001 and the ethical requirements of the
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
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
the Code.
cease to continue as a going concern.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
► Evaluate the overall presentation, structure and content of the financial report, including the
for our opinion.
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
our audit of the financial report of the current year. These matters were addressed in the context of
business activities within the Group to express an opinion on the financial report. We are
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
responsible for the direction, supervision and performance of the Group audit. We remain solely
a separate opinion on these matters. For each matter below, our description of how our audit
responsible for our audit opinion.
addressed the matter is provided in that context.
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.
Independent auditor’s report to the members of Estia Health Limited
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
Report on the Audit of the Financial Report
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
Opinion
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
We have audited the financial report of Estia Health Limited (the Company) and its subsidiaries
should not be communicated in our report because the adverse consequences of doing so would
(collectively the Group), which comprises the consolidated statement of financial position as at
reasonably be expected to outweigh the public interest benefits of such communication.
30 June 2023, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
Report on the audit of the Remuneration Report
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors’ declaration.
Opinion on the Remuneration Report
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
We have audited the Remuneration Report included in pages 68 to 82 of the Directors’ Report for the
Act 2001, including:
year ended 30 June 2023.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
In our opinion, the Remuneration Report of Estia Health Limited for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
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.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Basis for opinion
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
those standards are further described in the Auditor’s responsibilities for the audit of the financial
accordance with Australian Auditing Standards.
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
Ernst & Young
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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
Paul Gower
addressed the matter is provided in that context.
Partner
Melbourne
22 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2022-23 Annual Report | Estia Health 157
Additional Information
Additional information required under ASX Listing Rule 4.10 and not shown elsewhere in this Annual Report is
as follows. This information is current as at 18 September 2023.
(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
62
681
759
1,977
1,609
5,088
231,735,188
16,311,171
5,780,765
5,328,426
702,489
89.18
6.28
2.22
2.05
0.27
259,858,039
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
5
5
0
0
0
10
1,375,168
306,904
0
0
0
81.75
18.25
0.00
0.00
0.00
1,682,072
100.00
(c) Less than marketable parcels of ordinary shares
There are 379 shareholders with unmarketable parcels totalling 13,029 shares.
(d) 20 Largest shareholders
The twenty largest shareholders of quoted equity securities are as follows:
NAME
1. Citicorp Nominees Pty Limited
2. J P Morgan Nominees Australia Pty Limited
3. HSBC Custody Nominees (Australia) Limited
4. National Nominees Limited
5. BNP Paribas Noms Pty Ltd
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