Annual Report 2021Ramsay Health Care Limitedramsayhealth.com For more informationTo view our interactive Annual Report and for more information on the Company including market announcements and for a copy of the Company’s Corporate Governance Statement, visit the Investor Centre at: ramsayhealth.com Annual General Meeting 2021The 2021 Annual General Meeting will be held on 24 November at 10.30am. Full details are available in Ramsay’s Notice of Meeting.Indicative Key Dates for 2022RESULTS RELEASE DATES:Interim Results – Thursday, 24 February 2022 Preliminary Final Results – Thursday, 25 August 2022 DIVIDEND PAYMENT DATES – ORDINARY SHARESInterim Dividend – Thursday, 31 March 2022 (Record date 8 March 2022) Final Dividend – Thursday, 29 September 2022 (Record date 6 September 2022) DIVIDEND PAYMENT DATES – CARESWednesday, 20 April 2022 (Record date 30 March 2022) Thursday, 20 October 2022 (Record date 28 September 2022) ANNUAL GENERAL MEETING 2022The 2022 Annual General Meeting of Ramsay Health Care Limited is scheduled to be held on Tuesday, 29 November at 10.30am (Sydney time). Full details will be provided closer to the date.The World Health Organization (WHO) declared 2021 as the “International Year of Health and Care Workers” appropriately recognising the work of all employees working both at the front line and those supporting that effort since the outbreak of the pandemic. Ramsay Health Care has chosen to celebrate this year by profiling our people every week across each region in thanks and recognition for the vital work they carry out every day. The cover of this report celebrates some of our extraordinary employees.Support them so they can support you! TABLE OF CONTENTS
1 HIGHLIGHTS
2 CHAIRMAN AND CEO LETTER
3 ABOUT RAMSAY HEALTH CARE
4 KEY RISKS
5 OPERATING AND FINANCIAL REVIEW
6 RAMSAY CARES
7 GOVERNANCE
8 REMUNERATION REPORT – AUDITED
9 DIRECTORS' REPORT
10 FINANCIAL RESULTS
11 INDEPENDENT AUDITORS' REPORT
12 ADDITIONAL INFORMATION
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Corporate Directory As at 20 September 2021DirectorsNon Executive DirectorsMichael Siddle (Chairman) Peter Evans (Deputy Chairman) Alison Deans James McMurdo Karen Penrose Claudia Süssmuth Dyckerhoff David Thodey AO Executive DirectorCraig McNally (Managing Director & CEO)Group General Counsel & Company SecretaryHenrietta RoweRegistered OfficeSuite 18.03, Level 18 126 Phillip Street Sydney NSW 2000 AustraliaEmail: enquiry@ramsayhealth.com Website: www.ramsayhealth.com Telephone: +61 2 9220 1000 Facsimile: +61 2 9220 1001Share RegistryBoardroom Pty Limited Level 12, Grosvenor Place 225 George Street Sydney NSW 2000 AustraliaEmail: enquiries@boardroomlimited.com.au Website: www.boardroomlimited.com.au Telephone Enquiries (from within Australia): 1300 737 760 Telephone Enquiries (from outside Australia): +61 2 9290 9600 Facsimile: +61 2 9279 0664AuditorErnst & Young 200 George Street Sydney NSW 2000 AustraliaTABLE OF CONTENTSRAMSAY HEALTH CARE LIMITED 2
Annual Report 2021
In FY21 Ramsay’s focus has continued to be on the sustainability of our business and ensuring we protected the well-being of our employees, our patients and our clinicians. The solid result reflects the resilience of the organisation in the face of an incredibly challenging operating environment.FY2021 HighlightsOur global team’s response to the pandemic has highlighted the strength of the Ramsay culture and the pervasiveness with which our philosophy ‘People caring for People’ guides our employees and drives our actions.Solid financial performance and strong balance sheet and cashflows.FinancialReturn on Invested Capital on a proforma basis1 of7.0%Fully diluted EPS192.6cper share an increase of 47.6%per share an increase of 142% on FY20151.5cDividend1. Proforma basis assuming the Spire healthcare plc transaction was not in progress at 30th June 2021. Return on Invested Capital calculated as: rolling twelve month NPAT/Shareholders funds plus net debt minus liabilities.“ ” 1. HIGHLIGHTS
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Supporting medical research into new and better treatments to shape the future of health care.Caring for our communityClinical trials and research projects1000+ Reducing the environmental impact of health care by avoiding tonnes of single-use plastics, rolling out renewable energy and energy efficiency measures.Caring for our environmentAchieving gender balance (40:40:20), with women representing 45% of senior leaders and 43% of non-executive directors.Caring for our PeopleAchieving gender balance45%Patient feedback remains positive with excellent Net Promoter Scores measuring patient experience across the UK, Australia and Europe. Asia also received sound positive feedback.Caring for our PatientsHigh-quality care +70 NPSSingle-use plastic items replaced with more sustainable options20 million 4
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Dear Fellow Shareholder, Despite ongoing disruption from the COVID-19 (COVID) pandemic, Ramsay reported a solid result in FY21. The strength of the underlying business, together with an expanded pipeline of growth opportunities, provides us with confidence for the medium to long term.Over the past 12 months, Ramsay employees and clinicians have worked hard to support the public health campaign against COVID. In Europe, Ramsay Santé has played a critical role assisting the French Government by treating more than 11,000 COVID patients since the start of the pandemic. Across the Nordic region, our employees have stepped up to treat COVID patients, provide polymerase chain reaction (PCR) testing in our primary health care facilities and, more recently, to help roll-out the vaccination program.In the UK, Ramsay has been the leading provider of independent hospital services to the National Health Services (NHS) through both the provision of hospital capacity and treating non-COVID priority cases. Ramsay UK has looked after more than 650,000 NHS patients, hosted more than 20 NHS services from its facilities and provided 16,000 plus cancer treatments for NHS patients.Our joint venture in Asia, Ramsay Sime Darby, has been assisting with escalating COVID case numbers in Indonesia and Malaysia since the start of 2021, providing testing and vaccination services and treating both public and private COVID patients.In Australia, Ramsay employees have been deployed in public hospitals and aged care facilities impacted by the pandemic and Ramsay hospitals in New South Wales have been treating non-COVID patients to help ease pressure on the public system. In recent months, more than 400 Ramsay people have volunteered for community health roles such as working at public vaccination hubs.On behalf of the Board and senior management, we would like to thank our team around the world for living the values of The Ramsay Way, embodying Paul Ramsay's vision of ‘people caring for people’ by delivering the best of care to people often facing the worst of circumstances. We would also like to extend our condolences to the families of team members who have passed away from COVID and those who have lost loved ones to this disease over the past 18 months.RESULTSWe are pleased to announce that, despite the COVID disruption, Ramsay reported a 58.1% increase in statutory net profit to $449.0m for the 12-month period to 30th June 2021 (FY21). The solid growth in earnings reflects strong growth in surgical admissions across our regions when lock-down restrictions were not in place. The results continued to be impacted by surgical operating restrictions, as well as the flow-on impact of social distancing and lock-downs on demand for non-surgical services. Earnings included revenue and cost support from governments in Europe and the UK for the use of our facilities and services. The result also includes the impact of higher costs associated with operating in a COVID environment and the margin impact of both a drop in non-surgical admissions and a higher proportion of lower acuity surgical services in the catch-up volume.Our strong balance sheet and cashflow has been maintained with leverage at the wholly owned funding group level, on a proforma basis, declining to 0.7 times, driving lower financing costs over the year. We have a significant pipeline of growth opportunities and continue to explore strategic investment options to build scale or move into new and adjacent health care services, while remaining focused on maintaining our financial discipline as we look to improve returns across the business.The Board determined a fully franked final dividend of 103 cents per share, taking the full year dividend to 151.5 cents per share, a material increase on the COVID impacted FY20 result and flat on the pre COVID FY19 full year dividend. The higher-than-normal payout ratio of 79% reflects the Board's confidence in the strength of the business and in recognition of those shareholders who have supported the Company through the pandemic.Asia PacificThe Asia Pacific region reported an 18.9% increase in EBIT to $636.0m earned on an increase in total segment revenue and other income of 7.3% to $5,464.1m. The Australian result was impacted by surgical restrictions and general disruption from a four-month lock-down in Victoria in the first half of the fiscal year and multiple snap state lock-downs in the second half of the fiscal year. The combined cost of the business interruption is estimated at $83m. Despite the lock-downs, admissions growth was positive against both FY20 and FY19, reflecting double digit growth in surgical admissions and more subdued growth in non-surgical admissions.We continued to invest in a strong pipeline of brownfield and greenfield developments, with total capital expenditure of $260.0m over the course of the year. Brownfield projects completed during the year delivered 25 new net beds, one new operating theatre and seven renal chairs.Our joint venture in Asia, Ramsay Sime Darby was impacted by a significant rise in COVID cases in the second half of the year, which resulted in surgical restrictions as medical systems struggled to deal with the rise in hospitalisations. The business was supported during the period by conducting extensive PCR testing in Malaysia and Indonesia and assisting with the vaccine roll-out.United KingdomOur UK business reported an 83.4% increase in EBIT to $92.8m on a 21.3% decrease in revenue from patients and other revenue to $606.5m. The business was also heavily impacted by COVID outbreaks. The business operated under revised agreements with the NHS for most of the year, which provided Ramsay UK with net cost recovery for the services provided to the NHS, as well as accommodating the return of some capacity for private patient activity and routine NHS elective surgery activity. As stay-at-home restrictions were eased in the fourth quarter of the fiscal year, both private health insurance and self-funded admissions came back strongly. In April, we moved back to operating under normal arrangements with the NHS, however public sector volume recovered more slowly than the private sector.The business continued to invest in building out its footprint, with two new facilities opened in the 12-month period and another new facility opening recently. The business has also increased its investment in capabilities and clinical excellence, as it seeks to attract a higher share of private sector patients and doctors.Chairman & Managing Director's Review 2. CHAIRMAN AND CEO LETTER
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EuropeOur European 52.5% owned subsidiary, Ramsay Santé reported a 38.3% increase in EBIT to $403.8m. The business continued assisting governments across its regions, in particular in France, to treat COVID patients. The business continued to operate under revenue guarantee arrangements with the French Government and was also provided with financial compensation in relation to the costs associated with operating in a COVID environment. Across the Nordic regions, we were provided with financial payments in return for our services. The Nordic region reported a strong result, reflecting the different nature of services provided, as well as a lesser impact of COVID in some areas. During the 12-month period, the business continued to focus on its portfolio of facilities and disposed of a number of assets, as well as investing in its existing footprint.As lock-downs gradually eased, admissions started to improve, however staffing remains a significant issue, with fatigued nurses and other clinical employees taking extended leave. We are continuing work to identify additional ways to support the mental health and well-being of our teams.CAPITAL MANAGEMENTDuring FY21, Ramsay took the first steps in pursuing a strategy to strengthen our balance sheet by extending and staggering the tenor and diversifying the sources of our debt. Both Ramsay's wholly owned funding group and our European 52.5% owned subsidiary, Ramsay Santé, completed the refinancing of debt facilities, with syndicated sustainability linked loans with staggered longer-term tenors. The embedded targets in each of these facilities are consistent with the Ramsay Cares sustainability strategy and have been designed to be meaningful targets that require us to increase our emphasis and investment in key programs across the Group.During the year, as part of our focus on diversifying our debt sources, we were ascribed an investment grade rating of BBB (Stable) by Fitch.RAMSAY CARESDuring FY21, Ramsay officially launched its sustainability strategy under the banner of Ramsay Cares. We have established three global focus areas that aim to support healthier people, stronger communities and a thriving planet. Our approach to sustainability and any material social and environmental risks are overseen by the Board's Global Risk Management Committee. During the year, a number of sustainability initiatives were launched across the business. Additional emphasis and investment has gone towards supporting the mental health and the well-being of our staff, setting the foundations for emissions reduction and responsible sourcing within our medical supply chains. We committed to start reporting under the Taskforce on Climate Related Disclosures in our FY21 corporate reporting and this will continue to be embedded and expanded in FY22.BOARD CHANGESAs part of our ongoing succession planning, Peter Evans flagged at the 2020 AGM he intends to retire at the end of his current three-year term, which ends at this year's AGM. Peter has been an engaged and active Non-Executive Director of Ramsay Health Care since his appointment in 1990 and, prior to that, as an executive joining us in 1969. Since the very early days, he has made an enormous contribution to the development of Ramsay. On behalf of the other Board members, we would like to thank Peter for his guidance and input into the strategic direction of the organisation over many years. We are now undertaking an external search for an additional non-executive director to join our Board.STRATEGIC DIRECTION AND OUTLOOKDuring the year, the Board and management team undertook a deep dive into Ramsay's strategic direction, looking at where the business wants to be by 2030 and what needs to be done to get there. Our overarching vision is to leverage Ramsay's global platform to be a leading patient-centric, integrated health care provider of the future. The 2030 strategy balances the needs of all our stakeholders, taking into account a rapidly changing environment. We are focused on delivering shareholder value and improving returns by:• Growing, modernising and leveraging our world-class hospital network through both organic growth opportunities and strategic acquisitions where the financial metrics make sense for the business in the longer term.• Purposefully moving into new and adjacent services that enhance the existing business and create more integrated health care pathways for our patients. This could potentially be through acquisitions but also leveraging the current business platform.• Focusing on operational excellence using our scale, global network and strategic sourcing.• Reinforcing our strong organisational foundations, including increased investment in our digital capabilities and creating a more sustainable business platform that can respond to the changing health care environment.We are significantly increasing our development pipeline in fiscal year 2022 (FY22) and investment is expected to continue to be at elevated levels over the next few years. Over the medium term, returns from this investment are expected to be in-line with previous achievements.FY22 has begun with all our regions continuing to deal with the challenges of the COVID environment, including lock-downs and surgical restrictions in Australia and isolation orders in the UK. Our FY22 results will be impacted by the global response to the pandemic, including the effectiveness of vaccination programs in reducing the number and severity of COVID cases. However, as each region adapts to our new normal, we are well positioned for growth through addressing the backlog in demand for health care services in both the public and private systems and benefiting from the long term underlying growth drivers. We have a strong balance sheet and cashflow to support the delivery of our strategy and will remain disciplined in our approach to investment.We would like to close by again thanking our team, not just for their vital work through what has been a very difficult period in the Company's history but also for their commitment to the private and public health systems and the communities we serve.Michael Siddle & Craig McNally 6
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About Ramsay Health CareAt a GlanceRamsay Health Care (Ramsay) provides quality health care through a global network of clinical practice, teaching and research. Ramsay Health Care’s global network extends across 10 countries, with over eight million admissions/patient visits to its facilities in over 460 locations. Ramsay was founded by Paul Ramsay AO (1936–2014) in 1964 and has always focused on maintaining the highest standards of quality and safety; being an employer of choice; and operating the business based on a culture known as the ‘Ramsay Way’ with a philosophy based on ‘People Caring for People’1. Ramsay listed on the Australian Stock Exchange in 1997 and has a market capitalisation of A$15.3bn2 and an enterprise value (EV) of A$17.7bn2 (EV of A$23.0bn inclusive of lease liabilities). Ramsay employs over 80,000 people globally. Ramsay’s operations are split across four regions:AustraliaRamsay Australia has 72 private hospitals and day surgery units in Australia and is Australia's largest private hospital operator. Ramsay operations include mental health facilities as well as the operation of three public facilities. In addition, Ramsay has established the Ramsay Pharmacy retail franchise network which supports more than 59 community pharmacies. Ramsay Australia admits more than one million patients annually and employs more than 31,000 people.EuropeRamsay Santé is the second largest private care provider in Europe, operating specialist clinics and primary care units in approximately 350 locations across five countries in Europe. In France, Ramsay Santé has a market leading position with 132 acute care and mental health facilities. In Denmark, Norway and Sweden, Ramsay Santé operates 210 facilities including primary care units, specialist clinics and hospitals. Ramsay Santé also operates a 93-bed hospital in Italy. Ramsay Santé employs more than 35,000 staff and its facilities treat approximately seven million patients each year. Ramsay Health Care owns 52.5% of Ramsay Santé which is listed on the European financial markets’ platform Euronext.UKRamsay UK has a network of 34 acute hospitals and day procedure centres providing a comprehensive range of clinical specialities to private and self-insured patients as well as to patients referred by the NHS. Ramsay UK also operates a diagnostic imaging service and provides neurological services through its three neuro- rehabilitation facilities. Ramsay UK cares for almost 200,000 patients per year and employs more than 7,000 people.AsiaIn Asia, Ramsay Sime Darby Health Care Sdn Bhd operates four hospitals in Indonesia, four hospitals and a nursing college in Malaysia and one day surgery in Hong Kong. The business employs more than 4,000 people. Ramsay Sime Darby is a 50:50 joint venture arrangement with Malaysian multinational conglomerate Sime Darby Berhad.1. Please refer to https://www.Ramsayhealth.com/About-Us/Values website2. Closing price on 24th August 2021Asia Pacific Europe UKRevenue8%41%51%EBITDAR8%40%52%EBIT8%56%36%Admissions4%30%66%FY21 FY22FY21 and FY22F Capital Expenditure by Region $’mAsia PacificUKEuropeGlobal260400– 50058100– 140356400– 460674900– 1,100 3. ABOUT RAMSAY HEALTH CARE
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“ Our overarching vision is to leverage our global platform to be a patient-centric integrated healthcare provider of the future. The strategy balances the needs of all our stakeholders taking into account the rapidly changing environment and the pressures that this places on global healthcare systems. ”1. Ramsay Santé is a listed company on Euronext. Ramsay Health Care owns 52.5% of Ramsay Santé2. Ramsay Sime Darby Health Care SDN Bhd is a 50:50 jv with Sime Darby BerhadGlobal Health Care Services ProviderRamsay AustraliaRamsay Sime DarbyRamsay SantéRamsay UKFranceSwedenNorway Denmark ItalyIndonesiaMalaysiaHong KongStrengths of the Global Business Model• Market leading positions in private health care services Ramsay Australia – #1 Australia private hospital operator Ramsay Santé¹ – second largest private health care provider in Europe #1 France #1 Sweden #2 Norway and Denmark Italy 1 hospital in the Lombardy region Ramsay UK – largest independent supplier of services to the NHS Ramsay Sime Darby² – Indonesia, Malaysia and Hong Kong 8 facilities leveraged to the growing middle class• Strong and constructive relationships with stakeholders• Economies of scale• Diversified Portfolio – geography, payors, services mix• Clinical best practice – sharing of ideas• Scale to invest in innovation, education and research• Deep and experienced leadership teamGroup StrategyEFFICIENCY Strengthening the core through strategic sourcing and operational optimisationOperational ExcellenceRapid innovation driven by COVID-19 driving pathway modernisation delivering better outcomes for patients. Includes digital solutionsStrategic SourcingFurther levering size and scale to offset rising costs through strategic supply chainsDigitisationSector evolution is being driven by technology enabled digitisation of healthcare system interactions and clinical delivery modelsCreate the leading ecosystem for patient-centric integrated careSUSTAINABILITY Investing in strong organisational foundations Patient & Doctor ExperienceChanging patient and doctor expectations will drive changes to the model and improve outcomesClinical ExcellenceFocused on integrated disease management in key therapeutic areas; cardiovascular, cancer, orthopaedics and mental healthInnovationInvest in digital technology and research into new forms of careGlobal TalentAttraction and retention of industry leading talent will drive cross pollination of ideas around patient care and clinical excellenceGROWTH By growing, modernising and leveraging our World Class Hospital NetworkOrganic GrowthLeverage strong market share, underpinned by demographics and public sector backlog opportunitiesStrategic expansionThrough brownfield and greenfield developments expanding our footprint and creating hospitals of the futurePublic/Private CollaborationCOVID crisis has reinforced Public/Private collaboration creating opportunities across all regions to work with the public sector to improve health outcomes and drive productivityMoving purposefully into New and Adjacent Services AcquisitionsDisciplined strategy focused on acquisitions that deliver additional capabilities, integrated services and scaleIntegrated CareStrategy to expand beyond an episodic care model to delivering integrated care across pathway stages, care settings and servicesNew Models of CareManage disease in fit for purpose care settings and integrate key clinical and ancillary services 4.
KEY RISKS
Ramsay is committed to meeting high standards of risk management in conducting its business.
Effective risk management is the result of the collaborative endeavours of all key stakeholders
and is engrained in the Ramsay culture.
Ramsay faces a number of business risks that could affect its operations, business strategies and financial prospects. The key risks1 are
described below, together with relevant mitigation strategies.
Potential impact
How Ramsay is responding
Risk
COVID-19
COVID-19 continues to have a
significant impact globally.
• Government intervention in relation to the
nature and scale of surgeries
• Illness, quarantine, fatigue and mental
health impacts to our people
• Workforce shortages, including due to
health care as a profession being perceived
as less desirable
• Supply chain disruptions, particularly
Personal Protective Equipment (PPE)
• Detrimental economic impacts increasing
levels of unemployment that could
result in declines in private health
insurance membership
• Negative public perception of the
safety of hospitals impacting volume of
elective surgery
PEOPLE / WORKFORCE
People are Ramsay’s most
important asset and are
key to the organisation’s
ongoing success. It is important
that Ramsay continues to
attract and retain world class
talent and provides a safe
working environment.
• Inability to develop and implement strategy
• Increased costs to the business associated
with employee turnover and/or shortages
• Reputational damage and/or financial
penalties due to serious injury to a person
as a consequence of failure to maintain a
safe workplace
• Operational disruption due to strikes or
other forms of industrial action
CLINICAL QUALITY & SAFETY
The safety of our patients and
the delivery of high quality
clinical care is fundamental to
Ramsay’s success.
• Reputational damage as a consequence of
poor clinical outcomes
• Financial loss resulting from potential
significant medical malpractice incidents
or claims
• Potential impact on ability to recruit and
retain clinicians and employees
Ramsay has developed strong relationships with
relevant government agencies and representatives in
the regions in which it operates. This helps to ensure
that the impacts to Ramsay (as part of the broader
health care sector) are understood by government
in considering the industry-wide response. Ramsay
has had in place, and continues to negotiate,
agreements with government in each of its key
operating geographies to provide Ramsay with a
level of cost recovery in return for such capacity
arrangements (except for France, where there is a
level of revenue recovery).
Ramsay is providing support to employees, including
through additional training, its Employee Assistance
Programs and other wellness initiatives.
Strict safety protocols have been implemented in
hospitals and Ramsay has supply chain strategies in
place to ensure adequate PPE.
Ramsay strives to continue to be an employer of
choice to attract and retain employees, by:
• Ensuring an attractive employee value proposition
(e.g. remuneration, flexible working, career
progression, succession planning, training
and development)
• Maintaining an effective workplace health and
safety framework. This framework includes policies,
training, incident management, monitoring and
reporting of safety performance
• Investment in projects, technology
and infrastructure
• Focussing on The Ramsay Way culture - People
caring for people
Ramsay has in place a comprehensive Clinical
Governance Framework, which includes:
• Clinical effectiveness to ensure a high standard of
quality and continuous improvement
• Clinical risk management ensuring our services are
safe and minimise risk of error
• Credentialing, licensing and training frameworks
• Consumer participation which involves patients
and carers in quality improvement activities and
business planning through feedback.
1 This report does not identify every risk that could affect Ramsay’s business and the actions taken to mitigate these risks cannot provide absolute assurance that a risk will not
materialise. Risks presented in this section are in no particular order.
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Risk
RELATIONSHIPS WITH DOCTORS
The recommendation of a
patient’s doctor is often the
most significant factor in a
patient’s choice of hospital
in many of Ramsay’s regions.
Most doctors operating or
working at Ramsay’s hospitals
are not employees (other than in
Scandinavia) and therefore have
a choice of where to practice.
Potential impact
• Loss of doctors and associated
patient referrals
• Inability to provide leading clinical services
• Additional costs associated with doctor’s
decisions e.g. theatre times, use of supplies
and timing of patient discharge
• Policies may effectively reduce the role
of the private sector in a country’s health
system, including the involvement of the
private sector in the provision of healthcare
to public patients
GOVERNMENT POLICY & REGULATION
Ramsay operates in the
healthcare industry which is
subject to extensive laws,
regulations, policies and ethical
standards (which may vary
by jurisdiction). Government
policy may materially impact
the role of Ramsay in
provision of healthcare and/or
the affordability of private
health insurance.
FUNDERS - HEALTH INSURANCE FUNDS & GOVERNMENT SOURCES
Ramsay relies on funding
provided by private health
insurers and governments in
the provision of its services.
Changes in government or
health insurance funding could
have a material impact on
Ramsay’s operations.
• Economic factors or regulations may impact
the affordability of private health insurance
(particularly in Australia) and result in a
reduction in the level of private health
insurance coverage
• Reduction in earnings from health insurance
funding due to a decline in the profitability
of health funds, a decline in health fund
membership or an inability of health funds
to obtain premium increases (because of
government regulation or other restrictions).
• Failure to reach satisfactory commercial
terms with major insurers or changes to
government funding arrangements
• Increased costs as a result of recovery
strategies and/or financial penalties
• Suboptimal patient experience due to
delays or disruption to service delivery
• Potential consequences for individuals
(including patients and employees) of a
privacy breach
CYBER SECURITY
Ramsay handles and stores
personal information, including
health information, digitally
and in paper form for its
customers and employees.
A cybersecurity incident may
result in damage or interruption
to Ramsay’s information or
operational systems, or those
provided by third party vendors.
COMPETITION, INNOVATION, DEVELOPMENTS & ACQUISITIONS
Ramsay’s growth strategy may
be impacted by industry
disruption, innovation, the
actions of our competitors,
the ability to identify future
acquisitions or generate returns
on developments.
• Limited growth or inability to
when compared to competitors
• Limited improvement in service delivery
• Difficulty in attracting and
retaining employees
maintain earnings
a cyber breach.
• Reputational damage as a consequence of
• Inability to fully respond to industry changes
• Redundancy of services and assets
4. KEY RISKS
RAMSAY HEALTH CARE LIMITED
How Ramsay is responding
Ramsay continually invests in its facilities (e.g.
theatres, equipment, nurses, beds and suites) and
ensures it has strong relationships with its doctors
through regular support and engagement, including
providing education forums and opportunities for
innovative research.
Customer feedback (e.g. Net Promoter Score,
complaints etc.) is closely monitored as this also
impacts on doctor recommendations to patients.
Each country closely monitors current and proposed
government policy and regulation, including through:
• Maintaining and developing relationships with
Government in all regions in which it operates.
This takes place at all levels of government and at
various levels within the business (e.g. at a national
and local level).
• Membership and/or leadership in various industry
representative bodies to ensure input into
government healthcare policies and initiatives
Ramsay plays an important role in supporting the
health systems in the regions in which it operates and
works to foster strong working relationships with both
private health insurers and government funders.
Our commitment to clinical quality as well as provision
of cost effective, outcome focused care demonstrates
to third party funders the value in contracting
with Ramsay.
Cybersecurity risk is addressed through a Global
Cybersecurity Framework which includes controls
associated with prevention, detection and recovery.
In addition, the Framework is externally validated,
routinely tested and subject to ongoing review and
continuous improvement.
Innovation is a key component of Ramsay’s strategy.
This involves exploring out of hospital opportunities
as well as investing in facilities (new and existing) and
new technologies to ensure that Ramsay is meeting
consumer needs now and in the future.
Prior to undertaking any acquisition or development,
Ramsay undertakes comprehensive due diligence to
identify key risks and ensure appropriate valuation,
uses external advisors and all acquisitions are
considered by the appropriate executive committee
or the Board.
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4. KEY RISKS
RAMSAY HEALTH CARE LIMITED
Risk
CAPITAL STRUCTURE
Ramsay’s capital structure is
designed to support its strategy
and to be resilient to changes in
equity and debt markets.
Potential impact
How Ramsay is responding
• Constrained capacity to execute strategy
• Increased costs of funding
• Reduced availability of funding
Ramsay’s capital management plan ensures a strong
balance sheet to support its strategy. This includes
a plan for diverse sources of capital, ongoing
monitoring and compliance with limits and other
thresholds as set out in the Treasury Policy. The
policy provides a framework for the management of
treasury risks including liquidity risk, interest rate risk,
foreign exchange risk and counterparty credit risk,
and is audited independently.
The Ramsay Cares Sustainability Strategy outlines
a shared vision for sustainability across the global
businesses. Ramsay Cares sets measurable targets
and is supported by an investment plan. Key focus
areas include the mental health and the wellbeing
of our people, setting the foundations to reduce
our energy and emissions intensity and an emphasis
on responsible sourcing within our medical supply
chains. The strategy includes risk assessments in
each region to identify climate related risks and how
they may impact our business. The Ramsay FY21
Impact Report will include disclosure in accordance
with the Task Force for Climate-related Financial
Disclosures (TCFD).
Ramsay has a framework to manage and monitor
its legal and regulatory obligations. This includes
ensuring compliance with local laws, employee
training and effective management of licensing
and accreditation.
SUSTAINABILITY & CLIMATE CHANGE
Ramsay is committed to
sustainability and being resilient
to a changing climate
through our Ramsay Cares
Sustainability Strategy.
• Loss of reputation leading to inability to
attract employees and capital investment
• Increased operating costs from being
inefficient and exposure to more extreme
weather events
• Missed opportunities in responding to a
transition to a low carbon economy
LEGAL & REGULATORY
Ramsay operates in a highly
regulated industry. Hospitals
are required to be licensed
under various legislation in the
jurisdictions within which they
operate. Ramsay may also be
involved in disputes or litigation,
for example, with patients,
suppliers, funders, regulatory
bodies, or employees.
• Inability to operate a hospital if it is
not accredited
• Reputational damage due to lack of
compliance or disputes
• Costs associated with litigation (e.g. legal
costs and damages) or lack of compliance
(e.g. penalties)
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Annual Report 2021
5.
OPERATING AND FINANCIAL REVIEW
Martyn Roberts,
Group Chief Financial Officer
Group Performance
1 Key Highlights
• Solid result despite COVID environment; the strength of the
underlying business, together with an expanded pipeline of
growth opportunities, provides confidence for the medium to
long term despite ongoing COVID disruption in FY22.
• Statutory profit increased 58.1%, reflecting a strong increase in
admissions as our regions emerged from the initial wave of the
pandemic. The significant increase in earnings was reported
despite the disruptions caused by further COVID related lock
downs during FY21,
• A fully franked final dividend of 103.0cps was determined taking
the FY21 full year dividend to 151.5cps equivalent to the pre
COVID FY19 full year dividend (cps). The full year dividend
represents a payout ratio of 79% of statutory profit higher
than historical levels, reflecting the Board's recognition of the
support of shareholders during the uncertainty of COVID and
confidence in the strength of the Company's cashflow and
balance sheet position.
• The result includes government payments for the use of
and payments in some regions for the additional costs
associated with operating in a COVID environment.
• Ramsay’s strong balance sheet and cash flow supported the
continued investment in, and optimisation of, the Group’s
facilities and footprint to meet the strong underlying demand
for healthcare services over the medium to long term.
• The Australian business has identified a significant development
pipeline which will lead to increased capex in the next few
years as it expands the existing facilities platform and moves
into adjacent services to meet the strong underlying demand for
healthcare services.
• The business is well positioned to benefit from pent-up
demand for both private and public health care services across
our regions.
• Successfully refinanced syndicated debt facilities for both
the Wholly Owned Funding Group and Ramsay Santé, with
syndicated sustainability-linked loans with embedded targets
aligned with the Ramsay Cares strategy.
Ramsay facilities and services to assist with COVID outbreaks,
• Ascribed investment grade rating of BBB (Stable) by Fitch.
Chief Executive Officer Ramsay Santé, Pascal Roché (right), visiting Ramsay hospital Bois Bernard with Professor Benoît Vallet, Director General of the Hauts-de
France Regional Health Agency
Annual Report 2021
11
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
Overview of Results
Twelve months Ended 30 June A$'m
Asia Pacific
UK
Europe
Total segment revenue & other income
Asia Pacific
UK
Europe
EBITDAR
Rent and short term low value leases
Asia Pacific
UK
Europe
EBITDA
Depreciation
Amortisation & impairment
Asia Pacific
UK
Europe
EBIT
Financing costs (AASB16)
Net Financing Costs
Profit before Tax
Income Tax Expense
Net Profit after tax
Minority interests attributable to non-controlling interests
Net Profit after tax attributable to owners of the parent
Interim dividend per share (¢)
Final dividend per share (¢)
Basic Earnings per share (after CARES dividend) (¢)
Fully diluted earnings per share (after CARES dividend) (¢)
Weighted average number of ordinary shares (m)
Fully diluted weighted average number of shares (m)
2021
5,464.1
1,024.1
6,839.9
13,328.1
871.6
182.4
1,154.3
2,208.3
(154.8)
855.1
181.2
1,017.2
2,053.5
(849.3)
(71.6)
636.0
92.8
403.8
1,132.6
(234.2)
(156.8)
741.6
(230.1)
511.5
(62.5)
449.0
48.5
103.0
193.2
192.6
227.7
228.4
20201
5,090.0
929.5
6,398.0
12,417.5
776.2
165.9
1,031.9
1,974.0
(165.8)
759.3
164.6
884.3
1,808.2
(841.9)
(88.8)
535.0
50.6
291.9
877.5
(238.6)
(172.7)
466.2
(157.0)
309.2
(25.2)
284.0
62.5
0.0
131.0
130.5
208.1
208.9
Chg(%) CC2
7.3
14.6
3.3
9.4
11.9
14.1
14.1
13.2
3.9
12.2
14.2
17.1
14.8
(3.6)
17.4
18.1
93.1
43.8
31.0
0.9
6.3
64.0
(51.8)
69.7
(174.7)
60.4
Chg (%)
7.3
10.2
6.9
7.3
12.3
9.9
11.9
11.9
6.6
12.6
10.1
15.0
13.6
(0.9)
19.4
18.9
83.4
38.3
29.1
1.8
9.2
59.1
(46.6)
65.4
(148.0)
58.1
(22.4)
na
47.5
47.6
9.4
9.3
1 Ramsay ceased reporting a core /non-core earnings split in FY21. The FY20 reported core regional earnings split has been restated by the applicable non-core items to ensure an
appropriate comparison with FY21. The adjustments made are reflected in table below.
2 Constant currency
1.1 Adjustments to FY20 regional earnings to incorporate non-core items
Twelve months ended 30 June 2020 $'m
Amortisation - service concession assets
Net profit on disposal of non-current assets
Impairment of non-current assets
Restructuring - personnel costs
Restructuring - service costs
Income from the sale of development assets
Book value of development assets sold
Acquisition, disposal, and development costs
EBIT Impact
Income tax impact on non-core items
Non-controlling interests in non-core items net of tax
NPAT Impact
Asia Pacific
(1.7)
11.2
(16.0)
(3.7)
(18.3)
2.1
(6.8)
(6.5)
(39.7)
10.1
-
(29.6)
UK
-
-
(20.7)
(0.7)
-
-
-
(0.5)
(21.9)
2.6
-
(19.3)
Santé
-
-
(0.8)
(2.6)
(6.5)
-
-
(3.3)
(13.2)
4.5
4.6
(4.1)
Total
(1.7)
11.2
(37.5)
(7.0)
(24.8)
2.1
(6.8)
(10.3)
(74.8)
17.2
4.6
(53.0)
12
Annual Report 2021
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
1.2 Revenue Breakdown by type
Twelve months Ended 30 June $'m
Revenue from patients and other revenue
Revenue from governments under COVID 19 support contracts
Revenue from contracts with customers
Interest income
Other income - income from government grants
Other income - income from sale of development assets
Other income - net profit on disposal of non-current assets
Total revenue and other income
2021
12,435.5
428.7
12,864.2
7.1
428.3
20.4
12.3
13,332.3
2020
11,970.7
189.6
12,160.3
12.7
235.2
2.1
11.2
12,421.5
Chg (%)
3.9
126.1
5.8
(44.1)
82.1
871.4
9.8
7.3
Chg (%) CC*
5.8
134.7
7.8
(45.1)
87.3
870.7
6.3
9.4
• In FY21, Ramsay continued to make its facilities and clinical capabilities available to support public health systems in the regions it operates,
to assist in the response to further outbreaks of the COVID virus. In return, governments contributed to the overall viability of the private
hospital sector through contractual or legislative support.
• Revenue from “Governments under COVID support contracts” reflects payments received under agreements with governments in both the
UK and Australia (Victoria)1 that compensated Ramsay for the net recoverable costs associated with maintaining its facilities and workforce for
use by the public sector if required.
• “Other income from government grants” reflects payments received under French Government decrees which provided compensation for
both lost revenue and the cost from 1 March 2020 to 31 December 2020 and 1 January 2021 - 30 June 2021 (refer Divisional Results for
further detail) of Ramsay Santé providing its facilities and services to assist with supporting COVID patients. It also includes compensation for
COVID related costs from governments in the Nordic region.
• Group revenue from patients increased 3.9% over the prior corresponding period (pcp) reflecting stronger surgical admissions as the regions
emerged from the first wave of the pandemic, offset by the impact of surgical restrictions introduced under further outbreaks of the virus and
lower non-surgical admissions in the COVID environment.
• Income from the sale of development assets reflects the sale of medical suites in Australia (refer Refer Divisional Results for further detail).
• Net profit on disposal of non-current assets was earned on the sale of two facilities in France and the sale of nine facilities in Germany by
Ramsay Santé (refer to Divisional Performance for further detail).
2 EBIT
Group EBIT
Non- Recurring Items in FY21 Result
$'m
Net profit on disposal of assets
Impairment/write off of fixed assets
Transaction costs/ Acquisition, disposal, and development costs
Total Impact before tax and minority interests
One-off tax credit
Asia Pacific
11.9
(7.1)
(5.7)
(0.9)
-
UK
-
-
(8.7)
(8.7)
12.8
Europe
12.3
(27.5)
(9.4)
(24.6)
-
RHC Group
24.2
(34.6)
(23.8)
(34.2)
12.8
• Group EBIT increased 29.1% on the pcp and includes the impact of restrictions on surgical and non-surgical services across all regions
over the period, combined with the increased costs associated with operating in a COVID environment; offset to an extent by government
payments made in return for making Ramsay’s facilities and capabilities available for use by the public sector and additional compensation in
some jurisdictions for the higher costs of operating in a COVID environment.
• Net gain on the disposal of assets and investments primarily reflects the impact of the disposal of development assets in Australia combined
with the sale of nine facilities in Germany and a number in France. The profit taken on the sale of assets in Germany in the 1HFY21 result of
$25.7m has been partially offset in the full year result by provisions for indemnities and warranties associated with the sale of $24m.
• Transaction and development costs includes the $8.7m costs associated with the proposed scheme of arrangement with Spire Healthcare
plc (Spire) in the UK that did not proceed. In total, transaction costs were $23.8m over the 12 month period compared to $10.3m in the pcp.
• The 6.6% decline in rent primarily relates to the sale of assets and the restructure of the portfolio in the European business.
• The 0.9% increase in depreciation primarily relates to the pipeline of new developments reaching completion and operation at the end of
FY20 in the Australian business.
1 Refer Divisional Performance for further details on these contracts
Annual Report 2021
13
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
3 Financing Costs and Tax
• Net financing costs declined 9.2% over the pcp due to lower
average interest rates and lower average drawn debt levels
following the pay down of facilities from the proceeds of the
$1.5bn capital raising in April/May 2020.
• Financing costs includes the cost of closing out existing swaps
during the refinancing of Ramsay Sante's syndicated debt facilities
in May 2021 of $12.5m.
• The effective tax rate for the period was 31%, lower than the
forecast 33% at the 1HFY21 and slightly lower than the pcp due
to a one off tax credit of $12.8m booked in the UK related to
the enacted change in the corporate tax rate during the period,
resulting in an increase in the value of deferred tax assets (from
leases) generating a tax credit (the UK tax rate has been legislated
to rise from 19% to 25% from 1 April 2023).
4 Balance sheet
• The balance sheet remains in a strong position with the financial
flexibility to fund the Company's development pipeline and
expansion opportunities. At 30th June 2021 the balance sheet
reflected the funds drawn down and held in escrow for the
proposed scheme of arrangement with Spire Healthcare plc (Spire)
($1.96bn) (reflected in "Other Assets". The scheme of arrangement
was voted against by Spire shareholders in July1 and the funds
have been released and the debt repaid.
• On a proforma basis (assuming the the Spire transaction was not
in process at 30 June 2021 ), available liquidity in the form of
cash and undrawn facilities to the Wholly Owned Funding Group2
WOFG) as at 30th June was A$2.4bn ($1.147bn as reported at 30th
June 2021).
• Proforma leverage, return and net debt metrics are reflected in the
table below.
• In June 2021, Ramsay announced the refinancing of the WOFG
bank debt due in October 2022 with a $1.5 billion multi-currency
syndicated sustainability linked loan facility. The new facility
comprises three $500m tranches maturing in three, four and five
years respectively.
• The new facility has embedded targets that are aligned with the
three pillars of the Ramsay Cares sustainability strategy - Caring
for People, Caring for Planet and Caring for Community. The
targets have been designed to drive a more intense focus through
the business on sustainability, including on the mental health and
wellbeing of employees, setting the foundations to reduce our
energy intensity and emissions and an emphasis on responsible
sourcing within our medical supply chains.
• In April 2021, the Ramsay Santé Group refinanced its entire
€1,650m syndicated debt facility which was due in October 2022
and October 2024 with a sustainability linked loan. The facility
comprises two tranches, €900m which matures on April 22, 2026
and €750m on April 22, 2027 and has sustainability targets
specific to the European business that also align with the "Ramsay
Cares" strategy. The refinancing was completed at materially
improved margins and is expected to drive interest cost savings
in the order of €10m in FY22.
A$'m
Working capital
Property plant & equip
Intangible assets
Current & deferred tax assets
Other assets/(liabilities)
Capital employed (before right of use assets)
Right of use assets
Capital employed
Capitalised Leases (AASB16)
Net Debt1
Total shareholders funds (excl minority interest)
Invested Capital
Return on Capital Employed (ROCE) (%)
Return on invested capital (ROIC) (%)2
Wholly Owned Funding Group Leverage (Old Lease Standard AASB 117) (x)
Consolidated Group Leverage (New Lease Standard AASB 16) (x)
FFO adjusted leverage (x)3
30-6-2021
(802.9)
4,488.6
4,233.6
150.7
1,654.3
9,724.3
4,411.5
14,135.8
5,271.0
4,314.0
4,032.7
8,346.7
8.6
5.4
2.9
4.7
2.0
31-12-2020
(1,225.0)
4,466.6
4,203.3
211.6
(267.0)
7,389.4
4,328.8
11,718.2
5,142.7
2,149.4
3,925.5
6,074.9
7.0
4.1
0.9
3.4
-
30-6-2020
(875.6)
4,447.2
4,246.1
143.6
(138.7)
7,822.6
4,477.9
12,300.5
5,289.2
2,775.4
3,752.5
6,527.9
8.7
4.4
1.0
4.4
4.5
1 Net debt includes derivatives and excludes lease liabilities
2 ROIC calculated as rolling 12 month NPAT/Shareholders funds minus lease liabilities
3 FFO - funds from operations. Ramsay estimate calculated in line with credit rating agency Fitch methodology. Fitch calculation may differ. FY21 calculation is on a proforma basis assuming
that the Spire transaction was not in process at 30th June 2021
1 Refer ASX announcement on 19th July for further details on the vote
2 WOFG - excludes Ramsay Santé and Ramsay Sime Darby. Banking covenants calculated on WOFG balance sheet
14
Annual Report 2021
Proforma Net Debt, Leverage and Return Metrics at 30th June 2021
Net debt (excl. lease liability debt and incl. derivatives) A$'m
Return on Capital Employed (ROCE) (%)
Return on invested capital (ROIC) (%)2
Wholly Owned Funding Group Leverage (Old Lease Standard AASB 117) (x)
Consolidated Group Leverage (New Lease Standard AASB 16) (x)
1 Assumes Spire transaction was not in process at 30th June 2021
2 ROIC calculated as: rolling 12 month NPAT/Shareholders funds plus net debt minus liabilities
5 Cashflow
Twelve months ended 30 June A$'m
EBITDA
Changes in working capital
Finance costs
Income tax paid
Movement in other items
Operating cash flow
Capital expenditure
Free cash flow
Net (acquisitions)/divestments
Interest & dividends received
Cash flow after investing activities
Dividends
Other financing cash flows
Net increase/(decrease) in cash
Interest cover (x) (EBITDA/finance charges)
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
30-6-20211
2,355.7
9.3
7.0
0.7
3.7
30-6-2020
2,775.4
8.7
4.4
1.0
4.4
2021
2,053.5
(72.7)
(367.5)
(228.2)
96.1
1,481.2
(628.9)
852.3
(1,910.2)
34.9
(1,023.0)
(125.1)
709.1
(439.0)
5.6
2020
1,808.2
435.0
(418.8)
(203.4)
59.7
1,680.7
(680.6)
1,000.1
(22.7)
47.3
1,024.7
(335.1)
103.2
792.8
4.3
Chg (%)
13.6
(116.7)
12.2
(12.2)
61.0
(11.9)
7.6
(14.8)
(8,315.0)
(26.2)
(199.8)
62.7
587.1
(155.4)
n/a
• In France, cash advances received under revenue guarantee arrangements are reflected in working capital for the period and were in excess
of revenue guarantee accruals.
• The 2020 change in working capital reflected the impact of cash advances received from the French government in relation to the revenue
guarantee scheme. So far, the payments have not been settled to the extent anticipated, resulting in only a small change in working capital in
2021. At 30th June 2021 the settlement to be paid to the French Government is estimated at €121m.
• The decline in dividends paid reflects the Boards decision not to determine an FY20 final dividend.
• Net acquisitions reflects the funds placed in escrow at 30th June for the purposes of the proposed Spire transaction (A$1.96bn). These
amounts were returned and the debt repaid following the shareholder vote in July.
• Financing cashflows reflect the repayment of debt facilities following the $1.5bn capital raising launched in April 2020.
• Group capital expenditure over the period, including commitments, was A$674m split between Europe, A$356m, Australia A$260m and
the UK A$58m. Capital expenditure declined on the pcp reflecting spend brought forward into FY20 following the completion of Australian
projects ahead of time.
• Group capital expenditure for FY22 is expected to be in the range $900-1,100m. Refer to Divisional Performance for further details.
Annual Report 2021
15
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
6 Outlook
Outlook
• Ramsay’s FY22 result will be impacted by the effectiveness of
the ongoing global response to the COVID pandemic, including
the success of vaccination programs in each region in reducing
the number and severity of COVID cases. Vaccination rates
will dictate the extent to which each region can operate on an
unrestricted capacity basis and will influence patient and doctor
comfort levels in returning to a hospital environment for both
surgical and non-surgical services.
• Surgical backlogs and latent demand for non-surgical services
are expected to continue to drive volumes as countries emerge
from lock-downs. Ramsay expects to assist with relieving
pressure on public waiting lists. The pace at which backlogs
are addressed will be dependent, to an extent, on governments
providing health systems with additional funding.
• In Australia, the 1HFY22 results will be impacted by reduced
activity levels flowing from the lock-downs in NSW, Queensland
and Victoria. The EBIT impact of lock-downs in July in Australia
was approximately $13m (inclusive of higher costs associated
with COVID).
• Due to the introduction of surgical restrictions on 23rd August
2021 at seven of Ramsay's hospitals in Greater Sydney, the total
EBIT impact in FY22 is forecast to be significantly more material
and will depend on the duration of the restrictions. By way of
reference, the estimated EBIT impact of an approximately 90
day restriction on elective surgeries in Victoria in 2020 was
$70m. Ramsay's business in NSW is approximately twice the
size of Victoria.
• In the absence of further lock-downs, earnings are expected
to improve as peak COVID costs decline and further business
efficiencies are identified. While margins are expected to
improve through a return to a pre-COVID case mix over time
and peak COVID costs abating, the results will continue to be
impacted by higher usage and elevated costs of PPE and other
ongoing costs associated with social distancing and screening
(refer Divisional Results for further information on the Outlook
for Asia Pacific).
• In the UK, the business is focused on the significant opportunity
associated with the backlog of privately insured and self-funded
patients in the UK and increasing its market share of these
segments over time through further investment in clinical
excellence to attract doctors and patients.
• Ramsay UK signed a new National Increasing Capacity
Framework Agreement with the NHS for an initial term of two
years, plus a two-year extension. The business will continue
to support the NHS priorities flowing from the impacts of the
pandemic and will work with the NHS to assist with addressing
the backlog in elective procedures and treatments and waiting
list reduction.
• Activity in July and August has been impacted by snap 10-day
isolation orders notified by the UK Government's COVID tracing
app. This has resulted in employees, doctors and patients being
forced to isolate at short notice, driving the cancellation of
surgeries. As the rules stipulating isolation upon receipt of an
app notification are rolled back, the recovery in admissions is
expected to continue.
• The UK business will have the full year benefit of capacity
in three new facilities completed in the last twelve months.
The business will continue to look for opportunities to expand
the hospital footprint with new greenfield sites (refer Divisional
Results for further detail on the outlook for the UK).
• The French Government has extended the revenue guarantee
decree issued in April 2021 for the period 1 January - 30 June
2021 to 31 December, providing support and certainty to
Ramsay Santé. The businesses in the Nordics are expected
to continue to perform strongly ex-lockdowns, as countries in
the region emerge from COVID and the backlog in demand for
health care services is addressed (Refer Divisional Results for
further detail on the outlook for the Europe).
• COVID case numbers in France and the Nordic region
increased in July and August, driving higher hospitalisations;
both businesses will be impacted by any further lock-downs.
• Ramsay will continue to invest in the business and optimise its
facilities and footprint to strengthen its competitive advantage
and leverage the scale of the business. Total Group capital
expenditure for FY22 is expected to be in the range of
$900m-1.1bn. The increase in capital expenditure is primarily
being driven by an increase in brownfield capital expenditure in
Australia, combined with growth capital expenditure in Europe
and the UK and an increase in digital investment in the UK.
• Capital expenditure is expected to remain at elevated levels in
FY23-FY25 in light of the significant development pipeline in
the Australian business.
• Ramsay’s strong balance sheet and cashflow position the
business well to deliver on its long-term strategy and the
business will remain disciplined in its approach to investment.
• As part of its commitment to sustainability, Ramsay has
commenced aligning its reporting with the Taskforce for
Climate related Financial Disclosures (TCFD) recommendations
on climate-risk.
• Investment in the Ramsay Cares sustainability strategy will be
focused on the mental health and wellbeing of employees,
setting the foundations to reduce the Company's energy
intensity and emissions and an emphasis on responsible
sourcing within medical supply chains.
16
Annual Report 2021
Divisional Performance
7 Asia Pacific
7.1 Overview of Results
Australia
Twelve months Ended 30 June $'m
Revenue from patients
Revenue from governments under COVID 19 support contracts
Other income - income from the sale of development assets
Other income - net profit on disposal of assets
Intersegment revenue
Total revenue and other income
EBITDAR
Rent
EBITDA
Depreciation
Amortisation and impairment charges
EBIT
Financing costs associated with leases (AASB16 leases)
EBIT after financing costs associated with leases
Capital Expenditure
2021
5,429.7
11.1
20.4
-
2.9
5,464.1
860.8
(16.5)
844.3
(204.9)
(14.2)
625.2
(38.8)
586.4
260.0
1 FY20 restated to reflect non-core items taken below the line in FY20. Refer Group Performance for allocation of non-core items
Contribution from Asian Joint Venture
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
20201
5,037.1
30.9
2.1
11.2
8.7
5,090.0
760.3
(16.9)
743.4
(197.4)
(26.9)
519.1
(35.3)
483.8
348.8
2020
15.9
2020
968.9
214.5
100.6
Chg (%)
7.8
(64.1)
871.4
na
(66.7)
7.3
13.2
2.4
13.6
(3.8)
47.2
20.4
10.0
21.2
(25.5)
Chg (%)
(32.1)
Chg (%)
11.2
12.3
32.5
2021
10.8
2021
1,077.8
240.8
133.3
Twelve months Ended 30 June $'m
Share of profit from Joint Venture
Twelve months Ended 30 June MYR'm
Revenue
EBITDA
EBIT
7.2 Review of Results
7.2.1 Australia
• During the 1HFY21, Ramsay Australia assisted the Victorian
Government with both staff and facilities to support the public
hospital system and aged care sector impacted by the second
significant wave of COVID cases in that state.
• Elective surgery restrictions in Victoria were reintroduced on
23 July 2020, phasing out from the end of September with
100% unrestricted capacity in all hospitals returned at the end of
November. The estimated impact of these restrictions to EBITDAR
in 1HFY21 was $70m.
• Total revenue includes $11.1m received from state governments
(mainly the Victorian Government) under the viability agreement
that commenced on 23 July 2020, which allowed net recoverable
costs (recoverable costs less any revenue generated from
operations calculated on an accruals basis) to be claimed by
Ramsay in return for maintaining full workforce capacity at the
facilities required to assist with the COVID pandemic.
• The result was impacted by the transfer of the Mildura hospital
back to the Victorian State Government on 14th September 2020
(revenue impact $50.5m compared to the pcp).
• Over the course of 2HFY21, the Australian operations were
impacted by COVID induced snap lock-downs across all states.
The impact of each lock-down was influenced by whether surgical
restrictions were imposed, the number of work days impacted
and the nature of facilities in the state, such as emergency
departments. The total cost to EBITDAR of the multiple state lock
downs is estimated to have been $13m.
• Ramsay Australia reported a 7.8% increase in revenue from
patients compared to the pcp (ex-Mildura up 10.2%)3.
– Revenue from patients in 2HFY21 increased 15.7% compared to
the pcp to $2.1bn (19.2% increase ex-Mildura hospital).
– Revenue for 2HFY21 increased 4.8% compared to 2HFY19 (ex-
MIldura an increase of 7.8%).
• FY21 surgical admissions per work day increased 12.8% on the pcp
(ex-Mildura increased 15.2%).
– Surgical admissions per work day in 2HFY21 increased 23.9%
on the pcp (ex-Mildura an increase of 27.2%).
– Surgical admissions in 2HFY21 increased 5% on 2HFY19 despite
the impact of snap lock-downs (ex-Mildura an increase of 7.5%).
• Non-surgical admissions per work day for the twelve months
including medical, psych, obstetrics and rehabilitation were 2.1%
above the pcp (up 3.1% ex-Mildura) the lower growth reflecting the
impact of social distancing and lock-downs.
3 Ramsay transferred the operation of the Mildura public hospital back to the Victorian Government in September 2020
Annual Report 2021
17
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
– Non-surgical admissions in 2HFY21 were 10.7% above the pcp
(ex-Mildura an increase of 12.4%) driven by improving trends in
rehab and psych and stronger maternity volumes, however non
surgical admissions were impacted by snap COVID lock-downs.
– Non-surgical admissions in 2HFY21 were 1.1% above 2HFY19 (ex-
Mildura an increase of 2.3%) driven by weakness in day patient
psych, inpatient rehab and maternity admissions.
• Strong public admissions growth in Ramsay’s non-public hospitals,
revenue was up 100% from a low base and admissions were up
40% on pcp.
• The result was impacted by the transfer of the Mildura hospital
back to the Victorian State Government on 14th September 2020
(revenue impact $50.5m compared to the pcp).
• Revenue from the pharmacy network grew 3.4% over the
pcp to $464m, driven by improved performance from our
hospital dispensaries offsetting the lower revenue from the retail
pharmacies due to the closure of stores or reduced hours during
the year.
• EBITDAR increased 13.2% on the pcp and includes the impact
of increased costs associated with operating in the COVID
environment including the higher costs and usage of PPE, higher
personnel costs associated with screening and social distancing
and lower volume rebates. In 1HFY21, the impact of COVID related
costs (excluding Victoria) to EBITDAR was $8-9m per month on
average and reduced to $4-5m per month on average in 2HFY21.
• EBITDAR includes profit on the sale of medical suites of $11.9m
compared to profit on disposal of assets combined with the net
income from the sale of development assets in the pcp of $6.5m
in the pcp. Refer to Group Performance for further details on non
recurring items in the result.
• In FY21, an impairment/write-off of $7.1m was taken compared to a
$16m impairment in the pcp.
• Depreciation increased 3.8% on the pcp, reflecting new
facilities completed in FY20 as part of Ramsay’s brownfield
expansion program.
• The Australian result includes global head office costs that
increased by $30.1m at the EBIT level compared to the pcp,
primarily due to additional LTI and STI provisions and an increase
in other provisions versus the pcp.
Ramsay Australia CEO Carmel Monaghan celebrates the local partnership
between Waverly Private Hospital and Oz Harvest
18
Annual Report 2021
7.2.2 Ramsay Sime Darby
• The contribution from Ramsay Sime Darby (RSD) declined 32% on
the pcp to $10.8m.
• The result was impacted by an impairment taken against the Hong
Kong operation and a significantly higher tax rate due to a lower
investment tax allowance.
• Revenue increased 11.2% to MYR1,077.8m. Lower elective surgical
admissions were offset by higher diagnostic pathology services
in Indonesia and Malaysia driven by an increase in COVID PCR
testing and admission of COVID patients in Indonesia as a result of
a significant growth in cases in both countries.
• In Malaysia, RSD hospitals have worked closely with the
Government resulting in contracts to take non-COVID patients for
certain procedures from the public system to relieve the pressure
on public facilities caused by COVID cases. RSD has also been
treating self-funded COVID cases.
• RSD hospitals in Indonesia continue to treat Government, insured
and self-funded COVID patients.
• During the 12 month period, RSD acquired one hospital in Malaysia
and signed the sale and purchase agreement for the divestment
of the nursing college in Malaysia, which is pending the Ministry
of Higher Education's approval, targeted to be obtained before the
end of 2021.
Ramsay Sime Darby team members at The Central Hospital Hong Kong
7.3 Capital Expenditure
• Ramsay Australia capital expenditure for the 12 month period
was $260m, with $140m invested in brownfield and greenfield
developments. Projects completed during the 12 month period
delivered 93 gross beds (net 25 beds), 3 theatres (net 1) and 17
renal chairs (net 7). Spend was lower in FY21 than the pcp due
to the pull forward of spend as a number of projects completed
earlier than schedule in FY20.
• Spend included $16.7m on digital projects during the year.
• Total capital expenditure in FY22 is expected to be in the range
$400-500m. Of this $260-340m is expected to be invested in
greenfield or brownfield projects. This represents a significant
increase in investment on the pcp, reflecting the acceleration
of a number of projects to modernise and expand the existing
hospital footprint, build out the mental health offering, invest in
opportunities in new and adjacent health services and expand
the cancer care business. Projects in FY22 include expansions
at Greenslopes, Westmead, Beleura, Pindara and Hollywood
combined with the greenfield hospital development at Epping
in Victoria.
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
7.4 Outlook
• Ramsay Australia expects the volatility in patient admissions
to reduce as vaccination rates increase, diminishing the need
for lock-downs due to COVID outbreaks. The rate of recovery
in demand for non-surgical services will be impacted by any
ongoing COVID related operating restrictions and confidence
among doctors and the general public to return to the
hospital environment.
• While broad surgical restrictions had not been put in place
initially in Greater Sydney, the extended lock-down that
commenced in late June caused significant disruption to
admissions as patients cancelled appointments, staff and
doctors were forced into isolation due to exposure to COVID
cases in the community and social distancing rules came back
into force, impacting rehab and mental health admissions.
• The Victorian lock-downs since year-end have not imposed
surgical restrictions but activity levels have been impacted
by cancellations.
• Despite the lock-downs, total admissions for July (ex-Mildura)
increased 4.3% compared to July 2020 and 6.3% compared to
July 2019.
• The EBIT impact of lock-downs in Australia in July was
approximately $13m inclusive of COVID costs.
• Due to the introduction of surgical restrictions on 23rd August
2021 at seven of Ramsay's hospitals in Greater Sydney, the total
EBIT impact in FY22 is forecast to be significantly more material
and will depend on the duration of the restrictions. By way of
reference, the estimated EBIT impact of an approximately 90
day restriction on elective surgeries in Victoria in 2020 was
$70m. Ramsay's business in NSW is approximately twice the
size of Victoria.
• Over the medium term, top line organic growth is expected
to be driven by a backlog in elective surgical admissions, a
recovery in non-surgical admissions, organic market growth,
a drive by the business to increase market share through
investment in clinical facilities to attract new doctors and the
expansion and improvement of the current hospital footprint.
• Ramsay Australia will continue to incur higher costs associated
with operating in a COVID environment in FY22, primarily
around the increased use and cost of PPE and the impact
of social distancing measures. Scale benefits associated with
global procurement, calculated on a calendar year basis, are
expected to return in FY22 as volumes recover, however they
will be impacted by lock-downs. Average monthly increase in
costs associated with operating in a COVID environment ex
the lock-downs are expected to continue to be in the order of
$4-5m per month in 1HFY22.
• Ex-lockdowns case mix is expected to move back towards pre
COVID levels, positively impacting margins, however overall
EBITDAR margins are not expected to return to FY19 levels
in FY22 due to the higher costs of operating in the
COVID environment.
• Costs will be impacted by an increase in superannuation rate for
employees and the imposition of the mental health levy via a
payroll tax increase in Victoria from 1st January 2022.
• If borders remain closed, the availability of overseas trained
nursing staff may become an issue for the business from a
cost and availability perspective. Ramsay is focused on creating
strong graduate training programs to build an experienced staff
pool in-house to fill potential gaps.
• Depreciation is expected to increase in line with the completion
of brownfield developments and the accelerated depreciation
of two sites due to future planned upgrades and the return of
the Peel public hospital to the Western Australian Government
in August 2023.
• The pharmacy business is moving towards a model that focuses
on hospital dispensaries and community franchise pharmacies
co-located with or near medical centres and Ramsay sites
to support patient pathways as part of an integrated health
care solution.
• Ramsay Sime Darby will continue to offer assistance to the
public sector in its regions. The joint venture expects to
continue to participate in PCR testing across the regions,
supporting earnings in some areas. A return to pre-pandemic
elective surgery and medical admissions will be dictated
by the reduction in the spread and the impact of COVID,
with vaccination rates currently low due to the availability of
vaccines. The business should benefit from a new hospital in
Malaysia acquired in 2HFY21.
Ramsay Australia Chief Executive Officer, Carmel Monaghan (second from the left) and team members
Annual Report 2021
19
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
8 Ramsay UK
8.1 Overview of Results
Twelve months Ended 30 June $'m
Revenue from patients and other revenue
Revenue from governments under COVID 19 support contracts
Total revenue and other income
EBITDAR
Rent
EBITDA
Depreciation and amortisation
Impairment
EBIT
Financing costs associated with leases (AASB16)
EBIT less financing costs associated with leases
Capital Expenditure
2021
606.5
417.6
1,024.1
182.4
(1.2)
181.2
(88.4)
-
92.8
(81.8)
11.0
58.0
1 FY20 restated to reflect non-core items taken below the line in FY20 refer Group Performance for allocation of non-core items
Overview of Result in Local Currency
Twelve months Ended 30 June £'m
Total Revenue and other income
EBITDAR
EBITDA
EBIT
8.2 Review of results
• Ramsay UK continued to support the NHS as further waves of
the pandemic impacted the public health system during the year.
Ramsay has treated 650,000+ NHS patients since the start of the
pandemic, performed 16,000+ cancer treatments for the NHS and
hosted 20+ NHS services including 50,000+ MRI and CT scans.
• In 1HFY21, Ramsay UK operated under an agreement with the
NHS1 covering the period 1 July 2020 to 31 December 2020.
The agreement provided for Ramsay UK to receive net cost
recovery for its services to NHS and allowed for the return of
some capacity for private patient activity and routine NHS elective
surgery activity.
• In 2HFY21, Ramsay operated under a revised volume-based
agreement with the NHS, covering the period 1 January 2021
through to 31st March 20212. As a result of the jump in COVID
cases, the NHS triggered peak surge arrangements, resulting in
Ramsay capacity at 14 hospitals being utilised during the 3QFY21.
In these circumstances, Ramsay was paid on a cost recovery basis.
• In the 4QFY21, Ramsay provided activity to the NHS under a
new National Increasing Capacity Framework Agreement. This
operating arrangement with the NHS is expected to continue
through FY22.
20201
770.8
158.7
929.5
165.9
(1.3)
164.6
(93.2)
(20.8)
50.6
(85.1)
(34.5)
65.7
2020
494.8
89.5
88.8
26.9
Chg (%)
(21.3)
163.1
10.2
9.9
(7.7)
10.1
5.2
na
83.4
3.9
131.9
11.7
Chg (%)
14.7
13.0
13.2
91.1
2021
567.7
101.1
100.5
51.4
• The net cost recovery paid under the NHS agreement for the
12 month period was A$417.6m and is reflected in revenue from
government contracts.
• Private admissions returned strongly post the lock-down easing in
April and the increased weighting to these admissions during the
4QFY21 improved payor and complexity mix.
• The 21.3% decline in net patient revenue reflects the capacity
restrictions under the various agreements with the NHS during the
12 month period.
• Neurological rehabilitation revenues over the 12 month period
increased 4.4% despite social distancing restrictions and reflected
an improved contribution.
• EBITDAR increased 9.9% and included a 10% increase in personnel
costs and an 18.9% increase in supplies and purchases, both
increases reflecting higher costs associated with operating in a
COVID environment.
• The result includes A$8.7m of transaction costs associated with
the proposed scheme of arrangement with Spire, which was voted
down by Spire shareholders on 19th July 2021.3
1 ASX announcement 14 October 2020 “Ramsay Health Care Varies Agreement with NHS”
2 ASX announcement 22 December 2020 "Ramsay Health Care enters new agreement with NHS England"
3 ASX announcement 19 July 2021 "Results of Scheme Meeting"
20
Annual Report 2021
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
8.3 Capital Expenditure
• Capital expenditure over the 12 month period was A$58m, of
which $23m was invested in brownfield developments, digital
and growth projects. Projects included two new day hospitals
in Beacon Park Hospital and Stourside Hospital, with a third,
Buckshaw Hospital in Preston, due to open in September 2021.
• Ramsay UK also invested £12m in expanding and upgrading its
diagnostic capabilities. The investment has been made in both
new and upgraded modalities, including MRI, CT, X-ray and
3D mammography, as well as digital and remote technologies
supporting the ongoing strategic commitment to expanding
capacity for diagnostic services and ensuring the latest diagnostic
technologies within and across the hospital footprint. The
investment is critical to developing end-to-end patient pathways
and meeting the sustained demand for health services forecast in
the UK over the next few years.
• It further invested and deployed key technological infrastructure
projects, including the roll-out of SAP and upgraded the electronic
patient record (ePR) at 13 pilot locations prior to the full
deployment of ePR to the remaining hospitals across the UK by
November 2021.
• Capital expenditure in FY22 is forecast be in the range $100-140m.
Projects will be focused on:
– Strengthening the core hospital business, developing further
greenfield hub-spoke day surgery and inpatient capabilities
and diagnostic imaging capacity and enhanced remote and
AI functionality;
– Upfront investment in the patient health platform, with
stakeholder interface and patient engagement including
building digital bookings to insurers and integration with the
electronic patient record development program commenced in
FY21; and
– Further investment in core network architecture and data
management systems, including cloud capabilities and
cyber security.
8.4 Outlook
• In April 2021, Ramsay signed a new National Increasing Capacity Framework Agreement with the NHS for an initial term of two years,
plus a two-year extension.
• The business is focused on the significant opportunity associated with the backlog of privately insured and self-funded patients in
the UK and to increase its share of these markets over time through increased investment in clinical excellence to attract doctors
and patients.
• Ramsay will continue to support the NHS priorities flowing from the impacts of the pandemic and will work with the NHS to assist with
addressing the backlog in elective procedures and treatment and waiting list reduction.
• The FY22 result will have the full year benefit of capacity in three new facilities completed in the last 12 months. It will continue to look
for opportunities to expand the hospital foot print with new greenfield sites.
• Activity in July and August has been impacted by snap 10-day isolation orders notified by the UK Government's COVID tracing app. This
has resulted in employees, doctors and patients being forced to isolate at short notice, driving the cancellation of surgeries. As the rules
stipulating isolation upon receipt of an app notification are rolled back, the recovery in admissions is expected to continue.
• While 98% of Ramsay UK employees have been vaccinated, there is expected to be a need for booster vaccines to counter new
variants of the virus and the risk of further lock-downs and uncertainty around the operating environment.
• It remains unclear whether Brexit and the post-COVID demand for additional nurses and clinicians in most countries in the world will
impact Ramsay's access to appropriate skills and place pressure on the cost base in the UK.
• Whilst Ramsay UK will continue to be impacted by the higher costs associated with the COVID environment, the business has a number
of efficiency projects in place to offset the increase in costs.
• The NHS 2021/22 tariff is yet to be finalised and is not due to be implemented until 1 October 2021.
Ramsay UK Chief Executive Officer, Dr Andrew Jones opening one of our new facilities, Stourside Hospital
Annual Report 2021
21
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
9 Ramsay Santé
9.1 Overview of Results
Twelve months Ended 30 June A$'m
France
Revenue from patients and other revenue
Other income - net profit on disposal of assets
Income from government grants
Total revenue and other income
EBITDAR
Rent
EBITDA
Depreciation and Impairment
Amortisation
EBIT
Financing costs associated with leases (AASB16)
EBIT less financing costs associated with leases
Nordics
Revenue from patients and other revenue
Income from government grants
Other income - net profit on disposal of assets
Total revenue and other income
EBITDAR
Rent
EBITDA
Depreciation
Amortisation
EBIT
Financing costs associated with leases (AASB16 leases)
EBIT less financing costs associated with leases
Total Revenue and other income - Europe
EBIT - Europe
Total Europe Capital Expenditure
2021
20201
Chg (%)
4,574.9
10.3
336.4
4,921.6
947.4
(117.5)
829.9
(465.7)
(7.0)
357.2
(103.5)
253.7
1,824.4
91.9
2.0
1,918.3
206.9
(19.6)
187.3
(112.0)
(28.7)
46.6
(10.1)
36.5
6,839.9
403.8
356.2
4,352.7
-
235.2
4,587.9
863.4
(122.7)
740.7
(446.7)
(8.9)
285.1
(107.6)
177.5
1,810.1
-
-
1,810.1
168.5
(24.9)
143.6
(104.6)
(32.2)
6.8
(10.6)
(3.8)
6,398.0
291.9
280.2
5.1
na
43.0
7.3
9.7
4.2
12.0
(4.3)
21.3
25.3
3.8
42.9
0.8
na
na
6.0
22.8
21.3
30
(7.1)
10.9
585.3
4.7
na
6.9
38.3
27.1
1 FY20 result in the table above is restated to reflect non-core items taken below the line in FY20. Refer Group Performance for allocation of non-core items
Ramsay Santé - Result in local currency
Twelve months Ended 30 June €'m
Total Revenue and other income
EBITDAR
EBITDA
EBIT
9.2 Review of Results
• Over the 12 month period, Ramsay Santé continued to play an
important role in assisting governments in the regions in which
it operates to deal with the pandemic. The business treated well
above 11,000 COVID patients in its facilities, significantly above
Santé's market share in France and Sweden.
• In May 2020, the French Government issued a decree providing
private hospital operators, including Ramsay Santé, with a
guarantee of revenue for the ten months from 1 March 2020 to
31 December 2020, to compensate for the use of its facilities and
services if required during the pandemic. The revenue guarantee
was based on the average monthly revenue in CY2019 indexed
for one year and multiplied by 10, reflecting the months covered
1 Refer ASX announcement 19 April 2021 for further details on the new decree
22
Annual Report 2021
2021
4,282.5
722.7
636.9
252.8
2020
3,887.2
641.1
551.5
192.8
Chg (%)
10.2
12.7
15.5
31.1
by the decree. The method of calculation smoothed the business
seasonality driven by the northern hemisphere summer.
• In April 2021, the French Government issued a new revenue
decree providing support for Ramsay Santé’s operations from
1 January 2021 to 30 June 2021.1 The calculation of revenue under
the new decree is similar to the calculations under the decree
issued in 2020, based on average monthly revenue in CY2019
with some indexation applied. Income from government grants in
France for FY21 was $336.4m.
• The payments made under the revenue guarantee in France are
yet to be fully settled with Ramsay's actual billings, the build
up in working capital on the balance sheet since the start of
the pandemic has declined from its peak at 31 December 2020,
however is still material. The current estimate of the payment to
5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
settle with the French Government at 30th June is currently a net
position of €121m.
• In parallel with the revenue guarantee scheme, the French
Government also provided compensation for the additional costs
incurred related to operating in a COVID environment, including
additional PPE costs.
• The French Government also provided compensation for the
material increase in salaries for nursing staff committed to by the
French Government in 2020. The increase in salaries has been
built into tariffs from 1 March 2021 for the MSO (medical, surgical
and obstetrics) business moving forward. The compensation for
salary increases is reflected in the revenue line, offsetting the
additional costs in the personnel expenses line.
• Ramsay Santé also received compensation from governments
in the region for both lost revenue and costs associated with
operating in the COVID environment in the Nordics region,
predominantly in Sweden.
• Total European revenue increased 6.9% to $6,839.9m and
included government support payments of A$428.3m. Revenue
was impacted by the sale of a portfolio of nine German hospitals in
1HFY21 of ~€80m.
• During the period Ramsay Santé also booked transaction and
development costs of $9.4m compared to $3.3m in the pcp
• Revenue from patients in the French business increased by 5.1%
on the pcp, primarily due to the inclusion of the significant tariff
increase related to the nursing salary increase. A strong first
quarter in surgical volumes was offset by the cancellation of non
urgent surgical and medical activity at various times over the
course of the rest of the year, as COVID cases took priority.
• Total MSO admissions in France increased 8.8% on the pcp to
2.1m, however inpatient admissions were down 1.5% limited by
social distancing requirements and the reluctance of the public to
attend hospitals due to the presence of COVID patients.
• Mental health admissions increased 5.9%, however inpatient
admissions were impacted by social distancing requirements, as
were rehabilitation admissions.
• The French result includes net profit on disposal of assets of
$10.3m in France and reflects the sale of the Saint Vincent clinic
in Besançon and the Saint Pierre Clinic in Pontarlier in France
as part of the ongoing optimisation of Ramsay Santé’s portfolio
of facilities.
• EBITDA in France increased 9.7% on the pcp to $947.4m, positively
impacted by realised synergies from the Capio acquisition being
well above initial estimates of €20m and also supported by
Government compensation for increased costs associated with
operating in a COVID environment.
• France's result includes a $27.5m impairment of hospitals
identified as part of the ongoing strategic review of the portfolio
compared to a $0.8m impairment charge in FY20.
• Patient revenue in the Nordic region increased 0.8% over the
pcp, reflecting the divestment of the German business (impact
~€80m revenue in the pcp). Patient revenue in the Nordics,
excluding the effect of the German business, reported an organic
revenue growth of above 9%. The organic growth was driven by
the less volatile capitation reimbursement model in Sweden, the
primary care nature of a lot of the businesses, new care contracts,
the ophthalmology business in Norway and higher volumes in
Denmark and a less severe impact on activity from COVID across
most of the region. Total growth in the Nordics was also positively
impacted by a number of small bolt-on acquisitions made during
the year.
• During the 2QFY21, the Nordic region disposed of nine clinical
facilities in Germany acquired as part of the Capio acquisition in
FY19. This sale reflects the reversal of a provision, taken against
the underperforming German facilities at the time of the Capio
acquisition, of $26m. Against this amount reported in 1HFY21,
provisions totalling $24m have been made for indemnities and
warranties, taking the net gain on sale to $2m. The German
facilities reported a small operating loss in FY20.
9.3 Capital Expenditure
• Total capital expenditure for the 12 month period was A$356.2m
and included the expansion of a number of existing sites, real
estate acquisitions to expand consultation practices and in the
Nordic region investment included the expansion of St Göran
hospital in Sweden.
• Capital expenditure in FY22 is expected to be in the range
$400-460m, with approximately 15% of the total budget invested in
the Nordics region. Projects during the year include ongoing work
on the extension of St Göran and the expansion of two hospitals in
the Paris area.
9.4 Outlook
• The French Government has extended the revenue guarantee
decree issued in April 2021 to 31 December 2021, providing
support and some certainty to Ramsay Santé's French business.
• COVID cases in France declined rapidly after strict lock-downs
and the Government has introduced strong incentives for
people to get vaccinated, lifting penetration rates significantly
and easing pressure on the hospital system.
• COVID case numbers have increased again during July
and early August but predominantly in the non-vaccinated
population. The higher case numbers have resulted in a higher
number of patients being hospitalised.
• Ramsay Santé will continue to assist the French Government
with COVID cases in conjunction with addressing the backlog
in demand for surgical and non-surgical services. The ability
to attract and retain nursing staff in France will be critical to
Ramsay's ability to benefit from this backlog.
• In the Nordic region, COVID cases declined rapidly during June
and July, with activity levels returning to pre-COVID levels in the
main. COVID case numbers have also increased in the Nordics
from the latter part of July and August from a low level. There
are long waiting lists for elective care in the Nordics region and
Ramsay remains focused on capturing additional volumes.
• In the absence of government compensation for COVID-related
costs, margins in FY22 are expected to be impacted by
increased personnel costs and higher PPE costs associated with
the environment.
• Net interest costs in FY22 are expected to be approximately
€10m below FY21 following the refinancing of Ramsay Santé's
long-term debt at materially improved margins.
• In FY22, Ramsay Santé will be focused on:
– Building out integrated patient pathways including primary
care centres, imaging and further investment in digi physical
care delivery
– Continuing to improve efficiencies including the integration of
support services in France into one premise
– Optimising its hospital footprint and investing and
modernising the network
– Exploring bolt-on acquisition opportunities.
Annual Report 2021
23
6.
RAMSAY CARES
The challenges of 2020-21 highlighted the importance of being a socially and environmentally
sustainable business. Our long-term commitment to sustainability is driven through the Ramsay
Cares Sustainability Strategy. Ramsay Cares focuses on fostering healthier people, stronger
communities and a thriving planet. It reaffirms that we are here to have a positive impact for
current and future generations.
Ramsay Cares
The Ramsay Cares Sustainability Strategy unites our global
businesses in a shared vision for sustainability. It is underpinned
by our philosophy of 'people caring for people' – we call it
The Ramsay Way.
Ramsay Cares has three sustainability pillars:
Ramsay people across Australia, Europe, the United Kingdom
and Asia were engaged with a global project to refresh
Ramsay’s approach to sustainability. This process re-energised our
commitment to long-term sustainability across the business and
led to the establishment of a Global Sustainability Management
Committee, which developed a Global Sustainability Policy and the
Ramsay Cares strategy.
In February 2021, the Board approved the Ramsay Cares objectives
and targets to be achieved over the next three to five years. In the
coming year, we will focus on engaging our people, patients and
partners to help deliver the Ramsay Cares goals.
Ramsay is committed to driving action on the relevant United Nations
Sustainable Development Goals (SDGs), which provide a blueprint to
achieve a better and more sustainable future for all and underpin our
Ramsay Cares Sustainability Strategy.
To support our commitment, Ramsay has become a participant in
the United Nations Global Compact, a special initiative of the UN
Secretary-General calling on companies to align their operations and
strategies with ten universally accepted principles related to human
rights, labour, the environment and anti-corruption.
24
Annual Report 2021
Supporting global vaccination
Ramsay Health Care partners with national and regional
governments to support the public health response to
COVID outbreaks and assist with the roll-out of national
vaccination programs.
Ramsay Santé and Ramsay UK have been publicly
recognised for their outstanding contributions of both capacity
and expertise.
As of June 2021, more than 330,000 vaccination doses had
been provided in Capio facilities and at temporary centres for
mass vaccination in region Stockholm and Halland in Sweden.
Ramsay Santé has delivered more than 160,000 vaccine doses
and eight facilities in France are hosting vaccination centres.
Nurse immunisers, registered nurses and pharmacists from
Ramsay Australia have joined hundreds of clinical staff working
at mass immunisation hubs in several states.
Ramsay Sime Darby has overseen more than 75,000
vaccinations administered across Indonesian and Malaysian
hospitals, including ensuring more than 12,200 people with a
disability received their vaccinations.
For more detailed information about Ramsay Cares, please see
the 2021 Impact Report.
6. RAMSAY CARES
RAMSAY HEALTH CARE LIMITED
Patient experience
The quality of a patient's experience is a priority for us. Feedback
from patients is routinely gathered using the patient experience
measure Net Promoter Score1 (NPS). We are immensely proud that,
despite such a challenging environment, Ramsay has maintained an
excellent level of positive experience with high scores (above 70)
across our operations in the UK (84), Australia (73), France (71) and
the Nordics (71). Ramsay Sime Darby is transitioning to NPS and
continues to show solid results (36).
The Ramsay Way of ‘people caring for
people’ is exemplified in our steadfast focus
on our patients, people and partners.
This focus ensures Ramsay can continue to deliver high-quality care
during each wave of the COVID pandemic. It will underpin our
endemic COVID operations and is critical to Ramsay’s success as
a world-class global health care network.
High quality patient care
Throughout FY21, Ramsay maintained high-quality standards and
100% accreditation of our facilities. We continue to grow in
demand specialist services, with a global focus on four therapeutic
areas - mental health, cardiology, orthopaedics and oncology.
Comprehensive cancer care programs are being expanded in
France, the UK and Australia. Mental health services are extending
into regional areas and new out-of-hospital services have been a
key focus, through promixity care, at home services, allied health
and telehealth.
Innovation and technology
Digitisation and innovative technology will drive transformation
of our business. This year, exciting developments included knee
surgeries in Augmented Reality in France and a surgical procedure
at Sydney’s North Shore Private Hospital in Australia, viewed in
real-time by participants around the world. In the UK and Sweden,
patient care is benefitting from investment by Ramsay in a range
of diagnostic technologies such as MRI, CT, 3D mammography and
endoscopy suites.
Collaborating on quality
Ramsay Health Care has a Chief Medical Officer overseeing and advising on clinical quality and
strategic issues in all our regions. During the year, the establishment of a Global Chief Medical
Officer Group to advise on the COVID pandemic response has been invaluable.
January 2021 saw the retirement of Professor John Horvath AO as Group Chief Medical Officer.
In April 2021, we welcomed to the role Professor Sir Edward Byrne AC (pictured right), who offers
a wealth of knowledge and experience as a leader in education, research and policy globally.
Professor Byrne brings significant leadership and expertise; his contribution will be instrumental
as Ramsay Health Care moves into an endemic COVID operating environment and works to
deliver the Ramsay 2030 Strategy.
In May 2021, Ramsay Australia welcomed Dr Robert Herkes as Chief Medical Officer. Dr Herkes
is a respected senior clinician who has served as Chief Medical Officer for the Australian
Commission on Safety and Quality in Health Care. The Global Chief Medical Officer Group also
includes Dato' Dr Jacob Thomas (Ramsay Sime Darby), Dr Charles Ranaboldo (Ramsay UK), Dr
Margareta Danelius (Ramsay Santé - Capio) and Dr Francois Demesmay (Ramsay Santé - France).
Ramsay Australia has established the role of Chief Nurse and Clinical Services Director, in which
Dr Bernadette Eather is focused on nursing leadership, clinical governance, safety and quality,
and patient experience.
1 The Net Promoter Score (NPS) is an index ranging from -100 to +100 that measures the willingness of customers to recommend a company’s products or services to others.
Annual Report 2021
25
6. RAMSAY CARES
RAMSAY HEALTH CARE LIMITED
The global pandemic has brought rapid
change and unprecedented challenges to
the health sector.
The direct and indirect impacts on our employees, patients and
partners around the world cannot be underestimated. Through it all,
Ramsay remains focused on ‘people caring for people’ - we call it
The Ramsay Way.
The Ramsay Way
This year, guided by feedback from across the global business, we
distilled Ramsay’s enduring values into three simple yet powerful
principles: We value strong relationships, we aim to constantly
improve and we seek to grow sustainably. These values affirm that
Ramsay is committed to making a positive, long-term difference in
the world by caring for our people, our communities and our planet.
Investing in our people
Learning new skills is good for our people, patients, partners and
business. That is why Ramsay invests in a wide range of training and
development programs aimed at helping employees to grow, adapt
and participate. Key highlights include:
• Apprentice program – Our first apprentice nurses qualified at
Ramsay UK; 185 apprentices are studying clinical and non-clinical
subjects and 93 are waiting to start on their development journey.
• Nursing leaders – Ramsay Australia launched four new
development programs for nurses and midwives with a focus
on emerging leaders, mental health nursing and a graduate
fellowship program.
• Global Ramsay Leadership Academy – More than 100 managers
from across Ramsay’s global operations have enrolled in our
intensive program aimed at accelerating future leaders and
harnessing their bright ideas.
• Ramsay Leadership Behaviours and Framework – Ramsay UK
launched new behaviour descriptors for all leaders and a suite of
new courses. The aim is to provide clarity on ‘what good looks
like’ and accelerate development of our Head of Department and
Senior Leadership Teams.
• Global Graduate Program – Launched in June 2021, this
24-month program offers outstanding university graduates an
opportunity for in-country and overseas experience across
Ramsay’s corporate and operational business units.
Diversity and inclusion
Ramsay Health Care is a significant employer of women and is
committed to gender equality. Women comprise:
• 38 per cent of Board members (43 per cent of non
executive directors)
• 45 per cent of senior leadership (our global executive and
direct reports).
In January, Ramsay pledged to achieve 40 per cent women in
executive leadership by 2030 as one of the first signatories to 40:40
Vision, an investor-led initiative to achieve gender balance in the
leadership of Australia’s largest listed companies
26
Annual Report 2021
Wellbeing and resilience
Supporting, encouraging and empowering our people has never
been more important. This year, Ramsay augmented its wide range
of wellbeing programs with practical, innovative on-the-ground
support for our employees and their families. This included opening
wellbeing areas in UK hospitals, providing resilience training and
offered nutritious £1 meals for employees among numerous initiatives
to lift morale and reduce anxiety. In France, a preventative health
program to support the physical and mental wellbeing of employees
and their families was extended to include consulting and retired
doctors, who have been instrumental in Ramsay Santé’s COVID
response. Ramsay is also investing in creating mentally healthy
workplaces, with more than 100 Mental Health First Aiders trained
across the UK and Australia. In Europe, managers are being trained
to help identify and prevent signs of suffering and burnout.
Future leaders
Our Global Graduate Programme welcomed its inaugural
cohort this year. The two-year programme offers an exciting
springboard into the health care sector.
Following the success of Ramsay’s long-running clinical
graduate program, the new corporate programme immerses
university graduates in the areas of strategy, marketing, finance,
human resources, technology and operations.
Our first ten graduates were chosen from hundreds of
applicants from Australia, the UK, Malaysia and Indonesia
for their outstanding critical thinking, creativity, passion and
potential. Their academic backgrounds include business,
health information management, psychology, science and
social sciences.
As well as being mentored by Ramsay’s leaders, the graduates
are immersed in a program tailored to develop their individual
interests and inspire their contribution across the business.
They also get an opportunity to work and learn overseas, with
an eight-month placement at one of Ramsay’s global locations.
We look forward to fostering their talents and skills to help
shape the future of health care.
Mez - MalaysiaElliot - AustraliaNina - UKElaine - MalaysiaSarah - UKClaudia - IndonesiaRobin - AustraliaBrigitte - AustraliaJacinta - AustraliaJesslyn - Indonesia
6. RAMSAY CARES
RAMSAY HEALTH CARE LIMITED
We know that a thriving planet is important
to our health and wellbeing. We are focused
on climate action and environmental
performance across our value chain.
Responding to a changing climate
Ramsay is committed to taking action on climate change.
This includes reducing impacts arising from our operations to
help contribute to global mitigation measures aligned with the
international Paris Agreement. We are building a resilient business
that adapts to climate-related risks and takes advantage of
opportunities from the transition to a low carbon economy by 2050.
Reduce, reuse, recycle
Ramsay Australia has replaced more than 20 million pieces of
single-use plastics, including substituting plastic water bottles for
reusable jugs.
All other regions are driving a range of initiatives to reduce single
use plastics and Ramsay Sime Darby’s Subang Jaya Medical Centre
in Malaysia has opened a plastic-free, environmentally friendly café.
Greening theatres
We have started a concerted sustainability push in our theatres.
Ramsay Santé has launched an awareness and information campaign
to encourage anaesthesiologists to reduce their carbon footprint;
other initiatives include using reusable containers in sterilisation
processes and recycling intravenous tubing.
We have undertaken the first stage of risk assessment for Asia,
Australia, the UK, France and the Nordics to identify how climate
related risks may impact our business. The aim is to understand
regional differences and short- and long-term implications.
The next stage will involve more in-depth analysis of common risk
areas, such as existing buildings and supply chain. The Ramsay FY21
Impact Report will include our first disclosures in accordance with the
Task Force for Climate related Financial Disclosures (TCFD).
Renewable energy
All regions are focusing on energy efficiency and reducing
greenhouse gas emissions. A large renewable energy program is
being rolled out at our hospitals, with a focus on Australia.
Annual Report 2021
27
6. RAMSAY CARES
RAMSAY HEALTH CARE LIMITED
Ramsay Santé Foundation
The Ramsay Santé Foundation's Prevent2Care Lab has supported
47 start-ups in a free incubation program for innovators in the field
of health prevention. The Prevent2Care Lab and the Elior Group
created the Nutrition Lab incubation program for start-ups working
towards better community nutrition.
In 2019, the Ramsay Health Corporate Foundation, INCO and
the Pfizer Innovation France endowment fund launched the
Prevent2Care Tour, aiming to identify and reward associations in
Lille, Lyon, Toulouse, Marseille and Paris. This year, five grant winners
were chosen from more than 100 applicants.
Ramsay Health Care values the contribution
made to the many communities it serves
and society at large.
Our focus on health care allows us to commit significant resources
to clinical research, teaching and training. We are focused on a
global approach to health care prevention and supporting local
communities. Our procurement and sourcing activities have a ripple
effect and we are working to make a positive impact across our
value chain.
Clinical trials
As a local service provider with an international footprint, our
investment in clinical research, teaching and training has a global
impact. We test new therapies and new ways of doing things to
improve treatment options and develop new models of care. Ramsay
Santé is the number one private group in medical and scientific
research in France, producing over 3,260 scientific publications in
the past four years. As well, 4,336 patients were included in 679
clinical studies in 2020.
Community programs
Ramsay supports accessible health care by delivering high-quality
services in numerous regional areas. As well as helping more people
access the care they need, when and where they need it, Ramsay
provides significant regional employment and career opportunities
which helps local communities grow and thrive.
Ramsay hospitals and clinics are eager to support their local
communities. Whether raising funds or raising awareness, we know
that every effort makes a difference.
Ramsay Australia has an established Clinical Trials Network of 14
hospitals across the country, with plans to expand in the near
future. Our dedicated clinical trials units conduct over 200 trials at
any one time across numerous areas such as cancer, cardiology
and neurology.
Ramsay Hospital Research Foundation (RHRF)
This year, $1.85m funding was awarded to support research across
Australia. Since inception, the Foundation has funded 24 projects,
providing over $13m of support to research in clinical areas such
as rehabilitation, mental health, cancer and maternity. We have also
collected outcome measures from more than 20,000 patients.
Responsible sourcing and supply chain
Working with our suppliers to reduce the risk of modern slavery
practices and identify opportunities to reduce the environmental
impact of the value chain has significant benefits for the broader
community and our planet. As we continually improve our processes,
a major review has shaped our focus areas for the next three years.
Our global and regional procurement teams are working together
to drive action and have adopted a new supplier sustainability
assessment platform, where key suppliers are assessed by a
third party.
28
Annual Report 2021
6. RAMSAY CARES
RAMSAY HEALTH CARE LIMITED
A focus on youth mental health
Since 2018, the Ramsay Santé Health Foundation has organised
Health Prevention Meetings designed to accelerate new programs
that improve preventative health care measures. At each meeting,
doctors, scientists, academics and other subject matter experts share
their knowledge and present innovative initiatives.
In 2020, the Ramsay Santé Health Foundation organised its third
Health Prevention Meeting focused on the question: Suicide among
young people: the other emergency? A study carried out by the
Foundation, in partnership with the conversational media Jam, had
shed light on worrying figures for suicide among young people and
the Meeting brought forward new ideas for tackling the issue.
This year, the Health Prevention Meetings addressed the theme of
harassment in schools. At present, more than one in ten students
is a victim of bullying and the meeting focused on key issues such
as cyberbullying.
Sustainable financing
During the year, sustainability-focused approaches were incorporated into refinanced syndicated debt facilities for both the wholly owned
funding group (WOFG) and Ramsay Santé.
The Ramsay Santé Group refinanced its €1,650m syndicated debt facility in April 2021 and the WOFG $1.5 billion multi-currency
syndicated sustainability linked loan facility was released in May, representing thefirst and largest such facility by a health care provider in
the Asia-Pacific.
The debt facilities have embedded sustainability targets that are aligned with the Ramsay Cares strategy and designed to drive a more
intense focus on sustainability across the business, including on the mental health and wellbeing of our people, reducing energy intensity
and greenhouse emissions, and responsible sourcing within our supply chains.
The refinancing process brought together Ramsay teams from different countries and across functions, including environmental,
engineering, finance, legal and risk.
The new facilities were significantly over-subscribed and received support from existing and new lenders, reflecting the growing level of
interest in supporting sustainability linked loans.
For more detailed information about Ramsay Cares, please see the 2021 Impact Report.
Annual Report 2021
29
7.
GOVERNANCE
We are committed to delivering high quality health care services, long-term sustainable
growth and shareholder returns. The Board recognises the importance of good governance
in achieving these corporate objectives, in discharging its responsibility to the Company and
endeavouring to meet the expectations of all stakeholders and in executing the broader role of
Ramsay as a good corporate citizen.
Our governance framework is designed to ensure that we are
effectively managed, that statutory obligations are met and that the
culture of personal and corporate integrity – the Ramsay Way –
is reinforced. The Ramsay Way philosophy is 'People Caring for
People'. We remain committed to maintaining these principles across
all aspects of our business, honouring the architect of The Ramsay
Way, the late Mr Paul Ramsay AO.
Our Board regularly reviews its corporate governance policies and
processes to ensure they are appropriate to meet governance
standards and regulatory requirements. The roles of the Board
and the Committees are set out in the Charters, available
on the Ramsay website at www.ramsayhealth.com/Investors/Board
of-Directors. Further details are set out in the Corporate
Governance Statement for the financial year ended 30 June 2021,
which outlines the key aspects of our corporate governance
framework and practices and is available at www.ramsayhealth.com/
Sustainability/Governance.
Corporate Governance Statement
The Company’s 2021 Corporate Governance Statement
can be found at: ramsayhealth.com/sustainability/
governance/corporategovernancestatement2021
Our governance framework
The Ramsay Way
People are at the heart of our success. As ‘people caring
for people’ there are three key ways we approach our work
every day.
We value strong relationships
Healthy working relationships lead to positive outcomes for all.
We look out for the people we work with, and we respect and
recognise them. Strong healthy relationships are the foundation
of our stakeholder loyalty.
We aim to constantly improve
We do things the right way. We enjoy our work and take pride in
our achievements. We are not afraid to challenge the status quo
to find better ways.
We seek to grow sustainably
Maintaining sustainable levels of profitability are only part
of our success. We prioritise long term success over short
term financial gains. Because we care about our people, our
community and our planet.
30
Annual Report 2021
DelegationAccountabilityBoardThe Board has formally delegated certain functions to Board Committees and to management via Board and Committee charters.Managing Director and other Senior ExecutivesAudit CommitteeRisk Management CommitteePeople & Remuneration CommitteeNomination & Governance CommitteeDelegationAccountabilityAccountabilityDelegation
7. GOVERNANCE
RAMSAY HEALTH CARE LIMITED
Board of Directors – skills and experience
Our Board comprises eight directors, a majority of whom are independent Non-Executive Directors. Ramsay aims to maintain a Board that
comprises Directors who are able to understand effectively and manage the issues arising in the Company’s business, review and challenge
the performance of management and optimise the Company’s performance.
The following table sets out the various skills/experience that comprise our Board Skills Matrix:
Skill / Experience
SECTORS/ACTIVITIES
Health Care
Explanation
Knowledge and experience in the health care industry and international
health systems.
Multinational Experience
Ability to manage and oversee an organisation’s business and strategic
objectives from an international perspective.
SPECIFIC SKILLS AND EXPERIENCE
Strategy
Ability to identify and critically assess strategic opportunities and threats and to
develop and implement successful strategies.
Public Policy and Regulatory Affairs
Ability to influence public policy development and manage the implications of
public and regulatory policy.
Capital Management and Finance
Ability to assess financial performance, analyse financial statements and
implement effective internal financial and risk controls.
Technology and Disruption
Ability to leverage technological developments to support growth and drive
competitive advantage, including responding to digital disruption.
People and Culture
Ability to set & communicate corporate culture, motivate key capital talent,
oversee management and evaluate the suitability of CEOs and other
key executives.
Workplace Health and Safety
Ability to oversee the proactive management of workplace health and
safety practices.
Consumer Focus
Ability to oversee a strong consumer-focused culture committed to achieving
consumer outcomes.
Operational Experience in Major Business
Ability to manage and oversee business operations and deliver sustained
business success.
Governance, Legal and Regulatory
Ability to assess the effectiveness of policies and procedures and to manage
legal, compliance and reputational risks.
Risk Management
Ability to identify and manage key risks to an organisation.
Mergers & Acquisitions
Ability to assess strategic M&A opportunities and oversee
execution/completion.
Annual Report 2021
31
7. GOVERNANCE
RAMSAY HEALTH CARE LIMITED
Biographical details of Directors and Company Secretary
MICHAEL SIDDLE
Chairman
Appointed 27/05/14
(Appointed as a
Director 26/5/75)
Mr Michael Siddle was appointed as Chairman of the Company on 27 May 2014, having been
Deputy Chairman for 17 years and a founding Director. He has built up significant knowledge
of the business and the private hospital industry, after starting with the Company in 1968.
Mr Siddle has extensive experience in the management of private hospitals and has been
integrally involved in Ramsay Health Care’s successful expansion through construction, mergers
and acquisitions.
Mr Siddle is also a Director of the Paul Ramsay Foundation.
Committee memberships:
• People & Remuneration Committee (Member)
• Nomination & Governance Committee (Member)
Independence status:
PETER EVANS FCA
Deputy Chairman
Appointed 27/05/14
(Appointed as a
Director 29/12/90)
• Non-independent
Mr Peter Evans was appointed as Deputy Chairman of the Company on 27 May 2014, having
served as a Non-Executive Director since his appointment to the Board in 1990. Mr Evans began
working with Ramsay Health Care in 1969. He is a Chartered Accountant who was in public
practice for over 20 years with predecessor firms of KPMG. Mr Evans has specialised in the
financial management of hospitals and has had extensive experience in the health care field for
over 50 years.
Mr Evans is also a Director of the Paul Ramsay Foundation and has been actively involved with
several other charitable organisations over many years.
CRAIG MCNALLY
CEO &
Managing Director
Appointed 03/07/17
ALISON DEANS
MA MBA GAICD
Non
Executive Director
Appointed 15/11/18
Committee memberships:
• Risk Management Committee (Chair)
• Audit Committee (Member)
Independence status:
• Non-independent
Mr Craig McNally was appointed Managing Director and Chief Executive Officer of Ramsay
Health Care (Ramsay) on 3 July 2017, after serving seven years with Ramsay Health Care as
Chief Operating Officer and 22 years prior to this in various roles including Head of Global
Strategy and European Operations. Mr McNally is also the Chairman of Ramsay Santé.
Mr McNally is one of Ramsay’s longest serving Executives, having commenced with the
Company in 1988. He has worked across operational, strategic and financial roles during
his tenure.
For the last two decades, Mr McNally has been responsible for the development and
implementation of Ramsay’s growth strategy including brownfield expansions, international
market assessments, mergers and acquisitions and new business strategies. He has been at
the forefront of all the major acquisitions and deals completed by Ramsay Health Care. His
unique ability to assess the opportunities and risks associated with new business ventures and
to evaluate their ‘strategic fit’, as well as his sound judgement and insight, has ensured the
Company’s successful growth both domestically and internationally.
Mr McNally has been a key leader in the development of The Ramsay Way culture and, in
particular, developing leadership capability within the global organisation.
Alison Deans has 25 years’ experience building technology-enabled businesses involved in
media, ecommerce, financial services and health, and across leadership roles as an executive, a
director and in venture capital.
Ms Deans joined the Board of Ramsay Health Care in November 2018. She is also Chair of
Cochlear Limited and a Non-Executive Director of SCEGGS Darlinghurst and Deputy Pty Ltd. She
is also on the Investment Committee of MainSequence Ventures.
In her executive career, Ms Deans was previously the CEO of eBay Australia and New
Zealand, CEO of eCorp Limited, (a publicly listed portfolio of digital businesses), CEO of Hoyts
Cinemas and, most recently, CEO of netus Pty Ltd - a technology investment company acquired
by Fairfax.
Ms Deans also spent seven years as a Consultant with McKinsey & Company and is currently a
Senior Advisor with the firm. She holds a Master of Business Administration from the Stanford
Graduate School of Business and a Master of Arts (Physics) from Cambridge University.
In the past three years, Ms Deans has served as a Director of the following listed companies:
• Cochlear Limited (Appointed February 2015)
• Westpac Banking Corporation (Resigned December 2020)
Committee memberships:
• People & Remuneration Committee (Chair)
• Nomination & Governance Committee (Member)
Independence status:
• Independent
32
Annual Report 2021
7. GOVERNANCE
RAMSAY HEALTH CARE LIMITED
JAMES MCMURDO
BSC (ECONOMICS),
ACA
Non
Executive Director
Appointed 10/09/19
Mr James McMurdo has over 30 years finance and banking experience. He has a background
in corporate advisory spanning across mergers and acquisitions, strategic advisory and
financing with experience across multiple industries including the healthcare sector. He has
held senior operating management roles and worked extensively in both the Asia Pacific and
European regions.
Mr McMurdo is one of the Founding Partners of Privatus Capital Partners, an advisory and
merchant banking business focussed on private capital. Prior to establishing Privatus, Mr
McMurdo held senior management roles at Deutsche Bank and was based in Hong Kong.
During his time at Deutsche Bank, he was Global Co-Head of Corporate Finance, Head of
Corporate and Investment Bank for Asia Pacific and CEO for Australia and New Zealand. He sat
on the firm’s Global Executive Committee for the Corporate and Investment Bank for four years.
Prior to this, Mr McMurdo was a Partner at Goldman Sachs, where he held senior positions in the
Investment Banking Division in Australia and Europe.
Mr McMurdo holds a degree in Economics from the University of Newcastle upon Tyne and is a
member of the Institute of Chartered Accountants for England & Wales.
Committee memberships:
• Audit Committee (Member)
Independence status:
KAREN PENROSE
B.COM (UNSW)
CPA FAICD
Non
Executive Director
Appointed 1/3/20
• Independent
Ms Karen Penrose has had an extensive executive career in leadership and CFO roles, mainly
in financial services. She is well-versed in financial management, customer outcomes and
operating in a rapidly changing regulatory environment which stems from 20 years in banking
with Commonwealth Bank and HSBC and eight years as a listed-company CFO.
Ms Penrose has been a full-time director since 2014 and is an experienced committee chair of
audit and risk. In addition to being a Non-Executive Director of Ramsay Health Care, Ms Penrose
also serves as a Director of Vicinity Centres, Bank of Queensland and Estia Health. Ms Penrose
is a member of Chief Executive Women and on the Board of Marshall Investments Pty Limited
and Rugby Australia Limited.
In the past three years, Ms Penrose has served as a Director of the following listed companies:
• Vicinity Centres (Appointed June 2015)
• Bank of Queensland (Appointed November 2015)
• Estia Health (Appointed October 2018)
• Ramsay Santé (Appointed February 2021)
• Spark Infrastructure Group (Resigned May 2020)
Committee memberships:
• Audit Committee (Chair)
• Risk Management Committee (Member)
Independence status:
CLAUDIA
SÜSSMUTH
DYCKERHOFF
PHD
Non
Executive Director
Appointed 30/10/18
• Independent
Dr Claudia Süssmuth Dyckerhoff PhD joined the Ramsay Health Care Board in October
2018, bringing expertise in market growth strategies, business development and operational
performance improvement in hospitals.
Dr Süssmuth Dyckerhoff has extensive global experience in hospitals and health care across
Europe, Asia, and the USA. She joined McKinsey & Company in Switzerland in 1995 and was
transferred to the USA focusing on supporting health care companies, including pharmaceutical/
medical device companies, payor, provider and health systems in Europe and the USA. In 2006,
Dr Süssmuth Dyckerhoff transferred to China, was elected Senior Partner in 2010 and supported
health care companies as well as governments across Asia. She also led McKinsey’s Asia-wide
Health Systems and Services Sector.
Dr Süssmuth Dyckerhoff also supports start-ups in the health care area; she joined the
board of the Health Tech company HUMA in April 2021 and the board of QuEST Global in
November 2020.
Dr Süssmuth Dyckerhoff studied Business Administration at the University of St Gallen,
Switzerland as well as at ESADE, Barcelona where she graduated with an MBA/CEMS Master.
She also holds a PhD in Business Administration from the University of St Gallen/University of
Michigan Ann Arbor.
In the past three years, Dr Süssmuth Dyckerhoff has served as a Director of the following
listed companies:
• Hoffmann La Roche (Appointed March 2016)
• Clariant AG (Appointed April 2016)
Committee memberships:
• Risk Management Committee (Member)
Independence status:
• Independent
Annual Report 2021
33
7. GOVERNANCE
RAMSAY HEALTH CARE LIMITED
DAVID
THODEY AO
Non
Executive Director
(Appointed
28/11/17) and
Lead Independent
Director
(Appointed 1/03/20)
Mr David Thodey AO is a business leader with an executive career in the technology and
telecommunications industries, garnering more than 30 years' experience creating brand and
shareholder value.
In addition to being a Non-Executive Director and Lead Independent Director of Ramsay Health
Care, Mr Thodey is Chair of Australia’s national scientific research agency, the Commonwealth
Scientific and Industrial Research Organisation (CSIRO), Chair of Tyro Payments Limited
(a leading alternative payments provider) and Xero Limited (a small business accounting
software company).
Mr Thodey was previously CEO of Telstra, Australia’s leading telecommunications and
information services company, and, prior to that, CEO of IBM ANZ.
Mr Thodey holds a Bachelor of Arts in Anthropology and English from Victoria University,
Wellington, New Zealand; he attended the Kellogg School of Management postgraduate
General Management Program at Northwestern University in Chicago, USA, and was awarded
an Honorary Doctorate in Science and Technology from Deakin University in 2016, as well as an
Honorary Doctorate of Business from University of Technology Sydney in 2018.
Mr Thodey is also a Fellow of the Australian Academy of Technological Sciences and
Engineering (ATSE) and the Australian Institute of Company Directors (AICD).
Mr Thodey was awarded an Order of Australia in 2017 for his service to business and the
promotion of ethical leadership and workplace diversity.
In the past three years, Mr Thodey has served as a Director of the following listed companies:
• Xero Limited (Appointed June 2019)
• Tyro Payments Limited (Appointed November 2018)
• Vodafone Group Plc (Resigned July 2020)
Mr Thodey is the Lead Independent Director and is a member of the following Committees:
• Nomination & Governance Committee (Chair)
• People & Remuneration Committee (Member)
Independence Status:
HENRIETTA ROWE
B.ECON (SOC
SCI) (HONS),
LLB (HONS),
FGIA, MAICD
Group General
Counsel &
Company Secretary
Appointed 25/06/19
• Independent
Ms Rowe was appointed Group General Counsel & Company Secretary on 25 June 2019 and is
responsible for the Group legal, governance and secretariat functions.
Ms Rowe has more than 14 years’ experience with leading global law firm, Herbert Smith
Freehills, and in-house at the Commonwealth Bank of Australia, specialising in corporate
governance, mergers and acquisitions and capital management.
She holds a Bachelor of Economics (Social Sciences) (Honours) and a Bachelor of Laws
(Honours) from the University of Sydney, is a Fellow of the Governance Institute of Australia
and a member of the Australian Institute of Company Directors Law Committee.
34
Annual Report 2021
The Ramsay Board and Board Committee membership
As at 30 June 2021
7. GOVERNANCE
RAMSAY HEALTH CARE LIMITED
Board
Audit
Committee
Risk
Management
Committee
People &
Remuneration
Committee
Nomination &
Governance
Committee
Name
Michael Siddle
Peter Evans
Craig McNally
Alison Deans
James McMurdo
Karen Penrose
Claudia Süssmuth Dyckerhoff
David Thodey AO
Chair and member
Member
Directors’ meetings
The number of scheduled Board and committee meetings held during the financial year ending 30 June 2021 and the number of meetings
attended by each of the Directors in office during this period is set out in the table below.
Please note the number of meetings that each Director was eligible to attend is included in brackets.
Name
Alison Deans
Peter Evans
James McMurdo
Craig McNally
Karen Penrose
Michael Siddle
Claudia Süssmuth Dyckerhoff
David Thodey AO
Board
18 (19)
19 (19)
18 (19)
19 (19)
19 (19)
19 (19)
18 (19)
19 (19)
Audit Committee
Risk
Management
Committee
People &
Remuneration
Committee
Nomination &
Governance
Committee
-
9 (9)
8 (9)
-
9 (9)
-
-
-
-
4 (4)
-
-
3 (4)
-
4 (4)
-
8 (8)
5 (5)
-
-
-
-
8 (8)
-
8 (8)
-
-
-
-
5 (5)
-
5 (5)
Annual Report 2021
35
8.
REMUNERATION REPORT – AUDITED
Letter to Shareholders
Dear Shareholders,
On behalf of the Board of Ramsay Health Care (Ramsay or the Group), I am pleased to present you with our FY21 Remuneration Report
(Report). Ramsay remains committed to ensuring our remuneration structures support Ramsay’s strategy and The Ramsay Way ('People Caring
for People'), as well as aligning our reward outcomes with the creation of sustainable, long-term value for shareholders and other stakeholders.
FY21 performance & highlights
FY21 has been marked by ongoing societal and commercial uncertainty, however the Group has adapted well and, once again, demonstrated
notable resilience in numerous volatile settings. Across all markets, our people, doctors and facilities have carried on supporting a significant
public sector and community response to the rapidly changing demands of the COVID environment. During FY21, the Group delivered solid
financial results, including strong cash flow, to support ongoing investment and drive business growth.
At Ramsay, we understand that our people are our greatest assets; indeed, The Ramsay Way underpins everything we do. During FY21, the
Board was especially pleased with the strong people and clinical outcomes delivered by the Group in particularly demanding circumstances.
Despite multiple public health lockdowns in Australia, UK, Europe and Asia, the Group did not require any redundancies or stand downs and we
continue to prioritise the health, safety and wellbeing of all our employees.
Ramsay’s 2030 strategy has been progressed in the interests of long-term shareholder value. This has included building additional capabilities
to ensure the Group is well placed to deliver various global and regional priorities. Our strong pipeline of organic growth opportunities has
continued to evolve and the Group remains keenly focused on cultivating operational excellence through strategic sourcing and optimising
business processes.
Linking remuneration outcomes with Group performance
In FY21, having regard to the Group’s performance during the financial year (as outlined above) and the current external climate:
• no increases were made to fixed annual remuneration (FAR) for Executive Key Management Personnel (KMP);
• the FY21 STI outcomes are between target and maximum for Executive KMP, reflecting solid financial outcomes through the pandemic
disruption with results improving as the business adapts to the unpredictable operating environment (refer to section 3.2 for further detail);
• the FY19 LTI (tested at 30 June 2021) did not vest, reflecting that there was no vesting against the relative TSR or EPS components. No
portion of the EPS component vested given the impact of COVID in FY20. The relative TSR component of the FY18 LTI was also retested in
FY21 and did not vest (refer to section 3.3 for further detail).
Remuneration changes for FY21
Changes to LTI
In response to feedback from our shareholders and as foreshadowed in the FY20 Remuneration Report, the Group has made a number of
changes to the LTI plan for FY21 to more closely align with long term value creation and market practice.
Key changes included:
• the introduction of a return on capital (ROIC) gateway in respect of the component of the LTI assessed against CAGR EPS. Ramsay
continues to pursue a growth strategy – including significant acquisitions, as well as organic capital investment – in a capital-intensive
business. As such, the Group recognises that it is important to ensure that management deploys capital effectively. To reflect this, from FY21,
the EPS component of the LTI grant will only vest if a threshold level of ROIC is achieved;
36
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
• transitioning to an EPS vesting schedule assessed against long term growth targets. From FY21, the EPS metric used in the LTI will be
based on 3-year growth in EPS assessed against threshold and stretch performance levels. This will increase transparency for shareholders,
strengthen the focus on long term performance and align with market practice;
• the Group will no longer report Core EPS and Non-Core EPS. To align with this, the EPS metric used for the FY21 LTI awards onwards will
be statutory EPS.
After making these changes (as further outlined in section 2.5) to our LTI program, the Board is comfortable our FY21 arrangements meet our
objectives and the expectations of stakeholders. While we will continue to monitor the effectiveness of the plan, the Board does not intend to
make any substantive changes in the near term.
Non-Executive Director (NED) fees
From FY21 and as foreshadowed in last year’s remuneration report, to align with market practice, the Board has determined to:
• reduce the Chairman’s fees from $725,000 (FY20) to $659,900 (FY21);
• reduce the Deputy Chairman’s fee and NED Board base member fees by 20% from previous FY20 levels. This will be achieved by no
longer making the NED Share Rights Plan award that was previously equal to 20% of the NED’s base fees (excluding Committee fees and
superannuation). As approved at the 2020 AGM, the Group will provide NEDs with the opportunity to salary sacrifice a portion of their fees to
be granted as share rights (if they choose to do so). There is no intention to adjust fees for FY22.
Further details are outlined in section 4 of this Remuneration Report.
Conclusion
The Board has reaffirmed its commitment to ensuring that reward outcomes continue to align with business performance by instituting
remuneration structures that support both the achievement of Ramsay’s strategic objectives and The Ramsay Way. We look forward to further
feedback from shareholders on this FY21 Remuneration Report.
ALISON DEANS
Chair, People and Remuneration Committee
Annual Report 2021
37
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
Remuneration Report Contents
38
39
45
51
53
55
1 Key Management Personnel (KMP)
2 Executive Remuneration Framework
3 FY21 Performance & Remuneration Outcomes
4 Non-Executive Director Remuneration
5 Remuneration Governance
6 Further information
1 Key Management Personnel (KMP)
This Report for the year ended 30 June 2021 has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth) and the
Accounting Standards.
The Report discloses the FY21 remuneration arrangements and outcomes for the people listed below, who are the individuals within the Group
who have been determined to be KMP in the financial year to 30 June 2021. KMP are those people who have the authority and responsibility
for planning, directing and controlling the Group’s activities, either directly or indirectly.
During FY21, the Board of Ramsay reviewed its Executive KMP following a number of changes in personnel, ongoing changes to our business
mix including geographies and refinements to responsibilities of existing roles. In particular, the Chief Strategy Officer left the Group at the end
of FY20 and his responsibilities were assumed by the Managing Director and Chief Executive Officer (MD & CEO) and Group Chief Financial
Officer (Group CFO). The former long-standing CEO Ramsay Australia ceased as KMP on 30 September 2020 and subsequently retired on
2 July 2021. The role of CEO Ramsay Australia has been replaced, however is no longer considered a KMP of the global Ramsay Group.
As a result of this review, the Executive KMP have been determined in FY21 to include two executives being the MD & CEO and Group CFO.
The FY21 Executive KMP reflect the Group’s organisational structure and that ultimate strategic responsibility (including approval of material
strategic decisions) rests with these two executives. The Group’s Executive KMP will continue to be reviewed in future years.
Name
Executive KMP
Mr Craig McNally
Mr Martyn Roberts
Mr Daniel Sims
Non-Executive Directors
Mr Michael Siddle
Mr Peter Evans
Ms Alison Deans
Mr James McMurdo
Ms Karen Penrose
Dr Claudia Süssmuth Dyckerhoff
Mr David Thodey AO
Position
Term
MD & CEO
Group CFO
CEO Ramsay Australia (former)
Full year
Full year
Until 30 September 20201
Chairman
Deputy Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full year
Full year
Full year
Full year
Full year
Full year
Full year
1 The CEO Ramsay Australia ceased as Executive KMP on 30 September 2020 and ceased formal employment with the Group on 2 July 2021.
38
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
2 Executive Remuneration Framework
2.1 Alignment of Ramsay’s strategy & remuneration framework
At Ramsay, our executive remuneration framework is designed to attract, motivate and retain a highly qualified and experienced group of
executives. It is structured to align executives to the creation of long-term shareholder value by executing on our focused strategy and
delivering on quality consumer outcomes, in accordance with The Ramsay Way ('People Caring for People').
Annual Report 2021
39
Attract, retain & motivatePerformance basedSimple & transparentStrategic AlignmentShareholder AlignmentThe Ramsay WayEnabling Ramsay to attract, motivate and retain the best talent globallyProvides reward where individuals have demonstrated strong performanceCan be easily explained and understood by all stakeholdersDrives performance against strategyDrives long term value for shareholdersEncourages the right behaviours aligned to “People Caring for People”Fixed annual remunerationShort-term incentive (STI)Long-term incentive (LTI)Provides competitive base pay to attract and retain the capability required to manage and lead a global businessRewards performance in executing Ramsay’s strategic priorities during the year, and behaviour aligned to the Ramsay WayDrives long-term value creation for shareholders and encourages an owner’s mindset and long-term decision makingOur Remuneration PrinciplesOur Remuneration FrameworkAttract, retain & motivatePerformance basedSimple & transparentStrategic alignmentShareholder alignmentThe Ramsay WayEnabling Ramsay to attract, motivate and retain the best talent globallyProvides reward where individuals have demonstrated strong performanceCan be easily explained and understood by all stakeholdersDrives performance against strategyDrives long term value for shareholdersEncourages the right behaviours aligned to “People Caring for People”FARSTILTIMinimum shareholding requirement Provides competitive base pay to attract and retain the capability required to manage and lead a global business (see section 2.3)Rewards performance in executing Ramsay’s strategic priorities during the year, and behaviour aligned to the Ramsay Way (see section 2.4)Drives long-term value creation for shareholders and encourages an owner’s mindset and long-term decision making (see section 2.5)Further supports alignment between the interests of executives and our shareholders (see section 2.7)Our remuneration principlesOur remuneration frameworkGrowthDriving stronger growth from the coreDeveloping new growth platforms• Organic Growth• Brownfield Capacity• Public/Private Collaboration• Acquisitions• Integrated Care• New Models of CareEfficiencyStrengthening the core• Operational Excellence• Digitalisation• Global Procurement• Capital EfficiencySustainabilityBuilding a more sustainable organisation• Patient & Doctor Experience• Clinical Excellence• Innovation• Global TalentRamsay’s Focused StrategyGrowthBy growing, modernising and leveraging our World Class Hospital NetworkMoving purposefully into New and Adjacent Services • Organic Growth• Brownfield Capacity• Public/Private Collaboration• Acquisitions• Integrated Care• New Models of CareEfficiencyStrengthening the core through strategic sourcing and operational optimisation• Operational Excellence• Strategic Sourcing• Digitalisation Sustainability Investing in strong organisational foundations • Patient & Doctor Experience• Clinical Excellence• Innovation• Global TalentGroup strategy – create the leading ecosystem for patient-centric, integrated care
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
2.2 Remuneration mix: the composition of our pay
The proportions of reward for current Executive KMP (i.e. the MD & CEO and Group CFO) that are delivered by each of the framework elements
when “target” and “maximum” performance is achieved is set out below. The remuneration mix is weighted towards at-risk, performance-based
remuneration to ensure a focus on both short-term and long-term performance, and alignment with shareholder interests.
2.3 Fixed Annual Remuneration (FAR) overview
FAR is set taking into account market benchmarks referenced to ASX-listed companies with similar market capitalisation, revenue and
international operations. As a global organisation and recognising that there are no direct Australian listed competitors, consideration is also
given to international healthcare organisations and other private healthcare operators in Australia.
To remain market competitive, FAR is reviewed annually against appropriate market benchmarks considering individual performance for the
year and the executive’s expertise brought to the role (see section 3.1 for FY21 FAR levels for Executive KMP).
40
Annual Report 2021
CEO(at target)27%27%46%CFO(at maximum)40%24%36%CEO(at maximum)25%31%44%CFO(at target)42%21%37%FARSTILTI
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
2.4 FY21 Short-Term Incentives (STI)
The Group’s STI plan is designed such that a proportion of Executives’ remuneration is at-risk – to be delivered based on the achievement of
performance measures linked to annual business objectives linked to the delivery of strategy.
The table below outlines the key terms and conditions applying to the STI arrangements for the Executive KMP during FY21. Refer to section 3.2
for detail in respect of FY21 STI outcomes.
Component
Opportunity
levels
Performance
period
How STI
awards are
assessed
Target Opportunity (% of FAR)
Detail
Executives
CEO & MD
Group CFO
CEO Ramsay Australia (former)
STI awards are assessed over the 12-month financial year. Any STI award payments are made after
performance is tested at the end of the performance period.
As shown in the diagram below, performance outcomes for all Executive KMP are determined based
on both Group and individual performance, using a scorecard, and moderated by performance
aligned with “The Ramsay Way” (see below for further detail on the STI scorecard measures and the
performance modifier respectively).
100
50
50
125
60
62.5
Maximum Opportunity (% of FAR)
The Board, in conjunction with the People & Remuneration Committee may exercise judgement and
apply discretion as is required to ensure that STI outcomes appropriately reflect the performance of
the individual and the Group, as well as aligning to the expectations of Ramsay’s stakeholders.
STI Opportunity
FAR
($)
x
STI Target
Opportunity
(%)
Unadjusted
Outcome
x
Scorecard Result
(%)
x
Ramsay Way
Modifier
The Ramsay
Way
(%)
Performance
Outcome
=
Value of STI
Award ($)
Performance
measures
(i.e. STI
scorecard)
The STI scorecard measures are aligned to five key strategic priorities – each one fundamental to
delivering on the Group’s strategy. These priorities are all measurable over an annual cycle and
fundamental to the delivery of our long-term strategy as they measure the financial outcomes and
strategic foundations delivered during the year whilst also ensuring we are continually improving our
culture, consumer engagement and, our high standards of quality.
A copy of the MD & CEO’s scorecard for FY21 can be found in section 3.2 of this report. For
executives, the scorecard cascades from the MD & CEO.
Clear threshold and stretch performance targets have been set for financial measures, to provide
greater transparency to executives and shareholders on the performance that the Board expects to
be achieved.
For non-financial metrics, quantitative metrics are used wherever possible and complemented with
qualitative metrics, assessed in performance appraisals undertaken by the People & Remuneration
Committee and the Board, drawing on multiple sources of feedback.
Financial
Strategic
People
Consumer
Quality
Rationale
NPAT, revenue and operating cash flow are critical to
the delivery of returns for our shareholders.
Delivery of annual strategic objectives that are key to
delivering the long-term strategy.
Our people are our most important asset and our
culture, The Ramsay Way ('People Caring for People'), is
fundamental to our ongoing success.
Listening and responding to the needs of our patients
allows us to continually evaluate and improve on
all aspects of our performance ensuring ongoing
competitive advantage.
Delivering superior clinical outcomes is critical to our
ongoing success, so we focus on maintaining the
highest stands of clinical quality and safety.
Operational
Executives1 (%)
Non-Operational
Executives2 (%)
50
15
15
10
10
40
20
20
10
10
Annual Report 2021
41
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
Component
‘The Ramsay
Way’
Performance
Modifier
Detail
The Ramsay Way ('People Caring for People') is the Group’s cultural backbone which assists in guiding decision making
that is both people and outcome focused, while also balancing risk behaviours in both a financial and non-financial sense.
The Ramsay Way performance modifier is a modifier which allows for adjustments to outcomes for each individual, based
on their demonstration of The Ramsay Way values and behaviours. The application of this modifier can only reduce the
quantum of awards, with the modifier being a multiplier between 0–100%.
Delivery
After performance is assessed, the STI award is delivered 50% in cash and 50% in deferred equity in the form of
restricted shares.
• For the CEO & MD, restricted shares are granted and deferred for 3 years.
• For other Executive KMP, the deferral period is 2 years with 50% of the deferred equity being released after the first year
and the second 50% released at the end of the subsequent year.
Restricted shares are allocated on a face value basis by dividing the deferred STI amount by the 5-day volume weighted
average price (VWAP) of Group shares to the STI payment date (rounded to the nearest whole number of shares).
Deferred STI Amount
($)
(50% of STI Award)
/
Share Price
($)
Face value allocation using
5 Day VWAP to STI
payment date
=
Allocation of
Restricted Shares
(Rounded to
the nearest
whole number)
Includes MD & CEO and former CEO Ramsay Australia.
1
2 Includes Group CFO.
2.5 FY21 Long Term Incentives (LTI) – granted
Overview of changes
The LTI plan is designed to reward sustainable long-term performance and align executives to shareholder outcomes, while allowing Ramsay to
attract and retain the best talent globally.
As noted above, key changes were made to the FY21 LTI plan to align with best practice. These changes included:
• the introduction of a ROIC gateway in respect of the component of the LTI assessed against CAGR EPS. Ramsay continues to pursue a
growth strategy – including significant acquisitions, as well as organic capital investment – in a capital-intensive business. As such, the Group
recognises that it is important to ensure that management deploys capital effectively. To reflect this, from FY21, the EPS component of the LTI
grant will only vest if a threshold level of ROIC is achieved;
• transitioning to an EPS vesting schedule assessed against long-term targets. From FY21, the EPS metric used in the LTI will be based on
a 3-year range for EPS growth against threshold and stretch performance levels. This will increase transparency for shareholders, strengthen
the focus on long-term performance and is aligned with market practice;
• the Group will no longer report Core EPS and Non-Core EPS. To align with this, the EPS metric used under the FY21 LTI onwards will be
statutory EPS (as further outlined below).
Key terms
The table below outlines the key terms attaching to the LTI awards granted to Executive KMP during FY21.
Component
Opportunity
levels
Detail
The table below outlines the face value of LTI awards granted to Executive KMP during FY21. LTI opportunities have
been set based on the ability of the executive to influence sustainable long-term value creation.
The CEO Ramsay Australia was granted an LTI in FY21 with a face value of $2,098,346 or 219% of FAR (which reflects a
legacy LTI arrangement which was progressively reduced each year). The Board of the Group determined that Mr Sims’
FY21 LTI grant would be pro-rated to 2 July 2021 relative to the performance period (being the date he formally ceased
employment with the Group), with the pro-rata amount left on foot to be tested and vest in the ordinary course at the
original vesting dates. The pro-rata opportunity is shown in the table below. As Mr Sims retired, his other legacy LTI
awards have been left on foot to be tested and vest in the ordinary course.
Executive KMP
C.R. McNally
M.J. Roberts
D.A. Sims (former)
Maximum LTI
Opportunity (% of FAR)
175
90
73
Maximum LTI
Opportunity ($)
3,650,325
1,080,000
699,449
Instrument
The Group’s LTI awards are delivered in performance rights.
Performance rights are granted for no consideration as they form part of the remuneration package for Executive KMP.
Each performance right is an entitlement to receive a fully paid ordinary share in Ramsay Health Care Limited at no cost
(or an equivalent cash payment at the discretion of the Board).
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Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
Component
Allocation
methodology
Detail
Performance rights are granted using a face value methodology. Each individual’s dollar value LTI opportunity
(as a percentage of FAR) is divided by the five-day VWAP up to and including the first trading day of the
performance period.
Executive
FAR Amount
($)
x
LTI Opportunity
(%)
Share Price
($)
/
Face value allocation using
5 Day VWAP to first day of
performance period
=
Allocation of
Performance
Rights
(Rounded to the
nearest whole
number)
Performance
Period
Calculation of
Awards
3 years (i.e. 1 July 2020 – 30 June 2023) for the FY21 grant.
Overview
FY21 LTI awards are subject to two performance conditions:
• Relative TSR (50%) against the S&P / ASX100 index (excluding real estate, finance and resources industries, as they
have different drivers of operating performance); and
• CAGR in EPS (50%) subject to the achievement of the ROIC gateway noted above.
Relative TSR (50%)
A relative TSR performance condition is used, as the Board is of the view that use of a TSR hurdle provides a strong link
between executive remuneration and shareholder return, relative to Ramsay’s ASX peers.
The Board also considers that it is appropriate to use a broader index-based comparator group (as outlined above)
rather than a sector specific peer group as there are too few Australian healthcare companies of a similar size and
scope of operations to Ramsay for benchmarking purposes.
The following table sets out the vesting schedule in respect of the relative TSR performance metric.
Group’s relative TSR
Below 50th Percentile
50th Percentile
50th and
75th Percentile
Above 75th Percentile
CAGR EPS (50%)
Vesting
Nil
50% vesting
Vesting on a straight-line basis between 50% and 100% vesting
100% vesting
EPS has been chosen as it is linked to long-term growth targets and provides evidence of Ramsay’s growth in
profitability and is linked to shareholder returns.
As noted above, from FY21, the measurement of EPS will be based on a 3-year growth range against threshold
and stretch performance hurdles.
Subject to the achievement of the ROIC gateway noted above, the following table sets out the vesting
schedule in respect of the EPS performance metric.
CAGR EPS
Less than 3%
3% (threshold)
Between 3% and 9%
9% (stretch)
Vesting
Nil
50% vesting
Vesting on a straight-line basis between 50% and 100% vesting
100% vesting
Gateway
As noted above, the EPS component of FY21 LTI awards will be subject to a ROIC gateway, reflecting the capital
intensive nature of the Group’s business. That is, both the EPS hurdle and ROIC gateway will need to be met in order for
any vesting to occur.
The ROIC outcome for the Group over the 3-year performance period is tested relative to the weighted average
cost of capital (WACC) for the Group over the 3-year performance period. The actual ROIC outcomes will need to be
above WACC for vesting to occur. The Board will consider the impact of acquisitions (which are made in line with a
Board approved acquisition plan) in the assessment of ROIC, including exclusion of capital spent and the returns from
that acquisition for the period of the approved build and ramp-up, to ensure that participants are not penalized for
undertaking an investment which is expected to deliver long-term profitable growth.
Annual Report 2021
43
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
Component
Board
discretion and
adjustment
principles
Detail
The Board, in conjunction with the People & Remuneration Committee, may exercise judgement and apply its
overarching discretion as is required to ensure that LTI outcomes appropriately reflect the performance of the individual
and the Group, as well as aligning to the expectations of Ramsay’s stakeholders.
In particular, the Board has discretion to make adjustments to the EPS outcomes used for the purposes of the FY21 LTI
award and, as noted above under “Gateway”, the Board will consider the impact of acquisitions (which are made in line
with a Board approved acquisition plan) in the assessment of the ROIC gateway.
To ensure any adjustments are consistently applied, five guiding principles will be applied as follows:
• Plan integrity and management accountability - adjustments will be made to align with the purpose of the plan and
reflect management accountability for past decisions;
• Nature and timing of adjustments - adjustments, both positive and negative, will only be made at the time of vesting;
• Transparency - the Group will provide a clear rationale and disclosure, for any adjustments made, especially in case
where performance has not been achieved;
• Material or significant events - adjustments will only be made for events or items over the vesting period that have a
material impact positively or negatively on the performance outcome, and consequently reward outcome;
• Balance of interests - adjustments will be balanced to ensure outcomes are not unfairly biased towards either
shareholders or management.
The Board will provide clear and transparent disclosure in respect of any exercise of Board discretion or adjustments to
EPS in the relevant Remuneration Report.
2.6 Other terms
The following components apply to both the STI and LTI.
Component
Board Discretion
Treatment
on cessation
of employment
Detail
As noted above, the Board, in conjunction with the People & Remuneration Committee, may exercise judgement
and apply discretion as is required to ensure that incentive outcomes appropriately reflect the performance of the
individual and the Group, as well as aligning to the expectations of Ramsay’s shareholders.
The Board retains absolute discretion in determining STI payments for a leaving executive. However, if an
executive ceases employment with Ramsay before key performance indicator (KPI) targets are achieved, then
they will generally not be entitled to receive any STI. However, if cessation of employment is due to retirement,
illness, disability or death or is a Group-initiated termination other than for cause, the Executive may receive a
pro-rata STI payment for the portion of the performance period they were employed.
LTI performance rights may remain on foot with hurdles tested at the same time as other participants in the plan
if cessation of employment is due to retirement, illness, disability or death or is a Group-initiated termination other
than for cause.
Malus and clawback
The Board may take action to reduce, recoup or otherwise adjust “at-risk” remuneration including in-year
incentives, unvested incentives and previously awarded incentives (cash or equity) where, in the opinion of
the Board:
• the employee has acted fraudulently or dishonestly, engaged in gross misconduct and / or breached his or her
duties or obligations to the Group (including acting in breach of the terms and conditions of their employment
and/or Ramsay’s Code of Conduct for Employees);
• has engaged in an act which has brought the Group into disrepute or has acted or failed to act in a way that has
contributed to, or is likely to contribute to, material reputational damage to the Group;
• is convicted of an offence or has a judgement entered against them in connection with the affairs of the Group;
• “at-risk” remuneration vests as a result of a Financial Misstatement Circumstance or the fraud, dishonesty,
negligence or breach of duties or obligations of any other person and, in the opinion of the Board, the
remuneration would not have otherwise vested;
• adverse outcomes have arisen after vesting of “at-risk” remuneration (including during the deferral period) that
cause a re-evaluation of the original assessment of performance generating the award; and/or
• any other circumstances exist or have occurred which the Board determines in good faith to have resulted in
the employee receiving an unfair benefit.
The ability of the Board to apply the policy is broad and includes (but is not limited to) lapsing or requiring
repayment of awards, and for unvested equity re-setting performance conditions or amending the terms on which
they are disposed.
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Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
2.7 Minimum shareholding requirements
A minimum shareholding requirement was introduced from the start of FY20 for Executive KMP and NEDs. This Policy is intended to support
alignment between KMP and the Group’s shareholders and requires all Executive KMP and NEDs to obtain and hold Ramsay shares in line with
the detail below:
Position
MD & CEO
Executive KMP
Non-Executive Directors
Minimum Shareholder Requirement
200% of FAR
100% of FAR
100% of base annual fees
Timeframe to Acquire
Five years from time of appointment (or
implementation of policy for individuals in role at
1 July 2019).
3 FY21 Performance & Remuneration Outcomes
This section provides a summary of Ramsay’s performance in FY21, and the actual remuneration outcomes that this delivered for
our executives.
3.1 FAR levels
For FY21, there were no adjustments to fixed remuneration for executives. The table below sets out FAR level for Executive KMP for FY21.
Executive KMP
C.R. McNally
M.J. Roberts
D.A. Sims (former)1
FY20 FAR ($)
2,085,900
1,200,000
960,000
FY21 FAR ($)
2,085,900
1,200,000
960,000
1 Mr Sims’ FAR is shown on an annualised basis based on his contractual value for FY21. As noted above, the CEO Ramsay Australia ceased as Executive KMP part-way through FY21 on
30 September 2020.
3.2 Actual STI outcomes
Overview
Actual STI outcomes delivered to Executive KMP in FY21 are set out in the table below. An overview of performance against the FY21 scorecard
(including key financial measures) is outlined below.
Executive KMP
C.R. McNally
M.J. Roberts
D.A. Sims (former)1
Target STI
opportunity
($)
2,085,900
600,000
480,000
Target STI
opportunity
(% of FAR)
100
50
50
Maximum STI
opportunity
($)
2,607,375
720,000
600,000
Maximum
STI
opportunity
(% of FAR)
125
60
62.5
% of FY21
STI
awarded
110
107
100
% of
maximum
FY21 STI
awarded
88
89
79
% of
maximum
FY21 STI
award
forfeited
12
11
21
1 The opportunity levels shown for Mr Sims represent his original STI opportunity at target and maximum for FY21 of $480,000 (or 50% of his annualised FAR) and $600,000 (or 62.5% of
his annualised FAR) respectively. As Mr Sims ceased as Executive KMP with the Group on 30 September 2020, his STI opportunity levels for FY21 were pro-rated to the date he ceased
as Executive KMP, for the purposes of Remuneration Reporting. Mr Sim’s pro-rata maximum STI opportunity for his service as KMP in FY21 was $150,000 which was tested and $120,000
awarded in the ordinary course.
Annual Report 2021
45
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
Performance against FY21 STI scorecard
The table below provides an overview of performance achieved against the MD & CEO’s FY21 STI scorecard, as approved by the Board.
Measure
Financial
• NPAT
• Revenue
• Operating cash flow
Strategic
• Growth investment
• Strategy development and implementation
People
• Executive leadership capability
• Employee engagement and cultural framework
• Gender diversity in senior management
• Workplace fatalities = 0
• Workplace safety as measured by top quartile
long time injury frequency rate
Consumer
• NPS
Quality
• Hospital accreditation
• Never events
• Infection rates
• Unplanned readmissions
• Unplanned return to theatre
Weighting
Achievement
Commentary on performance
50%
15%
15%
10%
10%
• NPAT, Revenue and operating cashflow results all
above target.
• Growth investment and new approvals near target.
• Strategy development completed and
implementation completed for some but not all
agreed milestones.
• Executive team strengthened with appointments of
Group Chief Medical Officer and CEO Australia.
• Strong employee engagement in a very
difficult environment.
• Gender targets and workplace safety
measures achieved.
• NPS targets achieved across all major regions.
• All hospital accreditations achieved.
• Quality measures achieved with improvement year
on year and exceeded targets set relative to
external benchmarks.
Exceeded
Met
Partially
met
The key financial metrics under the STI for FY21 STI were NPAT, Revenue and Operating Cashflow. Solid financial outcomes have been
achieved in FY21 despite the COVID operating environment. The growth in earnings reflecting a strong increase in admissions as our regions
emerged from the initial wave of the pandemic. Ramsay’s strong balance sheet and cashflow supported the continued investment in, and
optimisation of, the Group’s facilities and footprint to meet strong underlying demand for healthcare services over the medium to long term.
Revenue ($bn)
Net Cash Flows
from Operating Activity ($m)
NPAT ($m)
15
12
9
6
3
0
2,000
1,500
1,000
500
0
600
500
400
300
200
100
0
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
46
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
3.3 LTI outcomes
Overview
In FY21, two LTI awards were eligible to be tested:
1. re-testing of the TSR component of the FY18 LTI performance rights (noting that retesting no longer applies to LTI grants made from FY19)
2. assessment of the FY19 LTI awards.
As outlined below, there was no vesting in respect of either LTI grant in FY21.
Vesting outcomes (FY18 LTI)
There was no vesting of the FY18 LTI in FY21.
As disclosed in the FY20 Remuneration Report, there was a re-testing of the FY18 LTI performance rights subject to the TSR performance
condition at 31 December 2020 and, if some or all FY18 Rights did not vest, a third and final re-testing of the unvested FY18 Rights at 30 June
2021. If there were any unvested FY18 Rights remaining at 30 June 2021, they would automatically lapse. Retesting no longer applies to LTI
grants from FY19.
Refer to section 6 of the FY18 Remuneration Report for further detail on the terms attaching to the FY18 LTI awards, which can be accessed on
the Group’s website at ramsayhealth.com/Investors/Annual-and-Financial-Reports.
Vesting outcomes (FY19 LTI)
Overview
The FY19 grant was due to be tested at the end of FY21 (with a performance period from 1 July 2018 to 30 June 2021) for the MD & CEO and
the CEO Ramsay Australia. As detailed below, there was no vesting in respect of this grant reflecting that there was no vesting in respect of the
relative TSR component or the EPS component.
Refer to section 6.2 of the FY19 Remuneration Report for full detail of the terms attaching to the FY19 LTI awards, which can be accessed on the
Group’s website at ramsayhealth.com/Investors/Annual-and-Financial-Reports.
Performance
measure
Weighting
Actual level of performance
Relative TSR
50%
40.43 percentile
Aggregate EPS
50%
The Group’s EPS in FY20 was significantly below guidance due to
COVID-19. As a result of this and the legacy EPS hurdle, the Board
determined that the EPS performance rights did not vest.
Vesting outcomes under
FY19 LTI
0% of relative
TSR component
0% of aggregate
EPS component
0% overall vesting
Relative TSR performance condition
The vesting schedule in respect of the relative TSR component of the FY19 LTI performance rights is set out below. The Group achieved a
relative TSR ranking of 40.43 percentile, resulting in 0% vesting of this portion of the award.
Level of performance
Below 50th percentile
50th percentile
50th and 75th percentile
Above 75th percentile
Actual relative TSR achieved: 40.43 percentile
Vesting outcomes
Nil
50% vesting
Vesting on a straight-line basis between 50% and 100% vesting
100% percentile vesting
Level of vesting: 0%
The 3-year relative TSR1 performance over the last five years is detailed below:
TSR Percentile Ranking1
100%
80%
60%
40%
20%
0%
FY17
FY18
FY19
FY20
FY21
1 TSR percentile ranking is calculated with reference to the S&P / ASX200 index (excluding companies in real estate, finance and resources)
for the FY17 and the S&P / ASX100 Index (with the same exclusions) for the other financial years.
Annual Report 2021
47
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
EPS performance condition
From FY21, the measurement of EPS will be based on a 3-year growth range against threshold and stretch performance hurdles to align more
closely with market practice.
However, the FY19 performance rights that were subject to the EPS performance hurdle were measured by comparing Ramsay’s aggregate EPS
over 3 years against an aggregate EPS target calculated based on Ramsay’s market guidance for EPS disclosed at the start of each financial
year. The annual EPS targets were then aggregated to provide the threshold and maximum 3-year targets for vesting of performance rights.
These performance rights were subject to the vesting scale on a “step” basis as set out below.
The Group’s EPS in FY20 was significantly below guidance due to COVID. As a result of this and the legacy EPS hurdle, the Board determined
that the performance rights assessed against EPS did not vest.
Level of performance
EPS well short of the market guidance
EPS just below the lower end of market guidance
Lower end of market guidance is achieved
Mid-point of market guidance is achieved
Upper end of market guidance is achieved
Well above the upper end of market guidance achieved
No additional rights will vest for EPS performance between the above specified points.
Level of vesting (%)
0
25
50
75
90
100
The table below shows EPS performance relative to market guidance in the first 2 years of the performance period and the final nil vesting
outcome in respect of the EPS component of the FY19 LTI.
<1% below guidance
Lower end of guidance
Middle of guidance
Upper end of guidance
>1% above guidance
Actual EPS Achieved & Vesting Outcome
FY19
0% to 2% (cps)
272.4
275.1
277.9
280.6
283.4
281.0
FY20
-6% to 4% (cps)
261.5
264.2
267.0
269.8
272.5
155.9
% of Performance Rights
to vest
25
50
75
90
100
0
The EPS performance for the last 5 years is detailed in the graph below:
EPS (cents/share)
300
250
200
150
100
50
0
FY17
FY18
FY19
FY20
FY21
One-off awards
In joining Ramsay, the Group CFO Martyn Roberts forfeited significant unvested equity from his prior role. In recognition of this, the Group CFO
was provided with performance rights in FY20 equivalent to $1M that vest subject to meeting individual performance requirements and service
conditions over the 3 years from his employment anniversary. The vesting of the performance rights is weighted to the longer-term with vesting
in tranches of 20%, 30% and 50% over 3 years. The first tranche vested in FY21.
48
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
3.4 Five year Group performance correlated to variable reward outcomes
The graph and table below summarises STI and LTI outcomes over the past 5 years together with share price, dividend and NPAT performance
demonstrating the alignment of at-risk reward outcomes and shareholder outcomes.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
300cps
200cps
100cps
0cps
FY17
FY18
FY19
FY20
FY21
STI
LTI
Dividend
EPS
CEO STI outcomes (% of maximum)
CEO LTI outcomes (% of maximum)
Closing share price at end of period ($)
Dividends per Ordinary Shares ($)
NPAT ($M)
FY21
88
-
62.95
1.5150
449.00
FY20
-
-
66.52
0.6250
284.00
FY19
90
37
72.24
1.5150
545.50
FY18
70
45
53.98
1.4400
388.30
FY17
93.6
97
73.60
1.3450
488.90
3.5 Actual remuneration table (Executive KMP)
The table below provides a summary of the actual take-home pay received by Executive KMP during FY21. Unlike the statutory remuneration
tables in section 3.6 below, the below table has not been prepared in accordance with the requirements of the Australian Accounting Standards
and is unaudited. It is included on a voluntary basis to show what Executive KMP actually received in FY21, and amounts that are paid or vested
to executives in FY21 (with an FY20 for comparison).
Name
C.R. McNally
M.J. Roberts3
D.A. Sims4
(former)
Financial Year
FY21
FY20
FY21
FY20
FY21
FY20
FAR1 ($)
2,131,330
2,141,654
1,200,000
240,909
240,172
985,596
Other
payments ($)
-
-
207,403
-
-
-
STI Awarded2 ($)
2,294,490
-
642,000
-
120,000
-
LTI Vested ($)
-
-
-
-
-
-
Total Actual
Remuneration
($)
4,425,820
2,141,654
2,049,403
240,929
360,172
985,596
1 FAR includes cash salary, superannuation and non-monetary benefits such as private health insurance cover and motor vehicle running costs.
2 STI represents the amount awarded for FY21 noting that 50% is deferred into equity for 3 years for the CEO, and 1 and 2 years for the CFO.
3 Mr Roberts commenced 20 April 2020 so amounts for FY20 relate to the period 20 April to 30 June 2020. In joining Ramsay, Mr Roberts forfeited unvested equity from his prior role. In
recognition of this, the Group CFO was provided with performance rights equivalent to $1M that vest subject to meeting individual performance requirements and service conditions over
the 3 years from his employment anniversary. On 20 April 2021 20% or 3,074 of the Rights vested, with a vesting date value of $207,403.
4 Mr Sims ceased as Executive KMP on 30 September 2020. The FY21 remuneration details included within the table above reflect amounts paid to Mr Sims during his service period as a
member of the Executive KMP only.
Annual Report 2021
49
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
3.6 Statutory remuneration table (Executive KMP)
Details of each of the Executive KMP’s remuneration for FY21 (calculated in accordance with the applicable Accounting Standards) are set out below. All values are in Australian Dollars ($) unless
otherwise stated.
Fixed remuneration
Short-term benefits
Long-term benefits
Financial
Year
FY21
FY20
FY21
FY203
Cash Salary &
Fees ($)
2,085,209
2,085,900
1,178,306
236,693
Super-
annuation
($)
21,694
21,003
21,694
4,216
Non-
Monetary
Benefits1
($)
24,427
34,751
-
-
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
-
723,481
234,749
938,997
-
1,000,000
3,498,264
4,985,071
-
10,501
5,423
21,003
-
21,003
48,811
77,726
-
51,329
-
25,596
-
-
24,427
111,676
Name
C.R.
McNally
M.J.
Roberts3
Former
B.R Soden
D.A. Sims4
O.J-M.
Chretien
Total
Total
Accrued STI
($)
1,147,245
-
321,000
-
-
-
120,000
-
-
-
1,588,245
-
Long
Service
Leave
Entitlements
($)
34,347
59,769
19,625
3,820
Deferred STI
($)
1,147,245
-
321,000
-
LTI Share
Based Rights2
($)
1,449,628
(263,375)
877,893
100,496
Accrued
Termination /
Retirement
Benefits
($)
-
-
-
-
Total
Remuneration
($)
5,909,795
1,938,048
2,739,518
345,225
Share
Based
Payments
as % of
Total
Remuneration
44
(14)
44
29
Total
Performance
Related
Remuneration
(%)
63
(14)
55
29
-
-
9,296
20,907
-
17,062
63,268
101,558
-
-
-
-
-
-
1,468,245
-
-
(752,025)
226,180
(747,045)
-
(10,581)
2,553,701
(1,672,530)
-
531,332
-
-
-
500,00
-
1,031,332
-
564,618
595,648
259,458
-
1,527,484
9,244,961
4,634,833
-
(133)
38
(288)
-
(1)
44
(36)
-
(133)
58
(288)
-
(1)
61
(36)
1 This figure represents non-monetary benefits such as health insurance cover and motor vehicle running costs that do not form part of the Executive KMP’s cash salary.
2 In accordance with the requirements of the Accounting Standards, the remuneration includes a proportion of the fair value of the performance rights awarded under the LTI program granted or outstanding during the year. The fair value is determined as at the
grant date and is progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that Executives may ultimately realise should the equity instruments vest. The fair value of the performance
rights at the date of their grant has been determined in accordance with AASB 2 applying the Black-Scholes and Monte Carlo Simulation models. The assumption underpinning these valuations are set out in note 18 to the financial statements.
3 Mr Roberts commencing employment with the Group on 20 April 2020 so amounts for FY20 relate to the period 20 April to 30 June 2020. In joining Ramsay, the Group CFO Martyn Roberts forfeited unvested equity from his prior role. In recognition of this, the
Group CFO was provided with performance rights equivalent to $1M that vest subject to meeting individual performance requirements and service conditions over the 3 years from his employment anniversary. Subject to satisfaction of continuing employment and
performance conditions, vesting is staggered over the 3 years as follows: 20% of the Rights or 3,074 vested on 20 April 2021, 30% of the Rights or 4,611 to vest on 20 April 2022, and 50% of the rights or 7,687 to vest on 20 April 2023. The FY21 cost attributable to
these rights is included within LTI Share Based Rights in line with the requirements of the Australian Accounting Standards.
4 Mr Sims ceased as Executive KMP on 30 September 2020. The FY21 remuneration details included within the table above reflect amounts paid to Mr Sims during his service period as a member of the Executive KMP only.
50
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
4 Non-Executive Director Remuneration
4.1 Overview
For FY21, to align with market practice the Board has determined to:
• reduce the Chairman’s fees from $725,000 (FY20) to $659,900 (FY21) and
• reduce the Deputy Chairman’s fee and NED Board base member fees by 20% from previous FY20 levels. This will be achieved by no
longer making the NED Share Rights Plan award that was previously equal to 20% of the NED’s base fees (excluding Committee fees and
superannuation). As approved at the 2020 AGM, the Group will still provide NEDs with the opportunity to salary sacrifice a portion of their
fees to be granted as share rights (if they choose to do so). There is no intention to adjust fees for FY22.
4.2 Remuneration policy & arrangements
The Board sets the fees for its NEDs in line with the key objectives of the Group’s NED remuneration policy set out below. NEDs fees are
reviewed annually and are set at a level that is sufficient to attract and retain high calibre NEDs with skills and experience required to oversee a
business of Ramsay’s size and complexity.
Market competitive to secure and retain
talented, qualified NEDs
The Board’s policy is to remunerate NEDs
at market-competitive rates to attract and
retain NEDs of the highest calibre and
requisite expertise having regard to:
• market data,
• the size, complexity and international
spread of the Group’s operations and
• the workload and time commitment
of NEDs.
Preserving and safeguarding
independence and impartiality
NED remuneration consists of base
fees, and additional fees for the
Chair and members of any Board
Committee (with the exception of the
Nomination Committee).
No element of NED remuneration is
“at-risk” (i.e. NEDs are not entitled to
any performance-related remuneration)
to preserve their independence
and impartiality.
Aligning NEDs and security
holder interests
NEDs are encouraged to hold securities
in the Group to create alignment between
the interests of NEDs and shareholders.
To create alignment between the interests
of NEDs and shareholders, all NEDs
are subject to a minimum shareholding
requirement equal to 100% of their annual
base fee. This requirement must be
satisfied within 5 years of appointment for
newly appointed NEDs. Refer section 2.7.
4.3 Fees & other benefits
Aggregate fee pool
The current annual aggregate fee pool for NEDs is capped at $3,500,000 (including statutory superannuation contributions), as approved by
shareholders at the AGM held on 12 November 2014. No change is proposed to the fee pool.
FY21 fee structure
The table below outlines the revised FY21 fee schedule for NEDs. FY21 marks the fourth conservative year that NED fees have not been
increased, rather a reduction in the Chair fee from $725,000 to $659,900 and a 20% reduction in the Deputy Chairman’s and base member fee
from FY20 levels occurred in FY21. All fees shown in the table below are inclusive of superannuation.
Position
Board
Audit Committee
Risk Management Committee
People & Remuneration Committee
Nomination Committee
Chair (inc. superannuation)
Chair: $659,900
Deputy Chair: $271,674
$56,000
$50,000
$41,000
Member fee (inc. superannuation)
$227,200
$28,000
$25,000
$21,000
No fee provided for this committee
Internationally based NEDs will also receive a travel allowance equivalent to $10,000 per meeting for travel in excess of nine hours for
attendance at Board meetings.
Prescribed benefits
NEDs appointed prior to October 2003 (being, Michael S Siddle & Peter J Evans) remain entitled to retirement benefits under the, now frozen,
Directors’ Retirement Benefits Plan. Under the plan, retirement benefits previously accrued on a pro-rata basis over a period of nine years,
commence after a minimum service period of three years.
Entitlements are indexed in line with the one-year Commonwealth Government Bond Rate and are adjusted twice a year. No adjustments are
made based on increases in NED fees or years of service. The indexation of retirement benefits occurs simply to preserve the real value of
existing entitlements and not to enhance any NED’s remuneration, and as such, is not counted towards the aggregate fee pool.
The value of the frozen benefits as at 30 June 2021, to which participating NEDs are entitled upon retirement are set out below:
Total Frozen Benefit
31 Dec 09 ($)
2,879,813
Total Provision
30 June 2020 ($)
1,244,096
Benefits paid in FY21 ($)
-
Total Bond Rate
Adjustment ($)
1,668
Total Provision
30 June 2021 ($)
1,245,764
Annual Report 2021
51
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
4.4 Statutory remuneration table (NEDs)
The fees paid or payable to the NEDs of the Group in respect of FY21 are set out in the table below.
All values are in Australian dollars ($) unless otherwise stated.
Fixed remuneration
Short-term benefits
Long-term benefits
Name1
M.J. Siddle
(Chairman)
P.J. Evans
(Deputy Chair)
C.A. Deans
(NED)
J.M. McMurdo
(NED)
K.L.C. Penrose
(NED)
C.R. Süssmuth
Dyckerhoff
(NED)
D.J. Thodey AO
(NED)
Retired
R.H. McGeoch
AO
K.C.D.
Roxburgh
Total
Total
Financial
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Cash Salary
& Fees2 ($)
638,206
705,178
351,695
445,925
261,375
297,863
248,408
235,479
301,359
82,803
245,294
289,347
240,875
317,380
-
113,995
-
118,453
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Super-
annuation
($)
21,694
21,003
21,694
21,003
21,694
21,003
21,694
16,919
21,694
7,001
21,694
21,003
21,694
21,003
-
8,751
-
8,751
Non-
Monetary
Benefits3
($)
-
-
-
-
-
-
-
-
-
-
-
-
Accrued
STI ($)
-
-
-
-
-
-
-
-
-
-
-
-
Long
Service
Leave
Entitlements
($)
-
-
-
-
-
-
-
-
-
-
-
-
Deferred
STI
($)
-
-
-
-
-
-
-
-
-
-
-
-
LTI
Share
Based
Rights
($)
-
-
-
-
-
-
-
-
-
-
-
-
Accrued
Termination /
Retirement
Benefits4 ($)
737
5,421
931
6,848
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Remuneration ($)
660,637
731,602
374,320
473,776
283,069
318,866
270,102
252,398
323,053
89,804
266,988
310,350
262,569
338,383
-
122,746
-
127,204
Share Based
Payments as %
of Total
Remuneration
-
-
-
-
-
-
-
-
-
-
-
-
Total
Performance
Related
Remuneration
(%)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,287,212
2,606,423
151,858
146,437
1,668
12,269
2,440,738
2,765,129
1 Each of the NEDs listed in the table above held their named position for the whole of FY21.
2 With respect to NED fees in FY20, this amount includes fees received in the form of share rights under the NEDs Share Rights Plan.
3 This figure represents non-monetary benefits such as health insurance cover and motor vehicle running costs that do not form part of the KMP’s cash salary.
4 With respect to NEDs, this constitutes amounts provided for by Ramsay during the financial year in relation to the contractual retirement benefits which the NED will be entitled to upon retirement from office. These amounts represent the bond rate adjustment for
the year as set out in section 4.3 above.
52
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
5 Remuneration Governance
5.1 Remuneration Governance
Overview
As summarised below, the Board oversees the Ramsay people strategy, both directly and through the People & Remuneration Committee. The
People & Remuneration Committee seeks input from the MD & CEO and the Group Chief People Officer, who attend Committee meetings,
except where matters relating to their own remuneration are considered.
Annual Report 2021
53
BoardThe remuneration related responsibilities of the Board include:• satisfying itself that the Group’s remuneration framework is aligned with the Group’s purpose, values, strategic objectives and risk appetite; • setting performance targets for the MD & CEO and members of the senior executive team, considering performance against those targets and determining remuneration outcomes; and • determining the remuneration of the MD & CEO and CFO.ManagementProvides information relevant to the remuneration decisions and makes recommendations to the People & Remuneration Committee. The MD & CEO recommends the remuneration arrangements and performance assessment of his direct reports.People & Remuneration CommitteePrimarily responsible for the consideration and recommendation of alternative remuneration practices, to the Board. Consideration is given to the many stakeholders in which the committee regularly interacts with, including management, shareholders and external advisors. Responsibilities include:• reviewing and making recommendations to the Board on the remuneration arrangements of the MD & CEO and CFO, and equity-based incentives across the Group;• reviewing and approving remuneration arrangements for the senior executive team, and remuneration policies and people practices for the Group including monitoring the Group’s remuneration framework for alignment to values, strategic objectives, long-term financial soundness and risk appetite;• review of remuneration by gender, effectiveness of people policies, engagement survey results and succession planning;• reviewing and recommending to the Board in relation to Director fees, travel and other benefits.Consultation with Shareholders & other external stakeholdersContinued regular consultation with shareholders and proxy advisors to ensure remuneration practices are aligned to market expectations.Remuneration Consultants & Other External AdvisorsSupport the People & Remuneration Committee by providing independent advice on matters including:• objective benchmarking data;• market practices of other listed companies;• legal, tax and accounting advice; and• alternatives for incentives plans. 8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
Interaction between risk & remuneration
Our remuneration framework has been structured to encourage long-term sustainable decision making from all of our leaders, ensuring that
the interests of the Group’s shareholders and broader stakeholder groups (i.e. customers, employees, community etc) are at the heart of all
decisions. It is important that the Group’s remuneration framework encourages the sound management of both financial (and non-financial risks)
and mitigates against excessive risk taking or short-term oriented behaviours by executives.
This is achieved under the executive remuneration framework in a number of ways:
• Structure: under the executive remuneration framework, a portion of the STI is deferred into equity (vesting over 1 to 2 years, or 3 years
depending on role) and the LTI is delivered in performance rights which are performance-tested over 3 years. Both of these mechanisms
encourage alignment between executives and the Group’s shareholders, as the value of these awards to participants fluctuates with the
Group’s share price;
• Board discretion: the Board, in conjunction with the People & Remuneration Committee, has the ability to exercise discretion to ensure the
quantum of executive remuneration is appropriate in light of individual and Group performance (which extends to reductions in STI and LTI
vesting outcomes, including to zero, for adverse risk outcomes). STI awards are also subject to The Ramsay Way (“People Caring for People”)
performance modifier,
• Minimum shareholding requirements: as noted in section 2.7 above, a minimum shareholding requirement was introduced in FY20 for
executives and NEDs which requires the accumulation of Group shares over 5 years. This requirement encourages alignment between the
interests of the Group’s shareholders, and executives and NEDs;
• Malus & clawback provisions: incentives are subject to malus and clawback provisions which provide the Board with the ability to reduce
and/or withhold any variable remuneration awards that have been awarded but remain unvested or unpaid, as well as recoup amounts that
have previously been paid. These provisions are described in section 2.6; and
• Remuneration governance: in determining final variable remuneration outcomes each year, the People & Remuneration Committee will
consult with the Risk Management Committee and Group Chief Risk Officer to ensure that the financial and non-financial risk considerations
are taken into account.
5.2 Use of remuneration consultants
In accordance with its Charter, the People & Remuneration Committee can engage with remuneration consultants, according to
specific guidelines.
Ramsay did not receive any “remuneration recommendations” as defined under the Corporations Act 2001 (Cth) in FY21.
5.3 Details of Executive Service Agreements
The MD & CEO and Group CFO have written service contracts. The below details the key terms of these agreements.
Term
Duration
Termination by employee
Further detail
• Ongoing
• 6 months’ notice. The Group may elect to make a payment in lieu of notice.
• Employee may terminate the employment agreement without notice if a fundamental change occurs
in his role or responsibilities.
Termination by Group
Restraint Period
• 12 months’ notice (MD & CEO) or 6 months’ (Group CFO) or payment in lieu of notice.
• Ramsay may summarily terminate employment without notice in certain circumstances.
• 12 month restraint provision applies.
5.4 Security Trading Policy
All Ramsay NEDs and employees are subject to the Group’s Securities Trading Policy, a copy of which is available on our website at
ramsayhealth.com/Sustainability/Governance.
This policy prohibits:
• the dealing (or procurement of another person to deal) with Ramsay’s securities or the securities of another company where they are in
possession of inside information;
• dealing with Ramsay securities during blackout periods;
• short-term dealing (e.g. buying and selling securities within a 12-month period or entering into forward contracts); and
• hedging Ramsay securities.
54
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
6 Further information
6.1 Executive KMP and NED share ownership
The table below outlines the holdings and movements during FY21 in the equity of Ramsay by each KMP, including their related parties. No shares were held nominally by any KMP or their
related parties.
Non-Executive Directors
M.S. Siddle
P.J. Evans
C.A. Deans
J.M. McMurdo
K.L.C. Penrose
C.R. Süssmuth Dyckerhoff
D.J. Thodey AO
Executive KMP
C.R. McNally
M.J. Roberts
D.A. Sims1 (former)
Held at 1 July 2020
Received on Vesting
of LTI
Received as
Other Remuneration
Other Net Change
Purchase / Sale
Held at 30 June 2021
Ord. Shares
CARES
Ord.
Shares
CARES
Ord.
Shares
CARES
Ord.
Shares
CARES
Ord. Shares
CARES
3,905,919
11,099
5,705
4,964
957
3,705
11,071
351,707
191
104,257
-
-
1,402
-
-
-
700
-
-
-
-
-
-
-
-
-
-
-
3,074
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,905,919
11,099
5,705
4,964
957
3,705
11,071
351,707
3,265
104,257
-
-
1,402
-
-
-
700
-
-
-
1 Mr Sims ceased as an Executive KMP on 30 September 2020. Mr Sims details are provided in the above table up until the date he ceased as KMP.
55
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
6.2 Movement in securities
The below table shows the movements (during FY21 and up to the date of this Report) in equity settled performance rights granted as remuneration to Executive KMP.
Executive KMP
C.R. McNally
M.J. Roberts
D.A. Sims11 (former)
Instrument
Date of Grant
Number of
Rights
Granted1
Vesting Date2
Number of
Rights Vested/
Exercised3
Value of
Rights
Vested /
Exercised4 ($)
Number of
Rights Subject to
TSR Retesting5,6
Number of
Rights
Forfeited /
Lapsed7,8
Value of
Rights
Forfeited /
Lapsed9 ($)
Equity settled
performance
rights
Equity settled
performance
rights
Equity settled
performance
rights
10-Nov-16
17-Nov-17
17-Nov-18
17-Nov-19
15-Dec-20
20-Apr-20
15-Dec-20
10-Nov-16
17-Nov-17
15-Nov-18
17-Nov-19
15-Dec-20
24,289
47,958
66,346
50,483
55,563
15,372
16,193
16,193
42,571
47,186
31,922
31,940
31-Aug-20
31-Aug-20
31-Aug-21
31-Aug-21
31-Aug-22
31-Aug-23
Staggered10
31-Aug-23
31-Aug-20
31-Aug-20
31-Aug-21
31-Aug-21
31-Aug-22
31-Aug-23
-
-
-
-
-
-
3,074
-
-
-
-
-
-
-
-
-
-
-
-
-
207,403
-
-
-
-
-
-
-
24,289
-
23,979
-
-
-
-
-
16,193
-
14,191
-
-
-
24,289
23,979
23,979
66,346
-
-
-
-
16,193
28,380
14,191
47,186
-
21,293
1,597,101
1,576,717
1,629,138
4,507,561
-
-
-
-
1,064,756
1,866,101
964,139
3,205,826
-
1,446,651
1 The implied maximum possible total value of the equity awards allocated during FY21 and yet to vest can be determined by multiplying the number of Performance Rights granted by the current share price of Ramsay shares. The minimum possible total value of
LTI awards is nil. The weighted average fair value per FY21 Performance Right at the grant date was $27.45 for the TSR performance hurdle and $59.45 for the EPS performance hurdle. The performance criteria applicable to prior year grants are disclosed in prior
Remuneration Reports.
2 This vesting date is an indicative date only. Vesting of Performance Rights will occur once the Board has determined the extent to which the applicable performance hurdles have been met. Vesting will only occur after the announcement of the release of Ramsay’s
Full Year results for the previous financial year.
3 On the vesting of each Performance Right, the holder receives one fully-paid ordinary share in Ramsay, subject to disposal and other dealing restrictions, if held in the trust.
4 The value of vested Performance Rights is based on Ramsay’s 5-day VWAP on the date of vesting (as there is no exercise price payable in respect of Performance Rights).
5 The FY17 LTIs subject to the TSR performance condition did not achieve the required performance threshold on re-testing and therefore lapsed on 31 August 2020.
6 The FY18 LTIs subject to the TSR performance condition failed to achieve the required performance threshold on re-testing and therefore lapsed on 31 August 2021.
7 The FY18 LTI Performance Rights subject to Core EPS performance condition did not achieve the relevant threshold required for vesting and therefore lapsed on 31 August 2020.
8 All the FY19 LTI Performance Rights subject to Core EPS performance condition and to the TSR performance condition did not achieve the relevant thresholds required for vesting and therefore lapsed on 31 August 2021.
9 The value of unvested Performance Rights is calculated using the relevant Ramsay 5-day VWAP at the date of lapsing.
10 In joining Ramsay, the Group CFO Martyn Roberts forfeited unvested equity from his prior role. In recognition of this, the Group CFO was provided with performance rights equivalent to $1M that vest subject to meeting individual performance requirements and
service conditions over the 3 years from his employment anniversary. Subject to satisfaction of continuing employment and performance conditions, vesting is staggered over the 3 years as follows: 20% of the Rights or 3,074 vested on 20 April 2021, 30% of the
Rights or 4,611 to vest on 20 April 2022, and 50% of the rights or 7,687 to vest on 20 April 2023.
11 Mr Sims ceased as an Executive KMP on 30 September 2020. The details for Mr Sims are provided in the above table up until the date he ceased as KMP. The Performance Rights granted to Mr Sims on 15 December 2020 have been adjusted on a pro-rata basis
for the period of service up to the date of his retirement. Accordingly, a total of 21,293 Rights granted on 15 December 2020 have lapsed.
56
Annual Report 2021
8. REMUNERATION REPORT – AUDITED
RAMSAY HEALTH CARE LIMITED
The movement during FY21 in the number of rights over ordinary shares in Ramsay held, directly or indirectly or beneficially, by each KMP, including their related parties is as follows.
Non-Executive Directors
M.S. Siddle
P.J. Evans
C.A. Deans
J.M. McMurdo
K.L.C. Penrose
C.R. Süssmuth Dyckerhoff
D.J. Thodey AO
Executive KMP
C.R. McNally
M.J. Roberts
D.A. Sims1 (former)
Equity Settled Performance
Rights / Share Rights
Rights held at
1 July 2020
Number of
Rights Granted
Number of
Rights Vested /
Exercised
Number of
Rights
Forfeited /
Lapsed
Rights held at
30 June 2021
Number of
Rights Vested /
Exercised Post
30 June 2021
Share Rights
Share Rights
Share Rights
Share Rights
Share Rights
Share Rights
Share Rights
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance Rights
Performance Rights
Performance Rights
189,076
15,372
137,872
55,563
16,439
31,940
-
3,074
-
48,268
-
44,573
196,371
28,737
125,239
-
-
-
-
-
-
-
-
-
-
1 Mr Sims ceased as an Executive KMP on 30 September 2020. Mr Sims details are provided in the above table up until the date he ceased as KMP.
6.3 Other transactions and balances with Executive KMP
Loans to Executive KMP
No Executive KMP or their related parties held any loans with the Group during the Reporting Period.
Other Executive KMP transactions
The Group did not engage in any transactions with Executive KMP or their related parties during the Reporting Period.
57
Annual Report 2021
9.
DIRECTORS' REPORT
The Directors present the Directors’ Report for the year ended 30 June 2021 for the
consolidated entity consisting of Ramsay Health Care Limited (Ramsay or the Company)
and its controlled entities (together, the Group).
The information referred to in the table below is incorporated into, and forms part of, this Directors’ Report:
Item Description
1.
2.
3.
Key Risks
Operating and Financial Review
Remuneration Report
Directors’ roles, skills and qualifications and all directorships of other listed
companies held by each Director in the last 3 years
Company Secretary’s qualifications and experience
Number of Board and Committee meetings and Directors’ attendance
4.
5.
6.
Section / page number of this Annual Report
Section 4 on pages 8 to 10
Section 5 on pages 11 to 23
Section 8 on pages 36 to 57
Section 7 on pages 32 to 34
Section 7 on page 34
Section 7 on page 35
Directors’ relevant interests
Details of Director’s holdings in the share capital of the Company as at the date of this report are as follows:
Name
Alison Deans
Peter Evans
James McMurdo
Craig McNally
Karen Penrose
Michael Siddle
Claudia Süssmuth Dyckerhoff
David Thodey AO
Ordinary shares
5,705
11,099
4,964
351,707
957
3,905,919
3,705
11,071
Convertible Adjustable Rate
Equity Securities (CARES)
1,402
-
-
-
-
-
-
700
Rights over Ordinary
Shares
-
-
-
106,046
5801
-
-
-
1 Ms Penrose acquired Share Rights by way of salary sacrifice under the Non-Executive Director Share Rights Plan, as approved by shareholders at the Annual General Meeting held on
24 November 2020.
Remuneration report
The Remuneration Report in Section 8 on pages 36 to 57 of this Annual Report is incorporated into, and forms part of, this Directors’ Report.
Operating and financial review
Information on the operations of the Group during the financial year, the results of those operations, the Group’s financial position and its
business strategies and prospects is set out in the Operating and Financial Review (OFR) in Section 5 on pages 11 to 23 of this Annual Report
and is incorporated into, and forms part of, this Directors’ Report.
58
Annual Report 2021
9. DIRECTORS' REPORT
RAMSAY HEALTH CARE LIMITED
Principal activities
During the year, the principal activity of the Group was to own and operate hospitals and health care services in approximately 460 locations
across Australia and globally. There were no significant changes in the nature of the Company’s activities during the year.
State of affairs
Other than as referred to in the OFR, there have been no significant changes in the Group’s state of affairs during the year.
Likely developments and expected results
Likely developments in the operations of the Group and the expected results of those operations are set out in the OFR in Section 5 on pages
11 to 23 of this Annual Report and is incorporated into, and forms part of, this Directors’ Report.
Matters subsequent to the end of the financial year
On 26 May 2021, Ramsay announced that it had reached agreement with the board of Spire Healthcare Group PLC (Spire) on the terms of a
recommended cash offer to acquire the entire issued and to be issued share capital of Spire, by way of a scheme of arrangement under part
26 of the UK Companies Act 2006 (Scheme). The Court Meeting and General Meeting at which Spire shareholders voted on resolutions to
approve and implement the Scheme were held on the 19 July 2021. As the requisite majority of votes required to pass all of the resolutions
were not achieved, the proposed acquisition will not proceed. As a result, the amounts held in escrow of $1,958.1 million (Refer Note 16.a) at
30 June 2021, in relation to this business combination were released and subsequently used to pay down loans and borrowings of the Group.
There have been no other significant events after the reporting date that may significantly affect the Group’s operations in future years, the
results of these operations in future years or the Group’s state of affairs in future years.
Dividends
Dividends paid or recommended for payment on ordinary shares are as follows:
• Final dividend recommended @ 103.0 per share (2020: 0.0 cents1). Total of $235.7 million (2020: $0.0 million1).
• Interim dividend paid during the year @ 48.5 cents per share (2020: 62.5 cents). Total of $106.2 million (2020: $126.3 million).
Dividends paid or recommended for payment on CARES are as follows:
• Final dividend recommended @ $1.74 per security (2020: $1.77). Total of $4.5 million (2020: $4.6 million).
• Interim dividend paid during the year @ $1.73 per security (2020: $2.04). Total of $4.5 million(2020: $5.3 million).
The tax rate at which dividends have been franked and recommended dividends will be franked is 30% (2020: 30%).
Environmental regulation
The Group holds licences from the Environment Protection Regulatory Bodies applicable to hospitals for the maintenance of a safe
environment. The Directors are not aware of any breaches of these licences.
Non-audit services
Ernst & Young received or are due to receive $2,753,006 for the provision of non-audit services. Refer to Note 21 for further information.
The Board is satisfied that the provision of non-audit services during the year by Ernst & Young is compatible with, and did not compromise, the
auditor independence requirements of the Corporations Act 2001 (Cth) for the following reasons:
1. all non-audit services provided by Ernst & Young were reviewed and approved to ensure they do not impact the integrity and objectivity of
the auditor; and
2. the nature and scope of each type of non-audit service provided means that auditor independence was not compromised.
1 No final dividend was determined
Annual Report 2021
59
9. DIRECTORS' REPORT
RAMSAY HEALTH CARE LIMITED
Indemnification and insurance of directors and officers
The Company’s Constitution requires the Company to indemnify any person who is, or has been, an officer of the Company, including the
Directors and other executive officers, against the liabilities incurred while acting as such officers to the extent permitted by law.
In accordance with the Company’s Constitution, the Company has entered into a Deed of Indemnity, Insurance and Access with each of the
Company’s Directors and certain executives. No Ramsay Director or officer of the Company has received benefits under an indemnity from the
Company during or since the end of the financial year.
The Company agrees to pay a premium in respect of a contract insuring current and former directors and executives of the Company and its
subsidiaries against liability that they may incur as an officer of the Company or any of its subsidiaries, including liability for costs and expenses
incurred by them in defending civil or criminal proceedings involving them as such officers, with certain exceptions. It is a condition of the
insurance contract that no details of the premiums payable or the nature of the liabilities insured are disclosed.
Indemnification of auditor
As part of the Company’s terms of engagement with Ernst & Young, the Company has agreed to indemnify Ernst & Young to the extent
permitted by law and professional regulations, against any losses, liabilities, costs or expenses incurred by Ernst & Young where they arise out
of or occur in relation to any negligent, wrongful or wilful act or omission by Ramsay. No payment has been made to Ernst & Young by Ramsay
pursuant to this indemnity, either during or since the end of the financial year.
Proceedings on behalf of the Company
No application has been made under section 237 of the Corporations Act 2001 (Cth) in respect of the Company, and there are no proceedings
that a person has brought or intervened in on behalf of the Company under that section.
Rounding
The amounts contained in this report and in the financial report have been rounded off to the nearest hundred thousand unless otherwise
specified under the option available to the Company under ASIC Corporations (Rounding in Financial / Directors’ Reports) Instrument 2016/191.
The Company is an entity to which the Instrument applies.
Approval
Signed in accordance with a resolution of the Directors.
M.S. SIDDLE
Chairman
Sydney, 24 September 2021
C.R. McNALLY
Managing Director and Chief Executive Officer
60
Annual Report 2021
9. DIRECTORS' REPORT
RAMSAY HEALTH CARE LIMITED
Annual Report 2021
61
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Auditor’s Independence Declaration to the Directors of Ramsay Health Care Limited As lead auditor for the audit of the financial report of Ramsay Health Care Limited for the financial year ended 30 June 2021, 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; and b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Ramsay Health Care Limited and the entities it controlled during the financial year. Ernst & Young Douglas Bain Partner 24 September 2021 9. DIRECTORS' REPORT
RAMSAY HEALTH CARE LIMITED
Directors' declaration
In accordance with a resolution of the Directors of Ramsay Health Care Limited, we declare that:
In the opinion of the Directors:
a. the consolidated financial statements and notes of Ramsay Health Care Limited for the year ended 30 June 2021 are in accordance with the
Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the year ended on
that date; and
ii. complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
b. the consolidated financial statements and notes also comply with International Financial Reporting Standards as disclosed in the
Overview Note;
c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
d. this declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 30 June 2021;
e. as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in Note 23 will be
able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee.
On behalf of the Board
M.S. SIDDLE
Chairman
Sydney, 24 September 2021
C.R. McNALLY
Managing Director and Chief Executive Officer
62
Annual Report 2021
10.
FINANCIAL RESULTS
Contents
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
OVERVIEW
a
b
c
d
e
f
g
Basis of preparation
New and amended accounting standards and
interpretations, effective 1 July 2020
Accounting standards and interpretations issued but not
yet effective
Basis of consolidation
Significant accounting judgements, estimates
and assumptions
Current versus non-current classification
Foreign currency translation
I RESULTS FOR THE YEAR
1
2
3
4
5
6
Segment information
Revenue and other income
Expenses
Dividends
Earnings per share
Net tangible assets
II CAPITAL – FINANCING
7
8
Equity
Net debt
69
69
69
69
69
70
70
70
71
71
73
76
77
78
78
79
80
82
64
65
66
67
68
69
91
91
94
96
98
99
102
103
106
112
112
116
116
118
118
119
120
123
125
125
III ASSETS AND LIABILITIES – OPERATING AND INVESTING
9 Working capital
10 Business combinations
11
Property, plant and equipment
12 Right of use assets
13
14
15
Intangible assets
Impairment testing of goodwill
Taxes
16 Other assets (net)
IV RISK MANAGEMENT
17
Financial risk management
V OTHER INFORMATION
18
19
Share based payment plans
Subsequent events
20 Related party transactions
21 Auditors’ remuneration
22 Information relating to subsidiaries
23 Closed group
24 Parent entity information
25 Material partly – owned subsidiaries
Annual Report 2021
63
10. FINANCIAL RESULTS
RAMSAY HEALTH CARE LIMITED
Consolidated Income Statement
FOR THE YEAR ENDED 30 JUNE 2021
Revenue from contracts with customers
Interest income
Other income – income from government grants
Other income – income from the sale of development assets
Other income – net profit on disposal of non-current assets
Total revenue and other income
Employee benefit and contractor costs
Occupancy costs
Service costs
Medical consumables and supplies
Depreciation, amortisation and impairment
Cost of development assets sold
Total expenses, excluding finance costs
Share of profit of joint venture
Profit before tax and finance costs
Finance costs
Profit before income tax
Income tax
Net profit for the year
Attributable to non-controlling interests
Attributable to owners of the parent
Earnings per share (cents per share)
Basic earnings per share (after CARES dividend)
Diluted earnings per share (after CARES dividend)
Note
2.a
2.b
3
3
16.b
3
15
5
5
2021
$m
12,864.2
7.1
428.3
20.4
12.3
13,332.3
(7,258.7)
(558.9)
(447.8)
(3,008.7)
(920.9)
(8.5)
(12,203.5)
10.9
1,139.7
(398.1)
741.6
(230.1)
511.5
62.5
449.0
511.5
2020
$m
12,160.3
12.7
235.2
2.1
11.2
12,421.5
(7,020.4)
(551.4)
(315.0)
(2,723.1)
(930.7)
(6.8)
(11,547.4)
16.1
890.2
(424.0)
466.2
(157.0)
309.2
25.2
284.0
309.2
193.2
192.6
131.0
130.5
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
64
Annual Report 2021
10. FINANCIAL RESULTS
RAMSAY HEALTH CARE LIMITED
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2021
Net profit for the year
Items that will not be reclassified to net profit
Actuarial (loss) on defined employee benefit obligation
Items that may be subsequently reclassified to net profit
Cash flow hedges
Profit/(loss) taken to equity
Transferred to Income Statement
Net change in cost of hedging
Net (loss) on bank loan designated as a hedge of a net investment
Foreign currency translation
Income tax relating to components of other comprehensive income/(expense)
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to non-controlling interests
Attributable to owners of the parent
2021
$m
2020
$m
511.5
309.2
(37.4)
(10.2)
17.1
1.6
3.1
(1.5)
(69.0)
6.1
(80.0)
431.5
44.6
386.9
431.5
(5.0)
12.3
1.4
(26.3)
20.9
(0.8)
(7.7)
301.5
27.3
274.2
301.5
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Annual Report 2021
65
10. FINANCIAL RESULTS
RAMSAY HEALTH CARE LIMITED
Consolidated Statement of Financial Position
AS AT 30 JUNE 2021
Note
2021
$m
2020
$m
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Prepayments
Other current assets
Total current assets
Non-current assets
Other financial assets
Investments in joint venture
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Prepayments
Receivables
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other creditors
Loans and borrowings
Lease liabilities
Derivative financial instruments
Provisions
Income tax payable
Total current liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Provisions
Defined employee benefit obligation
Derivative financial instruments
Other creditors
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Treasury shares
Convertible Adjustable Rate Equity Securities (CARES)
Other reserves
Retained earnings
Parent interests
Non-controlling interests
TOTAL EQUITY
8.a
9.a
9.b
15
16.a
16.b
11
12
13
15
9.a
9.c
8.b
8.c
8.d
16.c
15
8.b
8.c
16.c
16.e
8.d
15
7.a
7.b
7.c
1,004.8
1,801.4
409.4
12.3
133.0
1,990.5
5,351.4
82.9
217.5
4,488.6
4,411.5
4,233.6
457.6
10.9
70.6
13,973.2
19,324.6
3,013.7
51.7
368.2
14.9
185.0
83.7
3,717.2
5,229.0
4,902.8
386.3
249.1
23.2
30.7
235.5
11,056.6
14,773.8
4,550.8
2,197.6
(76.7)
252.2
(91.3)
1,750.9
4,032.7
518.1
4,550.8
1,503.7
1,916.9
411.0
14.6
175.4
39.2
4,060.8
82.6
245.8
4,447.2
4,477.9
4,246.1
450.1
11.1
78.1
14,038.9
18,099.7
3,203.5
32.3
347.8
6.2
133.7
49.4
3,772.9
4,195.5
4,941.4
390.0
222.9
45.1
24.3
271.7
10,090.9
13,863.8
4,235.9
2,197.6
(78.2)
252.2
(51.0)
1,431.9
3,752.5
483.4
4,235.9
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
66
Annual Report 2021
10. FINANCIAL RESULTS
RAMSAY HEALTH CARE LIMITED
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2021
At 1 July 2020
Total Comprehensive Income
Dividends paid
Treasury shares vesting to employees
Share based payment expense
for employees
Acquisition of subsidiary/non
controlling interest
At 30 June 2021
At 1 July 2019
AASB 16 Leases adjustment
At 1 July 2019 – Restated
Total Comprehensive Income
Dividends paid
Shares purchased for executive
performance share plan
Treasury shares vesting to employees
Issue of share capital (net of
transaction costs)
Share based payment expense
for employees
Acquisition of subsidiary/non
controlling interest
At 30 June 2020
Issued
Capital
(Note 7a)
Treasury
Shares
(Note 7b)
CARES
(Note 7c)
Other
Reserves
Retained
Earnings
Non-
controlling
Interests
$m
2,197.6
-
-
-
-
-
$m
(78.2)
-
-
1.5
-
-
$m
252.2
-
-
-
-
-
$m
(51.0)
(47.4)
-
(1.5)
8.6
-
$m
1,431.9
434.3
(115.3)
-
-
-
$m
483.4
44.6
(9.8)
-
-
(0.1)
Total
$m
4,235.9
431.5
(125.1)
-
8.6
(0.1)
2,197.6
(76.7)
252.2
(91.3)
1,750.9
518.1
4,550.8
713.5
-
713.5
-
-
-
-
1,484.1
-
-
(82.1)
-
(82.1)
-
-
(9.8)
13.7
-
-
-
252.2
-
252.2
-
-
-
-
-
-
-
(33.2)
-
(33.2)
(5.8)
-
-
(13.7)
-
1.3
0.4
1,693.3
(218.9)
1,474.4
280.0
(322.5)
479.4
-
479.4
27.3
(12.6)
3,023.1
(218.9)
2,804.2
301.5
(335.1)
(9.8)
-
1,484.1
1.3
-
-
-
-
(10.7)
(10.3)
-
-
-
-
-
2,197.6
(78.2)
252.2
(51.0)
1,431.9
483.4
4,235.9
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Annual Report 2021
67
10. FINANCIAL RESULTS
RAMSAY HEALTH CARE LIMITED
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2021
Cash flows from operating activities
Receipts from customers
Receipts of government grants
Payments to suppliers and employees
Income tax paid
Lease finance costs
Other finance costs
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets
Proceeds from sale of businesses and non-current assets
Interest and dividends received
Business combinations, net of cash received
Business combinations consideration held in escrow
Acquisition of investments and purchase of non-controlling interests
Net cash flows used in investing activities
Cash flows from financing activities
Dividends paid to ordinary shareholders of the parent
Dividends paid to non-controlling interests
Repayment of lease principal
Payments for ordinary shares bought back
Proceeds from borrowings
Repayment of borrowings
Costs of refinancing
Proceeds from share issue (net of transaction costs)
Net cash flows from/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents
Net foreign exchange differences on cash held
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
2021
$m
2020
$m
12,866.0
305.9
(11,095.0)
(228.2)
(234.2)
(133.3)
1,481.2
(628.9)
132.1
34.9
(90.1)
(1,951.5)
(0.7)
(2,504.2)
(115.3)
(9.8)
(334.0)
-
6,243.3
(5,173.4)
(26.8)
-
584.0
(439.0)
(59.9)
1,503.7
1,004.8
12,433.8
235.2
(10,366.1)
(203.4)
(238.6)
(180.2)
1,680.7
(680.6)
34.6
47.3
(25.4)
-
(31.9)
(656.0)
(322.5)
(12.6)
(323.8)
(9.8)
1,182.2
(2,222.3)
-
1,476.9
(231.9)
792.8
(34.6)
745.5
1,503.7
3
8.a
10
16.a
8.a
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
68
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
OVERVIEW
RAMSAY HEALTH CARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Overview
This section sets out the basis on which the Ramsay 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.
The consolidated financial report of Ramsay Health Care Limited
(the Group) for the year ended 30 June 2021 was authorised for
issue on 24 September 2021 in accordance with a resolution of
the Directors. Ramsay Health Care Limited is a for profit company
limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange. The nature of the
operations and principal activities of the Group are described in the
Directors' Report.
a Basis of preparation
This general purpose financial report:
• has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian
Accounting Standard Board (AASB) and the Corporations Act 2001;
• has been prepared on the basis of historical cost, except for
derivative financial instruments, listed investments, assets held for
sale and the assets and liabilities recognised through business
combinations which have been measured at fair value;
• complies with International Financial Reporting Standards as
issued by the International Accounting Standards Board;
• is presented in Australian Dollars;
• where necessary, and as a result of a change in the classification
of certain revenues and expenses during the current year,
comparative amounts in the consolidated income statement, and
associated notes have been reclassified for consistency with
presentation in the current period;
• presents all values as rounded to the nearest hundred 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.
b New and amended accounting
standards and interpretations,
effective 1 July 2020
The Group applied for the first-time certain standards and
amendments, which are effective for annual periods beginning on
or after 1 July 2020. The nature and effect of these changes are
disclosed below.
AASB 2018-6 Amendments to AASs – Definition of
a Business
The amendment clarifies that to be considered a business, an
integrated set of activities and assets must include, at a minimum,
an input and a substantive process that, together, significantly
contribute to the ability to create output. Furthermore, it clarifies
that a business can exist without including all of the inputs and
processes needed to create outputs. These amendments had no
impact on the consolidated financial statements of the Group,
but may impact future periods should the Group enter into any
business combinations.
AASB 2020-4 Amendments to AASs – COVID-19
Related Rent Concessions
The amendments provide relief to lessees from applying AASB 16
guidance on lease modification accounting for rent concessions
arising as a direct consequence of the COVID pandemic. As a
practical expedient, a lessee may elect not to assess whether a
COVID related rent concession from a lessor is a lease modification.
A lessee that makes this election accounts for any change in lease
payments resulting from the COVID related rent concession the
same way it would account for the change under AASB 16, if
the change were not a lease modification. This amendment had
no material impact on the consolidated financial statements of
the Group.
c Accounting standards and
interpretations issued but not yet
effective
New and amended standards and interpretations issued by the
AASB that will apply for the first time in the next annual financial
statements are not expected to impact the Group as they are either
not relevant to the Group’s activities or require accounting which is
consistent with the Group’s current accounting policies.
d Basis of consolidation
The consolidated financial statements comprise the financial
statements of Ramsay Health Care Limited and its subsidiaries (‘the
Group’) as at and for the period ended 30 June each year. Control
is achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee.
When the Group has less than a majority of the voting or similar
rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an
investee, including:
• The contractual arrangement with the other vote holders of
the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts
and circumstances indicate that there are changes to one or more of
the three elements of control. 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 Consolidated Financial Statements from
the date the Group gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of Other Comprehensive Income
(OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the
non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries
Annual Report 2021
69
g Foreign currency translation
Both the functional and presentation currency of Ramsay Health Care
Limited and its Australian subsidiaries is Australian dollars (A$). Each
entity in the Group determines its own functional currency and items
included in the financial statements of each entity are measured
using that functional currency.
Transactions in foreign currencies are initially recorded in the
functional currency by applying the exchange rates ruling at the date
of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at
the reporting date.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are translated using the exchange rate as at the
date of the initial transaction. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at
the date when the fair value was determined.
The functional currencies of the overseas subsidiaries are: British
pounds for Ramsay Health Care (UK) Limited and Euro for Ramsay
Santé SA. As at the reporting date the assets and liabilities of the
overseas subsidiaries are translated into the presentation currency
of Ramsay Health Care Limited at the rate of exchange ruling at
the reporting date and the Income Statements are translated at
the weighted average exchange rates for the year. The exchange
differences arising on the translation are taken directly to a separate
component of equity.
On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign operation is
recognised in the Income Statement.
NOTES TO THE FINANCIAL STATEMENTS
OVERVIEW
RAMSAY HEALTH CARE LIMITED
to bring their accounting policies into line with the Group’s
accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss
of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it derecognises the related assets
(including goodwill), liabilities, non-controlling interests and other
components of equity while any resultant gain or loss is recognised
in profit or loss. Any investment retained is recognised at fair value.
e Significant accounting
judgements, estimates and
assumptions
In applying the Group’s accounting policies, management has made
a number of judgements, estimates and assumptions concerning
the future. The key judgements, estimates and assumptions that are
material to the financial statements relate to the following areas:
Note 2.b
Note 8.c
Note 10
Note 11
Note 13
Note 14
Note 15
Note 16.c
Note 16.e
Note 18
Other income – income from
government grants
Lease liabilities
Business combinations
Property, plant and equipment
Intangible assets
Impairment testing of goodwill
Taxes
Provisions
Defined employee benefit obligation
Share based payment plans
Page 75
Page 86
Page 94
Page 96
Page 99
Page 102
Page 103
Page 108
Page 110
Page 116
f Current versus 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:
• 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 reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets
and liabilities.
70
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
I Results for the Year
This section provides additional information on the Group results for the year, including further detail on results by segment,
revenue, expenses, earnings per share and dividends.
1 Segment information
The Managing Director and his management team examine the Group’s performance and allocate resources from a geographic
perspective and have identified four different business units. The segment information discloses the financial performance and
total assets and liabilities of each operating business.
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Managing Director (the chief
operating decision maker) in assessing performance and in determining the allocation of resources.
The operating segments are identified by management based primarily on the country in which the service is provided, as this is the Group’s
major risk and has the most effect on the rate of return, due to differing currencies and differing health care systems in the respective countries.
The Group has four reportable operating segments being Asia Pacific, UK, France and Nordics.
Discrete financial information about each of these operating businesses is reported to the Managing Director and his management team on at
least a monthly basis.
Types of services
The reportable operating segments derive their revenue primarily from providing health care services to both public and private patients in
the community.
Accounting policies and inter-segment transactions
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. Segment
revenue, segment expense and segment results include transfers between the segments. These transfers are eliminated on consolidation.
The accounting policies used by the Group in reporting segments are the same as those contained throughout the accounts and in
prior periods.
Annual Report 2021
71
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
1 Segment information (Continued)
Year Ended 30 June 2021
Revenue from contracts with customers
Other income – income from government grants
Other income – income from the sale of development assets
Other income – net profit on the disposal of non-current assets
Total revenue and other income before intersegment revenue
Intersegment revenue
Total segment revenue and other income
Earnings before interest, tax, depreciation, amortisation and
rent (EBITDAR)1
Rent2
Earnings before interest, tax, depreciation and amortisation (EBITDA)3
Depreciation and amortisation
Earnings before interest and tax (EBIT)4
Net finance costs
Income tax expense
Net profit after tax
Attributable to non-controlling interest
Net profit attributable to owners of the parent
Asia
Pacific
$m
5,440.8
-
20.4
-
5,461.2
2.9
5,464.1
UK
$m
France
$m
Nordics
$m
Total
$m
1,024.1
-
-
-
1,024.1
-
1,024.1
4,574.9
336.4
-
10.3
4,921.6
-
4,921.6
1,824.4
91.9
-
2.0
1,918.3
-
1,918.3
12,864.2
428.3
20.4
12.3
13,325.2
2.9
13,328.1
871.6
182.4
947.4
206.9
2,208.3
(16.5)
855.1
(219.1)
636.0
(1.2)
181.2
(88.4)
92.8
(117.5)
829.9
(472.7)
357.2
(19.6)
187.3
(140.7)
46.6
(154.8)
2,053.5
(920.9)
1,132.6
(391.0)
(230.1)
511.5
(62.5)
449.0
"EBITDAR" is a non-statutory profit measure and represents profit before interest, tax, depreciation, amortisation and rent.
1
2 Rent includes rental costs of short term or low value assets together with any related rent costs, including rent related taxes that could not be capitalised as part of lease liabilities.
3 "EBITDA" is a non-statutory profit measure and represents profit before interest, tax, depreciation and amortisation.
4 "EBIT" is a non-statutory profit measure and represents profit before interest and tax.
Year Ended 30 June 2020
Revenue from contracts with customers
Other income – income from government grants
Other income – income from the sale of development assets
Other income – net profit on the disposal of non-current assets
Total revenue and other income before intersegment revenue
Intersegment revenue
Total segment revenue and other income
Earnings before interest, tax, depreciation, amortisation and
rent (EBITDAR)1
Rent2
Earnings before interest, tax, depreciation and amortisation (EBITDA)3
Depreciation and amortisation
Earnings before interest and tax (EBIT)4
Net finance costs
Income tax expense
Net profit after tax
Attributable to non-controlling interest
Net profit attributable to owners of the parent
Asia
Pacific
$m
5,068.0
-
2.1
11.2
5,081.3
8.7
5,090.0
UK
$m
France
$m
Nordics
$m
Total
$m
929.5
-
-
-
929.5
-
929.5
4,352.7
235.2
-
-
4,587.9
-
4,587.9
1,810.1
-
-
-
1,810.1
-
1,810.1
12,160.3
235.2
2.1
11.2
12,408.8
8.7
12,417.5
776.2
165.9
863.4
168.5
1,974.0
(16.9)
759.3
(224.3)
535.0
(1.3)
164.6
(114.0)
50.6
(122.7)
740.7
(455.6)
285.1
(24.9)
143.6
(136.8)
6.8
(165.8)
1,808.2
(930.7)
877.5
(411.3)
(157.0)
309.2
(25.2)
284.0
"EBITDAR" is a non-statutory profit measure and represents profit before interest, tax, depreciation, amortisation and rent.
1
2 Rent includes rental costs of short term or low value assets together with any related rent costs, including rent related taxes that could not be capitalised as part of lease liabilities.
3 "EBITDA" is a non-statutory profit measure and represents profit before interest, tax, depreciation and amortisation.
4 "EBIT" is a non-statutory profit measure and represents profit before interest and tax.
As Ramsay is no longer reporting a core/non-core earnings split, the segment results for the year ended 30 June 2020 have been restated to
reflect a consistent presentation with the segment results presented for the year ended 30 June 2021.
72
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
1 Segment information (Continued)
Asia Pacific
$m
UK
$m
France
$m
Nordics
$m
Adjustments
&
Eliminations
$m1
Total
$m
8,303.0
(3,662.2)
3,399.7
(2,967.9)
10,019.0
(7,966.7)
2,111.1
(998.8)
(4,508.2)
821.8
19,324.6
(14,773.8)
6,500.8
(2,139.5)
2,716.0
(2,272.8)
10,643.9
(8,614.7)
1,866.9
(836.8)
(3,627.9)
-
18,099.7
(13,863.8)
At 30 June 2021
Assets & liabilities
Segment assets
Segment liabilities
At 30 June 2020
Assets & liabilities
Segment assets
Segment liabilities
1 Adjustments and eliminations consist of investments in subsidiaries, intercompany and receivables/payables, which are eliminated on consolidation.
Segment revenue reconciliation to Income Statement
Segment revenue reconciliation to Income Statement
Total segment revenue and other income
Inter segment sales elimination
Interest income
Total revenue and other income
2 Revenue and other income
2021
$m
2020
$m
13,328.1
(2.9)
7.1
13,332.3
12,417.5
(8.7)
12.7
12,421.5
The Group primarily derives revenue from providing health care and related services to both public and private patients in
the community.
2.a Revenue from contracts with customers
Revenue from patients
Revenue from governments under COVID-19 support contracts
Rental revenue
Revenue from ancillary services
Revenue from contracts with customers
2021
$m
11,915.8
428.7
87.2
432.5
12,864.2
2020
$m
11,485.7
189.6
79.8
405.2
12,160.3
Annual Report 2021
73
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
2 Revenue and other income (Continued)
Accounting Policies
Revenue is recognised and measured at the amount of the consideration received or receivable to the extent that the performance
obligations under contracts have been satisfied and the revenue can be reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
REVENUE FROM PATIENTS
Revenue from patients is recognised on the date on which the services were provided to the patient.
REVENUE FROM GOVERNMENTS UNDER COVID-19 SUPPORT CONTRACTS
During 2020 and 2021, specific contracts were entered into with various government bodies under which Ramsay made available its
facilities and services, including equipment and staff, to assist with the respective government’s response to the COVID pandemic. Each of
the revenue agreements are specific to each government body as follows:
Australia
Agreements with the state governments of NSW, WA, QLD and VIC (each a State) commenced from either 31 March or 1 April 2020.
In return for the commitment to maintain full workforce capacity at the facilities, Ramsay has received, and recognised as revenue, the
net recoverable costs (being recoverable costs less any revenue generated from operations, calculated on an accruals basis (revenue
amounts)) for these services. Recoverable costs include direct operating costs, service costs, corporate overhead costs (to the extent
related to the provision of service), depreciation associated with pre-existing capital, which is owned, and depreciation associated with
amortisation of leases. Interest and debt servicing costs are excluded. The agreements expire on various dates, depending on each
State’s requirements. These end dates are (in most cases) 20 or 30 days after the State gives notice but not before; in the case of VIC, the
temporary restrictions imposed on private hospitals performing category 3 and non-urgent category 2 surgeries have been lifted; in the
case of QLD, the State determines that activation of the Australian Health Sector Emergency Response Plan for Novel Coronavirus 2019
has ceased; and, in the case of NSW, the date notified by the Commonwealth government as being the last date covered by the private
hospital financial viability payment under the National Partnership Agreement.
Recoverable costs and revenue amounts are aggregated quarterly with each quarter considered separately. Where the revenue amounts
exceed recoverable costs the payment for that quarter is deemed to be zero.
VIC and QLD include a “Pause and Restart” mechanism whereby the State can put the agreement on pause allowing the Operator
to return to normal operations and relieves the State of any payment obligations during the pause while allowing the State to restart
the contract to provide COVID pandemic support when necessary. The QLD State government agreed to Ramsay’s request to put the
agreement on hold from 1 July 2020. While the VIC agreement was paused from 30 June 2020, it was restarted with effect from 23 July
2020 to 31 March 2021. The NSW agreement does not have a Pause and Restart mechanism and remains on foot.
The agreement with the State government of WA was terminated with effect from 30 June 2020. However, it included a right for the WA
Department of Health to direct Ramsay for a 12-month period from 30 June 2020 to sign a new agreement on the same terms as the
original agreement, which could be exercised if the Department or Commonwealth government formed the view that this was necessary
to respond successfully to the COVID pandemic.
UK
An agreement with NHS England, commenced on 23 March 2020, to make the Ramsay UK facilities and services available to the NHS
England and its patients. Ramsay received, and recognised as revenue, the net cost of the capacity and services provided, including
operating costs, overheads, use of assets, rent and interest less a deduction for revenue earned through the provision of private, urgent
elective care to patients. The term of the agreement was initially for a minimum of 14 weeks from 23 March 2020 and was then on a rolling
basis, with one month’s notice. This agreement terminated on 31 December 2020. A new, volume based, agreement came into effect on
1 January 2021 and expired on 31 March 2021.
Future events could cause the assumptions on which these revenue accruals are based to change, which could affect the future results of
the Group. As the revenue recognised by the Group in accordance with the contracts is variable, revenue has been recognised only to the
extent that it is highly probable that a significant revenue reversal of the cumulative amount of revenue will not occur when the uncertainty
associated with the variable consideration is resolved.
RENTAL REVENUE
Rental income is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in
the periods in which it is earned. Lease incentives granted are recognised in the Income Statement as an integral part of the total
rental income.
REVENUE FROM ANCILLARY SERVICES
Income from ancillary services is recognised on the date the services are provided to the customer.
INCOME FROM SALE OF DEVELOPMENT ASSETS
Income from sale of development assets is recognised when the control of the development asset is transferred to the customer.
INTEREST INCOME
Revenue is recognised as interest accrues 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 (EIR), which 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.
74
Annual Report 2021
2 Revenue and other income (Continued)
2.b Other income – income from government grants
Other income – income from government grants
Significant Accounting Policies
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
2021
$m
2020
$m
428.3
235.2
INCOME FROM GOVERNMENT GRANTS
Government grants are recognised when there is reasonable assurance that the grant will be received and all the attached conditions will
be complied with. Grants are accounted for on a gross basis in revenue and expenses, by the Group. Where retention of a government
grant is dependent on the Group satisfying certain criteria, it is initially recognised as deferred income. When the criteria for retention have
been satisfied, the deferred income balance is recognised as other income.
Key Accounting Judgements, Estimates and Assumptions
Ramsay Santé was a beneficiary of the French government decree, issued on 7 May 2020, which provided a guarantee of revenue from
1 March 2020 to 31 December 2020, equal to 10/12th of the 2019 calendar year revenue from the government, with some small indexation
factor. As the actual billings over this March to December period fell below the guaranteed revenue, then Ramsay Santé was entitled to
the shortfall. In line with the requirements, under this guarantee, these estimates, payments and final square ups are being completed on a
site by site basis. This funding was extended to 30 June 2021.
As the final square up of the revenue guarantee will not be performed until late FY22 and the grant income recognised for Ramsay Santé
is based on the current estimate at hand at the time of issuing the Ramsay Group financial statements, these estimates may be updated
and result in a different amount. Any resulting difference will be booked in the Ramsay Group results for the year ending 30 June 2022.
Subsequent to 30 June 2021, formal confirmation that the guarantee will be extended for the six months to 31 December 2021 has
been given.
2.c Revenue from contracts with customers and income from government grants
Revenue from contracts with customers
Other income – income from government grants
Revenue from contracts with customers and income from government grants
Note
2.a
2.b
2021
$m
12,864.2
428.3
13,292.5
2020
$m
12,160.3
235.2
12,395.5
Annual Report 2021
75
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
3 Expenses
A breakdown of specific expenses helps users understand the financial performance of the Group.
Note
2021
$m
2020
$m
13
8.c
8.c
8.c
(i) Depreciation
Depreciation – Plant and equipment
Depreciation – Buildings
Depreciation – Right of use asset – Property
Depreciation – Right of use asset – Plant and equipment
Total
(ii) Amortisation
Amortisation – Service concession assets
Amortisation – Other
Total
(iii) Impairment
Impairment – Plant and equipment
Impairment – Land and buildings
Impairment – Right of use asset – Property
Impairment – Intangible assets
Total
Total depreciation, amortisation and impairment
(iv) Property rental costs
Expense relating to short term leases (included in occupancy costs)
Expense relating to leases of low value assets (included in occupancy costs)
Variable lease payments (included in occupancy costs)
(v) Employee benefit and contractor costs
Wages and salaries
Workers’ compensation
Superannuation
Termination benefits
Social charges and contributions on wages and salaries
Other employment
Share based payments (expenses arising from transactions accounted for as equity
settled share-based payment transactions)
Total
(vi) Finance costs
Interest expense
Finance charges – Lease liability
Finance cost – unwinding of discount and effect of changes in discount rates on
deferred consideration
Finance costs capitalised
Total
292.3
145.5
344.8
66.7
849.3
34.7
15.4
50.1
3.2
18.3
-
-
21.5
292.4
148.2
339.6
61.7
841.9
33.2
18.1
51.3
4.8
11.2
20.8
0.7
37.5
920.9
930.7
20.2
7.3
0.9
5,906.4
18.5
198.9
17.5
827.6
278.1
11.7
7,258.7
166.1
234.2
400.3
-
(2.2)
398.1
21.2
3.5
0.5
5,800.9
10.4
187.1
28.4
776.4
223.8
(6.6)
7,020.4
189.0
238.6
427.6
0.4
(4.0)
424.0
76
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
3 Expenses (Continued)
Accounting Policies
FINANCE COSTS – RECOGNITION AND MEASUREMENT
Finance costs include interest, amortisation of discounts or premiums related to borrowings and other costs incurred in connection with
the arrangement of borrowings. Financing costs are expensed as incurred unless they relate to a qualifying asset. A qualifying asset is an
asset which generally takes more than 12 months to get ready for its intended use or sale. In these circumstances, the financing costs are
capitalised to the cost of the asset. Where funds are borrowed by the Group for the acquisition or construction of a qualifying asset, the
amount of financing costs capitalised are those incurred in relation to that borrowing.
4 Dividends
Dividends are a portion of Ramsay Group’s profit that are paid out to its shareholders, in return for their investment.
(i) Dividends on ordinary shares paid during the year:
Interim dividend paid
Franked dividends – ordinary
(48.5 cents per share) (2020: 62.5 cents per share)
Previous year final dividend paid
Franked dividends – ordinary
(0.0 cents per share) (2020: 91.5 cents per share)1
(ii) Dividends proposed and not recognised as a liability:
Current year final dividend proposed
Franked dividends – ordinary
(103.0 cents per share) (2020: 0.0 cents per share)1
(iii) Dividends determined and paid during the year on CARES:
Current year interim and previous year final dividend paid
Franked dividends – CARES
(iv) Dividends proposed and not recognised as a liability on CARES:
Final dividend proposed
Franked dividends – CARES
(v) Franking credit balance
The amount of franking credits available for the subsequent financial year are:
franking account balance as at the end of the financial year at 30% (2020: 30%)
franking credits that will arise from the payment of income tax payable as at the end of the
financial year2
The amount of franking credits available for future reporting periods:
impact on the franking account of dividends proposed or determined before the financial report was
authorised for issue but not recognised as a distribution to equity holders during the period
Parent
2021
$m
2020
$m
106.2
126.3
-
106.2
184.9
311.2
235.7
-
9.1
11.3
4.5
4.6
839.7
14.6
854.3
(103.0)
751.3
704.2
9.5
713.7
(2.0)
711.7
1 No final dividend determined for FY2020.
2 As Ramsay Health Care Ltd and its 100% owned subsidiaries have formed a tax consolidated group, effective 1 July 2003, this represents the current tax payable for the Australian group.
Annual Report 2021
77
NOTES TO THE FINANCIAL STATEMENTS
RESULTS FOR THE YEAR
RAMSAY HEALTH CARE LIMITED
4 Dividends (Continued)
The tax rate at which paid dividends have been franked is 30% (2020: 30%). $240.2 million (2020: $4.6 million) of the proposed dividends will
be franked at the rate of 30% (2020: 30%).
5 Earnings per share
Earnings per share is the portion of post-tax profit allocated to each Ramsay ordinary share.
Net profit for the year attributable to owners of the parent
Less: dividend paid on Convertible Adjustable Rate Equity Securities (CARES)
Profit used in calculating basic and diluted (after CARES dividend) earnings per share
Weighted average number of ordinary shares used in calculating basic earnings per share
Effect of dilution – share rights not yet vested
Weighted average number of ordinary shares adjusted for the effect of dilution
2021
$m
2020
$m
449.0
(9.1)
439.9
284.0
(11.3)
272.7
2021
Number of
Shares (m)
2020
Number of
Shares (m)
227.7
0.7
228.4
208.1
0.8
208.9
The share rights granted to Executives but not yet vested, have the potential to dilute basic earnings per share.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of
completion of these financial statements
Earnings per share
basic (after CARES dividend) for the year
diluted (after CARES dividend) for the year
2021
Cents per
Share
2020
Cents per
Share
193.2
192.6
131.0
130.5
Calculation of earnings per share
Basic earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent (after
deducting the CARES dividend) by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent (after deducting
the CARES dividend) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
6 Net tangible assets
Net Tangible Assets ('NTA') are the total assets minus intangible assets and total liabilities, divided by the number of ordinary
shares of the Company currently on issue. Net Tangible Assets includes Right of Use assets.
Net tangible asset/(liabilities) per ordinary share
2021
$ per Share
0.42
2020
$ per Share
(0.82)
78
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
II Capital – Financing
This section discusses how the Ramsay Group manages funds and maintains capital structure, including bank borrowings,
related finance costs and access to capital markets.
How the Group manages its capital – Financing
When managing capital, management’s objective is to ensure the entity will be able to continue as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that is consistent with
its targeted credit rating, ensuring sufficient headroom is available within such a rating to support its growth strategies whilst at the same time
striving for the lowest cost of capital available to the entity. Prudent liquidity reserves in the form of committed undrawn bank debt facilities or
cash are maintained in order to accommodate its expenditures and potential market disruption.
The Company may raise or retire debt, change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new
shares or financial instruments containing characteristics of equity, or sell assets to reduce debt in order to achieve the optimal capital structure.
The Group’s capital is comprised of equity plus net debt. Net debt is calculated as interest bearing liabilities plus derivatives relating to debt,
less cash assets.
During 2021, dividends of $115.3 million (2020: $322.5 million) were paid. For the year ended 30 June 2021 fully franked ordinary dividends of
151.5c (2020: 62.5c) per share were declared.
The group monitors its capital structure primarily by reference to its Group Consolidated Leverage Ratio. Debt levels are assessed relative to
the cash operating profits (EBITDA1) of the Group that are used to service debt. This ratio is calculated as Net Debt/EBITDA and is 4.7x for the
year ended 30 June 2021 (2020: 4.4x). Escrow funds of $1.96 billion were recorded in the Statement of Financial Position at 30 June 2021. A
normalised Group Consolidated Leverage Ratio of 3.7x has been calculated after reducing Net Debt by the $1.96 billion cash held in escrow on
30 June 2021.
The Group has committed senior debt funding with various maturities starting in November 2022 and ending in June 2031 (please refer to
Note 8.b for further information in relation to these borrowings). As such, these subsidiaries must comply with various financial and other
undertakings in particular, the following customary financial undertakings:
• Total Net Leverage Ratio (Net Debt/EBITDA1)
• Interest Cover Ratio (EBITDA1/ Net Interest)
• Minimum Shareholders Funds
Details of Capital – Financing are as follows:
Equity
Net Debt
Note
7
8
2021
$m
4,550.8
9,585.0
14,135.8
2020
$m
4,235.9
8,064.6
12,300.5
1
EBITDA is Earnings before Interest, Tax, Depreciation and Amortisation.
Annual Report 2021
79
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
7 Equity
Issued capital
Treasury shares
Convertible Adjustable Rate Equity Securities (CARES)
Other reserves
Retained earnings
Non-controlling interests
7.a Issued Capital
Note
7.a
7.b
7.c
2021
$m
2,197.6
(76.7)
252.2
(91.3)
1,750.9
518.1
4,550.8
2020
$m
2,197.6
(78.2)
252.2
(51.0)
1,431.9
483.4
4,235.9
Issued capital represents the amount of consideration received for the ordinary shares issued by Ramsay Health Care Limited
(the Company).
Issued and paid up capital
At 1 July
Shares issued – Share Placement (net of transaction costs)
Shares issued – Share Purchase Plan
At 30 June
2021
Number (m)
228.9
-
-
228.9
2021
$m
2,197.6
-
-
2,197.6
2020
Number (m)
202.1
21.4
5.4
228.9
2020
$m
713.5
1,183.3
300.8
2,197.6
Terms and conditions of issued capital
ORDINARY SHARES
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds
from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to
one vote, either in person or by proxy, at a meeting of the Company.
Accounting Policies
ORDINARY SHARES
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as
a deduction, net of tax, from the proceeds.
7.b Treasury Shares
Treasury shares are the shares repurchased on the open market, for the share rights issued to employees under the Employee
Share Plan.
1.1 million ordinary shares (30 June 2020: 1.2 million)
Nature & Purpose
Treasury shares are shares in the Group held by the Employee Share Plan and are deducted from equity.
2021
$m
2020
$m
76.7
78.2
80
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
7 Equity (Continued)
7.c Convertible Adjustable Rate Equity Securities (CARES)
Convertible Adjustable Rate Equity Securities (CARES) are non-cumulative, redeemable and convertible preference shares in
Ramsay Health Care Limited.
Issued and paid up capital
2.6 million CARES shares fully paid (30 June 2020: 2.6 million CARES shares fully paid)
252.2
252.2
2021
$m
2020
$m
Terms and conditions of CARES
Ramsay Health Care Limited
Convertible Adjustable Rate Equity Securities (CARES) which are a non-cumulative, redeemable and convertible preference
share in Ramsay.
$100 Per CARES.
The holder of each CARES is entitled to a preferred, non-cumulative, floating rate dividend equal to:
Dividend Entitlement = (Dividend Rate x Face Value x N) / 365
where:
N is the number of days in the Dividend Period
The payment of Dividends is at the Directors’ discretion and is subject to there being funds legally available for the payment
of Dividends and the restrictions which apply in certain circumstances under the financing arrangements.
If declared, the first Dividend will be payable on each CARES in arrears on 20 October 2005 and thereafter on each 20 April
and 20 October until CARES are converted or exchanged.
The Dividend Rate for each Dividend Period is calculated as:
Dividend Rate = (Market Rate + Margin) x (1-T)
where:
The Market Rate is the 180 day Bank Bill Swap Rate applying on the first day of the Dividend Period expressed as a
percentage per annum.
The Margin for the period to 20 October 2010 was 2.85% per annum. It was determined by the Bookbuild held on
26 April 2005.
T is the prevailing Australian corporate tax rate applicable on the Allotment Date.
As Ramsay did not convert or exchange by 20 October 2010 the Margin was increased by a one-time step up of 2.00% (200
basis points) per annum.
One-time 2.00% (200 basis points) step-up in the Margin at 20 October 2010
Ramsay expects the Dividends paid on CARES to be fully franked. If a Dividend is not fully franked, the Dividend will be
grossed up to compensate for the unfranked component.
If, on a Dividend Payment Date, the Australian corporate tax rate differs from the Australian corporate tax rate on the
Allotment Date, the Dividend will be adjusted downwards or upwards accordingly.
CARES have no maturity. Ramsay may convert or exchange some or all CARES at its election for shares or $100 in cash for
each CARES on 20 October 2010 and each Dividend Payment Date thereafter.
Ramsay also has the right to:
• convert or exchange CARES after the occurrence of a Regulatory Event; and
• convert CARES on the occurrence of a Change in Control Event.
Issuer
Security
Face
Value
Dividends
Dividend
Rate
Step-up
Franking
Conversion
or
exchange
by Ramsay
Conversion
Ratio
Ramsay cannot elect to convert or exchange only some CARES if such conversion or exchange would result in there being
less than $50 million in aggregate Face Value of CARES on issue.
The rate at which CARES will convert into Shares will be calculated by reference to the market price of Shares during
20 business days immediately preceding, but not including, the conversion date, less a conversion discount of 2.5%. An
adjustment is made to the market price calculation in the case of a Change in Control Event. The Conversion Ratio for each
CARES will not be greater than 400 shares.
CARES rank equally amongst themselves in all respects and are subordinated to all creditors but rank in priority to Shares.
Ranking
Participation Unless CARES are converted into Shares, CARES confer no rights to subscribe for new shares in any fundraising by Ramsay
or to participate in any bonus or rights issues by Ramsay.
CARES do not carry a right to vote at general meeting of Ramsay except in limited circumstances.
Voting
Rights
Annual Report 2021
81
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt
Cash assets
Loans and borrowings – current
Lease liabilities – current
Loans and borrowings – non-current
Lease liabilities – non-current
Derivative net assets / (liabilities) – debt related
8.a Cash and cash equivalents
Note
8.a
8.b
8.c
8.b
8.c
8.d
2021
$m
1,004.8
(51.7)
(368.2)
(5,229.0)
(4,902.8)
(38.1)
(9,585.0)
2020
$m
1,503.7
(32.3)
(347.8)
(4,195.5)
(4,941.4)
(51.3)
(8,064.6)
Cash and cash equivalents comprise of cash at bank, cash on hand and short-term deposits with a maturity of less than 3
months. This note presents the amount of cash on hand at year end, together with further reconciliations in relation to the
Statement of Cash Flows.
Cash at bank and on hand
2021
$m
1,004.8
2020
$m
1,503.7
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between
one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term
deposit rates.
Accounting Policies
CASH AND CASH EQUIVALENTS
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and on hand and short-term deposits with an
original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net
of outstanding bank overdrafts and restricted cash.
Reconciliation to Statement of Cash Flows
For the purposes of the Statement of cash flows, cash and cash
equivalents comprise the following at 30 June
Cash at bank and on hand
2021
$m
2020
$m
1,004.8
1,503.7
82
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
Reconciliation of net profit after tax to net cash flows from operations
Net profit after tax for the year
Adjustments for:
Share of profit of joint venture
Depreciation, amortisation and impairment
Interest received
Share based payments
Net profit on disposal of non-current assets
Other
Changes in assets & liabilities
Deferred tax
Receivables
Other assets
Creditors, accruals and other liabilities
Provisions
Inventories
Current tax
Net cash flows from operating activities
2021
$m
2020
$m
511.5
309.2
(10.9)
920.9
(7.1)
11.7
(12.3)
2.2
(27.8)
(103.9)
66.1
134.9
(22.4)
(11.4)
29.7
1,481.2
(16.1)
930.7
(12.7)
(6.6)
(11.2)
-
(39.1)
(268.1)
5.6
929.6
(57.2)
(84.0)
0.6
1,680.7
Reconciliation of liabilities arising from financing activities
As at
1 July
2020
Cash
Flows
Foreign
Exchange
Movement
New
Leases
Acquisition
of
Subsidiary
Disposal/
Termination
or
Reassessment
of Leases
As at
30 June
2021
Other
$m
$m
$m
$m
$m
$m
$m
$m
32.3
5.9
(0.3)
1,064.0
(334.0)
735.9
(50.9)
(54.0)
(105.2)
-
-
384.8
384.8
14.0
15.7
11.2
40.9
-
-
(26.2)
(26.2)
(0.2)
51.7
4.7
-
4.5
5,229.0
5,271.0
10,551.7
Loans and borrowings
– current
Loans and borrowings
– non-current
Lease Liabilities
Total
Loans and borrowings
– current
Loans and borrowings
– non-current
Lease Liabilities
Total
4,195.5
5,289.2
9,517.0
As at
1 July
2019
$m
34.0
5,209.4
351.2
5,594.6
Disclosure of financing facilities
Refer to Note 8.b.
Restated
Balance at
1 July
2019
$m
AASB16
Adjustment
$m
Cash
Flows
$m
Foreign
Exchange
movement
$m
-
-
34.0
(1.7)
5,209.4
(1,038.4)
4,929.6
4,929.6
5,280.8
10,524.2
(323.8)
(1,363.9)
-
16.7
0.3
17.0
New
Leases
$m
-
-
319.9
319.9
As at
30 June
2020
$m
Other
$m
-
32.3
7.8
4,195.5
12.0
19.8
5,289.2
9,517.0
Annual Report 2021
83
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
8.b Loans and Borrowings
This note outlines the Group's loans and borrowings, which are predominantly from banks and other financial institutions, with
varying maturities.
Current
Secured bank loans:
€ Bi-lateral Facilities1
Total current loans and borrowings
Non-current
Unsecured bank and other financial institution loans:
A$ 1,500,000,000 Syndicated Facility Loan2
A$ 800,000,000 Syndicated Facility Loan3
A$ 125,000,000 Bi-lateral Term Loan4
A$ 200,000,000 Bi-lateral Term Loan5
£ 395,000,000 Syndicated Facility Loan6
€ 225,000,000 Syndicated Facility Loan7
€ 300,000,000 Syndicated Facility Loan3
Secured bank loans:
€ 1,650,000,000 Syndicated Term Loan8
€ 1,725,000,000 Syndicated Term Loan9
€ Bi-lateral Facilities1
Total non-current loans and borrowings
Total loans and borrowings
Maturity
2021
$m
2020
$m
Up to Jun 2031
51.7
51.7
32.3
32.3
Up to Jul 2026
Dec 2023
Oct 2024
Oct 2024
Nov 2022
Nov 2022
Oct 2024
Up to Apr
2027
Up to Oct
2024
Up to Jun 2031
1,195.4
716.5
-
199.6
-
-
474.3
2,585.8
2,277.2
-
366.0
2,643.2
5,229.0
5,280.7
-
-
123.4
197.4
289.3
288.0
488.4
1,386.5
-
2,561.2
247.8
2,809.0
4,195.5
4,227.8
1 Euro bi-lateral facilities are secured by a first charge over certain Ramsay Santé and controlled entities’ land and buildings. These loans are repayable in instalments over the term of
the facilities.
2 Sustainability linked syndicated revolving bank debt facility with equal tranches mature over 3 year, 4 year and 5 year.
3 Syndicated revolving bank debt facility.
4 Bi-lateral term loan facility repaid in full on 16 Dec 2020 and was orginally repayable in Oct 2024.
5 Bi-lateral term loan facility and repayable in full on maturity.
6 Syndicated revolving bank debt facility was terminated in Jun 2021. It had the original maturity date of 22 Nov 2022.
7 Syndicated revolving bank debt facility terminated in Jun 2021. It had the original maturity date of 22 Nov 2022.
8 Sustainability linked syndicated term loan facilities repayable in full on maturity.
9 Syndicated term loan facilities repayable in full on maturity. This facility has been cancelled in April 2021.
RAMSAY AND ITS WHOLLY OWNED SUBSIDIARIES
Ramsay Funding Group’s syndicated debt facility agreements and bi lateral debt facilities were partially refinanced with a sustainability linked
syndicated revolving debt facility on 24 June 2021. The covenant package, group guarantees and other common terms and conditions in
respect of the debt facilities are governed under a Common Terms Deed Poll (CTDP).
RAMSAY SANTÉ AND CONTROLLED ENTITIES
Ramsay Santé and controlled entities’ senior debt facility agreements were fully refinanced with sustainability linked syndicated term loan
facilities on 22 April 2021. The Group Increased its borrowings under bi lateral debt facilities by €98,190,000 during the reporting period.
The lenders to these debt facilities only have recourse to Ramsay Santé and certain Ramsay Santé controlled entities. The debt facilities are
secured by first ranking pledges over certain material companies of Ramsay Santé, granted only by Ramsay Santé and certain Ramsay Santé
controlled entities. Guarantees have also been provided and are provided only by Ramsay Santé controlled entities.
84
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
Fair values
The fair values of the Group’s interest bearing loans and borrowings are determined by using the discounted cash flow method with discount
rates that reflect market interest rates, specific country risk factors, individual creditworthiness of the counterparties and the other risk
characteristics associated with the underlying debts.
Unless disclosed below, the carrying amount of the Group’s current and non-current borrowings approximate their fair value. The fair values
have been calculated by discounting the expected future cash flows at prevailing market interest rates depending on the type of borrowings.
At reporting date, the market interest rates vary from 0.060% to 0.0803% (2020: 0.093% to 0.102%) for Australia, 0.0555% to 0.0779% (2020:
0.090% to 0.141%) for UK and -0.569% to -0.542% (2020: -0.510% to -0.422%) for France respectively.
The fair value of the interest bearing loans and borrowings was estimated using the level 2 method valuation technique in which the lowest
level of input that is significant to the fair value measurement is directly or indirectly observable. Set out in the table below is a comparison by
carrying amounts and fair value of the Group’s Interest bearing loans and borrowings.
Bank loans
2021
2020
Carrying
Amount
$m
5,280.7
Fair
Value
$m
5,381.3
Carrying
Amount
$m
4,227.8
Fair
Value
$m
4,657.9
Interest rate, foreign exchange & liquidity risk
Details regarding interest rate, foreign exchange and liquidity risk is disclosed in Note 17.
Assets pledged as security
The carrying amounts of assets pledged as security for loans and borrowings are set out in the following table:
Fixed and floating charge
Fixed assets
Investment holdings in subsidiaries
Total non-current assets pledged as security
2021
$m
2020
$m
3.1
3,917.8
3,920.9
-
3,667.2
3,667.2
Defaults & breaches
During the current and prior years, there were no defaults or breaches on any of the loans.
In April 2020, lenders to the Ramsay Funding Group provided consent to amend or waive key banking covenants tests, in connection with the
funding agreements (FA) and the Common Term Deed Poll (CTDP), for the next two semi-annual covenant testing points up to and including the
31 December 2020 testing date.
This waiver was given on the condition that the Company did not declare a dividend in relation to its ordinary shares (it being agreed that
CARES are not ordinary shares and that this condition did not therefore apply in respect of or seek to restrict the declaration or payment of
dividends in respect of CARES) during the period up to 31 December 2020.
Accounting Policies
LOANS AND BORROWINGS
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Losses
are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Annual Report 2021
85
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
8.c Lease liabilities
The Group has lease contracts for the use of hospitals, office space and various items of equipment and vehicles which it
uses in its operations. Leases of hospitals and office space can have lease terms between 5 and 99 years, while vehicles and
equipment generally have lease terms between 5 and 10 years.
Generally, the Group is restricted from assigning and subleasing the leased assets. A number of the lease contracts include extensions,
termination options and variable lease payments, which are discussed below.
The Group also has certain leases of equipment with lease terms of 12 months or less and leases of office equipment with a low value. The
Group applies the ‘short term lease’ and ‘lease of low value assets’ recognition exemptions for these leases.
At 1 July
Adjustment on adoption of AASB16 Leases
At 1 July - Restated
Additions
Business Combination
Disposals or terminations
Payments
Accretion of interest
Reassessment of lease terms
Exchange differences
At 30 June
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Assets pledged as security
The carrying amounts of assets pledged as security for lease liabilities are set out in the following table:
Leased assets pledged as security
2021
$m
5,289.2
-
5,289.2
384.8
11.2
(91.0)
(568.2)
234.2
64.8
(54.0)
5,271.0
2021
$m
368.2
4,902.8
5,271.0
2020
$m
351.2
4,929.6
5,280.8
319.9
-
(9.4)
(562.4)
238.6
21.4
0.3
5,289.2
2020
$m
347.8
4,941.4
5,289.2
2021
$m
2020
$m
365.3
351.6
Cash outflows
The Group had total cash outflows for leases of approximately $596.6 million in 2021 (2020: $587.6 million) - the principal portion of lease
payments totalled $334.0 million (2020: $323.8 million), interest payments totalled $234.2 million (2020: $238.6 million) and other payments
relating to low-value assets, short term and variable lease payments totalled approximately $28.4 million (included in payments to suppliers and
employees) (2020: $25.2 million).
86
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
Accounting Policies
All leases are accounted for by recognising a right of use asset and a lease liability except for:
• Leases of low value assets, being those with a cost of $50,000 or less; and
• Leases with a term of 12 months or less.
LEASE LIABILITIES
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount
rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which
case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes
the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to
which they relate.
On initial recognition, the carrying value of the lease liability also includes:
• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favour of the group if it is reasonably certain to exercise that option;
• any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of the termination option
being exercised.
LEASE ASSETS
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
• lease payments made at or before commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision recognised where the group is contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding
and are reduced for lease payments made. Right of use assets are amortised on a straight line basis over the shorter of the useful life of
the asset or the term of the lease. Lease liabilities are remeasured when there is a change in future lease payments arising from a change
in an index or rate or when there is a change in the assessment of the term of the lease.
The Group applies the short term lease recognition exemption to its short term lease of equipment, being those leases that have a lease
term of 12 months or less from the commencement date and do not contain a purchase option. The Group also applies the low-value
assets recognition exemption to leases of equipment that are considered to be of low value. Lease payments on short term leases and
leases of low value assets are recognised as an expense on a straight line basis over the lease term.
Key Accounting Judgements, Estimates and Assumptions
LEASE TERM
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend
the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain
not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms. The Group applies judgement in evaluating
whether it is reasonably certain to exercise the options to renew. That is, it considers all relevant factors that create an economic incentive
for it to exercise the renewal. After commencement date, the Group reassess the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not exercise) the option to renew.
DISCOUNT RATES
The lease payments are discounted using the interest rate implicit in the lease or the Group’s incremental borrowing rate (IBR). The IBR
is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to
obtain an asset of a similar value to the right of use asset in a similar economic environment. The IBR therefore requires estimation when
no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted
to reflect the terms and conditions of the lease.
Annual Report 2021
87
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
8.d Derivative financial instruments
A derivative is a financial instrument typically used to manage an underlying risk, using futures, swaps and options. The value
change of a derivative is related to changes in a variable, such as interest rate or foreign exchange rate. The Group uses
derivatives to manage exposure to foreign exchange and interest rate risk.
Current liabilities
Interest rate derivative contracts – cash flow hedges
Non-current liabilities
Interest rate derivative contracts – cash flow hedges
2021
$m
2020
$m
(14.9)
(23.2)
(6.2)
(45.1)
Instruments used by the Group
Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposure to fluctuations in interest
and foreign exchange rates.
INTEREST RATE SWAPS AND FORWARD FOREIGN EXCHANGE CONTRACTS – CASH FLOW HEDGES
Interest bearing loans in Australian Dollar of the Group currently bear an average variable base interest rate excluding margin of 0.0666%
(2020: 0.1532%). Interest bearing loans in GBP of the Group currently bear an average variable base interest rate excluding margin of 0.0706%
(2020: 0.1316%). Interest bearing loans in Euro of the Group currently bear a zero variable base interest rate excluding margin pursuant to an
interest rate floor within the facility agreements whereby base interest rate (EURIBOR) is deemed to be zero when it is negative.
In order to reduce the variability of the future cash flows in relation to the interest bearing loans, the Group has entered into Australian Dollar,
GBP and Euro interest rate swap contracts under which it has a right to receive interest at variable rates and to pay interest at fixed rates.
Swaps in place cover approximately 67% (2020: 57%) of the principal outstanding.
While the Group also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected
sales and purchases, these other contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
Included in bank loans at 30 June 2020 was a GBP borrowing of £120.0 million which was designated as a hedge of the net investment in
the UK subsidiary. It was used to hedge the Group’s exposure to changes in exchange rates on the value of its net investment in the UK
operations. Gains or losses on the retranslation of this borrowing were transferred to Other Comprehensive Income to offset any gains or losses
on translation of the net investment in the UK subsidiary. This was repaid in June 2021. A net loss on the bank loan designated as a hedge of
the net investment in a subsidiary of $3.4 million (2020: net loss $15.8 million) was recognised in Other Comprehensive Income during the year.
Included in bank loans at 30 June 2020 was a Euro borrowing of €478.7 million which was designated as a hedge of the net investment in the
French subsidiary. It was used to hedge the Group’s exposure to changes in exchange rates on the value of its net investment in the French
operations. Gains or losses on the retranslation of this borrowing were transferred to Other Comprehensive Income to offset any gains or losses
on translation of the net investment in the French subsidiary. This was repaid in December 2020. A net gain on the bank loan designated as a
hedge of the net investment in a subsidiary of $1.9 million (2020: net loss $10.5 million) was recognised in Other Comprehensive Income during
the year.
Interest rate risk
Information regarding interest rate risk exposure is set out in Note 17.
Credit risk
Credit risk arises from the potential failure of counterparties to meet their obligations at maturity of contracts. This arises on derivative financial
instruments with unrealised gains. Management constantly monitor the fair value of favourable contracts outstanding with any individual
counterparty. Management only deal with prime financial institutions with appropriate credit ratings in order to manage this credit risk.
88
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
Fair Value of Derivative Financial Instruments
The fair value of the derivative financial instruments was estimated using the level 2 method valuation technique and is summarised in the
table above.
The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models
incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.
The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in
hedge relationships.
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. Information about the valuation techniques
and inputs used in determining the fair value of various assets and liabilities are disclosed in the relevant notes.
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
Level 2
Level 3
Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable
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.
There were no transfers between Level 1 and Level 2 or between Level 2 and Level 3 during the year.
The notional principal amounts and period of expiry of the interest rate derivatives contracts are as follows:
0-1 years
1-2 years
2-3 years
3-5 years
Over 5 years
2021
$m
1,043.5
-
110.0
790.5
-
1,944.0
2020
$m
3,048.7
1,254.1
-
923.9
-
5,226.7
The interest rate derivatives require settlement of net interest receivable or payable each 90 or 180 days. They are settled on a net basis. The
swaps are measured at fair value and all gains and losses attributed to the hedged risk are taken directly to equity and re-classified to the
Income Statement when the interest expense is recognised.
Accounting Policies
The Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rates. Such
derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured to fair value. Derivatives are carried as assets when the fair value is positive and as a liability when the fair value
is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion
of cash flow hedges, which is recognised in Other Comprehensive Income, and later classified to profit and loss when the hedge item
affects profit or loss.
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.
Annual Report 2021
89
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL – FINANCING
RAMSAY HEALTH CARE LIMITED
8 Net debt (Continued)
Accounting Policies
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 the strict criteria for hedge accounting are accounted for as follows:
CASH FLOW HEDGES
The effective portion of the gain or loss on the hedging instrument is recognised directly in Other Comprehensive Income in the cash flow
hedge reserve, while any ineffective portion is recognised immediately in the Income Statement as other operating expenses.
The Group uses predominantly 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 only designates the intrinsic value of the interest rate option contracts as hedging instruments. The time value of the interest
rate option contracts are recognised in Other Comprehensive Income and accumulated in a separate component of equity under the cost
of Hedging Reserve. These deferred costs of hedging are recognised in the profit or loss on a systematic basis over the tenor of the
interest rate option contracts.
Amounts recognised as Other Comprehensive Income are transferred to profit or loss when the hedged transaction affects profit or loss,
such as when the hedged financial income or financial expense is recognised. When the hedged item is the cost of a non-financial asset
or non-financial liability, the amounts recognised as Other Comprehensive Income are transferred to the initial carrying amount of the
non-financial asset or liability.
If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised in Other
Comprehensive Income is transferred to the Income Statement. If the hedging instrument expires or is sold, terminated or exercised
without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in Other
Comprehensive Income remains in Other Comprehensive Income until the forecast transaction or firm commitment affects profit or loss.
Bank loan designated as a hedge of a net investment
The bank loan designated as a hedge of a net investment in a foreign operation is accounted for in a similar way to cash flow hedges.
Gains or losses on the hedging instrument (Bank Loan) relating to the effective portion of the hedge are recognised directly in Other
Comprehensive Income, while any gains or losses relating to the ineffective portion are recognised in profit or loss. On disposal of the
foreign operation, the cumulative value of any such gains or losses recognised directly in Other Comprehensive Income is transferred to
the Income Statement.
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.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using
the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
90
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
III Assets and Liabilities – Operating and Investing
This section outlines how the Ramsay Group manages its assets and liabilities to generate profit.
How the group manages its overall financial position
The Group manages its overall financial position by segregating its balance sheet into two categories; Assets and Liabilities – Operating and
Investing and Capital – Financing. Assets and Liabilities – Operating and Investing is managed at both the site and group level while Capital –
Financing (refer to section II) is managed centrally.
Details of Assets and Liabilities – Operating and Investing are as follows:
Working Capital
Property, plant and equipment
Right of use assets
Intangible assets
Current and deferred tax assets/(liabilities)
Other assets/(liabilities)
9 Working capital
Trade and other receivables (current)
Inventories
Trade and other creditors (current)
Note
9
11
12
13
15
16
Note
9.a
9.b
9.c
2021
$m
(802.9)
4,488.6
4,411.5
4,233.6
150.7
1,654.3
14,135.8
2021
$m
1,801.4
409.4
(3,013.7)
(802.9)
2020
$m
(875.6)
4,447.2
4,477.9
4,246.1
143.6
(138.7)
12,300.5
2020
$m
1,916.9
411.0
(3,203.5)
(875.6)
Consistent with prior periods, Ramsay actively manages the collection of debtor receipts and creditor and employee payments. This often
results in a negative working capital metric. Any surplus or deficit in the working capital is managed through efficient use of the revolving debt
facilities and cash balances.
9.a Trade and other receivables
Trade and other receivables primarily consists of amounts outstanding from Governments, Health Funds and Self Insured
patients for delivering health care and related services.
Current
Trade and other receivables
Allowances for impairment loss
Non-current
Rental property bonds and guarantees receivable
Other
Total
2021
$m
2020
$m
1,863.4
(62.0)
1,801.4
37.3
33.3
70.6
1,872.0
1,978.6
(61.7)
1,916.9
52.0
26.1
78.1
1,995.0
Annual Report 2021
91
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
9 Working capital (Continued)
Allowances for impairment loss
An allowance for expected credit loss (ECL) is recognised based on the difference between the contractual cash flows and the expected cash
flows. The Group has applied a simplified approach in calculating ECLs by establishing a provision matrix for forward-looking factors specific to
the debtors and the economic environment.
Movements in the provision for impairment loss were as follows:
At 1 July
Charge for the year
Foreign exchange translation
Amounts written off
Disposal of subsidiary
At 30 June
Ageing analysis
At 30 June, the ageing analysis of trade and other receivables is as follows:
2021
$m
2020
$m
(61.7)
(29.5)
0.6
24.3
4.3
(62.0)
(43.4)
(43.2)
(2.1)
27.0
-
(61.7)
Neither
past due
nor
impaired
$m
1,439.1
990.0
Total
$m
1,934.0
2,056.7
0-30
Days
PDNI1
$m
218.6
245.3
31-60
Days
PDNI1
$m
81.2
238.5
61-90
Days
PDNI1
$m
13.6
211.9
91+
Days
PDNI1
$m
119.5
309.3
Considered
impaired
$m
62.0
61.7
2021
2020
1 PDNI – Past due not impaired
Receivables past due but not considered impaired are: $ 432.9 million (2020: $1,005.0 million). Payment terms on these amounts have not
been re-negotiated as based on the credit history of receivables past due not considered impaired, management believes that these amounts
will be fully recovered. This is due to the fact that the Group mainly deals with the Government and creditworthy Health Funds.
Related party receivables
For terms and conditions of related party receivables refer to Note 20.
Fair value
Due to the short term nature of the current receivables, the carrying value approximates fair value. The carrying values of the discounted
non-current receivables approximates their fair values.
Credit risk
The maximum exposure to credit risk for current receivables is their carrying value. Collateral is not held as security. The Group’s credit risk
is low in relation to trade debtors because the majority of transactions are with the Government and Health Funds. The maximum exposure
to credit risk for non-current receivables at the reporting date is the carrying value of these receivables. The majority of the non-current
receivables are assessed as low risk.
Foreign exchange & interest rate risk
Details regarding foreign exchange and interest rate risk exposure are disclosed in Note 17.
92
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
9 Working capital (Continued)
9.b Inventories
Inventories include medical supplies to be consumed in providing future patient services, and development assets, including
medical suites to be sold, that are currently under construction.
Amount of medical supplies to be consumed in providing future patient services – at cost
Development assets to be sold that are currently under construction – at cost
Total
2021
$m
363.8
45.6
409.4
2020
$m
365.2
45.8
411.0
Inventory expense
Medical supplies recognised as an expense for the year ended 30 June 2021 totalled $3,008.7 million (2020: $2,723.1 million) for the Group.
This expense has been included in the medical consumables and supplies in the Income Statement. The cost of development assets sold which
has been recognised as an expense for the year ended 30 June 2021 totalled $8.5 million (2020: $6.8 million) for the Group. This expense has
been included in Cost of development assets sold in the Income Statement.
Accounting Policies
Inventories are recorded using the FIFO method and are valued at the lower of cost and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make
the sale.
9.c Trade and other creditors
Trade and other creditors consists of amounts owing to employees and suppliers for goods and/or services delivered and
customer amounts paid in advance of provision of services.
Trade payables
Sundry creditors and accrued expenses
Employee and Director entitlements
Other creditors1
Total
2021
$m
1,164.6
474.1
1,061.6
313.4
3,013.7
2020
$m
1,148.6
505.5
993.6
555.8
3,203.5
1
Included in this balance is funding received in advance from various Governments under COVID-19 arrangements
Fair values
Trade and other creditors amounts are non-interest bearing and are normally settled on 30-60 day terms. Due to the short term nature of these
payables, their carrying value is assumed to approximate their fair value.
Interest rate, foreign exchange & liquidity risk
Details regarding interest rate, foreign exchange and liquidity risk exposure are set out in Note 17.
Annual Report 2021
93
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
10 Business combinations
Ramsay’s growth has been driven by an ongoing pipeline of acquisitions of healthcare businesses.
Business Combinations – 2021
Ramsay has recognised amounts for business combinations in the financial statements for the year ended 30 June 2021 which have been
determined on a provisional basis only. These businesses are within the healthcare sector.
Assets
Liabilities
Fair value of identifiable net assets
Goodwill arising
Business combination date fair value of consideration transferred
The cash outflow as a result of the business combination is as follows:
Cash Paid
Net cash acquired with the subsidiary
Net consolidated cash outflow
$m
58.7
(53.0)
5.7
108.2
113.9
(113.9)
23.8
(90.1)
Business Combinations – 2020
Ramsay has recognised amounts for business combinations in the financial statements for the year ended 30 June 2020 which are as follows:
Assets
Liabilities
Fair value of identifiable net assets
Goodwill arising
Business combination date fair value of consideration transferred
The cash outflow as a result of the business combination is as follows:
Cash Paid
Net consolidated cash outflow
$m
16.2
(10.4)
5.8
19.6
25.4
(25.4)
(25.4)
The purchase price accounting has now been finalised. There was not a material difference in the provisional fair values initially recognised.
These businesses are within the healthcare sector.
94
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
10 Business combinations (Continued)
Accounting Policies
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is
measured at fair value and is calculated as the sum of the business combination date fair values of the assets transferred by the acquirer,
the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any
non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree
either at fair value or at the proportionate share of the acquiree's identifiable net assets. Business combination related costs are expensed
as incurred.
In accounting for a business combination, the Group assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other
pertinent conditions as at the business combination date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the business combination date.
Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 9 Financial
Instruments, is measured at fair value with changes in fair value recognised in profit or loss. If the contingent consideration is not within the
scope of AASB 9, it is measured in accordance with the appropriate standard. Contingent consideration that is classified as equity is not
remeasured and subsequent settlement is accounted for within equity.
Key Accounting Judgements, Estimates and Assumptions
The Group recognises the identifiable assets and liabilities of businesses at their business combination date fair values. Where a
significant amount of land and buildings are recognised in the business combination, the fair value will be determined by an external
valuer using an approach relevant to the market in that country.
Annual Report 2021
95
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
11 Property, plant and equipment
Property, plant and equipment represents the investment by the Group in tangible assets such as land, buildings, hospital fit-outs
and medical equipment.
Land &
Buildings
$m
Plant &
Equipment
$m
Assets Under
Construction
$m
Total
$m
3,854.2
(818.6)
3,035.6
3,007.0
93.4
143.4
2.8
-
(145.5)
(18.3)
(17.0)
(30.2)
3,035.6
3,820.0
(813.0)
3,007.0
3,169.0
(219.6)
2,949.4
90.9
117.0
13.6
(148.2)
(11.2)
(6.9)
2.4
3,007.0
3,992.0
(823.0)
3,169.0
2,744.8
(1,791.5)
953.3
952.8
216.7
88.9
6.3
3.6
(292.3)
(3.2)
(12.6)
(6.9)
953.3
2,583.8
(1,631.0)
952.8
1,112.0
(148.7)
963.3
215.2
81.4
-
(292.4)
(4.8)
(2.5)
(7.4)
952.8
2,685.5
(1,573.5)
1,112.0
499.7
-
499.7
487.4
274.2
(232.3)
-
(24.4)
-
-
(3.8)
(1.4)
499.7
487.4
-
487.4
361.8
-
361.8
327.2
(198.4)
-
-
-
(0.7)
(2.5)
487.4
361.8
-
361.8
7,098.7
(2,610.1)
4,488.6
4,447.2
584.3
-
9.1
(20.8)
(437.8)
(21.5)
(33.4)
(38.5)
4,488.6
6,891.2
(2,444.0)
4,447.2
4,642.8
(368.3)
4,274.5
633.3
-
13.6
(440.6)
(16.0)
(10.1)
(7.5)
4,447.2
7,039.3
(2,396.5)
4,642.8
30 June 2021
Cost
Accumulated depreciation and impairment
Movement:
At 1 July 2020
Additions
Transferred from assets under construction
Business combination
Reclassification (Note 13)
Depreciation
Impairment
Disposals
Exchange differences
At 30 June 2021
30 June 2020
Cost
Accumulated depreciation and impairment
Movement:
At 1 July 2019
Transfer to right of use asset (Note 12)
Restated 1 July 2019
Additions
Transferred from assets under construction
Business combination
Depreciation
Impairment
Disposals
Exchange differences
At 30 June 2020
1 July 2019
Cost
Accumulated depreciation and impairment
96
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
11 Property, plant and equipment (Continued)
Accounting Policies
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes
the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred.
Depreciation is calculated, consistent with the prior year, on a straight-line basis over the estimated useful life of the assets as follows:
• Buildings and integral plant – 40 to 60 years
• Plant and equipment, other than plant integral to buildings – various periods not exceeding 10 years
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
IMPAIRMENT
The carrying values of property, plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount
being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of
property, plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to
which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or
cash-generating unit is then written down to its recoverable amount.
Impairment losses are recognised in the Consolidated Income Statement in the expense category Depreciation, amortisation
and impairment.
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal the depreciation charge is
adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining
useful life.
DERECOGNITION & DISPOSAL
An item of property, plant and equipment is derecognised upon disposal or when no further 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 Income Statement in the year the asset is derecognised.
Key Accounting Judgements, Estimates and Assumptions
Useful lives of assets are estimated based on historical experience. The useful life of assets are assessed annually and adjusted where
deemed necessary.
Annual Report 2021
97
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
12 Right of use assets
A right of use asset represents the Group’s, as a lessee, right to use an asset over the life of a lease. This is a new asset concept
introduced by the accounting standard AASB16 Leases, which the Group first adopted on 1 July 2019 – see note 8.c for the
Group’s lease arrangements and related lease liabilities recognised.
30 June 2021
Cost
Accumulated depreciation
Movement:
At 1 July 2020
Additions
Business combination
Depreciation
Reassessment of lease terms
Disposals or terminations
Exchange differences
At 30 June 2021
30 June 2020
Cost
Accumulated depreciation
Movement:
At 1 July 2019
Adjustment on adoption of AASB16 Leases
Transfer from property, plant and equipment (Note 11)
Restated 1 July 2019
Additions
Depreciation
Impairment
Reassessment of lease terms
Disposals or terminations
Exchange differences
At 30 June 2020
1 July 2019
Cost
Accumulated depreciation
Leased
property
$m
Leased plant &
equipment
$m
Total
$m
5,690.5
(1,501.0)
4,189.5
4,271.8
320.9
10.9
(344.8)
62.6
(65.4)
(66.5)
4,189.5
5,445.2
(1,173.4)
4,271.8
-
4,130.6
219.6
4,350.2
251.4
(339.6)
(20.8)
21.4
(5.0)
14.2
4,271.8
-
-
-
378.5
(156.5)
222.0
206.1
88.1
0.3
(66.7)
1.7
(3.0)
(4.5)
222.0
338.3
(132.2)
206.1
-
49.4
148.7
198.1
68.5
(61.7)
-
-
(0.5)
1.7
206.1
-
-
-
6,069.0
(1,657.5)
4,411.5
4,477.9
409.0
11.2
(411.5)
64.3
(68.4)
(71.0)
4,411.5
5,783.5
(1,305.6)
4,477.9
-
4,180.0
368.3
4,548.3
319.9
(401.3)
(20.8)
21.4
(5.5)
15.9
4,477.9
-
-
-
Leased assets, where pledged, are used as security for the related lease liabilities. Refer note 8.c.
98
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
13 Intangible assets
The Group’s investment in intangible assets includes goodwill, service concession assets, brand names and software.
30 June 2021
Cost
Accumulated depreciation
Movement:
At 1 July 2020
Additions
Business combination
Reclassification (Note 11)
Disposals
Amortisation
Impairment
Exchange differences
At 30 June 2021
30 June 2020
Cost
Accumulated depreciation
Movement:
At 1 July 2019
Adjustment on adoption of AASB16 Leases
Restated 1 July 2019
Additions
Business combination
Disposals
Amortisation
Impairment
Exchange differences
At 30 June 2020
1 July 2019
Cost
Accumulated depreciation
1 Mainly brands and internally generated software costs
Goodwill
$m
Service
Concession
Assets
$m
Other
$m1
Total
$m
3,766.3
-
3,766.3
3,783.4
-
108.2
-
(61.0)
-
-
(64.3)
3,766.3
3,783.4
-
3,783.4
3,767.0
-
3,767.0
-
19.6
(1.2)
-
-
(2.0)
3,783.4
3,767.0
-
3,767.0
220.9
(121.2)
99.7
115.5
0.6
7.6
15.1
-
(34.7)
-
(4.4)
99.7
216.0
(100.5)
115.5
154.0
(6.8)
147.2
3.1
-
-
(33.2)
-
(1.6)
115.5
219.2
(65.2)
154.0
513.6
(146.0)
367.6
347.2
46.7
0.1
5.7
(7.1)
(15.4)
-
(9.6)
367.6
460.1
(112.9)
347.2
342.3
-
342.3
27.6
-
(5.5)
(18.1)
(0.7)
1.6
347.2
436.5
(94.2)
342.3
4,500.8
(267.2)
4,233.6
4,246.1
47.3
115.9
20.8
(68.1)
(50.1)
-
(78.3)
4,233.6
4,459.5
(213.4)
4,246.1
4,263.3
(6.8)
4,256.5
30.7
19.6
(6.7)
(51.3)
(0.7)
(2.0)
4,246.1
4,422.7
(159.4)
4,263.3
Annual Report 2021
99
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
13 Intangible assets (Continued)
Accounting Policies
GOODWILL
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over
the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. The key factor contributing
to the goodwill relates to the synergies existing within the acquired businesses and also expected to be achieved as a result of combining
these facilities with the rest of the Group.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is determined to have an
indefinite life.
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.
Each unit or group of units to which the goodwill is so allocated such that:
• It represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
• Is not larger than an operating segment determined in accordance with AASB 8 Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which
the goodwill relates. When the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying
amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit (group of cash-generating units) and an
operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on
the relative values of the operation disposed of and the portion of the cash-generating unit retained. Impairment losses recognised for
goodwill are not subsequently reversed.
SERVICE CONCESSION ASSETS
Service concession assets represent the Group’s right to operate hospitals under Service Concession Arrangements. Service concession
assets constructed by the Group are recorded at the fair value of consideration received or receivable for the construction services
delivered. Service concession assets acquired by the Group are recorded at the fair value of the assets at the date of acquisition. All
service concession assets are classified as intangible assets.
To the extent that the Group has an unconditional right to receive cash or other financial assets under the Service Concession
Arrangements a financial asset has been recognised. The financial asset is measured at fair value on initial recognition and thereafter at
amortised cost using the effective interest rate method. The financial asset will be reflected on initial recognition and thereafter as a ‘loan
or receivable’.
OTHER INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible asset acquired in a business
combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised software
development costs, are not capitalised and expenditure is charged against profits in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be 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.
Amortisation is calculated, consistent with the prior year, on a straight-line basis over the estimated useful life of the assets as follows:
• Service Concession Asset – over the term of the arrangement
• Software - 2 to 10 years
The amortisation period and the amortisation method for an intangible asset with a finite useful life is 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 estimate. The
amortisation expense on intangible assets with finite lives is recognised in the Consolidated Income Statement.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level
consistent with the methodology outlined for goodwill impairment testing. Such intangibles are not amortised. The useful life of an
intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be
supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate
and is thus accounted for on a prospective basis.
100
Annual Report 2021
13 Intangible assets (Continued)
Accounting Policies
Useful lives
Amortisation method used
Service Concession Assets
Finite
Amortised over the period of
the lease
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
Brands
Software costs
Indefinite
Not applicable
Finite
Amortised over the period
of expected future benefit
from the related project on a
straight line basis
Internally generated
Internally generated
or acquired
Impairment testing
Acquired
Acquired
When an indication of
impairment exists. The
amortisation method is
reviewed at each financial
year end.
Annually or more frequently
if events or changes in
circumstances indicate that
the carrying value may
be impaired.
When an indication of
impairment exists. The
amortisation method is
reviewed at each financial
year end.
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 Income Statement when the asset is derecognised.
Key Accounting Judgements, Estimates and Assumptions
Useful lives of assets are estimated based on historical experience and the expected period of future consumption of embodied economic
benefits. Useful lives are reviewed annually and adjustments made where deemed necessary.
Annual Report 2021
101
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
14 Impairment testing of goodwill
Goodwill arises when the Group acquires a business. It is the portion of the purchase price that is higher than the sum of the fair
value of net assets acquired, which represents the synergies expected to arise from the acquisition. Goodwill is impaired when
its historical cost exceeds its current recoverable amount.
Description of the cash generating units and other relevant information
Goodwill acquired through business combinations has been allocated in part to individual cash generating units and part to segments as
synergies are achieved from the larger Group. Management assess goodwill by aggregating cash generating units to the level of the segment
for purposes of impairment testing because the goodwill relates to synergies existing within the acquired business and synergies achieved from
combining acquired facilities with the rest of the Group. Goodwill is tested for impairment on an annual basis, as a minimum.
Goodwill has been allocated to the Asia Pacific business, the UK business, the French business and the Nordics as follows:
2021
2020
Asia Pacific
$m
1,181.7
1,181.7
UK
$m
279.6
272.7
France
$m
1,250.2
1,280.9
Nordics
$m
1,054.8
1,048.1
Total
$m
3,766.3
3,783.4
Key Accounting Judgements, Estimates and Assumptions
The recoverable amount of the Asia Pacific business, the UK business, the French business and the Nordics business has been
determined based on a value in use calculation using cash flow projections as at 30 June 2021 based on financial estimates approved by
senior management and the Board of Directors covering the following financial year. In determining the 2022 (year 1) cash flow projections
and subsequent year growth factors, management has factored in the performance of the Group in the current year, including the period
impacted by the COVID pandemic. As COVID is only expected to have a short term impact on the business, Management currently
forecasts that the Group volume and cost profiles will return to pre-COVID levels in 2023 for all CGUs. A growth factor is then applied to
the following 4 years through to the end of the value in use models. Key assumptions used in the value in use calculations are outlined
in the table below. Significant assumptions used in the impairment testing are inherently subjective and in times of economic uncertainty
caused by the COVID pandemic, the degree of subjectivity is higher than it might otherwise be.
Terminal growth rate (Year 5+)
2021
2020
Pre-tax discount rate
2021
2020
Asia Pacific
%
UK
%
France
%
Nordics
%
3.0
3.3
9.7
10.3
1.9
1.9
8.4
8.2
1.0
1.0
7.9
7.7
2.0
2.0
7.6
7.2
Key inputs in value in use calculations are:
• Tax rates have been estimated at 30% for Australian operations, and 19% - 34.4% for overseas operations consistent with the current
local tax legislation.
• Discount rates – discount rates reflect management’s estimate of the time value and the risks specific to each of the cash generating
units that are not already reflected in the cash flows. This is the benchmark used by management to assess operating performance and
to evaluate future investment proposals. In determining appropriate discount rates for each unit, regard has been given to the weighted
average cost of capital of the entity as a whole and adjusted for country and business risk specific to the unit.
• Growth rate estimates – they are based on management’s internal estimates of long term growth rates for each of the cash
generating units.
Management has performed sensitivity testing by CGU and on the aggregated CGUs based on assessing the effect of changes in hospital
occupancy rates, health fund rates, wage increases, revenue growth rates and discount rates. COVID is only expected to have a short
term impact on the business and therefore the impact on the value in use for each CGU is minimal.
For Asia Pacific, the United Kingdom, France and the Nordics, management do not consider that any reasonably likely changes in hospital
occupancy rates, health fund rates, wage increases, revenue growth rates and discount rates would result in the carrying value of goodwill
exceeding the recoverable amount.
102
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
15 Taxes
This note provides an analysis of the income tax expense and deferred tax balances, including a reconciliation of the tax
expense recognised, reconciled to the Group's net profit before tax at the Group's applicable tax rate. A deferred tax asset or
liability is created when there are temporary differences between the accounting profit and taxable profit, representing a future
income tax recoverable or payable.
(i) Income tax expense
The major components of income tax expense are:
Income Statement
Continuing operations:
Current income tax
Current income tax charge
Deferred income tax
Relating to origination and reversal of temporary differences
Adjustments in respect of deferred income tax of previous years
Income tax expense reported in the Consolidated Income Statement
2021
$m
2020
$m
266.9
193.1
(31.2)
(5.6)
230.1
(36.7)
0.6
157.0
(ii) Numerical reconciliation between aggregate tax expense recognised in the Consolidated Income Statement and tax expense
calculated per the statutory income tax rate
A reconciliation between tax expense and the product of the accounting profit before income tax
multiplied by the Group’s applicable income tax rate is as follows:
Accounting profit before tax
At the Parent Entity’s statutory income tax rate of 30% (2020: 30%)
Expenditure not allowable for income tax purposes
Amounts not assessable for income tax purposes
Impact of changes in foreign tax rates on deferred tax balances
Other French income tax expense
Foreign tax rate adjustment due to differences in rates between Australia and Other Countries
Other
Income tax expense reported in the Consolidated Income Statement
2021
$m
2020
$m
741.6
466.2
222.5
26.8
(11.1)
(27.7)
18.1
12.1
(10.6)
230.1
139.8
13.7
(39.1)
(2.6)
44.4
6.4
(5.6)
157.0
Annual Report 2021
103
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
15 Taxes (Continued)
(iii) Recognised tax assets and liabilities
Opening balance
Adjustment on adoption of AASB 16 Leases
Restated opening balance
(Charged)/ credited to income
Credited to equity
Payments
Exchange differences
Acquisitions and disposals of subsidiary
Closing balance
2021
$m
Current
income tax
2021
$m
Deferred
income tax
2020
$m
Current
income tax
2020
$m
Deferred
income tax
(34.8)
-
(34.8)
(266.9)
-
228.2
1.6
0.5
(71.4)
178.4
-
178.4
36.8
4.8
-
0.9
1.2
222.1
(40.9)
-
(40.9)
(193.1)
-
198.1
1.1
-
(34.8)
56.6
59.6
116.2
36.1
11.5
-
12.3
2.3
178.4
Statement of Financial Position
2021
$m
2020
$m
Amounts recognised in the Statement of Financial Position for Deferred Income Tax at 30 June:
Deferred tax liabilities
Inventory
Recognition of revenue
Depreciable assets
Other provisions and lease liabilities
Gross deferred tax liabilities
Set-off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Employee provisions
Other provisions and lease liabilities
Unearned income
Losses
Derivatives
Gross deferred tax assets
Set-off of deferred tax liabilities
Net deferred tax assets
(20.5)
(17.4)
(124.6)
(133.4)
(295.9)
60.4
(235.5)
201.5
243.1
6.6
55.4
11.4
518.0
(60.4)
457.6
(17.1)
(56.4)
(123.6)
(128.1)
(325.2)
53.5
(271.7)
168.3
268.5
6.9
48.3
11.6
503.6
(53.5)
450.1
(iv) Tax consolidation
Ramsay Health Care Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group effective 1 July 2003.
Ramsay Health Care Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax funding and
sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries using a group allocation method on a modified
standalone basis. In addition, the agreement provides for the allocation of income tax liabilities between the entities should the head entity
default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis
that the possibility of default is remote.
TAX EFFECT ACCOUNTING BY MEMBERS OF THE TAX CONSOLIDATED GROUP
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the allocation of
current and deferred taxes using a group allocation method, on a modified standalone basis in accordance with the principles of AASB 112
Income Taxes. Allocations under the tax funding agreement are made every six months.
The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the subsidiaries' inter-company accounts
with the tax consolidated group head company. There is no difference between the current and deferred tax amounts allocated under the tax
funding agreement and the amount subsequently charged to the subsidiary. Therefore, there is no contribution/distribution of the subsidiaries'
equity accounts.
As a result of tax consolidation, intercompany assets of Ramsay Health Care Limited have increased by $9.7 million (2020: increased by
$10.5 million). This is included in the summarised information relating to Ramsay Health Care Limited. Refer to Note 24.
(v) Tax losses
At 30 June 2021, there were nil (2020: $0.7 million) capital losses carried forward and therefore no resulting deferred tax asset has
been recognised.
104
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
15 Taxes (Continued)
Accounting Policies
INCOME TAX
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by
the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
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; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the
timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the
carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in
which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the
foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to 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.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the Income Statement.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Key Accounting Judgements, Estimates and Assumptions
In determining the Group’s deferred tax assets and liabilities, management is required to make an estimate about the availability of
future taxable profits and cash-flows. Changes in circumstances will alter expectations, which may impact the amount of tax losses and
temporary differences recognised.
Annual Report 2021
105
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
16 Other assets (net)
Prepayments – current and non-current
Other assets – current
Other financial assets – non-current
Investments in joint venture
Receivables – non-current
Provisions – current and non-current
Defined employee benefit obligation
Other creditors – non-current
16.a Other current assets
Note
16.a
16.b
9.a
16.c
16.e
2021
$m
2020
$m
143.9
1,990.5
82.9
217.5
70.6
(571.3)
(249.1)
(30.7)
1,654.3
186.5
39.2
82.6
245.8
78.1
(523.7)
(222.9)
(24.3)
(138.7)
Other current assets relate to non-trade amounts owned by the Group which are due or receivable within 12 months.
Business combination amounts held in escrow
Other current assets
Total
2021
$m
1,958.1
32.4
1,990.5
2020
$m
-
39.2
39.2
The business combination amounts held in escrow are governed by the escrow agreement between Ramsay and third parties for the potential
Spire acquisition. This amount is not treated as cash and cash equivalents due to the terms and conditions associated with the escrow
arrangement. Under this arrangement the cash held in escrow is not readily available to Ramsay. These are term deposits denominated in AUD,
GBP and EUR which earn interest. The amounts held in escrow were subsequently refunded in July 2021. Refer to Note 19 for further details.
106
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
16 Other assets (net) (Continued)
16.b Investments in joint venture
The Group has a 50% interest in Ramsay Sime Darby Health Care Sdn Bhd (RSDH), a joint venture involved in operating
hospitals and day surgery facilities across Malaysia, Indonesia and Hong Kong and a 50% interest in Ascension Ramsay
Global Sourcing Limited. The Group’s interest in both entities is accounted for using the equity method in the consolidated
financial statements.
At 1 July
AASB 16 Leases adjustment
Share of profit of joint venture
Dividend paid
Foreign currency translation and other equity movements
At 30 June
Accounting Policies
2021
$m
2020
$m
245.8
-
10.9
(24.9)
(14.3)
217.5
270.3
(0.2)
16.1
(35.0)
(5.4)
245.8
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets
of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about
the relevant activities require unanimous consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those necessary to determine control
over subsidiaries.
The Group’s investment in a joint venture is accounted for using the equity method. Under the equity method, the investment in a joint
venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of
net assets of the joint venture since the acquisition date. Goodwill relating to the joint venture is included in the carrying amount of the
investment and is neither amortised nor individually tested for impairment.
The Income Statement reflects the Group’s share of the results of operations of the joint venture. Any change in OCI of those investees is
presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the joint venture, the
Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting
from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture.
The aggregate of the Group’s share of profit or loss of a joint venture is shown on the face of the Income Statement and represents profit
or loss after tax and non-controlling interests in the subsidiaries of the joint venture.
The financial statements of the joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are
made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment
in the joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the joint
venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable
amount of the joint venture and its carrying value, then recognises the loss as ‘Share of profit of joint venture’ in the Income Statement.
Upon loss of joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any
difference between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained investment and
proceeds from disposal is recognised in profit or loss.
Annual Report 2021
107
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
16 Other assets (net) (Continued)
16.c Provisions
A provision is a liability with uncertain timing and amount, but the expected settlement amount can be reliably estimated by
the Group. The main provisions held are in relation to insurance, restructuring, legal obligations, unfavourable contracts and
employee benefits.
Current
Restructuring provision
Unfavourable contracts
Insurance provision
Legal and compliance provision
Other provisions
Non-current
Employee and Director entitlements
Unfavourable contracts
Insurance provision
Restructuring provision
Legal and compliance provision
Other provisions
Total
Movements in provisions
2021
$m
2020
$m
14.4
3.8
19.3
89.5
58.0
185.0
42.3
45.7
71.3
63.2
156.4
7.4
386.3
571.3
16.0
10.8
13.7
38.7
54.5
133.7
41.3
67.8
74.2
51.6
148.8
6.3
390.0
523.7
At 1 July 2020
Business combination
Arising during the year
Utilised during the year
Unused amounts reversed
Exchange differences
At 30 June 2021
Current 2021
Non-current 2021
Current 2020
Non-current 2020
Restructuring
$m
Insurance
$m
Unfavourable
contracts
$m
Legal and
compliance
$m
Other
provisions
$m
Total
$m
67.6
-
52.2
(32.1)
(8.0)
(2.1)
77.6
14.4
63.2
77.6
16.0
51.6
67.6
87.9
-
9.2
(5.1)
(1.6)
0.2
90.6
19.3
71.3
90.6
13.7
74.2
87.9
78.6
-
-
(6.8)
(20.8)
(1.5)
49.5
3.8
45.7
49.5
10.8
67.8
78.6
187.5
5.1
81.8
(11.2)
(12.8)
(4.5)
245.9
89.5
156.4
245.9
38.7
148.8
187.5
60.8
3.0
16.2
(6.9)
(6.3)
(1.4)
65.4
58.0
7.4
65.4
54.5
6.3
60.8
482.4
8.1
159.4
(62.1)
(49.5)
(9.3)
529.0
185.0
344.0
529.0
133.7
348.7
482.4
108
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
16 Other assets (net) (Continued)
Nature and timing of provisions
RESTRUCTURING PROVISION
The restructuring provision primarily relates to:
• the restructuring of the Group subsequent to acquisitions. Provisions are made in the year the restructuring plans are drawn up and
announced to employees; and
• restructuring of entities with the Group.
INSURANCE PROVISION
Insurance policies are entered into to cover the various insurable risks. These policies have varying levels of deductibles. The medical
malpractice provision is made to cover deductibles arising under the Medical Malpractice Insurance policy, including potential uninsured and
‘Incurred but not Reported’ claims.
EMPLOYEE LEAVE BENEFITS
Wages, salaries, and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting
date are recognised in other payables in respect of employees' services up to the reporting date. They are measured at the amounts expected
to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future
payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that
match, as closely as possible, the estimated future cash outflows.
UNFAVOURABLE CONTRACTS
This provision consists of VAT and other taxes payable on impaired right of use assets for certain leases.
LEGAL AND COMPLIANCE PROVISION
The legal and compliance provision primarily relates to amounts provided for litigation that is currently in the court process or a matter under
review by a relevant authority.
Accounting Policies
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.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in
the Income Statement net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Key Accounting Judgements, Estimates and Assumptions
The insurance provision is actuarially assessed at each reporting period using a probability of sufficiency between 80% - 95% based
on differing exposures to risk. The greatest uncertainty in estimating the provision is the costs that will ultimately be incurred which is
estimated using historical claims, market information and other actuarial assessments. Included in the insurance provision is an amount for
claiming handling expenses at between 5%-10% of the estimated Ramsay claim cost.
16.d Superannuation commitments
The Group contributes to industry and individual superannuation funds established for the provision of benefits to employees of entities within
the economic entity on retirement, death or disability. Benefits provided under these plans are based on contributions for each employee and
for retirement are equivalent to accumulated contributions and earnings. All death and disability benefits are insured with various life insurance
companies. The entity contributes to the funds at various agreed contribution levels, which are not less than the statutory minimum.
Annual Report 2021
109
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
16 Other assets (net) (Continued)
16.e Defined employee benefit obligation
A defined benefit plan is an employer-based program that pays retirement benefits based on a predetermined formula such as
the employee’s length of employment, age and salary history. The Group has a defined employee benefit obligation in France as
required to be paid under local legislation. There is also a defined benefit obligation in the Nordics.
In contrast to a defined contribution plan, the employer, not the employee, is responsible for all of the planning and investment risk of a
defined benefit plan. The Group has a defined contribution obligation in other jurisdictions. Refer Note 16.d.
The following tables summarise the funded status and amounts recognised in the consolidated Statement of Financial Position for the plans:
Net (liability) included in the Statement of
Financial Position
Present value of defined benefit obligation
Fair value of plans assets
Net (liability) – non-current
2021
$m
2020
$m
2019
$m
2018
$m
2017
$m
(473.5)
224.4
(249.1)
(418.4)
195.5
(222.9)
(389.9)
174.6
(215.3)
(85.7)
5.3
(80.4)
(80.2)
5.0
(75.2)
Net expense for the defined employee benefit obligation (Note 3) (recognised in
superannuation expenses)
Changes in the present value of the defined benefit obligation are as follows:
Opening defined benefit obligation
Acquisitions
Current service cost
Interest cost
Benefits paid
Actuarial losses on obligation
Exchange differences on foreign plans
Closing defined benefit obligation
Changes in the fair value of plan assets are as follows:
Opening fair value of plans assets
Expected return
Contributions by employer
Benefits paid
Actuarial gains
Exchange differences on foreign plans
Closing fair value of plans assets
Actuarial return on plan assets
2021
$m
2020
$m
21.1
24.5
2021
$m
2020
$m
(418.4)
(1.3)
(18.5)
(5.1)
14.1
(51.1)
6.8
(473.5)
195.5
2.5
17.5
(3.7)
11.4
1.2
224.4
2.5
(389.9)
-
(18.9)
(9.0)
10.5
(11.6)
0.5
(418.4)
174.6
3.4
19.6
(3.2)
1.4
(0.3)
195.5
3.4
110
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
16 Other assets (net) (Continued)
Plan assets are invested as follows:
Equities
Bonds
Property
Other
The Group expects to contribute nil to its defined benefit obligations in 2022.
Actuarial losses recognised in the Statement of Comprehensive Income
Cumulative actuarial losses recognised in the Statement of Comprehensive Income
2021
%
2020
%
27.8
46.1
8.3
17.8
21.6
49.9
9.4
19.1
2021
$m
39.7
142.3
2020
$m
10.2
102.6
The principal actuarial assumptions used in determining obligations for the liabilities are shown below (expressed as weighted averages):
Discount rate
Future salary increases
Future pension increases
Accounting Policies
2021
%
0.9 to 2.0
1.0 to 2.9
1.0 to 2.0
2020
%
1.1 to 1.6
1.0 to 2.9
1.0 to 2.9
The Group has defined employee benefit obligations in the Nordics and in France, arising from local legislative requirements.
The cost of providing benefits under these obligations are determined using the projected unit credit method using actuarial valuations.
Actuarial gains and losses for the defined obligation are recognised in full in the period in which they occur in Other Comprehensive
Income. Such actuarial gains and losses are also immediately recognised in retained earnings and are not reclassified to profit or loss in
subsequent periods.
Unvested past service costs are recognised as an expense on a straight line basis over the average period until the benefits become
vested. Past service costs are recognised immediately if the benefits have already vested, immediately following the introduction of, or
changes to, the obligation.
The defined benefit liability comprises the present value of the defined benefit obligation (using a discount rate based on government
bonds) less unrecognised past service costs.
Key Accounting Judgements, Estimates and Assumptions
The actuarial valuation involves making assumptions about discount rates, future salary increases and mortality rates. All assumptions are
reviewed at each reporting date. In determining the appropriate discount rates, the interest rates of corporate bonds in France and the
Nordics is considered. The mortality rate is based on publicly available mortality rates for France and the Nordics. Future salary increases
are based on expected future inflation rates in France and the Nordics.
Annual Report 2021
111
NOTES TO THE FINANCIAL STATEMENTS
RISK MANAGEMENT
RAMSAY HEALTH CARE LIMITED
IV Risk management
This section discusses the Group’s exposure to various risks and shows how these could affect the Group’s financial position
and performance.
17 Financial risk management
This note provides a summary of the Group’s exposure to key financial risks, including interest rate, foreign currency, credit and
liquidity risks, along with the Group’s policies and strategies to mitigate these risks. There have been no material changes to our
risk management policies since 30 June 2020.
Primary responsibility for identification and control of financial risks rests with the Audit Committee under the authority of the Board. The Board
reviews and agrees policies for managing each of the risks identified below, including the setting of limits for trading in derivatives, hedging
cover of foreign currency and interest rate risk, credit allowances, and future cash flow forecast projections.
The Group's principal financial instruments comprise receivables, payables, bank loans and overdrafts, cash and short-term deposits,
derivatives, and other financial assets.
The Group manages its exposure to key financial risks, including market risk (interest rate and foreign currency risk), credit risk and liquidity risk
in accordance with the Group's financial risk management policy. The objective of the policy is to support the delivery of the Group's financial
targets whilst protecting future financial security.
The Group enters into derivative transactions, principally interest rate swap contracts and foreign exchange forward contracts. The purpose
is to manage the interest rate and currency risks arising from the Group's operations and its sources of finance. The main risks arising from
the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The Group uses different methods to
measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign
exchange risk and assessments of market forecasts for interest rate and foreign exchange. Ageing analyses and monitoring of specific credit
allowances are undertaken to manage credit risk and liquidity risk is monitored through the development of future rolling cash flow forecasts.
The Group has entered into a Syndicated Facility Agreement with its Banks. The Syndicated Facility Agreement is with prime financial
institutions. By entering into a Syndicated Facility Agreement with a number of financial institutions compared to financing through a Bilateral
Facility Agreement, the Group has reduced its counterparty risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.
The Group's exposure to market interest rates relates primarily to the Group's long-term debt obligations with floating interest rates. The level of
debt is disclosed in Note 8.b.
At reporting date, the Group had the following mix of financial assets and liabilities exposed to variable interest rate risk that are not designated
in cash flow hedges:
Financial Assets
Cash and cash equivalents
Business combination amounts held in escrow
Financial Liabilities
Bank Loans
Net exposure
2021
$m
2020
$m
1,004.8
1,958.1
2,962.9
(3,070.2)
(107.3)
1,503.7
-
1,503.7
(1,815.0)
(311.3)
Interest rate derivatives contracts are outlined in Note 8.d, with a net negative fair value of $38.1 million (2020: negative $51.3 million) which are
exposed to fair value movements if interest rates change.
112
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
RISK MANAGEMENT
RAMSAY HEALTH CARE LIMITED
17 Financial risk management (Continued)
Interest rate sensitivity
The following sensitivity analysis has been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period.
At the end of the reporting period, as specified in the following table, if the interest rates had been higher or lower than the year end rates
and all other variables were held constant, the consolidated entity’s post tax profit and Other Comprehensive Income would have been affected
as follows:
Judgements of reasonably possible movements:
AUD
+60 basis points (2020: +45 basis points)
-60 basis points (2020: -45 basis points)
GBP
+50 basis points (2020: +55 basis points)
-50 basis points (2020: -55 basis points)
EUR
+30 basis points (2020: +40 basis points)
-30 basis points (2020: -40 basis points)
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2021
$m
2020
$m
2021
$m
2020
$m
(3.5)
3.5
2.2
(2.2)
14.3
(12.5)
-1
-1
(0.1)
0.3
(4.8)
4.8
1.4
(1.1)
-2
-2
-2
-2
1.4
(1.0)
1.0
(0.9)
11.8
(12.0)
1 There would be no significant impact on net profit as unhedged interest rate exposures are not significant.
2 There were no outstanding interest rate derivative contracts which have been designated as effective hedges at the year end.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the interest rate volatility observed during the
relevant financial year. The change in sensitivity applied for 2021, versus 2020, is due to the change in interest rate volatilities applicable
to 2021.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities
(when revenue or expense is denominated in a different currency from the Group’s functional currency) and the Group’s net investments in
foreign operations.
The Group manages its foreign exchange rate exposure within approved policy parameters by utilising foreign currency swaps and forwards.
When a derivative is entered into for the purpose of being a hedging instrument, the Group negotiates the terms of those derivatives to
match the terms of the hedged exposure. For hedges of forecast transactions, the derivatives cover the period of exposure from the point
the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in
foreign currency.
The Group hedges its exposure to fluctuations on the translation into Australian dollars of its foreign operations by holding net borrowings in
foreign currencies and by using foreign currency swaps and forward contracts.
Annual Report 2021
113
NOTES TO THE FINANCIAL STATEMENTS
RISK MANAGEMENT
RAMSAY HEALTH CARE LIMITED
17 Financial risk management (Continued)
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in GBP, Euro and MYR exchange rates, with all other variables
held constant. The impact on the Group’s post tax profit is due to changes in the fair value of monetary assets and liabilities including
non-designated foreign currency derivatives and embedded derivatives. The impact on the Group’s equity is due to changes in the fair value
of forward exchange contracts designated as cash flow hedges and net investment hedges. The Group’s exposure to foreign currency changes
for all other currencies is not material.
British Pound (GBP)
+15% (2020: +20%)
-15% (2020: -20%)
Euro (EUR)
+15% (2020: +20%)
-15% (2020: -20%)
Malaysian Ringgit (MYR)
+15% (2020: +20%)
-15% (2020: -20%)
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2021
$m
2020
$m
2021
$m
2020
$m
(0.1)
0.1
-1
-1
-1
-1
(0.2)
0.3
(0.1)
0.1
-1
-1
(55.2)
74.6
(110.6)
149.5
(28.7)
38.8
(32.8)
48.9
(8.8)
12.8
(38.6)
56.4
1 There would be no significant impact on net profit as unhedged foreign currency exposures are not significant. (2020: unhedged foreign currency exposures were insignificant.)
The movement in the post-tax profit amounts is a result of a change in the fair value of derivative financial instruments not designated in
a hedge relationship and monetary assets and liabilities denominated in foreign currencies, where the functional currency of the entity is a
currency other than the above currencies. Although the derivatives have not been designated in a hedge relationship, they act as an economic
hedge and will offset the underlying transactions when they occur.
The movement in equity arises from changes in the borrowings (net of cash and cash equivalents) in the hedge of net investments in overseas
operations (UK, France and Malaysia) and cash flow hedges. These movements will off-set the translation of the overseas operations’ net assets
in Australian dollar.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, derivative
instruments and other financial instruments. The Group's exposure to credit risk arises from potential default of the counter party, with a
maximum exposure equal to the carrying amount of these instruments. Exposure at reporting date is addressed in each applicable note.
Trade receivables
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group's policy to
securitise its trade and other receivables. The majority of transactions are with the Governments and Health Funds.
The Group’s credit policy requires all debtors to pay in accordance with agreed terms. The payment terms for the major debtors range from 15
days to 30 days.
Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be
uncollectable are written off when identified. An impairment provision is recognised based on expected credit loss where the Group measures
the impairment using a lifetime expected loss allowance for all trade receivables. Financial difficulties of the debtor, default payments or debts
more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying
amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.
The Group’s credit risk is spread across a number of Health Funds and Governments. Whilst the Group does have significant credit risk
exposure to a single debtor or group of related debtors, the credit quality of these debtors is considered high, as they are either Health Funds,
governed by the prudential requirements of APRA, or Governments.
The credit quality of financial assets that are neither past due nor impaired is considered to be high, due to the absence of defaults, and the
fact that the Group deals with creditworthy Health Funds and the Governments. Management has also put in place procedures to constantly
monitor the exposures in order to manage its credit risk.
Financial instruments and cash deposits
Credit risks related to balances with banks and financial institutions are managed by Ramsay Group Treasury in accordance with Board
approved policies. Such policies only allow financial derivative instruments to be entered into with high credit quality financial institutions with a
minimum long-term credit rating of A- or better by Standard & Poor’s. In addition, the Board has approved the use of these financial institutions,
and specific internal guidelines have been established with regard to limits, dealing and settlement procedures. Limits are set to minimise the
concentration of risks and therefore mitigate financial loss through potential counterparty failure. The investment of surplus funds is made only
with approved counterparties and within credit risk in relation to derivatives undertaken in accordance with the consolidated entity’s hedging
and risk management activities.
The Group does not hold any credit derivatives to off-set its credit risk exposure. The Group’s maximum exposure for financial derivative
instruments is noted in the liquidity table below.
114
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
RISK MANAGEMENT
RAMSAY HEALTH CARE LIMITED
17 Financial risk management (Continued)
Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to repay their financial
liabilities as and when they fall due.
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans
and leases.
To monitor existing financial assets and liabilities as well as to enable an effective controlling of future risks, Ramsay has established
management reporting covering its worldwide business units that reflects expectations of management’s expected settlement of financial
assets and liabilities.
The Group continually reviews its liquidity position including cash flow forecasts to determine the forecast liquidity position and maintain
appropriate liquidity levels.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.
Year ended 30 June 2021
Trade and other liabilities
Loans and borrowings
Lease liabilities
Financial derivatives
Year ended 30 June 2020
Trade and other liabilities
Loans and borrowings
Lease liabilities
Financial derivatives
Less than 3
months
$m
3 to 12 months
$m
1 to 5 years
$m
> 5 years
$m
Total
$m
(2,998.8)
(23.9)
(150.8)
(4.6)
(3,178.1)
(3,187.1)
(30.5)
(119.7)
(2.7)
(3,340.0)
-
(104.3)
(452.4)
(13.3)
(570.0)
-
(106.1)
(359.1)
(4.6)
(469.8)
-
(4,007.6)
(1,737.3)
(23.1)
(5,768.0)
-
(4,382.6)
(1,703.6)
(44.8)
(6,131.0)
-
(1,613.2)
(5,174.0)
-
(6,787.2)
-
(126.8)
(5,207.2)
-
(5,334.0)
(2,998.8)
(5,749.0)
(7,514.5)
(41.0)
(16,303.3)
(3,187.1)
(4,646.0)
(7,389.6)
(52.1)
(15,274.8)
The disclosed financial derivative instruments in the above table are the gross undiscounted cash flows. However, those amounts may be
settled gross or net. The following table shows the corresponding reconciliation of those amounts to their carrying amounts.
Year ended 30 June 2021
Inflows
Outflows
Net
Discounted at the applicable interbank rates
Year ended 30 June 2020
Inflows
Outflows
Net
Discounted at the applicable interbank rates
Less than 3
months
$m
3 to 12 months
$m
1 to 5 years
$m
> 5 years
$m
Total
$m
-
(4.6)
(4.6)
(1.6)
0.3
(3.0)
(2.7)
(1.6)
0.1
(13.4)
(13.3)
(13.3)
2.0
(6.6)
(4.6)
(4.6)
1.6
(24.7)
(23.1)
(23.2)
1.4
(46.2)
(44.8)
(45.1)
-
-
-
-
-
-
-
-
1.7
(42.7)
(41.0)
(38.1)
3.7
(55.8)
(52.1)
(51.3)
Collateral
The Group pledged part of its longer term deposits in order to fulfil the collateral requirements for the secured funding agreement (fiducie-
sûreté). At 30 June 2020, the fair values of the term deposits pledged was $12.1 million. No term deposits were held as collateral at 30 June
2021 due to changes in the terms and conditions of the secured funding agreement during 2021. The counterparties had an obligation to return
the securities to the Group. There were no significant terms and conditions associated with the use of collateral.
Annual Report 2021
115
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
V Other information
This section includes other information that must be disclosed to comply with the accounting standards and other
pronouncements, but that is not immediately related to individual line items in the financial statements.
18 Share based payment plans
A share based payment is a transaction in which the Group receives goods or services in exchange for rights to its own shares.
Ramsay operates one performance rights scheme, where share rights may be issued to eligible employees.
An executive performance rights scheme was established in January 2004 where Ramsay Health Care Limited may, at the discretion of the
Board, grant rights over the ordinary shares of Ramsay Health Care Limited to executives of the consolidated entity. The rights are issued for nil
consideration and are granted in accordance with the plan’s guidelines established by the Directors of Ramsay Health Care Limited. The rights
cannot be transferred and will not be quoted on the ASX. Non-executive directors are not eligible for this plan.
Information with respect to the number of rights granted under the executive performance rights plan is as follows:
Balance at beginning of year
granted
vested
forfeited
Balance at end of year
Exercisable at end of year
2021
2020
Number of
Rights
1,277,546
246,907
(7,505)
(472,611)
1,044,337
-
Weighted
Average Fair
Value
$43.30
$68.22
$56.17
Weighted
Average Fair
Value
$52.59
$69.32
$53.46
Number of
Rights
1,685,969
263,096
(201,620)
(469,899)
1,277,546
-
The following table summarises information about rights held by participants in the executive performance rights plan as at 30 June 2021:
Number of Rights
152,291
199,444
219,441
104,244
123,203
122,849
122,865
1,044,337
Grant Date
17-Nov-17
15-Nov-18
15-Nov-18
15-Nov-19
15-Nov-19
15-Dec-20
15-Dec-20
Vesting Date1
28-Aug-20
31-Aug-21
31-Aug-21
31-Aug-22
31-Aug-22
31-Aug-23
31-Aug-23
Weighted
Average
Fair Value2
$32.61
$33.86
$51.22
$33.36
$68.62
$27.14
$59.45
1 The vesting date shown is the most likely vesting date subject to full satisfaction of the respective performance conditions.
2 Fair value at grant date
116
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
18 Share based payment plans (Continued)
Accounting Policies
The Group provides benefits to employees (including Executive Directors) of the Group in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
There is currently one plan in place to provide these benefits, being the Executive Performance Rights Plan (equity-settled transactions),
which provides benefits to senior executives and Directors.
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at which they were
granted. The fair value is determined by an external valuer using the Monte Carlo and the Black Scholes models.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the
shares of Ramsay Health Care Limited (market conditions).
EQUITY-SETTLED TRANSACTIONS
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity (Share Based Payment Reserve),
over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (vesting date).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
• The extent to which the vesting period has expired and
• The number of awards that, in the opinion of the Directors of the Group, will ultimately vest. This opinion is formed based on the best
available information at reporting date.
No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date.
TREASURY SHARES
Shares in the Group held by the Executive Performance Share Plan are classified and disclosed as Treasury shares and deducted
from equity.
Key Accounting Judgements, Estimates and Assumptions
Performance rights are issued for nil consideration and are granted in accordance with the plan’s guidelines established by the Directors
of Ramsay Health Care Limited.
The fair value of share rights with TSR performance conditions (market based conditions) are estimated on the date of grant using a
Monte Carlo model. The fair value of share rights with non-market performance conditions are estimated at the date of grant using the
Black Scholes Option Pricing model. The following weighted average assumptions were used for grants made on 17 November 2017,
15 November 2018, 15 November 2019 and 15 December 2020:
Dividend yield
Expected volatility
Risk-free interest rate
Effective life of incentive right
Granted
15-Dec-20
2.40%
30.32%
0.10%
3 years
Granted
15-Nov-19
2.31%
22.50%
0.75%
3 years
Granted
15-Nov-18
2.88%
22.50%
2.11%
3 years
Granted
17-Nov-17
2.27%
22.5%
1.93%
3 years
The expected volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to
future volatility due to publicly available information.
The dividend yield reflects the assumption that the current dividend payout will continue with no anticipated increases. The expected life
of the rights is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects
the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
Annual Report 2021
117
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
19 Subsequent events
This note outlines events which have occurred between the reporting date, being 30 June 2021 and the date this financial report
is authorised.
On 26 May 2021, Ramsay announced that it had reached agreement with the board of Spire Healthcare Group PLC (Spire) on the terms of a
recommended cash offer to acquire the entire issued and to be issued share capital of Spire, by way of a scheme of arrangement under part 26
of the UK Companies Act 2006 (“Scheme”).
The Court Meeting and General Meeting at which Spire shareholders voted on resolutions to approve and implement the Scheme were held on
the 19 July 2021. As the requisite majority of votes required to pass all of the resolutions were not achieved, the proposed acquisition will not
proceed. As a result, the amounts held in escrow of $1,958.1 million (Refer Note 16.a) at 30 June 2021, in relation to this business combination
were released and subsequently used to pay down loans and borrowings of the Group.
There have been no other significant events after the reporting date that may significantly affect the Group’s operations in future years, the
results of these operations in future years or the Group’s state of affairs in future years.
20 Related party transactions
This note discloses the Group’s transactions with its related parties, including their relatives or related businesses.
Transactions with Related Party Entities and the Group
For the year ended 30 June 2021 there were no outstanding transactions (2020: $nil) to be billed to or billed from related party entities.
Compensation of Key Management Personnel
2021
$
2020
$
2,287,212
153,526
2,440,738
3,256,881
21,694
1,181,592
1,449,628
5,909,795
1,854,055
27,117
349,921
1,104,073
3,335,166
7,398,148
202,337
1,531,513
2,553,701
11,685,699
2,606,423
158,706
2,765,129
2,895,461
31,504
591,101
(1,015,400)
2,502,666
2,201,286
46,222
541,789
(657,130)
2,132,167
7,703,170
236,432
1,132,890
(1,672,530)
7,399,962
Non-Executive Directors
Short term benefits
Post-employment benefits
Executive Directors
Short term benefits
Post-employment benefits
Other long term benefits
Performance/Incentive rights
Executives
Short term benefits
Post-employment benefits
Other long term benefits
Performance/Incentive rights
Total
Short term benefits
Post-employment benefits
Other long term benefits
Performance/Incentive rights
118
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
21 Auditors’ remuneration
This note summarises the total remuneration received or receivable by the Group’s external auditors for their audit, assurance
and other services.
Amounts received or due and receivable by Ernst & Young (Australia) for:
An audit or review of the financial report of the entity and any other entity in the consolidated group
Fees for assurance services that are required by legislation to be provided by the auditor
Fees for other assurance and agreed-upon-procedures services under other legislation or
contractual arrangements
Other services in relation to the entity and any other entity in the consolidated group
Tax compliance
Assurance related
Advisory services
Amounts received or due and receivable by overseas member firms of Ernst & Young (Australia) for:
An audit or review of the financial report of the entity and any other entity in the consolidated group
Other services in relation to the entity and any other entity in the consolidated group
Tax compliance
The total fees paid to Ernst & Young member firms by service type are:
Audit Services
Non-audit Services
2021
$
2020
$
2,127,656
-
2,311,672
-
-
48,350
557,709
-
2,134,941
4,820,306
555,842
165,301
-
3,081,165
3,944,572
3,552,735
60,356
4,004,928
8,825,234
679,274
4,232,009
7,313,174
6,072,228
2,753,006
8,825,234
5,912,757
1,400,417
7,313,174
Amounts received or due and receivable by non-Ernst & Young audit firms for:
Audit or review of the financial report
2,493,263
1,950,577
Annual Report 2021
119
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
22 Information relating to subsidiaries
This note provides a list of all the significant entities controlled by the Group as at the reporting date, including those included in
the Closed Group.
Country of
Incorporation
% Equity Interest
Name
RHC Nominees Pty Limited1
RHC Developments Pty Limited
Ramsay Health Care Investments Pty Limited
Ramsay Hospital Holdings Pty Limited
Ramsay Hospital Holdings (Queensland) Pty Limited
Ramsay Health Care Ventures Pty Limited
Ramsay Finance Pty Limited
Ramsay Aged Care Holdings Pty Limited
Ramsay Aged Care Properties Pty Limited
RHC Ancillary Services Pty Limited
Linear Medical Pty Limited
Newco Enterprises Pty Limited
Sydney & Central Coast Linen Services Pty Limited
Benchmark Healthcare Holdings Pty Limited
Benchmark Healthcare Pty Limited
AHH Holdings Health Care Pty Limited
AH Holdings Health Care Pty Limited
Ramsay Centauri Pty Limited
Alpha Healthcare Pty Limited
Ramsay Health Care Australia Pty Limited
Donvale Private Hospital Pty Limited
The Benchmark Hospital Group Pty Limited
Dandenong Valley Private Hospital Pty Limited
Benchmark – Surrey Pty Limited
Benchmark – Peninsula Pty Limited
Benchmark – Donvale Pty Limited
Benchmark – Windermere Pty Limited
Benchmark – Beleura Pty Limited
Beleura Properties Pty Limited
Affinity Health Holdings Australia Pty Limited
Affinity Health Finance Australia Pty Limited
Affinity Health Pty Limited
Affinity Health Foundation Pty Limited
Affinity Health Holdings Indonesia Pty Limited
Hospitals of Australia Pty Limited
Glenferrie Private Hospital Pty Limited
Relkban Pty Limited
Relkmet Pty Limited
Votraint No. 664 Pty Limited
Votraint No. 665 Pty Limited
Australian Medical Enterprises Pty Limited
AME Hospitals Pty Limited
Victoria House Holdings Pty Limited
C&P Hospitals Holdings Pty Limited
HCoA Hospital Holdings (Australia) Pty Limited
AME Properties Pty Limited
AME Superannuation Pty Limited
1 Entities included in the deed of cross guarantee as required for the instrument
120
Annual Report 2021
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
22 Information relating to subsidiaries (Continued)
Country of
Incorporation
% Equity Interest
Name
Attadale Hospital Property Pty Limited1
Glengarry Hospital Property Pty Limited
Hadassah Pty Limited
Rannes Pty Limited
Hallcraft Pty Limited
Jamison Private Hospital Property Pty Limited
Affinity Health (FP) Pty Limited
Armidale Hospital Pty Limited
Caboolture Hospital Pty Limited
Joondalup Hospital Pty Limited
Joondalup Health Campus Finance Limited
Logan Hospital Pty Limited
Noosa Privatised Hospital Pty Limited
AMNL Pty Limited
Mayne Properties Pty Limited
Port Macquarie Hospital Pty Limited
HCoA Operations (Australia) Pty Limited
Hospital Corporation Australia Pty Limited
Dabuvu Pty Limited
NBH Hold Co. Pty Limited
NBH Operator Pty Limited
HOAIF Pty Limited
HCA Management Pty Limited
Malahini Pty Limited
Tilemo Pty Limited
Hospital Affiliates of Australia Pty Limited
C.R.P.H Pty Limited
Hospital Developments Pty Limited
P.M.P.H Pty Limited
Pruinosa Pty Limited
Australian Hospital Care Pty Limited
Australian Hospital Care (Allamanda) Pty Limited
Australian Hospital Care (Latrobe) Pty Limited
Australian Hospital Care 1988 Pty Limited
AHC Foundation Pty Limited
AHC Tilbox Pty Limited
Australian Hospital Care (Masada) Pty Limited
Australian Hospital Care Investments Pty Limited
Australian Hospital Care (MPH) Pty Limited
Australian Hospital Care (MSH) Pty Limited
Australian Hospital Care (Pindara) Pty Limited
Australian Hospital Care (The Avenue) Pty Limited
Australian Hospital Care Retirement Plan Pty Limited
eHealth Technologies Pty Limited
Health Technologies Pty Limited
Rehabilitation Holdings Pty Limited
Bowral Management Company Pty Limited
1 Entities included in the deed of cross guarantee as required for the instrument
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Annual Report 2021
121
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
22 Information relating to subsidiaries (Continued)
Country of
Incorporation
% Equity Interest
Name
Simpak Services Pty Limited1
APL Hospital Holdings Pty Limited1
Alpha Pacific Hospitals Pty Limited1
Health Care Corporation Pty Limited1
Alpha Westmead Private Hospital Pty Limited1
Illawarra Private Hospital Holdings Pty Limited1
Northern Private Hospital Pty Limited1
Westmead Medical Supplies Pty Limited1
Herglen Pty Limited1
Mt Wilga Pty Limited1
Sibdeal Pty Limited1
Workright Pty Limited1
Adelaide Clinic Holdings Pty Limited1
eHospital Pty Limited1
New Farm Hospitals Pty Limited1
North Shore Private Hospital Pty Limited1
Phiroan Pty Limited1
Ramsay Health Care (Asia Pacific) Pty Limited1
Ramsay Health Care (South Australia) Pty Limited1
Ramsay Health Care (Victoria) Pty Limited1
Ramsay Health Care Services (QLD) Pty Limited1
Ramsay Health Care Services (VIC) Pty Limited1
Ramsay Health Care Services (WA) Pty Limited1
Ramsay Pharmacy Retail Services Pty Limited1
Ramsay International Holding Company Pty Limited
Ramsay Professional Services Pty Limited1
Ramsay Diagnostics (No. 1) Pty Limited1
Ramsay Diagnostics (No. 2) Pty Limited1
Ramsay Health Care (UK) Limited
Ramsay Health Care UK Finance Limited
Ramsay Health Care Holdings UK Limited
Ramsay UK Properties Limited
Linear Healthcare UK Limited
Independent British Healthcare (Doncaster) Limited
Ramsay Diagnostics Limited
Ramsay Health Care UK Operations Limited
Independent Medical (Group) Limited
Exeter Medical Limited
Ramsay Health Care (UK) No.1 Limited
Ramsay Health Care Leasing UK Limited
Ramsay Santé SA2
Capio AB
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Guernsey
France
Sweden
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
52.54%
52.54%
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
52.50%
52.50%
1 Entities included in the deed of cross guarantee as required for the instrument
2 Ramsay Santé SA (formerly Ramsay Générale de Santé SA) owns a number of subsidiaries, none of which are individually material to the Group
122
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
23 Closed group
This note presents the consolidated financial performance and position of the Australian wholly owned subsidiaries, which
together with the parent entity, Ramsay Health Care Limited, are referred to as the Closed Group.
Entities subject to instrument
Pursuant to Instrument 2016/785, relief has been granted to the entities in the table of subsidiaries in Note 22, (identified by footnote 1) from the
Corporations Act 2001 requirements for preparation, audit and lodgement of their financial reports.
As a condition of the Instrument, these entities entered into a Deed of Cross Guarantee on 22 June 2006 or have subsequently been added
as parties to the Deed of Gross Guarantee by way of Assumption Deeds dated 24 April 2008, 27 May 2010, 24 June 2011, 20 October 2015,
17 December 2015 and 14 May 2019. The effect of the deed is that Ramsay Health Care Limited has guaranteed to pay any deficiency in the
event of winding up of a wholly owned Australian entity or if they do not meet their obligations under the terms of overdrafts, loans, leases
or other liabilities subject to the guarantee. The controlled entities have also given a similar guarantee in the event that Ramsay Health Care
Limited is wound up or if it does not meet its obligation under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee.
The consolidated Income Statement and Statement of Financial Position of the entities that are members of the Closed Group are as follows:
Consolidated Income Statement
Profit from operations before income tax
Income tax expense
Net profit for the year
Retained earnings at the beginning of the year
AASB 16 Leases adjustment
Dividends provided for or paid
Retained earnings at the end of the year
Closed Group
2021
$m
2020
$m
564.2
(178.3)
385.9
1,467.0
-
(115.3)
1,737.6
428.1
(128.5)
299.6
1,557.1
(67.2)
(322.5)
1,467.0
Annual Report 2021
123
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
23 Closed group (Continued)
Consolidated Statement of Financial Position
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other current assets
Total Current Assets
Non-current Assets
Other financial assets
Investments in joint ventures
Property, plant and equipment
Right of use assets
Goodwill and Intangible assets
Deferred tax assets
Prepayments
Non-current receivables
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other creditors
Lease liability
Provisions
Derivative financial instruments
Income tax payable
Total Current Liabilities
Non-current Liabilities
Interest-bearing loans and borrowings
Lease liability
Provisions
Derivative financial instruments
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Treasury shares
Convertible Adjustable Rate Equity Securities (CARES)
Retained earnings
Other reserves
TOTAL EQUITY
124
Annual Report 2021
Closed Group
2021
$m
2020
$m
17.1
683.5
160.7
30.2
1,322.7
2,214.2
648.4
217.5
2,440.5
458.2
1,076.3
193.9
10.9
207.1
5,252.8
7,467.0
153.7
21.0
66.1
2.7
6.4
249.9
1,947.1
565.1
129.0
4.3
2,645.5
2,895.4
4,571.6
2,197.6
(76.7)
252.2
1,737.6
460.9
4,571.6
564.7
618.4
160.0
31.7
9.9
1,384.7
648.8
245.8
2,381.6
347.2
1,073.8
185.3
11.1
205.2
5,098.8
6,483.5
990.9
16.6
41.3
4.6
6.9
1,060.3
536.5
450.0
129.3
9.6
1,125.4
2,185.7
4,297.8
2,197.6
(78.2)
252.2
1,467.0
459.2
4,297.8
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION
RAMSAY HEALTH CARE LIMITED
24 Parent entity information
This note presents the stand-alone summarised financial information of the parent entity Ramsay Health Care Limited.
Information relating to Ramsay Health Care Limited
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Other equity
Total shareholders’ equity
Net profit for the year after tax
2021
$m
2020
$m
2,831.4
2,976.1
2.0
2.0
2,197.6
776.5
2,974.1
2,652.5
2,806.7
3.3
3.3
2,197.6
605.8
2,803.4
282.3
279.8
As a condition of the Instrument (set out in Note 23), Ramsay Health Care Limited has guaranteed to pay any deficiency in the event of
winding up of a controlled entity or if they do not meet their obligations under the terms of overdrafts, loans, leases or other liabilities subject
to guarantee.
25 Material partly – owned subsidiaries
This note provides information of the significant subsidiaries that the Group owns less than 100% shareholding in.
Ramsay Santé (formerly Ramsay Générale de Santé) has a material non-controlling interest (NCI): This entity represents the French and Nordic
segments for management and segment reporting.
Financial information in relation to the NCI is provided below:
Proportion of equity interest and voting rights held by non- controlling interests
Refer to Note 22 which discloses the equity interest held by the Ramsay Group. The remaining equity interest is held by the non
controlling interest.
Voting rights for Ramsay Santé at 30 June 2021 are 52.8% (2020: 52.1%). The remaining interest is held by the non-controlling interest.
Accumulated balances of non-controlling interests
Refer to the Consolidated Statement of Changes in Equity.
Profit allocated to non-controlling interests
Refer to the Consolidated Income Statement.
Summarised Statement of Profit or Loss and Statement of Financial Position for 2021 and 2020
Refer to Note 1. The French and Nordic segments consist only of this subsidiary that has a material non-controlling interest.
Summarised cash flow information
Operating
Investing
Financing
Net increase in cash and cash equivalents
2021
$m
2020
$m
872.3
(325.5)
(418.4)
128.4
988.1
(306.3)
(408.4)
273.4
Annual Report 2021
125
11.
INDEPENDENT AUDITORS' REPORT
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Annual Report 2021
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Independent auditor's report to the members of Ramsay Health Care Limited Report on the audit of the financial report Opinion We have audited the financial report of Ramsay Health Care Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its consolidated financial performance for the year ended on that date; and b) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. 11. INDEPENDENT AUDITORS' REPORT
RAMSAY HEALTH CARE LIMITED
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127
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Why significant How our audit addressed the key audit matter 1. Carrying value of goodwill As disclosed in Note 14 of the financial report and in accordance with the requirements of Australian Accounting Standards, the Group performed an annual impairment test of the Australian, UK, French and Nordics cash generating units (“CGUs”) to determine whether the recoverable value of these assets exceeds their carrying amount at 30 June 2021. A value in use model was used to calculate the recoverable amount of each cash generating unit (“CGU”). Significant assumptions used in the impairment testing referred to above are inherently subjective and in times of economic uncertainty caused by the COVID-19 pandemic, the degree of subjectivity is higher than it might otherwise be. This matter was considered a Key Audit Matter due to the extent of audit effort and judgement required to assess the reasonableness of the forecast cash flows, growth rates, discount rates and terminal growth rates used by the Group in undertaking the impairment review. Our audit procedures included the following: Assessed whether the methodology used by the Group met the requirements of Australian Accounting Standards. For the Group’s value in use models, we: Tested the mathematical accuracy of the models; Assessed the basis of preparing cash flow forecasts, considering the accuracy of previous forecasts and budgets, current trading performance and the impact of COVID-19; Assessed the appropriateness of other key assumptions such as the discount rates and terminal growth rates with reference to publicly available information on comparable companies in the industry and markets in which the Group operates; and Performed sensitivity analyses on the key assumptions and evaluated whether a reasonably possible change in these assumptions could cause the carrying amount of the cash generating unit to exceed its recoverable amount. We involved valuation specialists in performing these procedures where appropriate. We evaluated the adequacy of the related disclosures in the financial report including those made with respect to judgements and estimates. Why significant How our audit addressed the key audit matter 2. Provision for insurance As disclosed in Note 16(c) of the financial report, the insurance provision covers deductibles arising under insurance policies, including potential uninsured claims. Significant judgement is required in its determination due to the uncertainty in predicting future claims arising from past events. The Group engages a third-party actuary to assess the carrying value at each reporting date. This assessment involves evaluating assumptions in relation to ultimate outcomes on individual claims, claims handling costs and discount rates. This matter was considered a Key Audit Matter due to the level of judgement required to estimate the value of the liability. Our audit procedures included the following: Assessed the key assumptions adopted by the actuary and used by the Group to determine the value of the provision. Specifically, we have reviewed the assumptions compared to industry practice, potential known claims and actual historical claims. Assessed the competence, qualifications and objectivity of the independent actuary the Group used. As the appropriateness of these provisions relies on specific claims information, we have reviewed and tested controls over the operating effectiveness of the Group’s processes for capturing and recording the data. Evaluated the adequacy of the disclosures relating to the provision in the financial report, including those made with respect to judgements and estimates. Given the specialist nature of the calculation performed to value the provision, our actuarial specialists were involved in the assessment of the valuation model and key assumptions. 11. INDEPENDENT AUDITORS' REPORT
RAMSAY HEALTH CARE LIMITED
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Annual Report 2021
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2021 annual report 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. Auditor's responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 11. INDEPENDENT AUDITORS' REPORT
RAMSAY HEALTH CARE LIMITED
Annual Report 2021
129
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key auditmatters. 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 ReportOpinion on the Remuneration ReportWe have audited the Remuneration Report included in pages 36 to 57 of the directors' report for the year ended 30 June 2021.In our opinion, the Remuneration Report of Ramsay Health Care Limited for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. 11. INDEPENDENT AUDITORS' REPORT
RAMSAY HEALTH CARE LIMITED
130
Annual Report 2021
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 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 Douglas Bain Partner Sydney 24 September 2021 12.
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 10th September 2021.
a Distribution of Shareholders – Ordinary Shareholders
Size of Holding
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,0001 and over
Totals
Number of Shareholders
69,376
9,525
688
267
46
79,902
Ordinary Shares
18,202,912
18,671,530
4,661,290
5,910,243
181,419,572
228,865,547
% of Issued Capital
7.950
8.160
2.040
2.580
79.270
100.000
b Less than marketable parcels of ordinary shares
The number of shareholdings held in less than marketable parcels is 604 holders, for a total of 1,670 ordinary shares.
c 20 Largest Shareholders – Ordinary Shareholders
Name
PAUL RAMSAY HOLDINGS PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
3
4
5
6
7 WOOLWICH INVESTMENTS PTY LTD
8
9
10
11
12
13
14
15
16 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
17
18 MUTUAL TRUST PTY LTD
19
20
BNP PARIBAS NOMS PTY LTD
CUSTODIAL SERVICES LIMITED
ARGO INVESTMENTS LIMITED
CS THIRD NOMINEES PTY LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
CERTANE CT PTY LTD
NETWEALTH INVESTMENTS LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS (NZ) LTD
Total of Securities
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
Number of fully paid
Ordinary Shares
51,594,147
42,999,269
30,788,535
15,714,365
7,228,641
4,986,109
3,750,000
2,943,857
2,759,174
2,023,131
1,949,041
1,915,000
1,126,284
1,083,948
1,062,130
1,052,692
883,811
769,053
638,713
538,278
175,806,178
% of Issued Capital
22.542%
18.787%
13.452%
6.866%
3.158%
2.178%
1.638%
1.286%
1.206%
0.884%
0.852%
0.837%
0.492%
0.474%
0.464%
0.460%
0.386%
0.336%
0.279%
0.235%
76.811%
d Substantial Shareholders
The names of the Substantial Shareholders listed in the Company’s Register as at 10th September 2021:
Shareholders
Paul Ramsay Foundation Limited/Paul Ramsay Holdings
Pty Limited
Number of fully paid Ordinary Shares
% of Issued Capital
42,999,269
18.787
e Voting Rights
In accordance with the Constitution each member present at a meeting whether in person, or by proxy, or by power of attorney, or by a duly
authorised representative in the case of a corporate member, shall have one vote on a show of hands, and one vote for each fully paid ordinary
share, on a poll.
Annual Report 2021
131
12. ADDITIONAL INFORMATION
RAMSAY HEALTH CARE LIMITED
f On-market purchases
During the year ended 30 June 2021 the Company purchased NIL ordinary shares on-market for the purposes of its employee and Non
Executive Director share plans (including to satisfy the entitlements of holders of vested performance rights to acquire shares under the
Executive Performance Rights Plan).
g Distribution of Convertible Adjustable Rate Equity Securities (CARES)
Holders
Size of Holding
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,0001 and over
Totals
Number of CARES holders
3,656
246
17
12
3
3,934
CARES
1,097,627
491,196
113,849
321,754
575,574
2,600,000
% of Issued Securities
42.220
18.890
4.380
12.380
22.140
100.000
h Less than marketable parcels of CARES
The number of CARES held in less than marketable parcels is 2 holders, for a total of 4 CARES.
i 20 Largest CARES Holders
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
NETWEALTH INVESTMENTS LIMITED
LONGHURST MANAGEMENT SERVICES PTY LTD
CITICORP NOMINEES PTY LIMITED
FIRST SAMUEL LTD ACN 086243567 <
1
2
3
4 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5 MUTUAL TRUST PTY LTD
6
7
8
9
10
11 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
12
13
14
15
16
17
18
19
20
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
PERODA NOMINEES PTY LIMITED
DAP1000 PTY LTD
NULIS NOMINEES (AUSTRALIA) LIMITED
NAVIGATOR AUSTRALIA LTD
AGO PTY LTD
REGION HALL PTY LTD
BETH MACLAREN SMALLWOOD FOUNDATION P/L
CITICORP NOMINEES PTY LIMITED
Total Securities of Top 20 Holdings
Number of fully paid CARES
330,756
134,500
110,318
81,596
64,241
29,548
24,434
20,969
18,343
15,895
15,806
14,344
13,159
12,050
11,369
9,365
7,850
7,676
7,500
7,349
937,068
% of Issued Capital
12.721%
5.173%
4.243%
3.138%
2.471%
1.136%
0.940%
0.806%
0.706%
0.611%
0.608%
0.552%
0.506%
0.463%
0.437%
0.360%
0.302%
0.295%
0.288%
0.283%
36.041%
j On-Market Buy-Backs
There is no current on-market buy-back in relation to the Company’s securities.
132
Annual Report 2021
Support them so they can support you! The World Health Organization (WHO) declared 2021 as the “International Year of Health and Care Workers” appropriately recognising the work of all employees working both at the front line and those supporting that effort since the outbreak of the pandemic. Ramsay Health Care has chosen to celebrate this year by profiling our people every week across each region in thanks and recognition for the vital work they carry out every day. The cover of this report celebrates some of our extraordinary employees.Support them so they can support you! ramsayhealth.com