Home' Japara Healthcare Annual Report : Japara Healthcare Annual Report 2016 Contents Directors’ Report continued
5. Operating and financial review continued
Business strategies and prospects for future financial years continued
(i) Additional services
In FY2015 the Group introduced a suite of additional services that are available to its residents. Revenue from additional services has grown
year-on-year and is expected to generate further revenue growth from resident contributions as they access these services. These services
include hairdressing, pay TV, superior room furnishings, concierge services and various non-clinical therapy services and are now offered to all
residents including those who occupy the pre-reform ‘high care’ places in the Group’s existing portfolio. In addition, the majority of the Group’s
brownfield and greenfield developments will include additional service offerings once these are completed.
(ii) Cost reduction initiatives
The Group reviews each of its major supplier and service contracts as they come to the end of their term. Further costs savings are expected
as these supply and service contracts are re-tendered.
(iii) Occupancy levels
The Group has historically maintained high occupancy levels, and continues to target incremental improvement in occupancy across its
portfolio. A dedicated client services team works with the facility managers on a daily basis to maintain a close relationship with the Group’s
resident consumer base and referral network. Benchmarking occupancy levels across the Group and amongst its competitors is used for
strategic direction and initiatives.
The Group continues to provide care and services that are closely aligned with consumer demands and is proactive in strategic marketing
activities to ensure the Group’s high occupancy objective is met. In addition, the Group’s growth strategy is targeted towards undersupplied
regions, as identified by its internal research team, which helps support high occupancy levels across the Group.
(iv) RAD/DAP funding
The Group has received strong net RAD inflows during the year totalling $54.9 million. Further new capital is anticipated to be received
from new RADs linked to newly delivered operational places, as well as RAD uplift emanating from the existing portfolio. Specifically, the
Group’s portfolio comprises a significant number of places that were previously licensed as ‘high care’ places and could not be charged an
accommodation bond. Since 1 July 2014, a large number of these places can now attract a RAD under the aged care reform. The capital
from RADs on these places was partly received in FY2015 and FY2016, and more is expected to be received over the next year.
Brownfield and greenfield developments
The Group’s current development program is to deliver over 900 new places to the market by the end of FY2019. In FY2016 the development of
30 new places and significant refurbishment of existing places at the Group’s Bayview facility in Carrum Downs, Victoria, was completed and
24 operational places were added to the portfolio upon the completion of the new 69 place facility at Trevu, South Australia. A further five
projects should be completed in FY2017.
The Group will utilise the 751 resident places that it was allocated during the Department’s 2014 and 2015 Aged Care Approvals Rounds to
meet its circa 900 place development program, with the balance to be obtained either transferred from its current facilities with non-operational
places (current non-operational places held: 228), from future Aged Care Approvals Rounds or by acquisition.
It is estimated that the brownfield and greenfield construction costs of future developments will be repaid by the RAD inflows received from
residents entering these facilities post completion.
During FY2016 and up to the date of signing this report, the Group has secured land for greenfield developments in Newport, Mt Waverley
and Rye in Victoria, and Belrose in New South Wales, and will continue to look for land in under-supplied areas in FY2017.
At the date of this report the following development projects are in the construction or planning phase:
• Kirralee, Ballarat, Victoria – 13 place extension and significant refurbishment, expected completion September 2016;
• George Vowell, Mt Eliza, Victoria – 34 place extension and significant refurbishment, expected completion October 2016;
• St Judes, Narre Warren, Victoria – 30 place extension and significant refurbishment, expected completion November 2016;
• Central Park, Windsor, Victoria – significant refurbishment of the entire facility, expected completion December 2016;
• Riverside, Launceston, Tasmania – 90 place new build expected to be completed May 2017;
• Kingston Gardens, Springvale South, Victoria – 56 place extension and significant refurbishment, expected to be completed in FY2018;
• Glen Waverley, Victoria – 60 place new build expected to be completed in FY2018;
• Rye, Victoria – 95 place new build expected to be completed in FY2018;
• Newport, Victoria – 120 place new build expected to be completed in FY2018;
18 Japara Healthcare Annual Report 2016
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