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5. Operating and financial review continued
Review of financial position continued
The Group maintains a minimum level of liquidity to ensure RADs/accommodation bonds are able to be refunded as required and its working
capital requirements are generally consistent throughout the course of a financial year with no significant variations. The Group's cash position
is expected to provide sufficient liquidity to meet the Group's current anticipated cash requirements.
Over time, the Group may seek additional funding from a range of sources to diversify its funding base to reduce reliance on the bank finance
market and to manage its exposure to interest rate risk.
Business strategies and prospects for future financial years
The Group is committed to maximising the value in its current portfolio of facilities through organic growth while maintaining a high level
of resident care and support in line with its ageing-in-place care model as described earlier in this report.
In addition to organic growth, the Group has an expansion strategy which centres on increasing the size of its aged care facility portfolio
through brownfield and greenfield developments and through acquisition of existing aged care facilities.
The Group is a supporter of reform that appropriately balances the community need for high-quality residential aged care and the sector's
financial sustainability. The Federal Government has identified the importance of the continuum of care model and the goal of enabling
a seamless transition between home and residential care for ageing residents. The Group seeks to build on current relationships with
complementary businesses and will look to develop relationships and opportunities across the care continuum in the medium term.
(i) Additional services
The Group has a suite of additional services that are available to its residents. Revenue from additional services continues to grow as take-up
levels improve 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. The majority of the
Group's brownfield and greenfield developments are being designed to enhance the level and availability of additional service offerings.
(ii) Cost reduction initiatives
The Group constantly reviews its supply and service contracts seeking improvements including efficiencies and cost savings without
compromising quality or service standards. It also continually refines its operations to identify improved and more efficient methods
(iii) Occupancy levels
The Group has historically maintained high occupancy levels and continues to target incremental improvement in occupancy across its
portfolio of facilities. A dedicated client services team supports the facility managers to maintain a close relationship with the Group's resident
consumer base and referral network. Benchmarked occupancy levels across the Group and its competitors are used for strategic direction
and improvements initiatives.
The Group continues to provide care and services that are closely aligned with consumer demands and is proactive in strategic marketing
and refurbishment activities to ensure high occupancy levels are maintained. In addition, the Group's development growth strategy is targeted
towards undersupplied areas, as identified by its internal research team, which helps support high occupancy levels across the Group.
(iv) RAD/DAP funding
The Group received strong net RAD inflows during the year totalling $55.7 million. Further new capital is anticipated to be received from RADs
linked to newly delivered operational places from brownfield and greenfield developments, as well as some RAD uplift emanating from the
Brownfield and greenfield developments
The Group's current development program is to deliver over 1,100 new places to the market by the end of FY2020. In FY2017, 124 new places
were delivered following the successful completion of four extensive brownfield projects in Victoria. Greenfield project Riverside Views, located
near Launceston, Tasmania, has recently been completed and will deliver 88 new places when commissioned in September 2017. The Group
has four projects currently under construction and another 12 projects within its pipeline at various stages of development. The Group owns
or has secured land sites for all its projects, with five land acquisitions made in FY2017 in optimal metropolitan locations across Victoria and
18 | Japara Healthcare Limited | Annual Report 2017
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