2017/18 has been a challenging year with us achieving our budgeted deficit from our operations.
Some of the challenges we have faced in the last 12 months have included continued reduced government funding with changes to the ACFI tool in residential care, as well as no indexation increase for this year coming for the ACFI tool. ACFI funds our staffing costs predominantly and so a no indexation increase from the Government makes it difficult to offset the recent Fair Work Australia decision to lift the minimum wage by 3.0% (which, by the way, is very well deserved for all our staff on the modern awards).
We have also experienced an unprecedented turnover in both our houses and beds (over 20 beds/houses changed hands in the past 12 months), as well as a delay in forecasted resident occupancy for our new serviced apartment project. We also were impacted by an entry contribution liability increase due to our recent revaluation of all our building stock.
The positive news to the delay in forecasted resident occupancy for our new serviced apartment project is that the 2018/19 financial year is looking very healthy with a significant number of accommodation retentions being accounted for in this current financial year. The entry contribution liability increase due to our recent revaluation of all our building stock has been offset by the recent valuations which showed an overall increase of $1M across all of our assets in both residential care and independent living.
From an industry perspective financially, new data released by independent industry analyst StewartBrown illustrated that 41% of residential aged care providers were making a loss at December 2017 compared with 31% in 2015-16 – and the situation is predicted to get even worse. We also have continued to be faced with increasing utility and hospitality costs over the past 12 months, and it appears that this is not getting any better into the future either.
As you can appreciate, these changes make it very difficult to manage a budget; however, as always, we soldier on and do our best. We as a Board acknowledge that we will always be confronted with the challenge of on the one hand being fiscally responsible but on the other hand being a Christian caring organisation always putting our residents first.
Previous Years Annual Reports