Radius Care Announces Record FY24 Result, Dividends Resumed
29 May 2024
Radius Care Announces Record FY24 Result, Dividends Resumed
Radius Residential Care Limited (NZX: RAD) today released its audited financial
statements for the year ended 31 March 2024, confirming another record operating
and financial performance and a strengthened balance sheet.
Key financial highlights:
Profit Before Tax of $3.6m, vs a loss of $(3.0m) in FY23.
EBITDAR per occupied bed
1
of $24.7k, 24% up on FY23.
Underlying EBITDA
1
of $20.9m, 47% up on FY23.
• Operating Cashflow of $14.1m, 249% up on FY23.
• AFFO
1
of $7.4m, 87% up on FY23.
• Net debt reduced by 26.5% to $73.5m, with no short-term debt remaining.
• Cash dividend of 0.70cps, with full imputation credits resulting in a gross
dividend of 0.97cps, paid on 16 May 2024.
“Radius Care provides essential and specialist healthcare services to the elderly
across New Zealand. Our laser focus on our core business has delivered profitable
growth, another year of industry leading results, and a strengthened balance sheet;
enabling the business to resume dividends.” said Brien Cree, Radius Care’s Executive
Chairman.
People
Andrew Peskett, Radius Care’s CEO, commented “Radius Care has over 1,700
exceptional people in our team, providing exceptional care to our residents. Our care
homes reached full staffing levels some time ago, and overall staff turnover has
reduced by 19% compared to the prior year. We continue to invest in our team, with
over 100 registered nurses having completed our “EPEC” internal leadership
programme”.
Business Performance
Mr Peskett said “the record operating performance was driven by a number of
factors:
1. Improved mix of higher-revenue hospital and specialist care residents.
2. Increased Accommodation Supplement revenue (+$1.9m vs FY23).
3. Cost out programme successfully implemented in early FY24, delivering
$1.3m in annual cost savings.
4. Strong resale gains at villages of $1.8m.
5. Growth in services beyond care, led by RConnect.”
1
These measures are non-GAAP (unaudited) financial measures. A reconciliation between
the financial statements and these measures is included in the Investor Presentation.
Financial Performance
Revenue increased 17% on the prior period to $171.2m.
Profit Before Tax was $3.6m, an improvement of $6.6m vs a Loss Before Tax of
$(3.0m) in FY23.
Radius Care’s key performance measure, pre-NZ IFRS16 Underlying EBITDA was a
record $20.9m compared to the previous record of $14.2m achieved for the
comparative period. Underlying EBITDA growth was driven by direct private
revenue paid by residents for non-government funded services and
accommodation supplement income increasing to $9.8m, up 24% from $7.9m in the
prior comparable period.
Underlying EBITDAR per bed was $24.7k in FY24 compared to $19.9k in FY23, and
continues to be significantly higher than the remainder of the industry. This key
performance metric demonstrates Radius Care’s ongoing ability to deliver profitable
performance in the sector.
AFFO of $7.4m was generated, 87% above the comparative period as higher
underlying income was partially offset by higher interest costs. Positive Cashflow
from Operations was $14.1m, another industry leading result.
Borrowings reduced significantly during the year, with a $26.5m reduction in Net
Debt as a result of the previously announced sale of Arran Court and increased
operating cashflow visible in AFFO. Radius Care recently confirmed the successful
refinancing of all remaining short-term debt, effective 28 March 2024. Following the
refinancing, 100% of Group borrowings are held with the ASB Bank, with an average
term of 2.8 years. This has reduced our overall financing costs, and we had $3.5m of
undrawn debt facilities as at 31 March 2024.
Dividend
A final dividend of 0.70 cents per share was declared for the FY24 year, carrying full
imputation credits which resulted in a gross dividend of 0.97 cents per share. The
dividend was paid on 16 May 2024.
The Board is targeting a return to the previous cycle of an interim dividend paid in
December and a final dividend paid in June.
Outlook
Radius Care expects continued growth in Underlying EBITDA and other metrics in
FY25.
ENDS
Media and Investor Contacts
Andrew Peskett
Chief Executive Officer
Phone: +64 21 747 363
Email: andrew.peskett@radiuscare.co.nz
Jeremy Edmonds
Chief Financial Officer
Phone: +64 22 650 9354
Email: jeremy.edmonds@radiuscare.co.nz
About Radius Care
Radius Residential Care Limited was founded in 2003 and provides essential
healthcare services to elderly New Zealanders. It operates in communities
throughout New Zealand, offering the full range of accommodation and care
options. Today, Radius Care operates 23 aged care facilities, of which it owns 12 and
leases 11. Four of the owned facilities also include retirement villages and Radius
Care’s online shop sells specialist assisted-living products. The company employs
over 1,700 people, including highly qualified healthcare staff who are committed to
providing the very best in nursing care, and has expanded its services, establishing
RConnect, a Nurse and Carer bureau and Home Care provider. Radius Care listed on
the NZX in December 2020. For more information visit radiuscare.co.nz or check out
our Facebook page @RadiusCareNZ.
---
Investor Presentation
F u l l Y e a r R e s u l t F Y 2 4
2FY24 Investor Presentation
Presenting
Today
Jeremy Edmonds
Chief Financial Officer
BA, BCom, CA
Andrew Peskett
Chief Executive Officer
BA (Hons), LLB
3FY24 Investor Presentation
Agenda
Overview of FY24
Performance
Delivered record operating and financial
performance
Analysis of
Result
Record EBITDA and cashflow, demonstrating
our leadership in specialist care offerings
Industry Update
Industry headwinds have now substantially
passed
Positioning
Radius Care
Strategy update
AppendicesKey operational and financial metrics
Summary Profit and Loss, Balance Sheet and
Cash Flow
Radius Althorp - Tauranga
4FY24 Investor Presentation
About Radius Care
Radius Care is a leading provider of
essential healthcare services to elderly
New Zealanders in communities
across the country.
Radius Care is focused on the high
acuity and specialist care segment of
the market (being hospital, dementia,
psychogeriatric, physical and
intellectual care). In addition, Radius
Care also provides some in-home care
services.
The high acuity and specialist care
segment has the strongest expected
demand growth, the highest per Care
Bed EBITDA margins across the
industry and strong barriers to entry.
Radius Care’s offering provides
specialised healthcare, as opposed to a
focus on property development.
Home Based
Support
Retirement
Village
Hospital care
Dementia
and other
specialist
care*
Radius Care
Retirement Village
Radius Shop &
Home Care
Rest home
care
Radius Care Aged Care
High acuity and specialist care
Low acuity
Lowest level of
assessed care
Highest level of
assessed care
Specialist care for
dementia or other
specialist needs
Units
(including with some
level of assistance)
*Other specialist care includes psychogeriatric, physical and intellectual care
Our offerings in relation to the continuum of care
DHB assessed care and increasing acuity
Radius Althorp - Tauranga
Overview of
FY24 Performance
D E L I V E R E D S T R O N G
O P E R A T I N G P E R F O R M A N C E
A C R O S S T H E G R O U P
6FY24 Investor Presentation
FY24 Business Highlights
ANOTHER RECORD FULL YEAR PERFORMANCE
Strong Operating Performance
•Record full year trading with 47% increase in
Underlying EBITDA
1
.
•Strong resale gains at villages of $1.8m with
28 village unit sales.
•Improved mix of higher-revenue Hospital
and specialist care residents.
•Delivered $1.3m annual savings in support
office costs.
•Debt reduced due to improved operating
cashflow and successful sale of a non-
strategic asset.
•Dividends resumed.
Fully Staffed
•1700 exceptional team members delivering
exceptional care in our fully staffed care homes.
Value from Strategic Acquisitions
•Strong operating performance of Matamata Country
Lodge contributed to growth.
Favourable Industry Dynamics Will Underpin High
Occupancy and Growth
•Staffing: Covid and immigration associated nursing
shortages are now behind us.
•Interest costs: Inflation easing and interest costs
stabilised.
1.Earnings before interest, tax, depreciation and amortisation. Underlying EBITDA is a non-GAAP (unaudited) financial
measure which is reconciled to GAAP measures included within the Appendices of this Investor Presentation.
7FY24 Investor Presentation
FY24 Financial Highlights
Financial Performance
•Underlying EBITDA $20.9m, 47%
up on FY23
•Operating Cashflow of $14.1m, up
249% from $4.0m in FY23.
•AFFO
1
of $7.4m, up 87% from
$4.0m in FY23.
•Underlying EBITDAR
2
(for the 12
months to 31
st
March 2024) per
care bed of $24.7k, up 24% from
FY23.
•Accommodation supplements
increased 24% to $9.8m.
•Dividends resumed with FY24
dividend of 0.70 cents per share,
including full imputation credits
of 0.27 cents per share, paid on
16
th
May 2024.
Balance Sheet Position
•Total assets of $334.7m.
•Investment properties
of $73.5m, up $3.4m
from FY23.
•Net Debt of $73.5m,
down $26.5m from FY23.
•No short term
borrowings.
1.Available Funds From Operations is a non-GAAP (unaudited) financial measure which is reconciled to GAAP measures included within the Appendices of this Investor Presentation.
2.Earnings before interest, tax, depreciation, amortisation and rent. Underlying EBITDAR is a non-GAAP (unaudited) financial measure.
8FY24 Investor Presentation
Our People
Employee engagement up significantly on a year ago.
60% of Facility Managers were promoted from within
Radius Care.
Last five audits have achieved the maximum four years
certification, with two more expected (pending
confirmation).
Over 100 Registered Nurses have completed our “EPEC”
internal leadership programme.
27% year-on-year reduction in Registered Nurse turnover
and a 19% reduction in turnover of all staff.
Radius Althorp - Tauranga
9FY24 Investor Presentation
Radius St Helenas
Analysis ofResult
R E C O R D E B I T D A A N D C A S H F L O W
D E M O N S T R A T I N G O U R L E A D E R S H I P
I N S P E C I A L I S T C A R E O F F E R I N G S
10FY24 Investor Presentation
Financial Performance Overview
Continued strong
occupancy, improved
Hospital bed mix and
successful execution of
business improvement
programme have
materially lifted
Underlying EBITDA.
$m
10.7
14.2
20.9
0.0
5.0
10.0
15.0
20.0
25.0
FY22FY23FY24
Underlying EBITDA
Underlying EBITDA of $20.9m, up 47% vs pcp
19.919.9
24.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
FY22FY23FY24
Underlying EBITDAR per Care Bed
1
Market leading returns
$000
1.Underlying EBITDAR for aged care segment divided by the average number of care beds occupied during the period.
11FY24 Investor Presentation
Strong Revenue Growth
6.8
7.9
9.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
FY22FY23FY24
Accommodation Supplements
$m
133.4
146.3
171.2
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
$m
FY22FY23FY24
Total Revenue
1
FY24 total revenue of $171.2m up 17% vs pcp
1.Total revenue excludes other income.
Continued strong
occupancy, improved
Hospital and Specialised
Care bed mix and strong
growth in
Accommodation
Supplements have
contributed to total
revenue growth of 17%.
12FY24 Investor Presentation
Dividends and AFFO
$m
4.2
4.0
7.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
FY22FY23
FY24
AFFO of $7.4m, up 87% on the $4.0m earned in FY23.
Available Funds From Operations ($m)
Dividends
FY24 final dividend of 0.70 cents per share, including
full imputation credits of 0.27 cents per share, was
paid on 16 May 2024.
The payout ratio for the dividend is 27% of FY24 full
year AFFO, which is below the target payout ratio of
50% to 70% of AFFO, due to the priorities earlier in
FY24 of repaying debt and strengthening the balance
sheet.
13FY24 Investor Presentation
65%
100%
0%
20%
40%
60%
80%
100%
FY23FY24
Balance Sheet and Net Debt
97.7
75.9
100.1
73.5
0.0
20.0
40.0
60.0
80.0
100.0
120.0
FY23FY24
$m
Drawn DebtNet Debt
Drawn Debt & Net Debt% of Debt Term > 2 years
$3.5m in available headroom with average term of 2.8 years
14FY24 Investor Presentation
One-off Deferred Tax Adjustment
Government Decision to Remove Tax Deductability
of Depreciation on Commercial Buildings
•On 28 March 2024, the NZ Government legislated the
removal of tax deductibility of depreciation on
commercial buildings, with effect from the year ended
31 March 2025.
•Following this change, NZ IAS 12 requires recognition
in FY24 of a one-off, non-cash deferred tax liability of
$11.3m.
•No additional FY24 Income Tax is payable as a result of
the change in legislation.
•ASB has excluded this deferred tax adjustment from
banking covenants.
•Without this non-cash, one-off impact, Net Profit After
Tax is $2.9m, representing a return to profitability
following the Net Loss After Tax of $2.1m in FY23.
Radius Althorp - Tauranga
15FY24 Investor Presentation
Radius St Helenas
Industry update
Radius Taupaki Gables - Auckland
16FY24 Investor Presentation
Supply shortfall
2
▪Supply growth in New Zealand has been
modest
▪Projected demand for aged residential care
beds is forecast to increase from c.40,000 to
c.44,000 beds by 2027 and c.54,000 by 2032
30,000
40,000
50,000
60,000
70,000
80,000
90,000
20192022202520282031203420372040
Industry Update
New Zealand has three clear favourable long-run tailwinds that will underpin high occupancy and organic growth.
1.Source: Stats NZ.
2.Source: NZ Aged Care Association quarterly data on supply of beds; Te Whatu Ora ARC demand planner 2022 edition.
3.5-year Compounded Annual Growth Rate calculated over the September 2018-2023 period.
Aging population
1
▪NZ population aged >65 years forecast to grow
at 2.7% p.a over the next decade
▪NZ population aged >85 years forecast to grow
at 5.2% p.a over the next decade
Historical supply of beds vs forecast
demand for beds
New Zealand population growth (65 years+)
Illustrative linear projection of bed supply
assuming historical 5-year CAGR
3
Forecast demand for care beds
2
Historical
supply of
care beds
2
Shortfall
-
2.0%
4.0%
6.0%
2003200820132018202320282033
65-85 5-yr CAGR85+ 5-yr CAGR
Covid and immigration associated
staffing shortages
▪First operator to fill vacancies in 2023 once
immigration resumed post-Covid
▪Limited outbreaks, now effectively managed
▪RConnect has enhanced staffing optimisation:
oImproved internal staff redistribution
oAdditional revenue stream established as
RConnect acts as an external staffing
bureau to other operators
Permanent and long-term arrivals to NZ
1
Significantly
increased arrivals
post-Covid
-
5,000
10,000
15,000
20,000
25,000
Jan-19Jan-20Jan-21Jan-22Jan-23Jan-24
17FY24 Investor Presentation
Strategy
Update
Radius Althorp - Tauranga
18FY24 Investor Presentation
Strategy Update
Targeted M&A
Brownfield development
Greenfield development
Grow Scale
Grow RConnect
Expand Radius Shop
Expand health services
beyond core aged care
Strategic Pillar 1
Grow Scale
Diversify Revenue
Develop Radius Way as a
template for aged care
services
Strategic Pillar 1
Grow Scale
Radius Way
19FY24 Investor Presentation
Outlook
Radius Care expects continued growth in
Underlying EBITDA and other metrics in FY25.
The Board is targeting a return to the previous
cycle of an interim dividend paid in December
and a final dividend paid in June.
Radius Millstream - Ashburton
20FY24 Investor Presentation
Appendices
Radius Taupaki Gables - Auckland
21FY24 Investor Presentation
The Radius Care growth pipeline provides unique exposure to a high acuity, specialised care provider that remains committed to and focused
on delivering compassionate and outstanding clinical care outcomes.
With an absolute focus on our core business, Radius Care delivers industry leading metrics, including EBITDAR per bed.
Strong Portfolio for Changing Demographics
Demand underpinned by population
demographics
1
Portfolio oriented to high acuity and specialist care
2
1.Source: Statistics New Zealand.
2.Source: Ministry of Health audit reports as disclosed on Ministry of Health website –https://www.health.govt.nz/your-health/certified-providers/aged-care/ based on data as at 3 May 2024.
A P P E N D I X 1
Average additional offerings
(Psychogeriatric, Physical, Intellectual, Dementia) per care home
0.0%
2.0%
4.0%
6.0%
8.0%
2003200820132018202320282033
Rolling 5
-
year pop CAGR
65 - 85 5-yr CAGR85+ 5-yr CAGR
1.0
0.8
0.6
0.4
0.3
RadiusRYMARVOCASUM
22FY24 Investor Presentation
At a Glance
1,789
Care Beds
1,700+
Employees
148
ILUs
National aged care focused portfolio with strong regional presence,
owing 12 and leasing 11 of the 23 sites nationwide
A P P E N D I X 2
ILUs are Independent Living Units
23FY24 Investor Presentation
Key operational and financial metrics
Operating Metrics
FY24FY23FY22FY21
Number of Care Beds (period end)
1
1,7891,8891,7841,715
Average Care Bed Occupancy
2
91.8%91.8%92.5%92.4%
Underlying EBITDAR per Care Bed
3
(000s)$24.7$19.9$19.9$19.5
Number of Units (period end)
4
14814810176
Number of new Unit sales--46
Number of existing Unit resales28887
Realised gains on resales (m)$1.8$0.8$0.4$0.5
Realised development margins (m)--$0.1$0.3
Cash DMF realised upon resale (000s)$1,369$295$476$525
Average resale price (000s)$391$464$389$407
Average new unit sale price (000s)--$403$408
1.Comprises Care Beds occupied, available to be occupied or unavailable due to refurbishment.
2.Total occupied Care Bed days divided by total Care Bed days available during the year.
3.Pro forma Underlying EBITDAR for aged care (as set out in the lower right table) divided by
theaverage number of Care Beds occupied during the year.
Accommodation Supplements
FY24FY23FY22FY21
Accommodation Supplements Revenue
$9.8m$7.9m$6.8m$5.6m
Number of Care Beds (period end)
1
1,7891,8891,7841,715
Number of Available Care Beds with
Accommodation Supplements
1,2171,2871,1741,146
Percentage of Care Beds with
Accommodation Supplements
68.0%68.1%65.8%66.8%
•30% over three years
•average resident tenure is 4.3 years
4.Comprises Units occupied, available to be occupied
or unavailable due to refurbishment.
5.Total revenue excludes Other income.
DMF terms for Retirement Village units
A P P E N D I X 3
Revenue Split
$m
FY24FY23FY22FY21
Aged Care
166.0142.3130.6119.5
Retirement Village
3.82.82.01.6
Group support
1.41.20.81.2
Total revenue
5
171.2146.3133.4122.3
24FY24 Investor Presentation
($000)FY24FY23
Revenue
Revenue168,739144,467
Deferred management fees2,4951,801
Total revenue171,234146,268
Change in fair value of investment property2,703765
Government subsidy received-189
Interest income13667
Gain on acquisition of previously leased property assets-1,781
Gain on business acquisition-927
Total revenue and other income174,073149,997
Expenses
Employee costs(105,744)(93,097)
Depreciation expense(9,942)(9,979)
Finance costs(15,637)(12,479)
Loss on revaluation of land and buildings-(3,028)
Other expenses(39,151)(34,398)
Total expenses(170,474)(152,981)
Profit/(Loss) before income tax3,599(2,984)
Income tax refund/(expense) excl one off deferred tax(748)878
Profit/(Loss) for the year excl one off deferred tax adjustment2,851(2,106)
One off deferred tax adjustment(11,339)-
Profit/(Loss)for the year
(8,488)
(2,106)
•Revenue up 17% to $171.2m.
•Underlying EBITDA up 47% to
$20.9m.
•Underlying EBITDAR per Care Bed
up 24% to $24.7k.
•Profit Before Tax of $3.6m, vs a loss
of $(3.0m) in FY23.
Financials
Statement of
Comprehensive Income
A P P E N D I X 4
25FY24 Investor Presentation
($000)FY24FY23
Assets
Cash and cash equivalents2,350515
Trade and other receivables15,00213,071
Held for sale assets-891
Inventories554753
Current tax assets-1,321
Investment properties73,52870,143
Property, plant and equipment117,310133,870
Right-of-use assets109,906112,464
Intangible assets16,06319,797
Deferred tax assets-3,770
Total assets334,713356,595
Liabilities
Cash and cash equivalents (overdraft)-2,894
Trade and other payables19,99020,543
Current tax liabilities1,621-
Borrowings75,86997,687
Deferred management fees7,6086,973
Refundable occupation right agreements37,42534,104
Lease liabilities121,086121,530
Deferred tax liabilities6,682-
Total liabilities270,281283,731
Net assets64,43272,864
Equity
Share capital56,82056,813
Reserves9,5789,529
Retained earnings(1,966)6,522
Total equity64,43272,864
•Investment properties of
$73.5m, up $3.4m from FY23.
•Property, plant and equipment
of $117.3m, down $16.6m from
FY23 due to the sale of Arran
Court.
•Lease liabilities of $121.1m,
down from $121.5m in FY23.
•Net debt of $73.5m, a reduction
of $26.5m/26.5% vs prior year,
with $18.3m from Arran Court
and the remainder of $8.2m
from operating cashflow.
Financials
Statement of
Financial Position
A P P E N D I X 5
26FY24 Investor Presentation
Financials
Statement of Cash Flows
($000)FY24FY23
Cash flows from operating activities
Receipts from residents for care fees and village fees168,430140,699
Receipts of Government subsidy-1,269
Payments to suppliers and employees(147,285)(124,697)
Proceeds from the sale of Refundable Occupation Right Agreements10,9383,715
Payments for the repurchase of Refundable Occupation Right Agreements(4,072)(2,847)
Interest received13667
Interest paid – borrowings(9,388)(6,506)
Interest paid – lease liabilities(5,962)(5,934)
Income tax (expense)/benefit1,303(1,729)
Net cash provided by operating activities
14,100
4,037
Cash flows from investing activities
Proceeds from the sale of care home18,300-
Proceeds from the sale of property, plant and equipment9897
Acquisitions of subsidiaries, net of cash acquired-(500)
Payments for the purchase of property, plant and equipment(3,451)(58,681)
Payments for village developments(682)(53)
Net cash used in investing activities
15,156
(59,227)
Cash flows from financing activities
Proceeds from bankborrowings18,50056,169
Repayment of bank borrowings(40,318)-
Principal payments of lease liabilities(2,709)(2,554)
Dividends paid-(2,892)
Net cash provided by/(used in) financing activities(24,527)50,723
Reconciliation of cash and cash equivalents
Cash and cash equivalents at beginning of the year(2,379)2,088
Net (decrease)/increase in cash and cash equivalents held4,729(4,467)
Cash and cash equivalents at end of year
2,350
(2,379)
A P P E N D I X 6
27FY24 Investor Presentation
Financials
Underlying Earnings
and AFFO Calculation
A P P E N D I X 7
($000)FY24FY23
Net Profit Before Tax3,599(2,984)
Remove: Change in fair value of investment property(2,703)(765)
Remove: Gain on acquisition of previously leased properties-(1,781)
Remove: Gain on business acquisition-(927)
Remove: Loss on revaluation-3,028
Include: Realised gains on resales1,760796
Include: Realised development margins--
Remove: Depreciation expense9,9429,979
Remove: Interest Income(136)(67)
Remove: Interest Expense15,63712,479
Include: Pre-NZ IFRS 16 operating lease expense(8,671)(8,488)
EBITDA19,42811,270
Underlying Adjustments:
COVID-19 Adjustments1551,588
Arran Court509-
Other Adjustments8401,344
Underlying EBITDA20,93214,202
Net interest expense (bank and other loans)(9,539)(6,439)
Pre-NZ IFRS16 tax (expense)/benefit(1,340)18
Income tax impact from adjustments-(736)
Maintenance capital expenditure(2,610)(3,068)
AFFO7,4433,977
28FY24 Investor Presentation
Directory of care homes
A P P E N D I X 8
OWNED
FACILITYLOCATION
CARE
BEDS
UNITS
St HelenasChristchurch52-
Thornleigh ParkNew Plymouth87-
Lexham ParkKatikati63-
HeatherleaNew Plymouth55-
Taupaki GablesKumeu60-
Windsor CourtOhaupo76-
Elloughton GardensTimaru86-
Clare House Invercargill69-
Clare House VillageInvercargill-26
PeppertreePalmerston North62-
St JoansHamilton82-
Fulton HomeDunedin93-
Windsor Court VillageOhaupo-22
Elloughton Grange VillageTimaru-54
Matamata Country LodgeMatamata81-
Matamata Retirement VillageMatamata-46
Total owned866148
Average owned7237
TOTAL
FACILITYCARE BEDSUNITS
Leased923-
Owned 866148
TOTAL
1,789148
LEASED
FACILITYLOCATIONCARE BEDS
KensingtonHamilton96
Potter HomeWhangarei55
Rimu ParkWhangarei55
WaipunaAuckland86
Hampton CourtNapier45
BaycareNorthland45
MatuaTauranga149
AlthorpTauranga119
Millstream
1
Ashburton80
Millstream Apartments
1
Ashburton19
GlaisdaleHamilton80
HawthorneChristchurch94
Total leased923
Average leased77
•Average current lease term of 17.7 years.
•Average time to final expiry of 24.3 years.
29FY24 Investor Presentation
0%10%20%30%40%50%60%70%80%90%100%
FY24
FY24
32.1%
22.5%
14.8%
44.2%
44.4%
51.5%
15.5%
24.0%
11.2%
14.8%
10.4%
4.9%
2.9%
5.5%
0.3%
0.2%
0.8%
Rest HomeSwingHospitalDementiaPsychogeriatric & Other Non ORAPhysical and intellectual
Care Bed
Type
87% of the
portfolio are beds
certified for high
acuity and
specialist care
with significant
flexibility of care.
This aligns with
the sector
dynamics of
‘aging in place’
reducing the need
for rest home level
care and
increasing the
need for higher
acuity care.
1.Source: Te Whatu ORA ARC Quarterly Reporting Survey, September 2023.
Bed Mix
Care Bed
Use
A P P E N D I X 9
Industry
average
1
~85% of Radius Care beds are certified for high acuity
~78% high acuity and specialist
~67% of Radius Care Beds are used for high acuity
30FY24 Investor Presentation
Important Notice
and Disclaimer
This presentation has been prepared by Radius Residential Care Limited (“Radius Care”), for informational purposes. This disclaimer applies to
this document and the verbal or written comments of any person presenting it.
This presentation sets out information relating to Radius Care’s full year result for the period to 31 March 2024. As such, it should be read in
conjunction with the audited consolidated financial statements for Radius Care and its subsidiaries for the period ended 31 March 2024
(“Financial Statements”) and other material that Radius Care has released to NZX along with this presentation. That material is also available at
www.radiuscare.co.nz.
In certain sections of this presentation, Radius Care has chosen to present certain financial information exclusive of the impact of significant
items. A number of non-GAAP financial measures are used in this presentation which are used by management to assess the performance of
the business and have been derived from the Financial Statements. You should not consider any of these financial measures in isolation from, or
as a substitute for the information provided in the Financial Statements.
This presentation may contain forward-looking statements and projections. Such forward-looking statements are based on current expectations,
estimates and assumptions and are subject to a number of risks and uncertainties, including material adverse events, significant one-off
expenses and other unforeseeable circumstances. There is no assurance that results contemplated in any of these projections and forward-
looking statements will be realised. Actual results may differ materially from those projected. Except as required by law, or the NZX Listing Rules,
no person is under any obligation to update this presentation at any time after its release or to provide further information about Radius Care.
The information in this presentation has been prepared in good faith by Radius Care. Neither Radius Care nor any of its directors, employees,
shareholders nor any other person give any representations or warranties (either express or implied) as to the accuracy or completeness of the
information in this presentation and to the maximum extent permitted by law, no such person shall have any liability whatsoever to any person
for any loss (including, without limitation, arising from any fault or negligence) arising from this presentation or any information supplied in
connection with it.
This presentation is not a product disclosure statement or other disclosure document, or an offer of shares for subscription, or sale, in any
jurisdiction. The information in this presentation does not constitute financial product, legal, financial, investment, tax or any other advice or a
recommendation.
31FY24 Investor Presentation
Thank You
---
Financial
Statements
2024
The Consolidated Statement of Comprehensive Income should
be read in conjunction with the accompanying notes
.
CONSOLIDATED
Statement of Comprehensive Income
For the year ended
In thousands of New Zealand dollars
NOTE
31 March
2024
31 March
2023
REVENUE
Revenue2.1168,739144,467
Deferred management fees2.12,4951,801
Total revenue171,234146,268
Change in fair value of investment property3.12,703765
Government subsidy received — 189
Interest income13667
Gain on acquisition of previously leased property assets — 1,781
Gain on business acquisition — 927
Total revenue and other income174,073149,997
EXPENSES
Employee costs(105,744)(93,097)
Depreciation expense2.2(9,942)(9,979)
Finance costs2.2(15,637)(12,479)
Loss on revaluation of land and buildings — (3,028)
Other expenses2.2(39,151)(34,398)
Total expenses(170,474)(152,981)
Profit/(Loss) before income tax 3,599(2,984)
Income tax refund/(expense)5.1(12,087)878
Profit/(Loss) for the year(8,488)(2,106)
OTHER COMPREHENSIVE INCOME FOR THE YEAR
Items that will not be reclassified subsequently to profit and
loss
Revaluation of land and buildings, net of tax3.2 — 3,558
Income tax on other comprehensive income — (874)
Other comprehensive income for the year—2,684
Total comprehensive income/(loss)(8,488)578
EARNINGS PER SHARE
Basic and diluted earnings/(loss) per share (cents per share)4.2(2.98)(0.76)
2
Radius Care Financial Statements 2024
The Consolidated Statement of Changes in Equity should
be read in conjunction with the accompanying notes.
CONSOLIDATED
Statement of Changes in Equity
For the year ended 31 March 2024
In thousands of New Zealand dollars
NOTE
Contributed
Equity
Asset
Revaluation
Reserve
Other
Reserve
Retained
Earnings Total
BALANCE AS AT 1 APRIL 2023 56,813 9,496 33 6,522 72,864
Profit/(Loss) for the year — — — (8,488) (8,488)
Share based payments7—49— 55
Other comprehensive income for the year3.2 — — — — —
Total comprehensive income for the year 7 — 49 (8,488) (8,432)
Transactions with owners
Dividends paid4.1 — — — — —
Total transactions with owners — — — — —
BALANCE AS AT 31 MARCH 2024 56,820 9,496 82(1,966) 64,432
BALANCE AS AT 1 APRIL 2022 51,732 6,812 — 11,544 70,088
Profit/(Loss) for the year — — — (2,106)(2,106)
Share based payments——33— 33
Other comprehensive income for the year3.2 — 2,684 — — 2,684
Total comprehensive income for the year — 2,684 33 (2,106) 611
Transactions with owners
Issue of share capital (net of transaction
costs and tax)
4.1 5,057 — — — 5,057
Dividends paid4.1 24 — — (2,916)(2,892)
Total transactions with owners 5,081 — — (2,916) 2,165
BALANCE AS AT 31 MARCH 2023 56,813 9,496 33 6,522 72,864
3
Radius Care Financial Statements 2024
01.
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED
Statement of Financial Position
The Consolidated Statement of Financial Position should be read
in conjunction with the accompanying notes.
The Board of Directors of the Company authorised these consolidated financial statements for issue on29 May 2024.
For and on behalf of the Board.
Hamish Stevens
Chair, Audit and Risk Committee
Brien Cree
Chair, Board of Directors
As at
In thousands of New Zealand dollars
NOTE
31 March
2024
31 March
2023
ASSETS
Cash and cash equivalents2,350515
Trade and other receivables5.315,00213,071
Held for sale assets — 891
Inventories554753
Current tax assets — 1,321
Investment properties3.173,52870,143
Property, plant and equipment3.2117,310133,870
Right-of-use assets3.4109,906112,464
Intangible assets5. 16,06319,797
Deferred tax assets5.1—3,770
Total assets 334,713 356,595
LIABILITIES
Cash and cash equivalents (overdraft) — 2,894
Trade and other payables5.419,99020,543
Current tax liabilities1,621 —
Borrowings4.375,86997,687
Deferred management fees3.37,6086,973
Refundable occupation right agreements3.3
Lease liabilities3.4121,086121,530
Deferred tax liabilities5.16,682—
Total liabilities 270,281 283,731
NET ASSETS64,43272,864
EQUITY
Share capital4.156,82056,813
Reserves 4.19,5789,529
Retained earnings(1,966)6,522
Total equity 64,432 72,864
4
Radius Care Financial Statements 2024
CONSOLIDATED
Statement of Cash Flows
The Consolidated Statement of Cash Flows should be read
in conjunction with the accompanying notes.
For the year ended
In thousands of New Zealand dollars
31 March
2024
31 March
2023
Receipts from residents for care fees and village fees168,430140,699
Receipts of Government subsidy—1,269
Payments to suppliers and employees(147,285)(124,697)
Proceeds from the sale of Refundable Occupation Right Agreements10,9383,715
Payments for the repurchase of Refundable Occupation Right Agreements(4,072)(2,847)
Interest received13667
Interest paid - borrowings(9,388)(6,506)
Interest paid - lease liabilities(5,962)(5,934)
Income tax benefit/(expense)1,303(1,729)
Net cash provided by operating activities14,1004,037
Proceeds from the sale of care home18,300—
Proceeds from the sale of property, plant and equipment9897
Acquisition of subsidiaries, net of cash acquired—(500)
Payments for the purchase of property, plant and equipment(3,451)(58,681)
Payments for village developments(682)(53)
Net cash provided by/(used in) investing activities15,156(59,227)
Proceeds fromborrowings 18,500—
Repayments of borrowings(40,318)56,169
Principal payments of lease liabilities(2,709)(2,554)
Dividends paid—(2,892)
Net cash provided by/(used in) financing activities(24,527)50,723
Cash and cash equivalents at beginning of the year(2,379)2,088
Net (decrease)/increase in cash and cash equivalents held4,729(4,467)
Cash and cash equivalents at end of year2,350(2,379)
COMPRISING OF
Cash and cash equivalents2,350515
Cash and cash equivalents (overdraft)—(2,894)
Cash and cash equivalents at end of year2,350(2,379)
5
Radius Care Financial Statements 2024
01.
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended
In thousands of New Zealand dollars
31 March
2024
31 March
2023
RECONCILIATION OF PROFIT/(LOSS) FOR THE YEAR TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Profit/(Loss) for the year(8,488)(2,106)
ADJUSTMENTS FOR NON-CASH ITEMS
Depreciation9,9429,979
Share based payments5588
Net loss/(gain) on disposal of property, plant and equipment227(1)
Gain on acquisition of previously leased property assets—(1,781)
Fair value adjustment to investment properties(2,703)(765)
Movement in deferred tax10,452(860)
Gain on business acquisition—(927)
Loss on revaluation of land and buildings—3,028
CHANGES IN OPERATING ASSETS AND LIABILITIES
- Trade and other receivables and other assets(1,970)(3,157)
- Inventories20115
- Trade and other payables and other liabilities1257,132
- Current tax liabilities2,938(1,759)
- Refundable Occupation Right Agreements3,321(4,849)
Net cash provided by operating activities14,1004,037
The Consolidated Statement of Cash Flows should be
read in conjunction with the accompanying notes.
CONSOLIDATED
Statement of Cash Flows (continued)
6
Radius Care Financial Statements 2024
In thousands of New Zealand dollarsBorrowings
Lease
Liabilities
Total
BALANCE AS AT 1 APRIL 202397,687121,530219,217
- Proceeds from borrowings18,500— 18,500
- Repayment of borrowings and lease liabilities(40,318)(2,709)(43,027)
Total changes from financing cash flows(21,818)(2,709)(24,527)
Non-cash changes
- Remeasurements— 2,2652,265
Balance as at 31 March 202475,869121,086196,955
BALANCE AS AT 1 APRIL 202230,000142,543172,543
- Proceeds from borrowings56,169— 56,169
- Repayment of borrowings and lease liabilities— (2,554)(2,554)
Total changes from financing cash flows56,169(2,554)53,615
Non-cash changes
- Financing of the Matamata Business acquisition11,518— 11,518
- Remeasurements— 18,68518,685
- Disposals— (37,144)(37,144)
Balance as at 31 March 202397,687121,530219,217
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Changes in the carrying amount of such liabilities, which comprise bank borrowings and lease liabilities, are
summarised below.
CONSOLIDATED
Statement of Cash Flows (continued)
The Consolidated Statement of Cash Flows should be
read in conjunction with the accompanying notes.
7
Radius Care Financial Statements 2024
01.
CONSOLIDATED FINANCIAL STATEMENTS
Notes
TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
1.1. Basis of Preparation
Reporting Entity
The consolidated fi nancial statements are for Radius
Residential Care Limited (‘the Company’) and its
subsidiaries (together ‘the Group’).
The Group provides rest home and hospital care for the
elderly along with development and operation of integrated
retirement villages in New Zealand.
Statutory Basis and Statement of Compliance
Radius Residential Care Limited is a limited liability company,
incorporated and domiciled in New Zealand. It is registered
under the Companies Act 1993 and is a FMC Reporting
Entity in terms of Part 7 of the Financial Markets Conduct
Act 2013. The Company is listed on the NZX Main Board
("NZX"). The consolidated fi nancial statements have been
prepared in accordance with the requirements of the NZX,
and Part 7 of the Financial Markets Conduct Act 2013.
These consolidated fi nancial statements have been prepared
in accordance with Generally Accepted Accounting
Practice in New Zealand ('NZ GAAP'). They comply
with New Zealand equivalents to International Financial
Reporting Standards ('NZ IFRS'), International Financial
Reporting Standards ('IFRS') and other applicable New
Zealand Financial Reporting Standards, as appropriate for
for-profi t entities. The Group is a Tier 1 for-profi t entity in
accordance with XRB A1 Application of the Accounting
Standards Framework.
The consolidated fi nancial statements have been prepared
on a going concern basis, which contemplates continuity
of normal business activities and the realisation of
assets and the settlement of liabilities in the ordinary
course of business.
The balance sheet for the Group is presented on the liquidity
basis where the assets and liabilities are presented in the
order of their liquidity.
Functional and Presentation Currency
The consolidated fi nancial statements are presented in New
Zealand dollars which is the Group’s functional currency. All
amounts have been rounded to the nearest thousand, unless
otherwise indicated.
Measurement Basis
These consolidated fi nancial statements have been prepared
under the historical cost convention, with the exception
of investment properties (note 3.1) and land and buildings
included within property, plant and equipment (note 3.2)
Legislative Changes Impacting the Consolidated
Financial Statements
On 26 March 2024, the Government substantively enacted
legislation which removes the deductibility of depreciation
on commercial and industrial buildings for tax purposes.
E ective from 1 April 2024, the tax depreciation rate will
revert to 0%. The change in tax legislation e ective from 1
April 2024 eliminates the tax base for these assets, thereby
creating a temporary di erence that leads to a deferred
tax liability. The impact of this change has been recognised
in the Group’s consolidated fi nancial statements for the
year ended 31 March 2024, which includes a one-o non-
cash deferred tax liability of $11.3m with a corresponding
tax expense within the Statement of Comprehensive
Income.
Key Estimates and Judgements
The Board of Directors and Management are required to
make judgements, estimates and assumptions in applying
the accounting policies. The assumptions, estimates and
judgements applied are based on experience and relevant
information the Board and Management believe are
reasonable. Actual results may di er from the estimates,
judgements and assumptions made by the Board of
Directors and Management.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
and in any future periods a ected.
The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are
signifi cant to the consolidated fi nancial statements are
described in the following notes:
• Valuation of investment properties (note 3.1)
• Valuation of land and buildings (note 3.2)
• Impairment testing of right-of-use assets (note 3.4)
• Recognition of deferred tax assets and liabilities
(note 5.1)
• Impairment testing of goodwill (note 5.2)
New and Amended Accounting Standards and
Interpretations
All mandatory new and amended standards and
interpretations have been adopted in the current year. The
new and amended standards and interpretations that have
had an impact on the Group have been described below.
The Group has not early adopted any new standards,
amendments or interpretations to existing standards that
are not yet e ective.
8
Radius Care Financial Statements 2024
Climate-Related Disclosures
The XRB issued its fi rst climate disclosure standards in
December 2022. The standards are e ective for annual
reporting periods beginning on or after 1 January 2023.
These disclosures do not form part of the fi nancial
statements but are rather contained in a separate
standalone climate statement.
These standards a ect entities known as Climate Reporting
Entities (CREs), including:
• Large, listed companies with a market capitalisation of
more than $60 million
• Listed issuers of quoted debt securities with a combined
face value of quoted debt exceeding $60 million
• Large, licensed insurers, registered banks, credit unions,
building societies and managers of investment schemes
with more than $1 billion in assets
• Some Crown fi nancial institutions (via letters of
expectation).
CREs will be required to prepare an annual climate
statement that discloses information about the e ects of
climate change on their business or any fund they manage.
They will need to obtain independent assurance about the
part of the climate statement that relates to the disclosure
of greenhouse gas (GHG) emissions, generally in the second
year of reporting.
The new Climate Standards issued are:
• Aotearoa New Zealand Climate Standard 1: Climate-
related Disclosures (NZ CS 1)
This standard requires disclosures explaining how the
entity manages its climate-related risks and opportunities.
The disclosure requirements cover four key areas
(Governance, Strategy, Risk Management and Metrics and
Targets). Entities must obtain assurance over the GHG
emissions disclosures.
• Aotearoa New Zealand Climate Standard 2: Adoption of
Aotearoa New Zealand Climate Standards (NZ CS 2)
This standard provides optional disclosure exemptions
that entities may apply during the fi rst few periods of
climate reporting.
• Aotearoa New Zealand Climate Standard 3: General
Requirements for Climate-related Disclosures (NZ CS 3)
This standard includes the principles for climate-related
disclosures (such as relevance, accuracy, and verifi ability),
general requirements for how the information is disclosed,
and guidance on topics such as materiality and estimation
uncertainty.
The Group does not meet the requirements of being a
CRE due to the fact that in the two accounting periods
immediately preceding the accounting period for which the
Group is currently reporting (i.e. the year ended 31 March
2024), the Group did not have either quoted debt securities
at any time with a total face value that exceeded $60
million; or equity securities (whether quoted or not) of more
than $60 million as implied by its market price or fair value
as at the 31 March 2024 balance date.
The Group has however decided to voluntarily prepare
a climate statement as at 31 March 2024, which will be
released prior to the end of July 2024. Independent
assurance about the part of the climate statement that
relates to the disclosure of GHG emissions will not be
obtained in the fi rst year in line with the assurance
requirements of NZ CS 1.
Disclosure of Accounting Policies (Amendments to NZ
IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2)
Entities are now required to disclose their
‘material’ accounting policies instead of ‘signifi cant’
accounting policies.
The Group has adopted this new standard for the fi nancial
reporting period beginning 1 April 2023. The adoption
of this new standard did not have a fi nancial impact on
the Group’s fi nancial statements but has resulted in the
update of accounting policies disclosed in the Group’s
fi nancial statements.
Defi nition of Accounting Estimates (Amendments to
NZ IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors)
The Group has adopted this new standard for the fi nancial
reporting period beginning 1 April 2023. The adoption of
this new standard did not have a fi nancial impact on the
Group’s fi nancial statements or the accounting estimates
disclosed in the Group’s fi nancial statements.
Segment Reporting
The Group operates in one operating segment being
the provision of aged care in New Zealand. The chief
operating decision maker, the Board of Directors, reviews
the operating results on a regular basis and makes
decisions on resource allocation based on the review of
Group results and cash fl ows as a whole. The nature of
the services provided and the type and class of residents
have similar characteristics within the operating segment.
The Ministry of Health is a signifi cant customer of the
Group as disclosed in note 2.1, as the Group derives care
fee revenue in respect of eligible Government subsidised
aged care residents. No other customers individually
contribute a signifi cant proportion of the Group's revenue.
All revenue earned and assets held are in New Zealand.
1.2. Accounting Policies
Material accounting policies which are relevant to
understanding the consolidated fi nancial statements are
disclosed in each of the applicable notes. They have been
applied on a consistent basis across all periods presented
in these consolidated fi nancial statements.
One other relevant policy is provided as follows:
Measurement of Fair Value
For fi nancial reporting purposes, '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 (under current market conditions)
9
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
at the measurement date, regardless of whether that
price is directly observable or estimated using another
valuation technique.
When estimating the fair value of an asset or liability, the
Group uses valuation techniques that are appropriate in
the circumstances and for which su cient data is available
to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs. Inputs to valuation techniques used to measure fair
value are categorised into three levels according to the
extent to which the inputs are observable:
• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date.
• Level 2 inputs are inputs other than quoted prices
included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
• Level 3 inputs are unobservable inputs for the asset
or liability.
Further information about the assumptions made in
measuring fair values is included in notes 3.1, 3.2, 4.1 and 5.6.
1.3. Climate Change Risk
As an aged care and retirement village operator, the Group
recognises that climate change poses potential risks to its
operations and fi nancial performance. The Group operates
23 residential care facilities and homes (12 owned and 11
leased) and four retirement villages across New Zealand.
The Group acknowledges that extreme weather events,
such as fl ooding and storms, can occur in other areas and
could impact the value and condition of its owned and
leased properties. The Group has appropriate material
damage and business interruption insurance coverage in
place to mitigate potential risks. Additionally, the e ects of
climate change, including rising temperatures and increased
precipitation, may lead to changes in zoning regulations or
building codes, potentially a ecting the Company’s ability
to develop or renovate its properties.
The Group is also aware of the potential for climate
change to impact its supply chain and increase the costs
of essential goods and services, such as medical supplies,
food, and energy, which could have an adverse e ect on its
fi nancial performance. The Group is proactively identifying
and managing these risks by monitoring climate-related
developments and assessing their potential impacts on its
operations and fi nancial performance.
Furthermore, the Group recognises the potential impact of
climate change on its assets, including goodwill, property,
plant and equipment, investment properties, and right-
of-use assets. Climate-related factors, such as changes in
market conditions or regulatory requirements, could result
in impairment charges or adjustments to the carrying
amount of these assets.
The Group is committed to monitoring and reporting on
climate-related risks and opportunities in its fi nancial
statements and other public disclosures. The Group
acknowledges that climate change is an ongoing and
evolving issue and will continue to take appropriate
steps to identify and manage potential impacts on its
operations, fi nancial performance, and fi nancial assets.
1.4. Market Capitalisation
At balance date the market capitalisation of the Group
(being the 31 March 2024 closing share price, as quoted
on the NZX Main Board, multiplied by the number of
shares on issue) was below the carrying amount of the
Group’s net assets and shareholders’ funds. In considering
the di erence, the Group notes that over 86% (2023:
85%) of total assets at 31 March 2024 are either non-
fi nancial property assets carried at fair value 51% (2023:
52%) as assessed by the Group’s independent external
property valuers or nonfi nancial assets subject to annual
impairment assessment 35% (2023: 33%). The Group has
undertaken an assessment of the recoverable amount of
its assets/cash generating units. Management believes
that no reasonably possible changes in any of the above
key assumptions would cause the carrying value of the
non-fi nancial assets to be materially lower than their
recoverable amount.
10
Radius Care Financial Statements 2024
2. OPERATING PERFORMANCE
2.1. Revenue
Revenue from Contracts with Customers
Revenue from care and village fees and recoveries income
is recognised in accordance with NZ IFRS 15 Revenue
from Contracts with Customers (“NZ IFRS 15”). Deferred
management fees and rental income are considered leases
under NZ IFRS 16 Leases (“NZ IFRS 16”), and are therefore
excluded from the scope of NZ IFRS 15.
Care and Village Fees
The Group derives revenue from the provision of residential
care and related services. Rest home, hospital and service
fee charges (including accommodation supplements) are
governed by the individual care admission agreement
with each care resident. The resident incurs a daily
care fee charged per the agreement, as set by the
Government each year. Care fees are recognised net of any
rebates to residents.
The Group derives care fee revenue in respect of eligible
Government subsidised aged care residents who receive
rest home, dementia or hospital level care. Government
aged care subsidies received from the Ministry of Health/
Te Whatu Ora included in care fees and village services
amounted to $101.7m (2023: $89.7m).
There are no elements of variable consideration or
signifi cant fi nancing component associated with care and
village fees and recoveries income.
Village fees are detailed within each resident's Occupation
Right Agreement (ORA) and relate to the operating costs
of the village. Revenue is recognised based on the daily or
weekly fees charged, refl ecting the period a resident has
occupied a unit.
The performance obligation of providing the care and village
services is satisfi ed over time, as the resident simultaneously
receives and consumes the benefi ts of the service as it is
provided. Billing and revenue recognition are generally done
during the same period that the performance obligation is
satisfi ed. Payments received in advance are recorded on
the statement of fi nancial position as a contract liability and
subsequently recognised through profi t or loss when the
services are rendered.
For the year ended
In thousands of New
Zealand dollars
31 March
2024
31 March
2023
Rest home, hospital and
dementia fees
142,209 124,364
Accommodation
Supplements
9,795 7,931
Village service fees 1,173 793
Rental income 165 116
Other services
provided to residents
15,397 11,263
168,739 144,467
Deferred Management Fees
Occupation Right Agreements (ORAs) confer the right to
occupy a retirement unit and are considered leases under
NZ IFRS 16 Leases.
A management fee is payable by the residents of the
Group's independent living units for the right to share
in the use and enjoyment of common facilities. The
management fee is calculated as a percentage of the ORA
amount and accrues either daily, monthly or annually for a
set period, based on the terms of the individual contracts.
The current ORAs accrue management fees at rates
ranging from 6.67% to 10% per annum.
The management fee is payable in cash by the resident at
the time of repayment (to the resident) of the refundable
ORA amount due. The Group has the right to set o of the
refundable occupation right agreement amount and the
management fee receivable.
At year end, the management fee receivable that has yet
to be recognised through profi t or loss as management
fee revenue is recognised as a deferred management fee
liability in the statement of fi nancial position.
Key Accounting Estimates and Judgements
The deferred management fee represents the di erence
between the management fees receivable under the ORA
and the portion of the management fee accrued which
is recognised on a straight-line basis over the longer of
the term specifi ed in a resident’s ORA or the average
expected occupancy for the relevant accommodation i.e.
eight years for villas and three to four years for serviced
apartments and villas (2023: eight years for villas and
three to four years for serviced apartments).
11
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.2. Expenses
For the year ended
In thousands of New Zealand dollars
NOTE
31 March
2024
31 March
2023
DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
- buildings3.21,4241,286
- motor vehicles3.2115127
- furniture, fixtures and fittings3.22,7042,812
- information technology3.2718871
- medical equipment3.2159112
5,1205,208
DEPRECIATION OF RIGHT-OF-USE ASSETS
- buildings3.44,8224,771
4,8224,771
Total depreciation9,9429,979
FINANCE COSTS
- interest - bank and vendor financing9,6756,505
- interest - lease liabilities3.45,9625,974
Total finance costs15,63712,479
OTHER EXPENSES
Fees paid to Auditors
Audit and review of consolidated financial statements296271
Tax compliance services
3023
Total fees paid to auditor
326294
Care home operating expenses27,88525,012
Operating rental expenses relating to low value and short-
term leases
412
Directors' fees579408
Donations and sponsorships1225
Loss/(gain) on sale of property, plant and equipment243(1)
Other expenses (no items of individual significance)10,0658,658
Total other expenses39,15134,398
12
Radius Care Financial Statements 2024
3. PROPERTY ASSETS
3.1. Investment Properties
Accounting Policy
Investment properties include completed freehold land and buildings, freehold land and buildings under development
comprising retirement villages including common facilities, provided for use by residents under the terms of a Refundable
Occupation Right Agreements (ORA). Investment properties are held for long term yields and to generate rental income.
Investment properties are initially recognised at cost. After initial recognition, investment properties are measured at fair
value. Gains or losses arising from a change in the fair value of investment properties are recognised in profi t or loss.
Deferred management fees, are accounted for as described in note 2.1.
As at
In thousands of New Zealand dollars
NOTE
31 March
2024
31 March
2023
INVESTMENT PROPERTIES
Opening carrying amount70,14346,014
Acquisition of Matamata Retirement Village — 23,037
Net fair value gain2,703765
Occupation Right Agreements settled(9,158)(2,919)
Occupation Right Agreements entered9,1582,919
Purchases662327
Other adjustments 20 —
Closing carrying amount73,52870,143
A reconciliation between the valuation and the amount recognised on the Consolidated Statement of Financial
Position as investment properties is as follows:
Valuation of operator's interest 25,500 22,821
Refundable Occupation Right Agreements3.337,42534,104
Deferred management fees3.37,6086,973
Unsold/vacant units7503,850
Residential properties
2,2452,395
73,52870,143
Valuation Process and Key Inputs
The Group's investment properties are valued on an annual
basis. This year the valuations were undertaken by LVC
Limited (LVC), an independent valuer. LVC are registered with
the Property Institute of New Zealand, employs registered
valuers and has appropriate recognised professional
qualifi cations and recent experience in the location and
category of properties being valued.
The valuation of investment property are adjusted for cash
fl ows relating to refundable ORA payments and management
fees receivable recognised separately on the Consolidated
Balance Sheet and also refl ected in the valuation model.
Unsold Units
Any developed but not yet sold units (unsold units) are
valued based on recent comparable transactions, adjusted
for disposal costs, holding costs and an allowance for
profi t and risk. This represents the fair value of the Group's
interest in unsold units at reporting date.
Key Accounting Estimates and Judgements
As the fair value of investment properties is determined
using inputs that are signifi cant and unobservable, the
Group has categorised investment properties as Level 3
under the fair value hierarchy in accordance with NZ IFRS
13 Fair Value Measurement.
13
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Valuation Uncertainty
As at 31 March 2024
The Group’s four investment properties were revalued on 31 March 2024 and included a valuation uncertainty clause in
their valuation report, noting "The market over the past two years has been softening due to a combination of Government
lending controls, global supply issues, abnormally high infl ation and rapidly rising interest rates resulting in declining asset
values. Sales transaction volumes decreased signifi cantly with a disconnect between vendor expectation and the price
purchasers were prepared to pay. The O cial Cash Rate (OCR) was held in July, August, October, November 2023 and
February 2024 to 5.50%. There are still infl ationary pressures in the market while increases in the Banks cost of capital
is impacting fi xed rates. New Zealand is now in a recessionary state". Given the valuation uncertainty, the valuer has
recommended in their reports that the valuations of the properties be reviewed periodically, noting reliance cannot be
placed on their report beyond three months.
As at 31 March 2023
Refer to the published consolidated fi nancial statements for the year ended 31 March 2023 for further information on prior
year valuation uncertainty.
Signifi cant Unobservable Inputs
The signifi cant unobservable inputs used in the fair value measurement of the Group’s portfolio of completed investment
properties are the discount rate and the property growth rate.
The following assumptions have been used to determine fair value:
Significant InputDescription
Inter-relationship Between
the Key Inputs and Fair Value
Measurement
20242023
Discount
rate
Villas and
serviced
apartments
The pre-tax
discount rate
A significant increase/
(decrease) in the discount
rate would result in a
significantly (lower)/higher
fair value measurement.
15.5% -
19.0%
13.5% -
17.0%
Property price growth rate
Villas
Anticipated annual
property price
growth over the
cash flow period 0
- 4 years
A significant increase/
(decrease) in the property
price growth rate would
result in a significantly
higher/(lower) fair
value measurement.
0% - 2.5%0% - 3.0%
Serviced
apartments
0% - 2.5%0% - 2.5%
Villas
Anticipated annual
property price
growth over the
cash flow period
5+ years
A significant increase/
(decrease) in the property
price growth rate would
result in a significantly
higher/(lower) fair
value measurement.
2.25% -
2.50%
2.25% -
2.50%
Serviced
apartments
2.25%2.25%
Due to the valuation uncertainty disclosed, the range of reasonably possible changes to key assumptions is uncertain and
could be signifi cantly greater than the ranges used in the sensitivity analysis.
14
Radius Care Financial Statements 2024
Sensitivities
Adopted Value of
Operator’s Interest
Discount RateProperty Growth Rates
AS AT 31 MARCH 2024
+0.5%-0.5%+0.25%-0.25%
Valuation $NZ000's25,500
Difference $NZ000's(800)8501,150(1,000)
Difference %-3.1%3.3%4.5%-3.9%
AS AT 31 MARCH 2023
+0.5%-0.5%+0.25%-0.25%
Valuation $NZ000's22,821
Difference $NZ000's(900)1,000900(650)
Difference %-3.3%3.7%3.3%-2.4%
The occupancy period is a signifi cant component of the valuations. LVC consider the demographic profi le of the village (age
and gender of residents) and the average occupancy period depending on the type of unit and averages within the industry.
Subsequent changes in residents are then calculated based on the period of occupancy expected for each resident as at the
date of the valuation. An increase in the stabilised departing occupancy period will have a negative impact on the valuation
and a decrease in the stabilised departing occupancy will have a positive impact on the valuation. The valuation calculates
the expected cash fl ows with stabilised departing occupancy assumptions set out below.
Signifi cant Input
As at31 March 2024 31 March 2023
Stabilised occupancy period - villas8.0 yrs - 9.0 yrs8.0 yrs - 9.0 yrs
Stabilised occupancy period - serviced apartments4 yrs4 yrs
Current ingoing price, for subsequent resales of ORA’s, is a key driver of the LVC valuations. A signifi cant increase/(decrease)
in the ingoing price (as driven by the property growth rates) would result in a signifi cantly higher/(lower) fair value
measurement.
3.2. Property, Plant and Equipment
Accounting Policy
Freehold land and buildings are measured at revalued
amounts, less any subsequent accumulated depreciation
and any accumulated impairment losses. At each reporting
date the carrying amount of each asset is reviewed to
ensure that it does not di er materially from the asset's
fair value at reporting date. Where necessary, independent
valuations are performed and the asset is revalued to refl ect
its fair value.
Category
Useful Life
Range
- Buildings50 years
- Motor vehicles5 years
- Furniture, fixtures and fittings5 - 10 years
- Information technology4 years
- Medical equipment 7 years
Assets are assessed for impairment whenever events or
circumstances arise that indicate the asset may be impaired.
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. Impairment
losses in respect of individual assets are recognised
immediately in profi t or loss unless the asset is measured
at a revalued amount, in which case the impairment loss
is treated as a revaluation decrease and is recognised in
other comprehensive income to the extent that it does
not exceed the amount in the revaluation surplus for the
same asset.
Gains and losses on disposals are determined by
comparing the net disposal proceeds with the carrying
amount of the asset. These are included in the profi t
or loss.
Carrying Value of Assets at Historical Cost
The carrying amount at which both land and buildings
would have been carried had the assets been measured
under historical costs is as follows:
As at
In thousands of
New Zealand dollars
31 March
2024
31 March
2023
Land and buildings 91,322 106,399
Accumulated
Depreciation
(2,785)(1,735)
Total 88,537 104,664
15
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In thousands of
New Zealand dollars
Land and
Buildings
Motor
Vehicles
Furniture,
Fixtures
and
Fittings
Information
Technology
Medical
Equipment
Work in
ProgressTotal
YEAR ENDED 31 MARCH 2024
Opening net book value112,51035612,8061,7464506,002133,870
Additions—1131,8182024528683,453
Revaluation———————
Transfers168—25——(193)—
Disposals
1
(13,608)(7)(1,146)(107)(25)—(14,893)
Depreciation(1,424)(115)(2,704)(718)(159)—(5,120)
Closing net book value97,646 347 10,799 1,123 718 6,677 117,310
AS AT 31 MARCH 2024
Cost99,0041,47938,3066,5851,4566,677153,507
Accumulated Depreciation(1,358)(1,132)(27,507)(5,462)(738)—(36,197)
Net book value97,64634710,7991,1237186,677117,310
In thousands of
New Zealand dollars
Land and
Buildings
Motor
Vehicles
Furniture,
Fixtures
and
Fittings
Information
Technology
Medical
Equipment
Work in
ProgressTotal
YEAR ENDED 31 MARCH 2023
Opening net book value56,06629310,9992,1202894,07273,839
Additions53,0831963,4044192598,67166,032
Revaluation531 — — — — — 531
Transfers5,007 — 1,224 78 14(6,323)—
Disposals(891) (6)(9) — — (418)(1,324)
Depreciation(1,286)(127)(2,812)(871)(112)—(5,208)
Closing net book value 112,510 356 12,806 1,746 450 6,002 133,870
AS AT 31 MARCH 2023
Cost
2
112,5271,45938,0246,6671,0546,002165,734
Accumulated Depreciation(17)(1,103)(25,218)(4,921)(605)—(31,864)
Net book value112,51035612,8061,7464506,002133,870
1. On 16 January 2024, the Group disposed of one property for consideration of $19m. The funds from the transaction were subsequently used to repay bank
borrowings, refer to note 4.3.
2. The revaluation noted in the Statement of Comprehensive Income di ers from the above due to deferred tax.
16
Radius Care Financial Statements 2024
Valuation Uncertainty
As at 31 March 2024
The Group’s twelve properties included in land and buildings
were revalued on 31 March 2023 (refer below). Management
assessed that these freehold land and buildings have not
experienced any signifi cant and volatile changes in fair
value necessitating a revaluation as at 31 March 2024. This
assessment was informed by advice provided by the Group's
land and buildings valuer, LVC Limited (LVC) (who provides
valuation services to the Group) who provided a desktop
valuation report confi rming that the carrying amounts of
these freehold land and buildings did not di er materially
from that which would be determined using fair value as at
31 March 2023. LVC have noted reliance cannot be placed on
their report beyond three months.
As at 31 March 2024 the valuer of all twelve properties
has included a valuation uncertainty clause in their
desktop valuation report noting "The market over the
past two years has been softening due to a combination
of Government lending controls, global supply issues,
abnormally high infl ation and rapidly rising interest rates
resulting in declining asset values. Sales transaction volumes
decreased signifi cantly with a disconnect between vendor
expectation and the price purchasers were prepared to
pay. The O cial Cash Rate (OCR) was held in July, August,
October, November 2023 and February 2024 to 5.50%.
There are still infl ationary pressures in the market while
increases in the Banks cost of capital is impacting fi xed
rates. New Zealand is now in a recessionary state". Given the
valuation uncertainty, the valuer has recommended in their
reports that the valuations of the properties be reviewed
periodically, noting reliance can not be placed on their
report beyond three months.
As at 31 March 2023
Refer to the published consolidated fi nancial statements
for the year ended 31 March 2023 for further information on
prior year valuation uncertainty.
Key Accounting Estimates and Judgements
Property measurements are categorised as Level 3 (2023:
Level 3) of the fair value measurement hierarchy as the fair
value is determined using inputs that are unobservable.
Signifi cant Unobservable Inputs
The signifi cant unobservable input used in the fair value
measurement of the Group’s land and buildings is the
capitalisation rate applied to rentals. A signifi cant decrease/
(increase) in the capitalisation rate would result in
signifi cantly higher/(lower) fair value measurement.
Sensitivities
Adopted
Value
Capitalisation
Rate
As at 31 March 2023
Valuation $NZ000's112,510
+0.5%-0.5%
Difference $NZ000's(7,900)9,200
Difference %(7.1%)8.2%
3.3. Refundable Occupation Right Agreements
Accounting Policy
Occupation Right Agreements (ORAs) confer the right to
occupy a retirement unit and are considered leases under
NZ IFRS 16 Leases.
A new resident is charged a refundable security deposit,
on being issued the right to occupy one of the Group's
units, which is refunded to the resident subject to a new
ORA for the unit being issued to an incoming resident,
net of any amount owing to the Group. The Group has
a legal right to set o any amounts owing to the Group
by a resident against that resident's security deposit.
Such amounts include management fees, rest home
and hospital fees, service fees and village fees. As the
refundable occupation right is repayable to the resident
upon vacating the unit (subject to a new ORA for the
unit being issued to an incoming resident), the fair value
is equal to the face value, being the amount that can
be refunded.
The right of residents to occupy the investment properties
of the Group is protected by the Statutory Supervisor
restricting the ability of the Group to fully control these
assets without undergoing a consultation process with all
a ected parties.
A resident is charged a village contribution fee in
consideration for the right to occupy one of the Group's
units to a maximum of 30% of the entry payment.
Some residents may be charged an administration fee for
the right to occupy one of the Group’s units of between
3.45% and 4.0% of the entry payment.
The village contribution is payable by the resident on
termination of the ORA. Village contribution is recognised
as deferred management fees, note 2.1. The management
fee receivable is recognised in accordance with the terms
of the resident's ORA.
The deferred management fee represents the di erence
between the management fees receivable under the ORA
and the portion of the management fee accrued which
is recognised on a straight-line basis over the longer of
the term specifi ed in a resident's ORA or the average
expected occupancy for the relevant accommodation i.e.
eight years for villas and three to four years for serviced
apartments (2023: eight years for villas and three to four
years for serviced apartments).
The management fee recognised in the Consolidated
Statement of Comprehensive Income represents income
earned in line with the average expected occupancy.
As a refundable occupation license payment is repayable
to the resident upon termination (subject to a new
ORA being issued to an incoming resident), the fair
value is equal to the face value, being the amount that
can be demanded.
The expected maturity of the refundable obligations to
residents is beyond 12 months.
17
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at
In thousands of New Zealand dollars
NOTE
31 March
2024
31 March
2023
REFUNDABLE OCCUPATION RIGHT AGREEMENTS
Refundable occupation right agreements 52,572 47,7 72
Less: Management fee receivable (per contract)(15,147) (13,668)
Refundable Occupation Right Agreements 37,425 34,104
RECONCILIATION OF MANAGEMENT FEES RECOGNISED
UNDER NZ IFRS AND PER ORA
Management fee receivable (per contract)(15,147)(13,668)
Deferred management fees2.1 7,608 6,973
Management fee receivable (per NZ IFRS)(7,539)(6,695)
COMPRISING OF
Current deferred management fees1,9181,900
Non-current deferred management fees5,6905,073
Deferred management fees7,6086,973
3.4. Leases
Accounting Policy
Right-of-use Assets
Right-of-use assets are measured at cost (adjusted for
any remeasurement of the associated lease liability),
less accumulated depreciation and any accumulated
impairment loss.
Right-of-use assets are depreciated over the shorter of the
lease term and the estimated useful life of the underlying
asset, consistent with the estimated consumption of the
economic benefi ts embodied in the underlying asset.
Lease Liabilities
Lease liabilities are initially recognised at the present value
of the future lease payments (i.e., the lease payments that
are unpaid at the commencement date of the lease). These
lease payments are discounted using the interest rate
implicit in the lease, if that rate can be readily determined, or
otherwise using the Group's incremental borrowing rate.
Subsequent to initial recognition, the lease liability is
measured at amortised cost using the e ective interest rate
method. Interest expense on lease liabilities is recognised
in profi t or loss (as a component of fi nance costs). Lease
liabilities are remeasured to refl ect changes to lease terms,
changes to lease payments and any lease modifi cations not
accounted for as separate leases.
Variable lease payments not included in the measurement of
lease liabilities are recognised as an expense when incurred.
Leases of 12 Months or Less and Leases of Low Value Assets
Lease payments made in relation to leases of 12-months
or less and leases of low value assets (for which a lease
asset and a lease liability has not been recognised) are
recognised as an expense on a straight line basis over the
lease term.
Key Accounting Estimates and Judgements
Extension and termination options are included in a
number of leases across the Group. These terms are
used to maximise the operational fl exibility of contracts.
The majority of extension and termination options are
exercisable only by the Group and not by the respective
lessor. All extension options have been assumed for the
calculations of the Group's lease liabilities.
The weighted average incremental borrowing rates
applied by the Group is 5% (2023: 5%). No new leases
were entered into during the year (2023: none) and no
leases were cancelled or modifi ed during the year (2023:
four leases were cancelled and no leases were modifi ed).
18
Radius Care Financial Statements 2024
As at
In thousands of New Zealand dollars
31 March
2024
31 March
2023
(A) RIGHT-OF-USE ASSETS
Land and buildings under lease132,816130,552
Accumulated depreciation(22,910)(18,088)
Total carrying amount of right-of-use assets109,906112,464
RECONCILIATIONS
Reconciliation of the carrying amount of right-of-use assets at the beginning and end of the financial year:
Land and buildings
Opening carrying amount112,464133,912
Depreciation(4,822)(4,771)
Remeasurements2,26410,428
Disposals — (27,105)
Closing carrying amount109,906112,464
On 6 May 2022, the Group acquired four properties that were previously leased. The disposal of the related right-of-use
assets and lease liabilities resulted in a gain on modifi cation of $1.8m being recognised upon the cancelling lease and
derecognition of the related Lease liability and Right of Use asset.
(B) LEASE LIABILITIES
Current
Land and buildings 2,6702,428
Non-current
Land and buildings 118,416119,102
121,086121,530
For the year ended
In thousands of New Zealand dollars
31 March
2024
31 March
2023
(C) LEASE EXPENSES AND CASH FLOWS
Interest expense on lease liabilities 5,962 5,974
Depreciation expense on right-of-use assets 4,822 4,771
Cash outflow in relation to leases8,6718,488
(D) MATURITY ANALYSIS - CONTRACTUAL UNDISCOUNTED CASH FLOWS
- Not later than 1 year8,7028,536
- Later than 1 year and not later than 5 years34,34034,245
- Later than 5 years181,677186,242
224,719229,023
19
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. SHAREHOLDER EQUITY AND FUNDING
4.1. Shareholder Equity and Reserves
Accounting Policy
20242023
Shares$000Shares$000
SHARE CAPITAL
Authorised, issued and fully paid up capital 284,876,74256,820284,848,64456,813
Total contributed equity284,876,74256,820284,848,64456,813
MOVEMENTS
Opening balance of ordinary shares issued284,848,64456,813269,243,08951,732
Shares issued for the Matamata business
acquisition
——15,328,0195,000
Shares issued to employees and service
providers
28,098 7 188,385 57
Dividend reinvestment plan
——
89,151 24
Closing balance of ordinary shares issued
284,876,74256,820
284,848,64456,813
All ordinary shares are authorised and rank equally with one vote attached to each fully paid ordinary share. The shares have
no par value. The Group incurred no transaction costs issuing shares during the year (2023: Nil).
Dividends
Dividend distributions to shareholders are recognised as a liability in the period in which dividends are declared. On 22 April
2024 a fi nal dividend of 0.97 cents per share (fully imputed) was declared in relation to the year ended 31 March 2024 and
was paid on 16 May 2024. No dividends were declared during the year ended 31 March 2024.
20242023
Cents per
share
Total $000
Cents per
share
Total $000
RECOGNISED AMOUNTS:
Prior year final dividend——0.761,481
Interim dividend
——0.701,435
———2,916
Final dividend declared0.701,994——
Asset Revaluation Reserve
The asset revaluation reserve is used to record the revaluation of freehold land and buildings.
Other Reserve
Other reserve is used to record the reserves arising in relation to share based payments by the Group.
20
Radius Care Financial Statements 2024
4.2. Earnings per share
Basic and Diluted
Basic earnings per share is calculated by dividing the profi t
after tax of the Group by the weighted average number of
ordinary shares outstanding during the year. As at 31 March
2024, there were no shares with a dilutive e ect (31 March
2023: none) and therefore basic and diluted earnings per
share were the same.
For the year ended
In thousands of New
Zealand dollars
31 March
2024
31 March
2023
Profit/(Loss) after
tax
(8,488)(2,106)
Weighted average
number of ordinary
shares outstanding
('000s)
284,871277,045
Cents per share (2.98) (0.76)
4.3. Borrowings
Accounting Policy
Borrowings are initially recognised at fair value, including
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any di erence between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the Statement of Comprehensive
Income over the period of the borrowings, using the
e ective interest method.
As at
In thousands of New
Zealand dollars
31 March
2024
31 March
2023
SECURED LIABILITIES
Current
Bank Loans— 23,000
Vendor Loan— 11,518
Non-current
Bank Loans75,86963,169
75,86997,687
Terms and Conditions and Assets Pledged as Security
Current
$000
Non-
current
$000
Facility
Limit
$000
Effective
Interest
Rate
%
Expiry Date
31 MARCH 2024
ASB Facility - A — 16,500 20,000 7.801 November 2026
ASB Facility - B — 9,694 9,700 7.331 November 2026
ASB Facility - C — 14,500 14,500 7.301 November 2026
ASB Facility - D — 23,675 23,675 8.806 May 2027
ASB Facility - F — 11,500 11,500 8.6928 March 2027
— 75,869 79,375
31 MARCH 2023
ASB Facility - A — 20,000 20,000 5.601 November 2026
ASB Facility - B 15,000 — 15,000 5.286 October 2023
ASB Facility - B — 4,994 5,000 5.281 November 2026
ASB Facility - C — 14,500 14,500 4.981 November 2026
ASB Facility - D — 23,675 23,675 6.686 May 2027
ASB Facility - E 8,000 — 8,000 6.706 October 2023
Vendor Loan 11,518 — 11,518 8.0021 October 2023
34,518 63,169 97,693
21
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ASB Bank Limited Loans
Security
As at 31 March 2024, all group borrowings are held with ASB
Bank Limited (“ASB”).
The Group's ASB facility loans and the Corporate Banking
Overdraft Facility Agreement are guaranteed by Group
subsidiaries and secured by mortgages over the Group's
care centre freehold land and buildings. When the land
and buildings are classifi ed as investment property and
investment property under development, these mortgages
rank second behind the Statutory Supervisors’ interest.
As at 31 March 2024, the balance of the bank loans over
which the properties are held as security is $75.9m (31
March 2023: $86.2m). The total facility limit as at 31 March
2024 is $79.4m (31 March 2023: $86.2).
As at 31 March 2024, the Group has a Corporate Banking
Overdraft Facility Agreement with ASB for $2m (31 March
2023: $5m). This facility bears interest at an e ective
interest rate of 8.82% (31 March 2023: 6.28%). As at 31
March 2024, the overdraft was not drawn (31 March 2023:
$2.9m drawn).
All facilities are interest bearing and repayable on the expiry
date of the loan.
Financing Arrangements
Under the Group's bank loan arrangements with ASB,
the Group must comply with banking covenants. These
covenants are tested and reported to ASB on a quarterly
basis. During the year ended 31 March 2024, the Group
complied with all banking covenant requirements to which it
is subject (2023: complied with all). For the purposes of the
fi nancial covenants, the Group has agreed with ASB that the
calculation of Adjusted EBITDA (Earnings Before Interest,
Tax, Depreciation and Amortisation) and Net Interest shall
continue to be based on the accounting treatment in use
before the introduction and adoption of NZ IFRS 16 Leases
(2023: The same defi nition of adjusted EBITDA applied).
ASB Facility B and Facility E
On 17 January 2024, net proceeds of $18.3m from the sale
of a care home were applied to repay $8m of Facility E
and $10.3m of Facility B, representing the completion of
the debt management programme previously agreed with
ASB as previously disclosed in the consolidated fi nancial
statements for the year ended 31 March 2023. Following
repayment, ASB extended the expiry date of Facility B to 1
November 2026 (previously 31 January 2024). Facilities B
and E were originally established to enable settlement of
the four previously leased land and buildings property
assets, and were subsequently extended on 31 March
2023 and 29 September 2023 with a fi nal expiry date of
31 January 2024.
ASB Facility F
On 28 March 2024, ASB established a new loan facility
(Facility F), with a facility limit of $11.5m and an expiry
date of 28 March 2027. The facility was fully drawn on
the establishment date with funds applied to fully repay
the vendor loan of $5m and the MRFT Finance limited
loan of $6m which had been secured by assets acquired
with the Matamata business acquisition (acquired on 29
September 2022).
Vendor Loan
The vendor loan which related to the Matamata business
acquisition was fully repaid on 28 March 2024. On 3 May
2023, $1m was repaid (of the original balance of $11.5m),
and the interest rate was increased from 8% to 18%
e ective until the revised maturity date of 21 October
2023. Interest payments were split between 12% payable
monthly and 6% capitalised monthly. Before this loan
matured, $5.6m was repaid on 5 October 2023, and the
remaining balance of $5m was extended to 30 April 2024
at a reduced rate of 16%, payable monthly.
MRFT Finance Loan
The MRFT Finance Limited Loan was fully repaid on 28
March 2024. On 5 October 2023, a loan facility of $6m
was established with MRFT Finance Limited with an
expiry date of 30 March 2024, and an option to extend
initial expiry for three months. This facility was secured
by assets acquired in the Matamata business acquisition
with an interest rate of 12%, payable monthly. The facility
was fully drawn on 5 October 2023 with funds applied to
repay $5.6m of the Vendor loan plus capitalised interest.
Providence Trust Loan
On 15 May 2023, the Providence Trust, a related party
of Executive Director Brien Cree, agreed to lend the
Company $1m at 18% per annum. This was subsequently
repaid in full on 1 November 2023.
22
Radius Care Financial Statements 2024
5. OTHER DISCLOSURES
5.1. Income Tax
Accounting Policy
Removal of tax depreciation on commercial and industrial
buildings
From the 2020/21 tax year, the Group has been depreciating
its commercial and industrial buildings on a 2% diminishing
value basis or a 1.5% straight-line basis, following the
reinstatement of tax depreciation for buildings with a
useful life of 50 years or more as part of the government's
COVID-19: Economic Response Package. E ective from
1 April 2024, the tax depreciation rate will revert to 0%,
impacting the tax value of buildings held from the 2024/25
tax year onwards.
The Group recognises deferred tax on temporary di erences
at the tax rates expected to apply when these di erences
reverse, using the tax rates enacted or substantively enacted
at the balance sheet date. The change in tax legislation
e ective from 1 April 2024 eliminates the tax base of
commercial and industrial buildings, thereby creating a
temporary di erence that leads to a deferred tax liability.
This liability is recognised unless the initial recognition
exemption (IRE) under NZ IAS 12 applies, which precludes
the recognition of deferred tax on initial recognition of
an asset or liability in a transaction that is not a business
combination and at the time of the transaction a ects
neither accounting nor taxable profi t and is a non cash item.
Key Accounting Estimates and Judgements
Deferred Tax on Investment Property
Deferred tax on investment property is assessed on the
basis that the asset value will be realised through use (“Held
for Use”).
An initial recognition exemption has been applied to newly
developed village sites in accordance with NZ IAS 12 Income
Ta xe s.
The Group’s ORAs comprise two distinct cash fl ows (being
an ORA deposit upon entering the unit and the refund
of this deposit upon exit). In determining the tax base
of investment property, the Group considered whether
taxable cash fl ows are received at the end of the ORA
period (i.e. upon refund of the ORA deposit by way of set
o on exit by a resident) or at the beginning of the ORA
period (i.e. at time of the receipt of the ORA deposit). The
Group has carefully evaluated all the available information
and considers it appropriate to recognise and measure
the tax base and associated deferred tax based on the
taxable cash fl ows being receivable at the end of the ORA
period as this best represents the Group’s contractual
entitlement.
In calculating deferred tax under the Held for Use
methodology, the Group has made signifi cant judgements
to determine taxable temporary di erences. The carrying
value of the Group’s investment property is determined
on a discounted cash fl ow basis and includes cash fl ows
that are both taxable and non-taxable in the future. The
Group has recognised deferred tax on the cash fl ows with
a future tax consequence being DMF as provided by LVC,
to the extent that it arises from depreciable components
(i.e. buildings) of the investment property. The Group uses
the valuers valuations to estimate the apportionment of
cash fl ows arising from the depreciable (i.e. buildings) and
non-depreciable components (i.e. land).
Deferred Tax on Buildings
The impact of the removal of tax depreciation on
commercial and industrial buildings, which reduced the
tax base to nil creating a signifi cant taxable temporary
di erence for all of the Group’s care home buildings,
classifi ed as Property, Plant and Equipment, irrespective of
their date of acquisition. The recognition of this temporary
di erence as a deferred tax liability depends on whether
the buildings were acquired through business combination
and whether the initial recognition exception (IRE) in NZ
IAS 12 was previously applied.
23
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended
In thousands of New Zealand dollars
31 March
2024
31 March
2023
(A) COMPONENTS OF TAX EXPENSE
Current tax1,635(18)
Deferred tax10,452(860)
12,087(878)
(B) INCOME TAX RECONCILIATION
The prima facie tax payable on profit before tax is reconciled to the income
tax expense as follows:
Prima facie income tax payable on profit before tax at 28.0%1,008(836)
Permanent differences(264)(70)
Under provision for income tax in prior year853
Deferred tax impact from reversal of depreciation on buildings
1
11,339—
Other(81)25
Income tax expense attributable to profit12,087(878)
As at
In thousands of New Zealand dollars
31 March
2024
31 March
2023
(C) DEFERRED TAX
Deferred tax relates to the following:
Deferred tax assets
The balance comprises:
Lease liabilities33,90334,028
Provisions2,6962,091
Deferred management fee income1,1261,281
Tax losses604539
Total Deferred Tax Asset38,32937, 9 3 9
Deferred tax liabilities
The balance comprises:
Property, plant and equipment2,8982,679
Right-of-use assets30,77431,490
Deferred tax impact from reversal of depreciation on buildings11,339—
Total Deferred Tax Liability45,01134,169
Net deferred tax assets/(liabilities)(6,682)3,770
(D) DEFERRED INCOME TAX REVENUE COMPRISES:
Through profit included in income tax expense
Decrease/(Increase) in deferred tax assets(390)5,442
Decrease in deferred tax liabilities10,842(6,202)
Increase in deferred tax liabilities as a result of acquisition—(100)
10,452(860)
Through other comprehensive income
Increase in deferred tax liabilities—874
—874
24
Radius Care Financial Statements 2024
Deferred Tax Impact From Reversal of Depreciation on Buildings
On 26 March 2024, the Government substantively enacted legislation which removes the deductibility of depreciation on
commercial and industrial buildings for tax purposes. E ective from 1 April 2024, the tax depreciation rate will revert to
0%. The change in tax legislation e ective from 1 April 2024 eliminates the tax base for these assets, thereby creating a
temporary di erence that leads to a deferred tax liability (DTL). As part of recognising the DTL, a one-o tax expense of
$11.3m has been recognised within the year ended 31 March 2024.
Deferred tax assets are recognised for deductible temporary di erences as Management considers that it is probable that
future taxable profi ts will be available to utilise those temporary di erences.
For the year ended
In thousands of New Zealand dollars
31 March
2024
31 March
2023
(E) IMPUTATION CREDITS AVAILABLE FOR USE IN SUBSEQUENT PERIODS
Balance at the beginning of the year6,0166,735
Dividends paid—(1,134)
New Zealand tax payments, net of refunds1,012415
Balance at the end of the year7,0 2 86,016
• The post-tax discount rate applied in the calculations
was between 11.0% and 12.6% (2023: post-tax between
11.2% and 12.4%). The pre-tax discount rate applied in
the calculations was between 14.3% and 16.6% (2023:
pre-tax between 14.8% and 16.5%).
• The terminal growth rate applied in the calculations was
2.0% (2023: 2.0%).
• Occupancy projections vary between CGU based on
actual and expected occupancy rates.
Management believes that no reasonably possible
changes in any of the above key assumptions would cause
the carrying value of the goodwill to be materially lower
than its recoverable amount.
Care CGUs Recoverable Amount
The recoverable amount of the individual care sites as at
31 March 2024 has been determined based on fair value
less costs of disposal, determined using discounted cash
fl ows. As the recoverable amount of individual care sites
was determined using inputs that are signifi cant and
unobservable, the Group has categorised these inputs
as Level 3 under the fair value hierarchy in accordance
with NZ IFRS 13 Fair Value Measurement. The signifi cant
unobservable inputs used in the fair value measurement
of the recoverable amount of the Group's individual care
sites were as described above, year 1 to 5 forecast cash
fl ows, a pre-tax discount rate, a terminal growth rate and
occupancy projections based on actual and expected
occupancy rates.
• A signifi cant increase/(decrease) in the forecast cash
fl ows, terminal growth rate, and occupancy projections
and rates, assumptions would result in a signifi cantly
higher/(lower) fair value measurement.
• A signifi cant increase/(decrease) in the pre-tax
discount rate would result in a signifi cantly (lower)/
higher fair value measurement.
5.2. Intangible Assets
Goodwill
As at
In thousands of New
Zealand dollars
31 March
2024
31 March
2023
Goodwill at cost16,06319,797
Total16,06319,797
On 16 January 2024, the Group sold one care home in
West Auckland with associated goodwill of $3.7m. Further
information is described in note 3.2.
Key Accounting Estimates and Judgements
Goodwill is allocated to 20 (2023: 21) individual CGUs within
the residential care business (which are various individual
residential care and village businesses acquired by the
Group). Corporate o ce cash fl ows incurred by the Group
are allocated to each CGU based on bed numbers.
The recoverable amount of CGUs as at reporting date
has been determined based on their fair value less costs
of disposal, determined using discounted cash fl ows
that includes Management’s estimates based on past
performance and its expectation for the future performance
for up to fi ve years. These estimates are based on budgeted
projections of occupancy levels, sales growth and changes
to cost structures. Cash fl ows from performance thereafter
are estimated using a standard growth rate deemed to be
reasonable by Management.
The key assumptions used for discounted cash fl ows
calculations are as follows:
• The year one through fi ve of the forecast cash fl ows are
based on the budget approved by the Board of Directors
for year one, and forecast for subsequent years.
• The cash fl ow period used in the calculations was 5 years
(2023: 5 years).
25
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.3. Trade and Other Receivables
As at
In thousands of New Zealand dollars
31 March
2024
31 March
2023
CURRENT
Trade receivables12,33510,583
Allowance for credit losses(522)(489)
11,81310,094
NZX listing bond 75 75
Prepayments2,8162,629
Accrued Income298273
3,1892,977
15,00213,071
Recognition, Measurement and Judgements in Applying Accounting Policies
When measuring expected credit losses ('ECL') the Group uses reasonable and supportable forward looking information,
which is based on assumptions for future movement of di erent economic drivers and how these drivers will a ect each
other.
The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default
experience of the debtors and an analysis of the debtors' current fi nancial positions, adjusted for factors that are specifi c
to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the
current as well as the forecast direction of conditions at the reporting date.
The Group has the following fi nancial assets subject to the application of the expected credit loss model:
• Trade receivables from care operations for the provision of care fees revenue for rest home and hospital fees. These are
split between private amounts owed by residents and amounts due from agencies such as the Ministry of Health and
Accident Compensation Corporation.
• Trade receivables from village operations for the provision of weekly service fees and occupation licence payment
receivables. These are receivable from residents.
The following table provides information about the risk profi le of trade receivables from contracts with residents and
Government agencies using a provision matrix. The information in the below table does not distinguish between resident
or product types as the Group’s historical credit loss experience does not show di erent patterns for di erent resident or
product types.
12-month Expected Credit Losses
Days Past Due
Not Past Due31-6061-9091 and OverTotal
AS AT 31 MARCH 2024
Estimated total gross carrying amount at
default ($000)
7,8621,1097162,12611,813
Expected credit loss rate (%)0.2%0.3%1.8%23.0%4.4%
Expected credit loss rate ($000) 16 3 13 490 522
AS AT 31 MARCH 2023
Estimated total gross carrying amount at
default ($000)
7,1217606312,07110,583
Expected credit loss rate (%)0.2%0.3%1.9%22.3%5.2%
Expected credit loss rate ($000) 13 2 12 462 489
26
Radius Care Financial Statements 2024
5.4. Trade and Other Payables and Provisions
The Group's obligation with respect to employee's defi ned contributions entitlements is limited to its obligation for any
unpaid superannuation guarantee contributions at the end of the reporting period.
As at
In thousands of New Zealand dollars
31 March 202431 March2023
CURRENT
Unsecured trade and other payables
Trade creditors4,3124,281
GST payable1,1841,228
Other payables31309
Accrued expenses2,2512,596
Deferred government grants income—1,053
Provisions
Annual leave6,4006,156
Other employee entitlements5,8124,920
19,99020,543
5.5. Related Party Transactions
Subsidiaries
The following are the Group’s subsidiaries.
Name of EntityPrincipal Activities
Ownership
Interests and
Voting Rights
Class of
Shares20242023
Radius Arran Court LimitedDormant100%100%Ordinary
Radius Matamata
Retirement Village Limited
Operating entity for Matamata Retirement
Village
100%100%Ordinary
Radius SPV Limited
Property owning entity for
Matamata Country Lodge and Matamata
Retirement Village.
100%100%Ordinary
R Connect Limited
Staff placement company providing short
term staffing solutions
100%100%Ordinary
Clare House Retirement
Village Limited
Operating entity for Clare House Retirement
Village and property owning entity for the
Clare House care home
100%100%Ordinary
Clare House Care LimitedOperating entity for Clare House Care100%100%Ordinary
Windsor Lifestyle Estate
Limited
Operating entity for Windsor retirement village100%100%Ordinary
Radius Care
Limited (non-trading)
Dormant100%100%Ordinary
Elloughton Grange
Village Limited
Operating entity for Elloughton retirement
village
100%100%Ordinary
Radius Care Holdings
Limited
Property owning entity for St Helenas,
Thornleigh Park, Lexham Park, Elloughton
Gardens, Heatherlea, Windsor Court, Taupaki
Gables, Peppertree, St Joans and Fulton care
homes
100%100%Ordinary
27
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
All subsidiaries are incorporated in New Zealand and have a balance date of 31 March.
Key Management Personnel Compensation and Other Related Parties
Key management personnel are all executives and Directors with the authority for the strategic direction and management
of the Group.
Related PartyRelationship
Brien CreeDirector and Ultimate Shareholder (via Wave Rider Holdings Limited)
Duncan CookDirector and Shareholder
Bret JacksonDirector and Ultimate Shareholder (via Takatimu Investments Limited)
Mary GardinerDirector
Hamish StevensDirector and Shareholder
Wave Rider Holdings LimitedShareholder
Takatimu Investments LimitedShareholder
Cibus Catering LimitedCommon Director (Brien Cree)
Valhalla Capital LimitedCommon Director (Brien Cree)
Neil FosterShareholder
Warehouse Storage LimitedCommon Shareholder (Neil Foster)
Main Family TrustShareholder
Tom WilsonDirector and Shareholder
Time Capital NZ Limited Common Shareholder (Tom Wilson)
Providence TrustTrustee (Brien Cree)
28
Radius Care Financial Statements 2024
For the year ended
In thousands of New Zealand dollars
31 March
2024
31 March
2023
Directors' remuneration and expenses579416
Dividends to Director related entities—990
Key management personnel salaries and other short term employee benefits3,1322,806
Key management personnel dividends—4
Total Director and key management payments 3,7114,216
OTHER RELATED PARTIES
Catering services
- Cibus Catering Limited8,3327,084
Consulting fees
- Duncan Cook
1
237451
- Time Capital NZ Limited10—
Rent paid
- Warehouse Storage Limited 1,2391,040
Rent received and utility recharges
- Cibus Catering Limited8467
Personal guarantee fee
- Brien Cree171170
Business acquisition
- Main Family Trust
2
—17,018
Vendor loan interest
- Main Family Trust
2
1,312461
Related party loan interest
- Providence Trust109—
As at
In thousands of New Zealand dollars
31 March
2024
31 March
2023
Trade creditors
- Cibus Catering Limited70386
Trade debtors
- Cibus Catering Limited514
Borrowings
- Main Family Trust
2
—11,518
1. Predominately relates to services provided as Legal Counsel (2023: Predominately relates to services provided as Legal Counsel and services in respect of the UCG
transaction and Matamata business acquisition).
2. Related to the consideration for the purchase of the Matamata business acquisition during the 2023 fi nancial year.
29
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Assignment of an Agreement for the Purchase of
Land From a Director
Brien Cree (Director) and the Group are party to an
agreement ('the Assignment Agreement'), whereby Mr Cree
agreed to assign to the Group his rights under an agreement
for sale and purchase of real estate ('Land SPA'), to acquire
a circa 4.3 hectare development property at Main North
Road, Belfast, Christchurch (‘the development property’)
from an unrelated third party.
The purchase price under the Land SPA is $5.8m, of which
a non-refundable deposit of $300k was paid by Mr Cree
during the 2021 fi nancial year. On the date of settlement,
being 16 April 2021, the Group paid Mr Cree $700k of which
$400k was for the assignment of the agreement to purchase
the land and $300k for the reimbursement of the deposit.
A condition of the Assignment Agreement was approval
of the transaction by the Board of the Group by 2 April
2021. On 2 April 2021 the Board (excluding Mr Cree as
an interested director) exercised its right to approve the
Assignment Agreement and the Group now holds the rights
to acquire the development property.
The Board approved the Assignment Agreement on 2 April
2021 on the basis the Group had obtained:
• resource consent and funding for the development of an
integrated aged care home and retirement village on the
property; and
• an independent valuation had confi rmed that the
property’s fair value after resource consent exceeded the
purchase price of the property (including the additional
$400k consideration paid to Mr Cree).
The balance of the purchase price under the Land SPA
(amounting to $5.5m) is payable to the third party vendor
on settlement, which will be completed when the title of the
property is issued. It is currently expected that title will be
issued in early 2025 (2023: mid 2024). The balance of the
purchase price will be funded from unused debt facilities
and operating cash fl ow.
5.6. Long Term Incentive Plan (LTIP)
On 18 July 2022, the Board approved a new Long Term
Incentive Plan for its senior executives.
Performance Hurdles
All Performance Share Rights (PSRs) will vest into ordinary
shares in Radius if the 10-day Value Weighted Average
Price (VWAP), for the 10 trading days immediately prior to
(and not including) 18 July 2025, is equal to or greater than
$1.081. This is three times the 10-day VWAP of 18 July 2022
(“Base Price”).
If the 10-day VWAP is between $1.027 and $1.081 (being
95% and 100% of three times the Base Price), the Radius
Board has discretion to scale the number of a participant’s
PSRs that will vest.
Recognition and Measurement
• On 18 July 2022, 4,164,844 share rights were issued for
nil consideration and a nil exercise price in relation to
the LTIP.
• On 15 August 2022, 1,109,824 share rights were issued
for nil consideration and a nil exercise price in relation to
the LTIP.
During the period, 1,387,281 share rights were forfeited and
replaced by a new participant with the same number of
share rights on the same terms and conditions. No share
rights were exercised or expired during the period. The fair
value of the share rights were determined using the Monte
Carlo valuation approach.
30
Radius Care Financial Statements 2024
5.7. Financial Risk Management
The Group is exposed to the following fi nancial risks in the normal course of business:
a. Credit risk
b. Liquidity risk
c. Interest rate risk
The Board of Directors reviews and agrees on policies for managing each of these risks as summarised below:
As at
In thousands of New Zealand dollars
NOTE
31 March
2024
31 March
2023
FINANCIAL ASSETS
Amortised cost
Cash and cash equivalents2,350 515
Trade and other receivables5.311,81310,094
Total assets14,16310,609
FINANCIAL LIABILITIES
Amortised cost
Cash and cash equivalents overdraft—2,894
Trade and other payables5.47,7 7 88,414
Lease liabilities3.4121,086121,530
Borrowings4.375,86997,687
Refundable Occupation Right Agreements3.337,42534,104
Total liabilities242,158264,629
(a) Credit Risk
Credit risk is the risk that one party to a fi nancial instrument will cause a fi nancial loss for the other party by failing to
discharge an obligation.
The Group’s exposure to credit risk, or the risk of counterparties defaulting arises mainly from cash at bank, trade and other
receivables.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date, of recognised
fi nancial assets is the carrying amount of those assets, net of any provisions for impairment of those assets, as disclosed in
the consolidated statement of fi nancial position and notes to consolidated fi nancial statements.
The Group has no signifi cant concentrations of credit risk. The Group's trade receivables represent distinct trading
relationships with each of its residents and various Government agencies. The only large trade receivables relate to
residential care subsidies which are receivable in aggregate from various District Health Boards and Work and Income New
Zealand. These entities are not considered a credit risk.
The Group does not have any material credit risk exposure to any single counterparty or group of counterparties under
fi nancial instruments entered into by the Group.
(i) Cash Deposits and Other Receivables
Credit risk for cash deposits is managed by holding all cash deposits with high credit rating fi nancial institutions, i.e. major
registered New Zealand banks.
31
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ii) Trade Receivables
Credit risk with respect to trade receivables is limited due to the large number of customers which qualify for Ministry
of Health/Te Whatu Ora funding in relation to payment of our services. Amounts owed by the residents are generally
unsecured. Credit risk is managed through the use of admission agreements for all residents, which gives contractual rights
to the Group in relation to security and collection of debts in circumstances where there is no entitlement to Ministry of
Health/Te Whatu Ora funding. All admissions are reviewed to ensure a duly completed admission agreement is available. The
loss allowance for expected credit losses of trade receivables is provided in Note 5.3. As the Group undertakes transactions
with a large number of customers and regularly monitors payment in accordance with credit terms, the fi nancial assets that
are neither past due nor impaired, are expected to be received in accordance with the credit risk.
(b) Liquidity Risk
Liquidity risk is the risk that an entity will encounter di culty in meeting obligations associated with fi nancial liabilities.
The Group has liquidity risk with respect to its repayment obligations of fi nancial liabilities.
The Group maintains a rolling 90 day forecast of daily cash fl ows to ensure it will have su cient liquidity to meet its liabilities
as they fall due. This is linked to a monthly rolling forecast which provides directional liquidity expectations for a minimum of
a further twelve months.
The Group has a bank facility which is subject to certain covenant clauses, whereby it is required to meet certain key
performance indicators. This bank facility is provided by the ASB Bank. Refer to note 4.3 for further information on the
Group's banking facility and covenant compliance.
The following table outlines the Group's remaining contractual maturities for non-derivative fi nancial instruments. The
amounts presented in the table are the undiscounted contractual cash fl ows of the fi nancial liabilities allocated to time
bands based on the earliest date on which the Group can be required to pay.
In thousands of New Zealand dollars
Less than 1
Year
Between 1
and 2 Years
Between 2
and 5 YearsOver 5 Years
AS AT 31 MARCH 2024
Trade and other payables 7,7 78 — — —
Lease liabilities8,7028,70325,637181,677
Borrowings — — 75,869 —
Refundable Occupation Right Agreements
1
37,425———
53,9058,703101,506181,677
AS AT 31 MARCH 2023
Cash and cash equivalents (overdraft)2,894 — — —
Trade and other payables8,414 — — —
Lease liabilities8,5368,54925,695186,242
Borrowings 34,518 — 63,169 —
Refundable Occupation Right Agreements
1
34,104 ———
88,4668,54988,864186,242
1. The refundable ORAs are repayable to the resident on vacation of the unit or on the termination of the occupation right agreement and subsequent resale of the unit.
The expected maturity of the refundable ORAs is shown in note 3.3.
32
Radius Care Financial Statements 2024
c. Interest Rate Risk
The Group is exposed to interest rate risk in relation to its interest earning cash deposits and its interest bank borrowings.
Interest rate risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate as a result of
changes in market interest rates. The Group manages it interest rate risk by maintaining a mix of variable rate and fi xed rate
borrowings.
Interest rates on cash at bank are subject to market risk in the event of changes to its interest rates. Interest rates on
non-current bank borrowings are generally subject to review annually or at shorter intervals, and interest rates on current
borrowings can be reviewed at the lender's discretion.
The following table outlines the Group's exposure to interest rate risk in relation to future cash fl ows and the e ective
weighted average interest rates on classes of fi nancial assets and fi nancial liabilities:
In thousands of New Zealand dollars
Interest
Bearing
Non-interest
Bearing
Total Carrying
Amount
Weighted
Average
Effective
Interest Rate
As at 31 March 2024
FINANCIAL INSTRUMENTS
Financial assets
Cash2,350—2,3500.0% Fixed
Financial liabilities
Bank and other loans(75,869)—(75,869)7.95%
Lease liabilities(121,086)—(121,086)5.0% Fixed
(194,605)—(194,605)
As at a 31 March 2023
FINANCIAL INSTRUMENTS
Financial assets
Cash515—5150.0% Fixed
Financial liabilities
Cash and cash equivalents (overdraft)(2,894)—(2,894)6.28%
Bank and other loans(97,687)—(97,687)6.08%
Lease liabilities(121,530)—(121,530)5.0% Fixed
(221,596)—(221,596)
The interest rate on the Group’s bank loans is fi xed for a relevant ‘Interest period’ (being either 30, 60, 90 or 180 days) and
comprised of the Base Rate (equal to the BKBM on the fi rst day of the relevant Interest Period), plus a Margin and Line fee in
accordance with the Group’s agreement with the bank. The weighted average interest period term as at 31 March 2024 was
30 days (2023: 30 days).
No other fi nancial assets or fi nancial liabilities are expected to be exposed to interest rate risk.
33
Radius Care Financial Statements 2024
02.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Sensitivity
If interest rates were to increase/decrease by 100 basis points from the rates prevailing at the reporting date, assuming all
other variables remain constant, then the impact of profi t for the year and equity would be as follows:
For the year ended
In thousands of New Zealand dollars
31 March 202431 March 2023
+ / - 100 basis points
Impact on profit after tax(644)(977)
Impact on equity(180)(274)
5.8. Contingent Liabilities
Lester Heights Business
On 26 June 2013, the Group entered into an agreement to
sell the Lester Heights business. The sale was settled on
31 August 2013. One of the conditions of sale is that in the
event that the new business owner defaults on the rental
payments, the Group is required to guarantee the rent. No
amounts have been paid to date, but in the event that a
default occurs, the potential cost to the Group is an annual
rent of $286,210 (2023: $286,210) per annum until 2029.
The Group will likely assume operations at this facility, in the
event of a default. At reporting date, the Group has assessed
the likelihood of the new business owner defaulting on the
rental payment as not probable (2023: not probable).
Other
There were no other material contingent liabilities at
reporting date (2023:Nil).
5.9. Commitments
At 31 March 2024, the Group has a
commitment to undertake $0.03m of asset
development (2023: $0.4m).
There are no signifi cant unrecognised contractual
obligations entered into for future repairs and maintenance
at balance date.
At 31 March 2024, the Group is also has a $5.5m (2023:
$5.5m) commitment to acquire a 4.3 hectare development
property at Main North Road, Belfast, Christchurch
as described in note 5.5. Related Party Transactions
'Assignment of an Agreement for the Purchase of Land
From a Director'.
5.10. Events Subsequent to Reporting Date
Dividends
On 22 April 2024, the Board declared a fi nal dividend of
0.97 cents per share (grossed up for imputation credits),
that was paid on 16 May 2024.
Other
There has been no other matter or circumstance which
has arisen since 31 March 2024 that has signifi cantly
a ected or may signifi cantly a ect:
a. the operations, in fi nancial years subsequent to 31 March
2024, of the Group; or
b. the results of those operations; or
c. the state of a airs, in fi nancial years subsequent to 31
March 2024, of the Group.
34
Radius Care Financial Statements 2024
Level 9, 45 Queen Street, Auckland 1010 T: +64 9 309 0463
PO Box 3899, Auckland 1140 E: auckland@bakertillysr.nz
New Zealand W: www.bakertillysr.nz
35
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Radius Residential Care Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Radius Residential Care Limited and its subsidiaries ('the
Group') on pages 2 to 34, which comprise the consolidated statement of financial position as at 31 March 2024, and
the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the consolidated financial statements, including
material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at 31 March 2024, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with New Zealand Equivalents to International
Financial Reporting Standards ('NZ IFRS') and International Financial Reporting Standards ('IFRS').
Our report is made solely to the Shareholders of the Group. Our audit work has been undertaken so that we might
state to the Shareholders of the Group those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Shareholders of the Group as a body, for our audit work, for our report or for the opinions we have formed.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) ('ISAs (NZ)'). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with
Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International
Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board and
the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor, our firm carries out other assignments for Radius Residential Care Limited and
its subsidiaries in the area of taxation compliance services. The provision of these other services has not impaired
our independence.
35
Radius Care Financial Statements 2024
03.
INDEPENDENT AUDITOR'S REPORT
36
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current year. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter How our audit addressed the key audit matter
Impairment testing of goodwill
As
disclosed in Note 5.2 of the Group’s
consolidated financial statements, the Group has
goodwill of $16,1m (2023: $19.8m) allocated
across 20 (2023: 21) cash-generating units (‘CGUs’)
as at 31 March 2024.
Goodwill was significant to our audit due to the size
of the asset and the subjectivity, complexity and
uncertainty inherent in the measurement of the
recoverable amount of these CGUs for the purpose
of the required annual impairment test. The
measurement of a CGUs’ recoverable amount
includes the assessment and calculation of its ‘fair
value less costs of disposal’.
Management has completed the annual
impairment test for all CGUs as at 31 March 2024.
This annual impairment test involves complex and
subjective estimation and judgement by
Management on the future performance of the
CGUs, discount rates applied to the future cash
flow forecasts, the terminal growth rates, costs of
disposal and future market and economic
conditions.
Management has also engaged an external
valuation expert to assist in the annual impairment
testing.
Our audit procedures, among others, included:
Understanding and evaluating the Group’s internal controls relevant
to the accounting estimates used to determine the recoverable
value of the Group’s CGUs.
Evaluating Management’s determination of the Group’s CGUs
based on our understanding of the nature of the Group’s business
and the economic environment in which the segments operate. We
also analysed the internal reporting of the Group to assess how
CGUs are monitored and reported.
Evaluating the competence, capabilities, objectivity and expertise of
Management's external valuation expert and the appropriateness of
the expert's work as audit evidence for the relevant assertions.
Challenging Management’s assumptions and estimates used to
determine the recoverable value of the Group’s CGUs, including
those relating to forecasted revenue, costs, capital expenditure,
discount rates, by adjusting for future events and corroborating the
key market-related assumptions to external data.
Procedures included:
o Evaluating the logic of the ‘fair value less costs of disposal’
calculations supporting Management’s annual impairment test
and testing the mathematical accuracy of these calculations;
o Evaluating Management’s process regarding the preparation and
review of forecasts (balance sheet, income statement, and cash
flow statement);
o Comparing forecasts used in the calculations to Board approved
forecasts;
o Evaluating the accuracy of the Group’s forecasting to actual
historical performance;
o Evaluating the forecast growth assumptions;
o Evaluating the inputs to the calculation of the discount rates
applied;
o Engaging our own internal valuation experts to evaluate the logic
of the ‘fair value less costs of disposal’ calculations and the
inputs to the calculations of the discount rates applied;
o Evaluating the forecasts, inputs and any underlying assumptions
with a view to identifying Management bias;
o Evaluating Management’s sensitivity analysis for reasonably
possible changes in key assumptions; and
o Performing sensitivity analysis for reasonably possible changes
in key assumptions, the two main assumptions being: the
discount rate and forecast growth assumptions.
Evaluating the related disclosures (including the accounting policies
and accounting estimates) about goodwill assets in the Group’s
consolidated financial statements.
36
Radius Care Financial Statements 2024
37
Key Audit Matter How our audit addressed the key audit matter
Valuation of investment properties
As disclosed in Note 3.1 of the Group’s
consolidated financial statements, as at 31 March
2024, the Group has investment properties
(operated by the Group as retirement villages)
totalling $73.5m (2023: $70.1m) (referred to,
together as ‘the investment properties’).
Investment properties were significant to our audit
due to the size of the assets and the subjectivity,
complexity and uncertainty inherent in estimating
the fair value of the investment properties.
Management has engaged an independent external
valuer (‘the Valuer’) to determine the fair value of
the Group’s investment properties as at 31 March
2024. The Valuer performed their work in
accordance with the International Valuation
Standards and the Australia and New Zealand
Valuation and Property Standards, NZ IFRS 13 Fair
Value Measurement and NZ IAS 40 Investment
Property. The Valuer engaged by the Group has
appropriate experience in the sector in which the
Group operates.
For each investment property, the Valuer
considered property-specific information such as
the income generated by departures and the re-sale
of independent living units. They then applied
assumptions in relation to, the timing of unit re-
sale, the length of occupancy of existing residents,
the price paid by new residents, price movements,
type of Occupancy Right Agreement, discount rate,
growth rate and terminal yield. The Valuer also
considered the individual characteristics of each
village, its location, its nature, its resident profile
and the expected future cash flows for that
particular village.
The Group has adopted the assessed values
determined by the Valuer.
As at the 31 March 2024 valuation date, the Valuer,
has included a valuation uncertainty clause in their
valuation report noting "The market over the past
two years has been softening due to a combination
of Government lending controls, global supply
issues, abnormally high inflation and rapidly rising
interest rates resulting in declining asset values.
Sales transaction volumes decreased significantly
with a disconnect between vendor expectation and
the price purchasers were prepared to pay. The
Official Cash Rate (OCR) was held in July, August,
October, November 2023 and February 2024 to
5.50%. There are still inflationary pressures in the
market while increases in the Banks cost of capital
is impacting fixed rates. New Zealand is now in a
recessionary state". Given the valuation uncertainty,
the valuer has recommended in their reports that
the valuations of the properties be reviewed
periodically, noting reliance cannot be placed on
their report beyond 3 months.
Our audit procedures, among others, included:
Understanding and evaluating the Group’s internal controls
relevant to the accounting estimates used to determine the fair
value of the Group’s investment properties.
Reading and evaluating the external valuation reports for the
Group’s investment properties as at 31 March 2024.
Confirming that the valuation approaches for the investment
properties were in accordance with NZ IFRS 13 and NZ IAS 40, and
suitable for determining the fair value of the Group’s investment
properties as at 31 March 2024.
Evaluating the competence, capabilities, objectivity and expertise
of Management's external valuation expert and the
appropriateness of the expert's work as audit evidence relevant to
the valuation assertion.
Agreeing property-related data provided by Management to the
Valuer, to the Group’s records.
Engaging our own external property valuation expert to assist in
understanding and evaluating the following, based on their
specialist knowledge from performing and reviewing valuations of
similar properties, known relevant transactional evidence and
available market data:
o the work and findings of the Group’s external valuation
expert engaged by Management;
o the Group’s valuation methods and assumptions to assist us
in challenging the appropriateness of valuation methods and
assumptions used by Management; and
o the acceptable range of values considered reasonable to
evaluate Management’s adopted valuation estimate.
This involved discussing and corresponding with Management, the
Valuer engaged by the Group and our own external property
valuation expert.
Evaluating the selection of valuation methods, inputs and
assumptions with a view to identifying Management bias.
Evaluating the disclosures (including the accounting policies and
accounting estimates) related to the investment properties which
are included in the Group’s consolidated financial statements
(including disclosure on the valuation uncertainty clauses included
by Management's external valuation expert in their valuation
reports).
37
Radius Care Financial Statements 2024
03.
INDEPENDENT AUDITOR'S REPORT
38
Key Audit Matter How our audit addressed the key audit matter
Valuation of freehold land and buildings
As disclosed in Note 3.2 of the Group’s consolidated
financial statements, as at 31 March 2024, the Group
has freehold land and buildings (operated by the Group
for provision of care services) totalling $97.6m (2023:
$112.5m) (referred to, together as ‘the freehold land
and buildings’).
Freehold land and buildings were significant to our
audit due to the size of the assets and the subjectivity,
complexity and uncertainty inherent in estimating the
fair value of the freehold land and buildings.
Under the requirement of NZ IAS 16 Property, Plant and
Equipment, revaluations shall be made with sufficient
regularity to ensure that the carrying amount does not
differ materially from that which would be determined
using fair value at the end of the reporting period. The
frequency of revaluations depends upon the changes in
fair values of the items of property, plant and
equipment being revalued. When the fair value of a
revalued asset differs materially from its carrying
amount, a further revaluation is required. Some items of
property, plant and equipment experience significant
and volatile changes in fair value, thus necessitating
annual revaluation. Such frequent revaluations are
unnecessary for items of property, plant and equipment
with only insignificant changes in fair value. Instead, it
may be necessary to revalue the item only every three
or five years.
Management assessed that these freehold land and
buildings had not experienced any significant and
volatile changes in fair value necessitating a revaluation
as at 31 March 2024. This assessment was informed
by external desktop valuation report provided by the
Group’s land and buildings Valuer, who advised that the
carrying amounts of these freehold land and buildings
did not differ materially from that which would be
determined using fair value as at 31 March 2023.
For each freehold land and building property, the Valuer
considered property-specific information such as
capitalisation rates and earnings per care bed. The
Valuer also considered the individual characteristics of
each property, its location, and its nature.
As at the 31 March 2024 valuation date, the Valuer, has
included a valuation uncertainty clause in their
valuation report noting "The market over the past two
years has been softening due to a combination of
Government lending controls, global supply issues,
abnormally high inflation and rapidly rising interest
rates resulting in declining asset values. Sales
transaction volumes decreased significantly with a
disconnect between vendor expectation and the price
purchasers were prepared to pay. The Official Cash
Rate (OCR) was held in July, August, October,
November 2023 and February 2024 to 5.50%. There are
still inflationary pressures in the market while increases
in the Banks cost of capital is impacting fixed rates.
New Zealand is now in a recessionary state". Given the
valuation uncertainty, the valuer has recommended in
their reports that the valuations of the properties be
reviewed periodically, noting reliance cannot be placed
on their report beyond 3 months.
Our audit procedures, among others, included:
Understanding and evaluating the Group’s internal controls
relevant to the accounting estimates used to determine the fair
value of the Group’s freehold land and buildings.
Understanding and evaluating the Group’s internal controls
relevant to monitoring the progress of land and buildings
under development (including understanding and evaluating
actual costs incurred to date vs. budgeted at a project
milestone level, consideration of cost overruns and estimated
project completion timelines and costs).
Reading and evaluating the external desktop valuation reports
for the Group’s freehold land and buildings as at 31 March
2024 and external valuation reports as at the respective
valuation dates.
Evaluating the recoverability of each development by enquiring
with the Group’s key development / project personnel,
inspecting the Group’s internal and external reporting and
reading any external valuation reports or advice.
Confirming that the valuation approach for the properties is in
accordance with NZ IFRS 13 and NZ IAS 16, and suitable for
determining the fair value of the Group’s freehold land and
building properties as at 31 March 2024.
Evaluating the competence, capabilities, objectivity and
expertise of Management's external valuation expert and the
appropriateness of the expert's work as audit evidence
relevant to the valuation assertion.
Agreeing property-related data provided by Management to the
Valuer to the Group’s records.
Engaging our own external property valuation expert to assist
in understanding and evaluating the following, based on their
specialist knowledge from performing and reviewing
valuations of similar properties, known relevant transactional
evidence and available market data:
o the work and findings of the Group’s external valuation
expert engaged by Management;
o the Group’s valuation methods and assumptions to
assist us in challenging the appropriateness of valuation
methods and assumptions used by Management; and
o the acceptable range of values considered reasonable to
evaluate Management’s adopted valuation estimate.
This involved discussing and corresponding with
Management, the Valuer engaged by the Group and our own
external property valuation expert.
Evaluating the selection of valuation methods, inputs and
assumptions with a view to identifying Management bias.
Evaluating Management’s income tax calculations used to
determine the additional deferred tax liabilities and tax
expenses due to the removal of tax depreciation on
commercial buildings recognised as at reporting date.
This involved discussing and corresponding with
Management, examining advice provided by the tax
accounting expert engaged by the Group and our own internal
tax experts.
Evaluating the disclosures (including the accounting policies
and accounting estimates) related to the freehold land and
buildings and income tax which are included in the Group’s
38
Radius Care Financial Statements 2024
39
Key Audit Matter How our audit addressed the key audit matter
RReemmoovvaall ooff ttaaxx ddeepprreecciiaattiioonn oonn ccoommmmeerrcciiaall bbuuiillddiinnggss
From 1 April 2024, tax depreciation on buildings will be
0% and will apply from the first day of the 2024/25
income tax year (i.e. 1 April 2024 for the Group). The
change in tax legislation to remove depreciation
deductions had a significant impact on the Group. The
elimination of tax deductions for depreciation will
reduce the tax base of the Group’s building assets to
nil. The removal of the tax base created a significant
taxable temporary difference for all of the Group’s
freehold building assets. The recognition of this
temporary difference as a deferred tax liability
depended on the timing of acquisition, whether
deferred tax was previously not recognised due to the
application of the initial recognition exception (IRE) in
NZ IAS 12 Income taxes, and the Group’s tax
accounting policies. The net impact of the newly
recognised deferred tax is recognised in tax expense in
the year of change, rather than through opening
retained earnings. As a result, the Group has
recognised additional deferred tax liabilities and tax
expenses totalling $11.3m.
This change in tax legislation was significant to our
audit due to the size of the deferred tax liabilities and
tax expenses and the subjectivity, complexity, and
uncertainty inherent in the application of NZ IAS 12 and
the assumptions required by Management for the
calculations of the deferred tax balances and deferred
tax expenses.
consolidated financial statements (including disclosure on the
valuation uncertainty clauses included by Management's
external valuation experts in their valuation reports).
Valuation and completeness of lease liabilities and right-
of-use assets
As disclosed in Note 3.4 of the Group’s consolidated
financial statements, the Group has lease liabilities of
$109.9m (2023: $121.5m), and, right-of-use assets of
$121.1m (2023: $112.5m) as at 31 March 2024.
Lease liabilities and right-of-use assets were significant
to our audit due to the size of the assets and liabilities
and the subjectivity, complexity and uncertainty
inherent in the application of NZ IFRS 16 Leases and
the assumptions required by Management for the
calculations of the lease balances and interest and
depreciation expenses.
Management completed calculations of the lease
balances for all leases for the year ended, and as at, 31
March 2024. These calculations required estimates
regarding the lease term and the incremental borrowing
rates. During the year ended 31 March 2024, no new
leases were entered into.
Management has exercised their judgement in
determining the recoverability of right-of-use assets. No
impairment has been recognised.
Our audit procedures, among others, included:
Understanding and evaluating the Group’s internal controls
relevant to the accounting estimates used to determine the
expected term of the Group’s leases and applicable
incremental borrowing rates.
Evaluating Management’s process relating to the identification,
recording, recognition and measurement of leases within the
scope of NZ IFRS 16.
For all leases:
o Agreeing key inputs in the lease calculation to the
underlying lease agreement(s);
o Recalculating the lease liability and right-of-use assets
based on the key inputs noted above and comparing our
recalculations to the balances recognised by the Group;
and
o Checking the appropriateness of the classification of the
lease liability between current and non-current based on
the remaining term of the lease.
For all existing leases, evaluating Management’s calculations
for the subsequent measurement of the leases, including lease
modifications and rent revisions.
For any leases where the underlying asset was purchased,
evaluating Management’s calculations for the derecognition of
the lease liability and right-of-use asset, and the resulting gain
/ (loss) on derecognition of the lease.
Evaluating the completeness of identified lease contracts by
checking that all leased facilities were included in the
calculation.
39
Radius Care Financial Statements 2024
03.
INDEPENDENT AUDITOR'S REPORT
40
Key Audit Matter How our audit addressed the key audit matter
Evaluating Management’s estimates regarding the terms of
the leases and Management’s consideration of options to
extend or terminate the leases.
Evaluating Management’s assessment of the incremental
borrowing rates applied to individual leases or portfolios of
leases.
Evaluating the inputs and any underlying assumptions with a
view to identifying Management bias.
Evaluating Management’s assessment of any indicators of
impairment for the right-of-use assets in accordance with NZ
IAS 36 Impairment of Assets.
Evaluating the disclosures (including the accounting policies
and accounting estimates) related to leases which are
included in the Group’s consolidated financial statements.
Responsibilities of the Directors for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated
financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine
is necessary to enable the preparation of the consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the Group for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related 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 Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are 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 ISAs (NZ) 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 these consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the consolidated financial statements is located
at the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
Matters Relating to the Electronic Presentation of the Audited Consolidated Financial Statements
This audit report relates to the consolidated financial statements of Radius Residential Care Limited and its
subsidiaries for the year ended 31 March 2024 included on Radius Residential Care Limited’s website. The Directors
of Radius Residential Care Limited are responsible for the maintenance and integrity of Radius Residential Care
Limited’s website. We have not been engaged to report on the integrity of Radius Residential Care Limited’s website.
40
Radius Care Financial Statements 2024
41
We accept no responsibility for any changes that may have occurred to the consolidated financial statements since
they were initially presented on the website.
The audit report refers only to the consolidated financial statements named above. It does not provide an opinion on
any other information which may have been hyper linked to or from these consolidated financial statements. If
readers of this report are concerned with the inherent risks arising from electronic data communication, they should
refer to the published hard copy of the audited consolidated financial statements and related audit report dated 29
May 2024 to confirm the information included in the audited consolidated financial statements presented on this
website.
Legislation in New Zealand governing the preparation and dissemination of consolidated financial statements may
differ from legislation in other jurisdictions.
The engagement partner on the audit resulting in this independent auditor’s report is S N Patel.
BAKER TILLY STAPLES RODWAY AUCKLAND
Auckland, New Zealand
29 May 2024
41
Radius Care Financial Statements 2024
03.
INDEPENDENT AUDITOR'S REPORT
Caring is our calling
Radius Residential Care Limited
ADDRESS
Level 4, 56 Parnell Road, Parnell, Auckland
PHONE
+ 64 9 304 1670
EMAIL
investor@radiuscare.co.nz
---
Results announcement
Results for announcement to the market
Name of issuer Radius Residential Care Limited
Reporting Period 12 months to 31 March 2024
Previous Reporting Period 12 months to 31 March 2023
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$171,234 17.1%
Total Revenue $174,073 16.1%
Net profit/(loss) from
continuing operations
($8,488) 303%
Total net profit/(loss) ($8,488) 303%
Interim/Final Dividend
Amount per Quoted Equity
Security
Not Applicable
(No further dividends proposed for the year ended 31 March
2024. On 21 April 2024, a final dividend of $0.00700000 per
share carrying imputation credits of $0.00270000 per share was
declared and subsequently paid on 16 May 2024.)
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.19 $0.17
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to attached documents (consolidated financial
statements, media release and results presentation).
Authority for this announcement
Name of person
authorised
to make this announcement
Jeremy Edmonds
Contact person for this
announcement
Jeremy Edmonds
Contact phone number 022 650 9354
Contact email address Jeremy.Edmonds@radiuscare.co.nz
Date of release through MAP
29 May 2024
Audited financial statements accompany this announcement.
=== IR PAGE TRANSCRIPT: FY24 Annual Results – Call Transcript ===
Radius Residential Care Limited 2024 Annual Results
Operator: Thank you for standing by and welcome to the Radius Residential Care Limited 2024
Annual Results. All participants are in a listen-only mode. There will be a
presentation followed by a question-and-answer session. If you wish to ask a
question, you'll need to press the star key followed by the number one on your
telephone keypad. I would now like to hand the conference over to Mr. Andrew
Peskett, Chief Executive. Please go ahead.
Andrew Peskett: Thanks, Ashleigh. As Ashleigh said, I'm Andrew and I'll be presenting with Jeremy
Edmonds this morning. It's a pleasure to bring you our record FY24 results. We will
follow the format of the presentation that was released to the NZX at 8:30 this
morning. I'll cover slides four to eight, then hand over to Jeremy to talk in more detail
around the numbers. And then, I'll finish off with slides 16 to 19.
Starting with slide four in the presentation deck about Radius Care. Slide four is a
summary of what we do, and most importantly, why we are different from the other
listed and larger competitors. We provide full continuum from home-based support to
higher acuity care, and this consists of levels of care such as hospital care, dementia,
psychogeriatric, and physical and intellectual care.
So, this reiterates that we are not dependent on the residential property market,
unlike the other retirement village operators. The high acuity and specialist care
segments represent both strong future demand and the highest EBITDA margins as
evidenced later in our presentation. Moving through slide five, we can see one of our
lovely residents, Irene, being looked after by Tony the Gardener at our Althorp Care
home. Then on to slide six, business highlights.
So again, reflecting on a record year, some of the business highlights on the left-
hand side in performance are the 50% increase in underlying EBITDA, the improved
hospital and high acuity mix as I talked about, and as signalled last year, we've
delivered over a million dollars, $1.3 million on the cost-out initiative in business
performance savings that we said we would achieve. That's an annual saving of
around $1.3 million across the business. In terms of our people on the right-hand
side, we have highly engaged, exceptional people who have a laser focus on
delivering exceptional care with a commercial lens. The headwinds of the industry
have now largely passed, being COVID, staff shortages, and increased costs. So,
with these now abated and our laser focus, we're well-placed to continue to deliver
the exceptional results that we have delivered in FY24.
Jeremy will talk to more details on the financial results later in the presentation, but
I'd just like to summarise some of them on slide seven. In the financial performance,
you can see a picture on slide seven of me at a staff meeting at Hampton Court as
well. And then, the financial highlights on slide seven, in particular, I'd like to highlight
the EBITDA per bed that we have reported on in FY24. We've delivered $25,000 per
bed, a new record up on $19,900 last year. And again, this is comfortably ahead of
our listed and other large competitors.
As promised in previous briefings, we increased our accommodation supplements
this year by nearly $2 million year-on-year, on FY23. Very pleasingly, our operating
cashflow was up $10 million to $14 million, and our AFFO, or Available Funds From
Operations, was $7.4 million, significantly increased on last year's $4 million. So, with
these improved financial metrics, we've resumed dividend payments. We paid a
dividend on the 16th of May, earlier this month. And we've significantly reduced net
debt by around 27%. And so, our net debt now currently sits at $73 million, $27
million down from March 2023.
Moving on now to my last slide of this segment and my favourite slide, our people.
You can see Kay driving a vanload of residents to the Mount for a stroll on slide
eight. And key things to point out on this slide are our net promoter score, or as we
call it, e-NPS. Employee engagement is significantly up year-on-year and over the
last two years.
As an example of that, our care home managers have an e-NPS of 74, which is very
high, both in terms of having increased at Radius and versus competitors. I'm
delighted that 60% of them have been appointed from internal placements. So,
they've worked at other Radius Care homes, either in a different role or in another
care home and then been promoted to facility manager, which is a really, really good
sign.
I would also like to point out the last seven audits. We've improved significantly in the
last year or so in terms of auditing our certification. In our last seven audits, we
effectively achieved (or will likely achieve) the maximum period of certification, which
was a really, really pleasing result and great credit to Rosie and all of the clinical
team.
Over 200 of our people have received the Exceptional People Exceptional Care or
EPEC training, including 100 registered nurses. And before I hand over to Jeremy, I'd
like to say thank you to our exceptional people, to our cleaners, to our caregivers, to
our nurses, our activities people, our gardeners, our maintenance people, to our
kitchen workers, and all others working at Radius Care. Right now, they're looking
after our residents and doing a fantastic job as they did throughout FY24. Thank you
all.
I'll now hand you over to Jeremy for a more in-depth analysis of the numbers.
Jeremy.
Jeremy Edmonds: Thank you, Andrew. I'm Jeremy Edmonds, Chief Financial Officer. I joined Radius
Care earlier in this year. So, this is my first conference call to present the full year
results. I'm really pleased to be here and to share with you some highlights from the
audited results for the financial year that we released today. So, if we move on to
slide 10, I'll start with our key measure of profitability, which is underlying EBITDA. As
Andrew mentioned, this hit a new record of $20.9 million dollars, up 47% on the year
before, which itself was a new record. These great results have translated into our
key measure of care profitability, Underlying EBITDAR per care bed, which also was
a new record at nearly $25,000 per bed, which is an industry-leading metric.
A lot of hard work has come together in delivering these results. I'll talk about
revenue on the next slide, but we had strong revenue growth, ongoing good
occupancy, and we have a great team of people providing great care for our
residents, while really thinking about managing their costs and productivity all at the
same time. So, all of this hard work has come together in those results.
Moving on to revenue on slide 11, our revenue grew strongly in the year up 17% on
last year. We did have a funding increase from the government part way through the
year, but really, this reflects the strength of our offering. We had great growth in
revenue from our accommodation supplement rooms and this reflects a stronger mix
with our continued focus on the high acuity hospital care and specialised care, which
helped our mix and drove revenue ahead of the industry.
Moving now onto cash, Andrew mentioned that our cash from operations was up
significantly to $14 million. But AFFO, or available funds from operations, has been
our primary measure of cash flow. And this was a new record up to $7.4 million from
$4 million. And it's this result that gave us confidence to resume dividends with the
dividend payment paid earlier this month, which as we said at the time, was below
our normal policy of dividend payments and reflected our priority earlier in the year to
reduce debt.
And on that subject, let's move to slide 13. We started this year with a very clear goal
to strengthen our balance sheet, to reduce debt, and to refinance our short-term
borrowings. And I'm very pleased to say on this subject that everything that we said
we would do, we have done. Our strong cash flow combined with the sale of one
care home during the year, reduced debt to by around $27 million and by more than
a quarter during the year. We finished the year with un-utilized loan facilities available
to draw with no overdraft and with no short-term borrowings.
And at the end of the year, all of our borrowings were with the ASB, our longstanding
banking partner. And all of them have long-dated terms with an average of 2.8 years.
So, I'm very pleased to say that our balance sheet has significantly strengthened
versus the position that we started the year with.
And then, finally, if we move on to slide 14, while I'd rather be listening to Arthur
playing music at Althorp, I do want to cover a more technical accounting issue. The
government decision to remove tax deductibility of depreciation on commercial
buildings was quite well known, and this was passed into law right at the end of
March. So accounting rules in this situation do require us to make a large adjustment
to deferred tax, which is entirely non-cash and one-off in nature.
Compared to the others in the sector, this is quite visible for us. But reflecting on that,
it does mean that we're profitable and in a tax-paying situation. So that's it from me.
And, before I hand back to Andrew, I'll just like to say what an absolute pleasure it is
to be part of this great team at Radius and it's fantastic sharing some great results
from what's been a great year, where we've made enormous progress.
Andrew Peskett: Thanks, Jeremy. It's been fantastic to have you on board. And thanks for that
summary. Moving now through slide 15, where Alan is building a birdhouse at
Taupaki, to slide 16, an industry update. You can see on the slide we have three
long-run tailwinds being ageing population, supply shortfall, and COVID and
immigration associated staff shortages. I'll run through each of those briefly.
First of all, the ageing population - we are due to have a 5% increase in population
over 85-years-old in the next decade. That's pretty significant. And we are well-
placed at Radius to take advantage of that ageing population. The shortfall in supply:
there's been a lot of press about this lately, and based on quite a few scientific
estimates on what's going to happen in the next three to eight years, there'll be
upwards of 40 to 50,000 bed shortfall in the sector. So that's just to repeat, 40 to
50,000 bed shortfall in the next three to eight years.
In terms of people, we're now fully staffed and have been for some time. And I'd like
to reiterate now the great work that R-Connect, our external and internal bureau
service has done. It's just had its first birthday recently. It's allowed us to collect
revenue from other listed providers and, most importantly, to optimise our staff mix
across facilities to make sure we don't use external bureaus. Our external bureau
use has come down from several hundred thousand dollars a month to very minimal,
averaging $10,000 to $20,000 per month currently. And it's allowed our wage to
revenue ratio to be in the mid-50% range, which again, is significantly below
competitors.
Now, moving to slide 17, we can see Flo doing her word search at Althorp.
And moving then to slide 18 with our strategic pillars. Firstly, growing scale - what we
are looking for and chasing down at the moment moving forward is value accretive
M&A, and similarly value accretive developments. We have mentioned and signalled
development pipelines in the past. We are re-assessing the various development
options we've got, and we'll start on those developments depending on, as I said,
those that are most value accretive over time.
We are looking to continue to diversify revenue, so the existing channels of R-
Connect and Radius Shop that we've talked about to improve those, and to expand
health services beyond aged care.
Thirdly, the Radius Way. The Radius Way is effectively the systems and processes in
place that enable us to produce an underlying EBITDAR per bed of $25,000. We're
looking to monetize and develop the Radius Way more and see opportunities, both in
New Zealand and globally, to assist other operators to improve their performance
and monetize the Radius Way to do this, using our intellectual property.
Finally, on the Outlook slide 19, you can see a great picture there at Millstream with
our HCA Bindu looking after Marie. A couple of things to touch on here. We're two
months into FY25. We're continuing to look to optimise the business, looking for 1%
improvements and continuous improvements on a daily basis throughout our care
homes. We're looking to exceed our FY24 metrics and to continue to pay dividends
to differentiate ourselves from the retirement village sector, and to continue to deliver
exceptional care from our exceptional people. And I'd like to finish on the note of
thanking our exceptional people as I did earlier in the presentation, thank you again
for all your wonderful work and I'll now hand you back to Ashleigh to take questions.
Operator: Thank you. If you wish to ask a question, please press star one on your telephone
and wait for your name to be announced. If you wish to cancel your request, please
press star two. If you're on a speakerphone, please pick up the handset to ask your
question. We will now pause momentarily to allow questions to be registered.
Operator: Thank you. There are no questions at this time. I'll now hand back to Mr. Peskett for
closing remarks.
Andrew Peskett: Thanks, Ashleigh. And, I'd just like to say thank you. I know it's a busy reporting time,
end of a busy reporting season, so thank you all for joining the call today. I've
enjoyed delivering the result and look forward to checking in with you all in the future.
Have a great day.
Operator: That does conclude our conference for today. Thank you for participating. You may
now disconnect.
[END OF TRANSCRIPT]
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