Australian Unity
Peter Promnitz - Chairman

Peter Promnitz

View Report
Rohan Mead - Group Managing Director

Rohan Mead

Group Managing Director
View Report

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

2016 at a glance


episode of care was delivered by Remedy Healthcare in 2016


of Australian Unity Office Property Fund unitholders voted in favour of all resolutions to list the Fund on the ASX


home care and disability clients transferred from NSW government services to Australian Unity


funds under management in newly acquired trust and estate administration businesses

Revenues ($billion) $1.55 billion
Members‘ funds ($million) $580 million
Health claims paid ($million)$707 million
Funds under advice ($billion)# $6.02 billion
Funds under management ($billion)* $8.20 billion
Retirement units and aged care beds 2,719
Operating earnings ($million)Σ $48.3 million
Profit before tax ($million) $37.3 million
Profit after tax ($million) $35.6 million

Revenues: comprise revenue and other income receipts (shown as the bottom section of the bar chart) as shown in the statement of comprehensive income in the annual report plus life investment contract premium receipts (shown as the top section of the bar chart). The latter receipts are recorded as movements in benefit fund policy liabilities in the balance sheet and not through the statement of comprehensive income.

Members’ funds: net assets of the Group attributable to members.

# Funds under advice: the total value of client funds invested through Australian Unity financial planners.

* Funds under management: Investors’ funds managed by the Australian Unity Investments business and its joint venture partners.

Σ Operating earnings: profit before tax attributable to members of Australian Unity less investment income, borrowing costs exclusive of accommodation bond interest reclassification and discontinued operations and business acquisition costs.

Chair’s report

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Chair’s report

Dear Members

I am proud to present the first annual report of Australian Unity produced since I became Chair of the company in March. I would like to start by thanking Glenn Barnes for his strong leadership as Chair of the company and the board over the past four years. I wish Glenn well in his future endeavours. I take on the Chair role at a pivotal time in Australian Unity’s long and successful history. I am honoured to lead the governance of the organisation during what we hope will prove to be a transformational period of growth.

I encourage members to read this annual report as it provides details of the many initiatives that management has pursued during the year. I trust that it serves as an accurate reflection of the strength of the organisation, the size of its ambitions and the scope of its operations.


This year, we report strong growth in revenues (up 11.4 percent to $1.6 billion), with more modest growth in profit after tax (up 2.9 percent to $35.6 million).

The profit figures, however, absorb the impact of a number of major strategic initiatives and in my view amount to a very positive result.

Home Care NSW

The first major investment that affected the result was the $114 million transaction with the NSW Government to transfer the Home Care Service of NSW to Australian Unity. This occurred in February. We have taken on the challenge of transforming this business from a financially unprofitable operation to one that is more strongly focused on the customer and growing into the future.

Our structure as a mutual company enables us to take these transformational long-term opportunities without the short-term pressure of delivering to external shareholders.

Our structure as a mutual company enables us to take these transformational long-term opportunities without the short-term pressure of delivering to external shareholders.

Since the transfer we have invested significantly in both transitioning and transforming the nature of that business. The substantial costs incurred in this process have impacted our financial result for the year under review. We are optimistic that the result of this extensive program of work will see material financial benefits in the future, along with important customer and social benefits.

Simple Corporate Bond

In order to fund the transfer and future growth plans, our finance and legal teams launched a $250 million capital raising through a Simple Corporate Bond in December 2015. Australian Unity was the first organisation to take advantage of the Simple Corporate Bond legislation. The new structure allows issuers to raise further funds over three years using the original base prospectus. This gives us considerable flexibility for the future. In addition to purchasing the Home Care business and other initiatives, the Australian Unity Bonds funding was used to repay the Australian Unity Notes. The Notes, a $120 million five-year debt instrument launched in 2011, were due to be paid out in April of this year. The decision to launch the Bonds some months earlier was a positive one for the company. It enabled Noteholders to hold their instrument until maturity, or convert to the new Bond offer. However, it did result in slightly higher interest carrying costs for the year.

Trust and estate administration

Also during the year, the Group made a strategic acquisition of a trust and estate administration company, Flinders Australia. The acquisition, which occurred on 1 July 2015 and was mentioned in last year’s annual report, allows us to expand our range of services offered to our customers and members. The impact of integrating this business also affected our overall financial result, albeit to a lesser extent than the Home Care NSW integration. Again, however, I am confident that our investment in this platform will strongly support and enable our strategic ambitions.

Importantly, both these acquisitions support our plans to build and manage a diverse portfolio of businesses that together and separately support our members and customers’ wellbeing. We are proud that the range and scope of our service offerings—in the areas of health, wealth and living—all assist our aim of helping people to thrive.


Each of our business areas are exposed to external factors that create both positive and negative risk. These factors range from government decisions through to changing consumer expectations and the likelihood of disruption from competitors or new entrants. The board aims to manage our portfolio of activities with a balanced approach to risk. Our strategic discussions accept that in some areas it is necessary to be more expansionary. Specifically, we are willing to have a tolerance of greater risk subject to prudent management for some business initiatives. In this regard, the board’s own discussions and those with management are robust and vital in order to ensure the company continues to grow and respond to changing consumer needs and opportunities.

Board changes

Along with the transition of the Chair, there have been other important changes to the board this year. Eve Crestani, who served as a director for 20 years, including many years chairing a number of board committees, retired with our best wishes, while we were delighted to welcome Paul Kirk as a new director. These changes were the continuation of the successful program of board renewal and succession launched by Glenn Barnes. Our long-term aim is to retain the board at the current size of six non-executive directors plus the Group Managing Director.

A final note concerns an executive colleague. Anthony Connon spent almost 20 years as Chief Financial Officer before transitioning to a strategic adviser role in 2014. Over more than two decades, Tony has served as a significant officer of the company, and receives our heartfelt thanks and best wishes as he retires from Australian Unity. We trust that Tony’s ongoing activities will enable him to continue to play an important role in the community.

Thank you to my fellow directors and the executive and management teams for their hard work and support during the year.

Peter Promnitz signature

Peter Promnitz

Group Managing Director’s report

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Group Managing Director’s report

Business expansion

Since my last formal report to members, Australian Unity has taken a number of major steps in unfolding the company’s strategic ambitions.

These ambitions—to be a significant provider of services that help people thrive and to deliver clear and measurable community value—are large in scope. We believe strong investment in social infrastructure is required in order to address the many and connected issues arising from healthcare needs and demographic factors. This infrastructure includes buildings, equipment and technologies and, equally importantly, new business models, growing and differently configured workforces and more efficient systems of care.

These ambitions—to be a significant provider of services that help people thrive and to deliver clear and measurable community value— are large in scope.

We believe that our heritage of more than 175 years as a community-based organisation; our long involvement in critical sectors; our structure as a mutual; and our practical understanding of key aspects of the social infrastructure challenge (derived from our operating activities) equip us to play our part in addressing this challenge.


Consistent with our strategic plans, we were therefore delighted, in February 2016, to welcome 50,000 clients and 4,300 staff into the Australian Unity Group through the transfer of the NSW Government’s Home Care Service.

The transfer, announced last August and reported in my letter to members last year, has broadened the company’s geographic footprint and deepened its operations. It significantly expands our home services division, which provides care support, social connection, transportation as well as clinical and other services to older Australians and to people living with a disability.

Since the transfer took place in February, a large team has been working hard to transition clients and staff in a multi-million dollar program of integration work. As well as integrating the data and processes from the former operations, we are also transforming key business processes, with the aim of improving and broadening client support services. Consistent with this approach, our care staff are being issued with mobile devices to support more agile operations that better respond to client needs. We believe changes like these are necessary to support new models of client-directed care. For example, we seek to enable our existing clients living with a disability to transition effectively to the National Disability Insurance Scheme, and to further grow this area of our operations. We are conscious that these integration steps involve clients and staff in material levels of change. We intend to support them all in this transition, as we seek to strengthen our operational platform, in order to provide more responsive and scalable services—in a sector where growth in demand is likely to be very significant.

Another major step that occurred during the year was our expansion into the provision of trust and estate services with the acquisition of a trust and estate administration company on 1 July 2015. We continue to progress our plans to operate this business as a full trustee services business and have applied for the appropriate licences. Integration costs, and costs associated with aligning the risk management systems impacted the financial results of the Personal Financial Services platform as we re-shaped this area—in line with our plans to offer services to more deeply support the financial wellbeing of individuals and communities.

In August 2016, after the reporting period that relates to this annual report, the Queensland Premier announced Australian Unity as the preferred tenderer for the redevelopment of the five hectare Herston Quarter site in inner-suburban Brisbane. Contracts should be finalised during the first months of the 2017 financial year, with construction planned to commence early in calendar 2017. Our masterplan was conceived as a substantial contribution to social infrastructure. Specifically, our plans for the site include a public rehabilitation hospital, a private hospital, aged care and retirement living, student and other accommodation and an innovation and co-working hub. The project, which will provide opportunities for external investors to also participate, is another important element of our future plans.

While these step changes are significant, they have occurred, as I noted at the outset, within the context of considered corporate development strategies. These initiatives have been undertaken with a view to strengthening and sensibly extending our platforms of service, which operate in the areas of health, wealth and living.

In addition to these step changes and to the significant organic growth achieved by the platforms, we undertook two projects to source capital and funding support relevant to our activities—beyond the traditional avenues utilised by companies of our corporate mutual structure. The Chair has already mentioned the $250 million Simple Corporate Bond. During the year we also successfully listed the Australian Unity Office Fund on the Australian Securities Exchange. This listing provided the opportunity to raise additional capital and for existing unitholders to access greater liquidity.

2016 financial performance

The company’s expanded operations generated $1.6 billion in revenues, an 11.4 percent increase over the prior year. Operating earnings increased by almost 20 percent to $48.3 million. Profit growth was less strong, with profit after income tax up 2.9 percent, or $1 million, to $35.6 million. This more muted growth was attributable to material integration costs. In addition, despite lower interest rates on average, we experienced slightly higher funding costs. This was because we issued the Simple Corporate Bonds in advance of the final settlement and completion of the Home Care NSW transfer and in advance of the repayment of our previously issued debt securities.

Staff and systems

During the year, the business more than doubled its workforce and our operations now employ some 7,000 staff. A substantial program of investment in our people management systems, our learning and development approaches and our occupational health and safety capabilities was a feature of the year under review. We plan further material investments in our risk management arrangements in the current year.

Another key feature of the year was the successful implementation of a substantial number of major information technology projects to modernise and to adapt our technology. These ranged from customer service, internet and telephony systems through to regulatory and compliance systems and a company-wide digital sourcing and procurement system.

Services to Aboriginal communities

As part of the transfer of Home Care NSW, we also welcomed 3,000 clients and 350 staff connected to the provision of services to Aboriginal peoples in NSW.

We also have operations within our Personal Financial Services platform that support traditional owners to manage their native title trusts. We plan for growth in these areas and so, as a company, we now look to a future where core parts of our operations are delivering trust-based services to these communities.

We take on these responsibilities with a strong sense of partnership with clients and staff. During the coming year, we plan to finalise and implement our first Reconciliation Action Plan, and I am pleased that we have the opportunity to do this within the context of practical and material engagement with Aboriginal communities as both a service provider and a substantial employer.


I echo the expression of thanks and the farewells from Peter Promnitz to former Chair, Glenn Barnes, and long-serving director, Eve Crestani, who both retired from the board this year, and to a key member of the executive team and former Chief Financial Officer, Tony Connon, who retired in August. Tony has been a central contributor to the company’s strategy and a key exponent of the company’s values, and has provided great personal support to me. My best wishes.

I thank all of my Australian Unity colleagues for their hard work in developing the company’s activities so positively during the past year.

Rohan Mead signature

Rohan Mead
Group Managing Director & CEO

Australian Unity Board of Directors

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Australian Unity Board of Directors

Peter Promnitz Chair


Rohan Mead
Group Managing Director & CEO
Su McCluskey

Appointed 1 September 2015

Paul Kirk

Appointed 1 February 2016

Stephen Maitland


Greg Willcock


Melinda Cilento

BA, BEc (Hons), MEc

Australian Unity Group Executives


David Bryant

CEO, Investments &
Chief Investment Officer

Amanda Hagan

CEO, Healthcare &
Group Executive, Digital

Steve Davis

CEO, Personal Financial Services

Derek McMillan

BSc (Hons), DipEd
CEO, Independent
& Assisted Living


Melinda Honig

General Counsel,
Company Secretary
& Chief Risk Officer

Jane Betts

PGDip (Bus)
Group Executive,
Human Resources

Tahir Tanveer

M InfoTech, BA (Econ), GAICD
Group Executive,
Business Technology

Kimina Lyall

BA (Journ), GradDip (Psych), GAICD
Group Executive,
Corporate Development

Anthony Connon

Strategic Adviser to the Group Managing Director
(until August 2016)

Kevin McCoy

BCom, HDip Acc, CA, PMP, GAICD
Chief Financial Officer

The journey to 1,000,000 customers

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

The journey to 1,000,000 customers

Retail health insurance Since 1840 Dental Since 1961 Corporate health insurance(GU Health) Since 1996 Remedy healthcare Since 2009

“Australian Unity helped me out a lot and when I spoke to the guys in the call centre, it was really like talking to a mate.”

Stewart – Healthcare
Investments, savings and funeral bonds Since 1840 Banking Since 1946 Funds management Since 1996 Real estate investment Since 1997

“The staff went above and beyond to help; making sure I had access to money after I lost my bank card.”

Peter – Big Sky
Personal Financial Services
Personal finance and insurance services Since 1926 Financial advice Since 2002 Trust and estate administration Since 1994

“What impressed me most was the passion of our adviser. He really helped my partner and I understand the solutions and what was best for us”.

Lisa – Financial planning
Icon86,000customers and clients
Independent & Assisted Living
Home care and disability services Since 1943 Retirement communities Since 1948# Aged care Since 1948# Aboriginal home care services Since 1981

“All my needs are covered. I’ve personally been very well cared for.”

Harold – Home care
Icon60,000residents and clients

Australian Unity’s customers are as diverse as our range of products and services. Some, like our clients in Remedy Healthcare, remain customers for an episode of treatment. Others, such as those with our banking or health insurance products, stay with us for generations. We provide services to retail and institutional investors, to grandparents supporting their family’s education, to young families buying their first home, to older Australians living in retirement and to some of Australia’s largest companies through corporate health insurance. We believe all our members, customers, residents, clients and communities share a desire to improve their lives in the area of health, wealth and living.

Establishment of companies that became Flinders Australia, which Australian Unity acquired in 2015.
Establishment date of services provided by Home Care NSW.
# Establishment of The Grand United Centenary Centre for aged members. Grand United merged with Australian Unity in 2005.

Building community value

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Building community value

Australian Unity’s strategy is built around community value.

Australian Unity exists to help people and their communities thrive. Over its 176-year history this mission has taken on many forms, but its essence has remained unchanged. The early days from 1840 saw members band together in small chapters to provide health and financial support to each other in the absence of a government-run social welfare system. In the late 1800s the members began to pursue their vision for homes to support aged and disadvantaged members. After World War II housing cooperatives created innovative products to meet the needs of a burgeoning population’s dream for home ownership.

Today’s Australian Unity offers members and customers a diverse suite of products and services in health, wealth and living. With the starting point that these products and services are commercially viable, Australian Unity also looks to ensure they offer community value. Community value involves value to the individual along with demonstrated broader social impact.

Australia, like many other countries, is grappling with an ageing demographic. While there is much to celebrate in this fact, it is also true that these changes mean Australia needs to build “social infrastructure”. Australian Unity aims to have a social impact by building that infrastructure. This includes services infrastructure, such as for personal care, building workforces and establishing new models of service delivery. It also means built infrastructure, such as hospitals, aged care facilities and community precincts.

In coming years, Australian Unity will further develop its strategy to prioritise investment decisions that build community value most effectively. This approach is underpinned by Australian Unity’s mutual structure, which allows for longer term investment horizons.

Our long-term strategic goals:

To reach millions of customers and their families

We believe our products and services offer value and help people thrive.

We seek to grow organically and also through strategic mergers and acquisitions to create effective scale in relevant areas of community need.

To deliver sought-after products and services

The changing customer landscape demands companies that are willing and able to design products and services that respond with heightened insights into customer needs.

We are investing millions of dollars in innovation approaches and digital transformation to address this challenge.

We are also seeking to identify new opportunities based on our combined experience and capabilities and bring them to market.

To build an influential national brand

In order to reduce the social infrastructure gap, we need to build strong partnerships with governments, communities and other organisations. We need to demonstrate our capability and thought leadership to be effective in this aim.

We first seek to deliver value to our customers, and we also consider how to deliver value to the broader community and achieve appropriate social impact.

To sustain financial substance with a balanced approach to risk

As a mutual organisation providing high trust services, we must ensure that we are financially sound for the long term.

We seek a “guardianship rate of return” in financial terms but do not pursue profit for profit’s sake. Our risk profile is balanced across the portfolio, which allows some areas to take a more expansionary approach where desirable.

We continue to develop our portfolio to ensure a sound balance of risk, revenue, profit and community value.

Above illustration: Artist’s impression of the future Herston Quarter health precinct in Brisbane.

Business performance

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Business performance



in total segment revenue
(2015: $825.0m)


in adjusted EBITDA^
(2015: 56.2m)

Health claims paid ($million) $707 million
Remedy Healthcare revenue ($million) $18.1 million
Private health insurance policyholder growth (%)



in total segment revenue
(2015: $107.2m)


in adjusted EBITDA^
(2015: 14.8m)

Funds under management, administration and advice ($billion)* $9.59 billion
Total segment revenue ($million) $123.1 million
Big Sky Loan Book ($million) $731 million

* Funds under management, administration and advice (FUMAA) includes funds under administration and advice in each of the Platypus, Federation Alliance and Big Sky Financial Planning businesses.

Personal Financial Services


in total segment revenue
(2015: $56.9m)


in adjusted EBITDA^
(2015: 3.95m)

Funds under advice and loan book combined ($billion) $6.82 billion
Total segment revenue ($million) $65.6 million
Staff in Personal Financial Services 127

Funds under advice: the total value of client funds invested through Australian Unity financial planners. These are shown as the bottom section of the bar chart.

# Loans under advice are shown as the top section of the bar chart (2016: $795m).

Independent & Assisted Living


in total segment revenue
(2015: $106.8m)


in adjusted EBITDA^
(2015: 23.9m)

Total segment revenue ($million) $223 million
Independent & Assisted Living development pipeline Total $579 million
^Adjusted earnings before interest, tax, depreciation and amortisation


The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.



increase in GU Health policyholders


average increase in retail health insurance premiums, lower than industry average


episode of care delivered by Remedy Healthcare


patients visited an Australian Unity dental clinic

Australian Unity’s Healthcare platform combines the provision of health insurance with the delivery of integrated healthcare services including dental services, hospital in the home, rehabilitation in the home, chronic disease management, depression and anxiety coaching and other preventative health services.

Australian Unity Healthcare provides individuals and families with insurance against the costs of hospital accommodation, theatre fees, prostheses and health services, including dental, optical and physiotherapy. It also supports members to self-manage their health risk factors and better manage their long-term conditions through telephone-based and home-based programs. In addition to supporting members to improve their health, these services also aim to reduce hospitalisations through these evidence-based programs.

The Healthcare platform has 239,558 policyholders throughout Australia. It also provides corporate health insurance through GU Health and dental services across six clinics. Australian Unity’s wholly owned subsidiary, Remedy Healthcare, provides evidence-based, integrated telephonic chronic disease management, mental health and in-home healthcare services in the country.

2016 Review

Retail health insurance

The number of retail health fund policyholders increased by 1.6 percent to 205,476 at 30 June 2016 (2015: 202,175). Maintaining and slightly improving policyholder numbers is a sound achievement in a challenging year in which health costs continued to rise at a substantially faster rate than the rest of the economy. Cost factors continue to drive policyholders to consider downgrading or dropping their insurance cover altogether. The retail fund’s average premium increase of 5.1 percent was lower than the industry average of 5.6 percent.

In response to growing consumer demand for more affordable products, the business developed a budget product range and indications are that this product type will remain in demand for the foreseeable future.

Corporate health insurance – GU Health

GU Health, Australian Unity’s corporate health insurance provider, continues to be the only fund in Australia that caters exclusively to the corporate market. GU Health increased its policyholders by 7.4 percent to 34,082 at 30 June 2016 (2015: 31,748).

During the year, GU Health successfully executed a strategy based on innovating and diversifying into communities beyond the corporate sector and this has contributed to its strong policyholder growth in 2016.

While still maintaining its niche status, GU Health is exploring new markets and continues to work with its corporate and prospective community stakeholders to support long-term sustainability as a specialist fund.

Remedy Healthcare

Remedy Healthcare is Australian Unity’s evidence-based chronic disease and preventative healthcare business. The business had another strong year of growth highlighted by two key acquisitions—Adelaide-based physiotherapy company Mobile Physio, and Queensland-based nursing services provider Lincs Healthcare.

Remedy Healthcare’s Hospital at Home and Rehabilitation At Home services are now utilised by almost all private health insurers and over the past two years these programs have reduced hospital claims paid by these health insurers by at least $20 million.

Remedy also successfully launched its mental health program ‘MindStep’ in November 2015. MindStep is the first of its kind in Australia and is an evidence-based program for people suffering from anxiety and depression delivered by telephone and was developed in collaboration with Flinders University in South Australia.


At 30 June 2016 Australian Unity operated five dental clinics located in the Melbourne CBD, South Melbourne, Box Hill, Rowville and Hughesdale in Victoria. In August 2016 a sixth clinic in Moonee Ponds, Victoria, opened.

During the year there were more than 61,000 patient visits to an Australian Unity dental clinic.

Progress and priorities

What we achieved

  • The number of retail health and corporate health fund policyholders increased during the year. Improving policyholder numbers in the current environment is a sound achievement.
  • Remedy Healthcare launched its mental health program ‘MindStep’ in November 2015. MindStep is the first of its kind in Australia and is an evidence-based program for people suffering from anxiety and depression. By 30 June 2016 the program was achieving 59 percent recovery rates. Recovery rates are measured using the PHQ-9 and GAD-7 clinical assessment scores.
  • Australian Unity’s Healthcare business initiated a campaign during the year focused on minimising waste in the healthcare system, and scrutinising procedures and services that are delivered unnecessarily. These factors drive up health costs that are ultimately passed onto the consumer either in the form of higher private health insurance premiums, or higher taxes. More than 900 policyholders participated in the campaign and their feedback was provided to the federal government, which is currently undertaking a range of reviews of the health system.

Where we were challenged

  • Customers are continuing to experience difficulty in covering insurance costs since means testing on the private health insurance rebate was put in place in 2012. This has led to an ongoing and escalating tendency for customers to downgrade their cover or abandon private health insurance altogether.
  • The underlying problem of health inflation—the number of times people are treated in hospital combined with the costs of the care they receive— is a major challenge that needs to be tackled across the healthcare sector.
  • Remedy Healthcare was challenged by ongoing changes to funding models and regulations for health and aged care, and by the continually rising cost of care, combined with escalating demand.

In the coming year we plan to:

  • Continuously improve the competitiveness and sustainability of retail health insurance products.
  • Strategically build GU Health business capability, allowing for diversification into new markets and business growth.
  • Consolidate and optimise future growth of the Remedy Healthcare and dental businesses.


The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.



increase in sales of education investment funds


in third party capital raised in real estate investment business for the Retirement Village Development Funds


growth in Big Sky net loan book


performance in the Platypus Systematic Growth Fund

Australian Unity’s Investments platform plays a key role in helping people and their communities thrive by strengthening their financial wellbeing. It offers a range of financial products and services that meet the diverse investment needs and objectives of its customers.

The platform invests money raised from its customers into commercial and social infrastructure assets. It operates in funds management, real estate and mortgages, banking (Big Sky), investment bonds, funeral bonds, and education savings plans.

2016 Review

Funds management

Australian Unity’s funds management business provides managed accounts and investment management of equities and fixed interest, primarily through its joint venture investment managers.

Equities and Fixed Interest

Platypus Asset Management

Platypus Asset Management is a true-to-label growth manager with a long history of outperforming the Australian equities market. Platypus offers two core funds: a high conviction Australian equity portfolio and a systematic growth fund. During the year Platypus achieved strong returns for its investors: Platypus Australian Equities Trust returned 10.9 percent and the Platypus Systematic Growth Fund achieved a return of 10.5 percent.

Acorn Capital

Acorn Capital operates the largest and most experienced microcap/small cap investment team in Australia. Its experienced team offers two investment capabilities across listed and unlisted Australian microcaps. The performance of the listed Acorn Capital Microcap Fund over the past year was very positive for investors, returning 14.9 percent.

Wingate Asset Management

Wingate Asset Management is a specialist international equity manager that employs a benchmark unaware and value-oriented approach with a bias toward quality. The Wingate Global Equity Fund returned -4.7 percent in a volatile global environment that saw short-term exuberance followed by periods of considerable pessimism. Wingate’s funds continued to focus on the long-term by retaining a preference for companies with USD denominated earnings and highly cash-generative businesses that are attractively priced.

Seres Asset Management

Seres Asset Management is Australian Unity’s Hong Kong based investment manager that focuses on equity opportunities in the Asia Pacific region. In difficult and volatile Asian markets the Seres Asian Equities Opportunities Fund returned -6.1 percent in Australian dollar terms and -9.1 percent in US dollar terms. Seres continues to apply its unique bottom-up fundamental approach to identify long-term regional and global industry leaders in early stages of development.

Altius Asset Management

Altius Asset Management is a specialist fixed interest manager that employs an active and diversified strategy that aims to take advantage of the mispricing of bonds in all market conditions. Altius Sustainable Bond Fund returned 4.6 percent in 2016 compared to 2.9 percent in 2015.

Real estate investment

Australian Unity’s real estate business raises money from retail and sophisticated investors, and deploys it on hospitals and infrastructure to support an ageing population, as well as commercial property, retirement village development, and mortgage lending.

During the year the Australian Unity Office Property Fund became the first A-REIT to list on the ASX (code: AOF) in the calendar year 2016 after investors voted overwhelmingly in favour of the business’ proposal to list. The initial public offering, which was made at $2.00 per unit, was well oversubscribed and there was a high level of interest from both institutional and retail investors.

Total funds under management in Australian Unity’s Real Estate Investment portfolio continued to grow during the year and reached $2.21 billion at 30 June 2016 compared to $1.88 billion in the previous year.

  • The Healthcare Property Trust is now the largest fund of its kind in Australia and during the year increased its funds under management from $697 million to $1.06 billion as at 30 June 2016. It achieved a return of 20.0 percent for the year to 30 June 2016 compared to 7.9 percent in the previous year.
  • The Retail Property Fund achieved a 15.3 percent return for the year to 30 June 2016 compared to 11.3 percent in 2015.
  • The Office Property Fund achieved a return of 19.6 percent compared to 14.3 percent for the previous year.
  • The Diversified Property Fund achieved a return of 19.5 percent for the year to 30 June 2016, a considerably better return than the 9.2 percent recorded in 2015.


Equity support for the Australian Unity Select Mortgage Income Fund continued to grow from financial planning groups, generating strong recurring monthly flows. The lending portfolio grew solidly over the period to $87 million at 30 June 2016.


Lifeplan Australia Friendly Society (Lifeplan) continues to be Australia’s largest provider of investment bonds and funeral bonds, and a leading provider of education savings plans.

Funds under management and administration increased to $1.99 billion from $1.95 billion in 2015.

During the year sales of education solutions increased by 23 percent and surpassed $149 million in funds under management.

With over $679 million in funeral funds under management and 90,400 clients, Australian Unity has a leading position in the pre-paid funeral market via the specialised business Funeral Plan Management (FPM).
During the year FPM broadened its business strategy to include a business-to-consumer proposition and further enhanced its online business management platform for funeral directors.

Big Sky

Big Sky had a year of record growth and consistently outperformed its competitor groups, with loan growth at record levels ($93 million of net loans during the period and net loan book growth of 15 percent). Big Sky now also provides its customers with a number of new tools and services, including an upgraded mobile banking application and enhanced online banking capabilities.

Big Sky’s total on-balance sheet assets grew to $862 million as at 30 June 2016 (30 June 2015: $754 million).

Big Sky was again rated by S&P and maintained its BBB rating which is a very positive result for an organisation of its size.

Progress and priorities

What we achieved

  • In June 2016, investors in the Australian Unity Office Property Fund voted overwhelmingly in favour of the proposal to list the Fund on the Australian Securities Exchange (ASX). The Fund was the first A-REIT to list on the ASX in calendar year 2016 and the initial public offering, which was made at $2.00 per unit, was well oversubscribed with a high level of interest from both institutional and retail investors.
  • Australian Unity Investments supported the Independent & Assisted Living platform with funding vehicles to support the development of assets in both New South Wales and Victoria.
  • Big Sky Building Society recorded another year of record growth, with net loan book growth of 15 percent. Big Sky’s total on-balance sheet assets grew to $862 million.

Where we were challenged

  • Conditions during the year included an ongoing downturn in commodity prices, fuller prices in the residential property market and ongoing downward pressure on interest rates.
    Taking these market characteristics into account, Australian Unity Investments focused on exploring investment options in less familiar areas while building up its office, commercial, healthcare and retirement village offerings.
  • With resource stocks in a downturn, specialist equities investment managers have had to find diversified investment opportunities in stocks other than the major banks and other well known, large companies.
  • Historically low interest rates and a highly competitive banking environment continue to pressure margins in our banking business.

In the coming year we plan to:

  • Develop new and alternative paths to market and access to listed capital markets.
  • Continue development of customised investment products and middle market segments.
  • Develop a meaningful direct customer acquisition and retention strategy.


Personal Financial Services

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Personal Financial Services


in total funds under advice


loans under advice in finance broking


increase in general insurance revenue


accountants commercially associated with the advice business

Australian Unity Personal Financial Services works with advisers and industry partners to provide professional advice that supports clients’ financial wellbeing, helping people and their communities thrive.

With its partners and advisers, the business provides regular financial guidance and mentoring across most aspects of their clients’ financial affairs, giving clients the information they need to make informed choices about their financial arrangements. During the year under review, funds under advice grew 1.5 percent to $6.0 billion.

2016 Review

Trust and estate administration services

Australian Unity Personal Financial Services completed the significant strategic acquisition of estate planning and administration specialists Flinders Australia Limited in July 2015. The acquisition has provided Australian Unity with a broader range of in-demand services for clients and members as well as the clients of their financial advisers and accountants.

The business has been focused on converting the Flinders Australia business to a fully licensed trustee business, which includes obtaining a trustee licence from the Australian Securities and Investments Commission, obtaining approval from the federal Treasury department, recruiting staff with the relevant skills and putting effective structures and business practices in place.

This acquisition strongly reflects one of the Personal Financial Services platform’s principal business objectives: driving growth in complementary businesses that help improve financial wellbeing. Estate planning and trustee-type services are increasingly in demand as the population ages, with a growing number of Australians and their families requiring protection, support and certainty through what can be an extremely difficult time.

Expansion into this business is directed toward providing an opportunity for middle income Australians to access these vital services. The market is currently dominated by services and products designed for people with high levels of wealth.

Financial advice

Financial advice revenue grew by 4.8 percent during the year to $53.2 million.

The number of financial advisers decreased marginally in 2016 to 176 as a result of some practices, as anticipated, leaving the now wholly-owned Premium Wealth Management business after its acquisition in 2015. Offsetting the anticipated attrition arising from the integration, the business recruited 10 new practices during the year. The adviser recruitment pipeline is encouraging and adviser numbers are expected to grow in the 2017 financial year.

The business continued to focus on the active level of support being provided by referring accountants, who are key partners in the delivery of high quality advice to clients. It has also positioned itself effectively in relation to legislative changes that now require accountants who provide advice in relation to the establishment of Self-Managed Superannuation Funds (SMSF) to either hold an Australian Financial Services Licence (AFSL); or be authorised by an AFSL holder; or work with a licensed or authorised financial adviser when providing SMSF advice. Australian Unity’s ability to offer such support resulted in the induction of 79 accountants during the year. Accountants commercially associated with the advice business now number 354.

Finance and insurance services

Loans under advice were $795 million at 30 June 2016 which is almost a four percent increase compared to $766 million at 30 June 2015. The business recorded a decrease in the number of mortgage brokers to 20, from 22 in 2015. Growth in loans under advice was affected by the changes to investment lending practices and concerns about the future of negative gearing leading up to the Federal election in July.

Finance broking continued to trend upwards during the year ended 30 June 2016 and loan settlements were $219 million compared to $214 million for the previous year representing a two percent increase.

Finance broking revenue also grew during the year and was $2.53 million marginally ahead of the previous year (2015: $2.48 million).

The business also focused on transitioning the personal lines insurance business from being underwritten by Steadfast and CGU to QBE. This has resulted in a consolidated insurance offering that delivers improved commercial terms, premium reductions, superior products and an improved business partnership. This transition will also assist by making a wider range of insurance offerings, including commercial and business insurances, available.

Revenue from general insurance grew to $2.95 million representing an increase of 67 percent.

Progress and priorities

What we achieved

  • Considerable progress on converting the Flinders Australia Limited business—acquired on 1 July 2015—to a fully licensed trustee company through recruitment of new people, strategic restructure and revision of business practices required to achieve this objective.
  • Australian Unity Personal Financial Services positioned itself effectively in relation to legislative changes that now require accountants who provide advice in relation to the establishment of Self-Managed Superannuation Funds (SMSF) to either hold an Australian Financial Services Licence (AFSL); or be authorised by an AFSL holder; or work with a licensed or authorised financial adviser when providing SMSF advice. Australian Unity’s ability to offer such support resulted in the induction of 79 accountants during the year. Accountants commercially associated with the advice business now number 354.
  • Significant growth in finance broking and the insurance services business with revenue growth of 67 percent.

Where we were challenged

  • While the business has been significantly strengthened by a number of recent strategic acquisitions it was adversely impacted—particularly in the second half of the year—by a multitude of external factors that shook investor and adviser confidence.
  • The business was also impacted by restructure costs associated with preparing the Flinders Australia Limited business for offering traditional trustee services. The development work undertaken to convert Flinders to a fully licensed trustee business requires considerable effort and resourcing and had a negative impact on overall business profitability in the year ended 30 June 2016.
  • The number of financial advisers decreased marginally to 176 at 30 June 2016 (30 June 2015: 183), due to some practices, as anticipated, leaving the now wholly-owned Premium Wealth Management business after its acquisition in 2015. Offsetting this expected attrition arising from integration, the business recruited 10 new practices during the year.

In the coming year we plan to:

  • Progress our application for a trustee licence, and develop, re-brand and rapidly grow the estate planning, trust and estate administration business.
  •  More rapidly expand the employed adviser and broker business while maintaining steady growth in the network of self-employed advisers and accountants.
  • Develop the digital platform to support business intelligence, financial literacy and online sales growth.

Independent & Assisted Living

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Independent & Assisted Living


More than


occupancy in retirement communities and aged care facilities


clients added after transfer of Home Care NSW

Australian Unity Independent & Assisted Living (previously Retirement Living) provides Retirement Communities, Aged Care, Home Care & Disability Services.

Australian Unity Independent & Assisted Living has continued to invest significantly in its retirement community and aged care assets. It has significantly grown its Home Care & Disability Services operations with the successful tender in 2016 for the transfer of the home care operations of the New South Wales Government (Home Care NSW).

2016 Review

Home care & disability services

During the year, the expansion in home care and disability support was a significant contributor to the overall strong result. In February, the Home Care NSW transfer resulted in 50,000 new clients and 4,300 staff joining Australian Unity. To support this growth and to realise the ambition of extending services to these new clients, new client management and staff rostering software capabilities were introduced, including planned mobility solutions to all staff and customer portal access for clients and their families. The business also established a 24-hour customer service hub in Parramatta.

The transfer of Home Care NSW also included a specialist Aboriginal Home Care service which provides culturally appropriate care for the Aboriginal community. Australian Unity is committed to maintaining the unique and important identity of Aboriginal Home Care and is proud to be one of the larger employers of Aboriginal and Torres Strait Islander peoples in NSW.

Overall, the business expects to deliver in excess of 3.5 million instances of home and disability care services in the 2017 financial year and will continue to invest in key technology that supports business growth and client needs.

Retirement communities

Australian Unity Independent & Assisted Living owns and operates 19 retirement communities in Victoria and New South Wales. Its portfolio grew across the year through the development of new units at existing communities and now consists of 2,110 (2015: 2,074) independent living units.

Retirement community development continued during the year at Sienna Grange and The Governors in Port Macquarie, NSW; The Residences at Rathdowne Place in Carlton, Victoria; Campbell Place in Glen Waverley, Victoria; and Lifestyle Manor in Bondi, NSW. Completion of these projects is planned to occur during the financial year 2017 with a total of 223 independent living units to be added to the businesses portfolio. Development at Peninsula Grange in Mornington, Victoria, also continues and will be complete in coming years.

Retirement community occupancy was greater than 97 percent across the 12 month period to 30 June 2016. Fewer than 30 independent living units remained uncontracted across the portfolio as at 30 June 2016.

Aged care

The aged care business continues to be an important area of growth for Independent & Assisted Living and is delivering a key component of business strategy to provide services that offer a continuum of care. During the year, its newest facility, Peninsula Grange in Mornington, Victoria, achieved 100 percent occupancy more than six months ahead of schedule. The business maintained 609 operational aged care beds throughout the year.

The business also commenced construction of Campbell Place Aged Care facility in Glen Waverley, Victoria, in September 2015 on land where the previously decommissioned Wahroonga Aged Care facility had stood. This facility will provide a further 102 operational aged care beds and is planned to open in the 2017 financial year.

In 2016, occupancy levels at Australian Unity’s aged care facilities remained very high at approximately 98 percent.


The management of Australian Unity’s developments and development pipeline is an important enabler in the provision of high quality accommodation options for Australian Unity customers. This component of the business provides the ability to develop accommodation options for customers that reflect a deep knowledge of the needs of ageing clients and younger people living with disabilities.

Collaboration with Australian Unity’s Investments team continued during the year with further development of alternative channels for development funding.

In September 2015, the business closed its second Development Fund, which invested in the Campbell Place Wellbeing Precinct. This Development Fund utilised third party capital—in conjunction with support from financiers—to fund the development of 58 new retirement apartments and 102 aged care beds. In June 2016, applications to invest in the third Development Fund, being the Sienna Grange Aged Care Facility in Port Macquarie, NSW, were closed, with applications to invest exceeding the funding required from external investors.

Given the increasing demand for quality retirement accommodation and the success of the Development Fund model, further investment opportunities are planned to be launched during the 2017 financial year.

Progress and priorities

What we achieved

  • Successfully tendered for—and then transferred —Home Care NSW.
  • Maintained very high occupancy rates in both our retirement communities and aged care facilities.
  • Together with Australian Unity Investments, successfully closed two development funds that raised sufficient capital to support the Port Macquarie (Sienna Grange) and Glen Waverley (Campbell Place) developments.

Where we were challenged:

  • Balancing the costs of providing flexible and accessible services in an environment of personal financing pressures for many older Australians is increasing pressure on the business.
  • Government funding constraints and system complexity continues to challenge the sector as a whole. The business is committed to working with the federal government to provide practical feedback on these constraints so that vulnerable Australians can enjoy higher wellbeing through the best care system achievable.

In the coming year we plan to:

  • Successfully integrate Home Care NSW into the business and embed new technologies designed to free more care workers’ time to spend with clients.
  • Support disability clients to transfer to the National Disability Insurance Scheme.
  • Accelerate the business’ aged care facility and retirement community development program.
  • Invest in our people through learning and development programs.


The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.


Australian Unity’s employee  engagement score of


is now in line with global high performing companies

More than


Aboriginal and Torres  Strait Islander people joined Australian Unity as part of the Home Care NSW transfer, making Australian Unity one  of the larger employers of Aboriginal and Torres Strait Islander peoples in NSW

“You feel so good because you are helping somebody and they appreciate it. I see the smile on their faces. My clients say it makes them feel more independent.”

Priscilla – Home Care Worker, Independent & Assisted Living

“Our clients share with us some very deep and personal things about their lives. It becomes a very honest and warm relationship.”

Nicci – Senior MindStep Coach, Remedy Healthcare

“From years of experience I have learnt that insurance is not about the money, it’s about protecting a life that’s worth living.”

Tim – Financial Adviser, Personal Financial Services

“I’ve been with Australian Unity since 2001. For the last 10 years I’ve been focusing solely on healthcare property. That’s very satisfying. We’re getting great outcomes for investors but also benefitting the community. ”

Chris – Head of Healthcare Property, Australian Unity Investments

Australian Unity’s workforce expanded rapidly after significant business investments, while leadership capability was further developed and workplaces made safer.

Home Care NSW workforce comes on board

Australian Unity’s workforce was significantly increased  in 2016 after the Home Care NSW transfer, with more than 4,300 employees joining the organisation. Among  the new employees are more than 300 Aboriginal and Torres Strait Islander people, making Australian Unity  one of the larger employers of Aboriginal and Torres Strait Islander peoples in NSW.

Staff engagement at globally high levels

During the year, Australian Unity conducted a staff engagement survey. For the first time, Australian Unity reached global high performance in both engagement (87 percent) and sustainable engagement (82 percent). Sustainable engagement measures the enduring strength of employee engagement. The survey also found significant workplace improvements over the preceding 12 months, including improved leadership, more receptiveness to staff feedback, and better change management processes and practices.

Strengthening leadership capability

Investing in leadership is vital in a growing business. During the year Australian Unity redeveloped its key leadership program, now known as ‘Momentum’. The program focuses on developing capability, improving collaboration and focusing business decisions on building community value. The 40-strong Momentum group has identified key goals they wish to achieve as a collective.

The Australian Unity Business School also continues to support and develop workforce capability, with 150 staff undertaking the range of leadership programs available.

Investment in Systems

Supporting Australian Unity’s growing workforce to  be its best requires investment. During the year a new  payroll and human resources system was implemented, giving managers and employees more information about the workforce. In the coming year Australian Unity plans further enhancements including a Learning Management System, mobile access and a new reward module for remuneration and benefits.

Remedy Healthcare coaching for  Home Care staff

Australian Unity’s suite of businesses allows one business to support another to improve employee wellbeing. In one example during 2016, 125 staff from the new Home Care business participated in a Remedy Healthcare health coaching program. This led to a 25 percent increase in staff meeting the Royal Australian College of General Practitioners’ guidelines for preventative health, just one of a number of positive results.

Occupational health and safety

Australian Unity has a diverse risk profile due to the nature of our workforce and working environments. Employees work in environments ranging from offices and clinics to residential aged care facilities and clients’ homes. Around 4,000 employees are mobile and on any given day over 2,000 are working on the road.

Australian Unity is addressing these challenges by commencing an early intervention program to provide appropriate medical care to employees requiring support, implementing an incident and hazard reporting system to all employees and introducing a driver safety induction program.

Diversity and equal opportunity

Gender: This year’s Workplace Gender Equity report showed improvement in most key gender metrics including gender balance in management positions and the reduction in the gender pay gap.

Aboriginal and Torres Strait Islander employees: During the year Australian Unity considerably expanded its Aboriginal and Torres Strait Islander employee numbers. Australian Unity is committed to supporting these employees to continue to provide specialised and culturally safe services to their clients. Programs to expand employment and development opportunities across the organisation for these employees and to continue to attract other Aboriginal and Torres Strait Islander candidates are in development.

Disability: The commencement of the National Disability Insurance Scheme creates opportunities for Australian Unity to improve workforce participation for people living with disabilities. This will continue to be a focus of the Human Resources team in the coming year.

Making a difference

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Making a difference


in total direct community contributions


in grants distributed to community groups


industry groups or policy institutes that have an Australian Unity executive as a board member


pages saved with new ‘follow me’ printing system

Australian Unity believes helping people and their communities to thrive doesn’t stop at offering valuable products and services. We also support community initiatives and advocate for public policy change on behalf of members, customers and society as a whole.

Areas of support 2016

Overall Australian Unity directly contributed $723,454 to the community during the year in review. This sum included community grants, employee volunteering and sponsorships as well as support for advocacy groups the Australian Council for Health Research and the Centre for Independent Studies.

Australian Unity’s executives were also involved in policy advocacy, participating on the boards of 12 industry groups or policy institutes.

Wiggles partnership

Australian Unity and The Wiggles have entered a three-year partnership, with the first project being the launch of a mobile app encouraging children to brush their teeth. The app, Brush Time with The Wiggles, has been downloaded more than 20,000 times.

the wiggles

Brandenburg Orchestra sponsorship

The Australian Brandenburg Orchestra visited eight Australian Unity retirement villages in the year under review, performing classical and baroque masterpieces to delighted audiences. The performances were part of an ongoing sponsorship arrangement between Australian Unity and the orchestra.


Australian Unity continues its advocacy to address the social infrastructure challenge in many forums. During the year under review Australian Unity partnered with the Business Council of Australia to host a series of health forums addressing the critical need for health reform in Australia. It also mounted a campaign to inform members of waste in the health system, encouraging members to share their personal experiences.

Australia Day

Australian Unity’s association with Australia Day, borne of its antecedent organisation The Australian Natives’ Association driving the original idea, continued this year with the Great Australia Day Breakfast at Parliament House in Victoria. Economist Ian Harper, who recently conducted a review of competition policy in Australia, gave the keynote speech in which he spoke of the potential for disruption of our traditional economic drivers to re-establish Australia on a path to rising living standards.

Australian Unity Wellbeing Index

The Australian Unity Wellbeing Index sparked great interest during the 2016 federal election campaign when it examined the happiness of Australians in each federal electorate. Rural electorates dominated the happiest rankings, while suburbs in the big cities of Sydney and Melbourne were at the lower end. The Index, a research partnership between Australian Unity and Deakin University, has measured personal wellbeing over the last 16 years. It examines factors such as health, finances, satisfaction with relationships, safety and connectedness to community. The average score has consistently remained around 76 out of 100, indicating Australians generally have high wellbeing.

Australian Unity Foundation

The Australian Unity Foundation, now in its 11th year, is an important part of Australian Unity’s community engagement effort. Since its inception in 2006, more than $1.6 million has been distributed to deserving organisations that support community wellbeing. This year, grants totalling $89,233 were awarded to The Victorian Homeless Fund; Taralye, an early intervention centre for deaf children and their families; Hilltop Foundation, a provider of skills, training and support programs to disadvantaged families and young people; and Highland Grace, an organisation that supplies weekly food hampers to needy families. A Heritage Fellowship Grant was also given to Melbourne University’s Dr Melanie Davern who is conducting a project to measure the impact of community programs and public policy initiatives using the Australian Unity Wellbeing Index.

Reconciliation Action Plan

Australian Unity is in the process of negotiating our first Reconciliation Action Plan, or RAP, with Reconciliation Australia. The transfer of Home Care NSW to Australian Unity in February brought with it hundreds of Aboriginal and Torres Strait Islander staff and thousands of clients, and further added momentum to this important initiative. The RAP is being developed with input from staff across Australian Unity’s businesses, and has strong support from all executives and the board. The Group Managing Director and the CEO of Personal Financial Services are leading the RAP working group.


Australian Unity is committed to environmental, cultural, social and ethical sustainability. An example is the Responsible Investment Policy under which Australian Unity’s real estate investment business manages its portfolio of properties. The policy includes commitments to the environment such as reduction in the use of non-renewable energy sources, social considerations including enhanced disability access in construction and design, and cultural commitments including the incorporation of cultural and heritage components into built form design. Australian Unity’s retirement communities also strive to incorporate industry-leading sustainability components into their design and use, with the Peninsula Grange community villas all having a 6-Star energy rating, and a community-wide rainwater collection system for re-use in irrigation and toilet flushing.

Australian Unity’s focus on sustainability extends beyond building construction into many aspects of everyday life. For instance, a new printing system was implemented during the period under review, and after just five months some 350,000 pages of paper have been saved.

Governance statement

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Governance statement

Australian Unity Limited is a mutual, public company with a number of wholly-owned subsidiaries carrying out the major operational activities of the Australian Unity Group.

Good corporate governance is a fundamental part of the culture and business practices of the Group. The key aspects of the Group’s corporate governance framework and practices are set out below.

Regulatory Framework

ASX Listing rules

The Company is committed to maintaining high corporate governance standards and has adopted a governance framework that meets the Australian Securities Exchange (ASX) requirements relevant to the Series B – Australian Unity Bonds (Tranche 1) (the Bonds) and reflects the majority of ASX Corporate Governance Principles and Recommendations (as applicable). The Company continues to be listed on the ASX as a Debt Listing, following the issue and quotation of the Bonds on 15 December 2015.


Australian Unity’s business operations are extensively regulated including by the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission and the ASX. Australian Unity Limited is registered as a non-operating holding company under subsection 28A(3) of the Life Insurance Act 1995 and regulated by APRA under that designation. Australian Unity is also subject to various State and Commonwealth regulators across its operations and workforce including the Department of Health, Australian Taxation Office, the Fair Work Ombudsman, the Workplace Gender Equality Agency and work health and safety regulators.

Board of directors

The board of directors of the Company is responsible for the governance of the Group.

Board composition and expertise

As at 30 June 2016, there were seven directors on the board, each with specific expertise and experience relevant to the Group’s activities. The board comprises a majority of directors who are non-executive and judged by the board to be independent and free of material relationships that might influence their ability to act in the interests of the Group and its members. The average tenure of non-executive directors at the end of the year in review is 3.7 years.

The personal qualities required of Australian Unity’s directors are:

  • honesty and integrity
  • strategic insight
  • capacity to relevantly question, probe and challenge
  • ability to inspire and inform
  • extensive connectivity within the business world
  • an understanding of contemporary leadership and management approaches
  • a commitment to both the values of the Group and the highest standards of corporate governance

As well as these qualities, directors must also possess particular skills or experience relevant to the business operations of the Group and be ‘fit and proper’ within the meaning of Australian legislation and regulatory regimes applicable to the Group’s business operations. The board’s current “skills-matrix” includes: industry-specific skills and experience in the Company’s businesses (healthcare, retirement communities and home services, financial services, investment management and insurance); and general skills in management and human resources, finances and accounting, legal, regulatory and public policy, marketing and communication and measured risk-taking.

The board, led by the Chair, reviewed the skills represented by the directors to ensure that the mix of skills remains appropriate to achieve the Company’s objectives. The board consists of directors with a broad range of skills, expertise and experience, and a diversity of backgrounds and gender.

Board role and responsibilities

The role of the board is to promote and protect the interests of the Company and its members. It does so by taking intelligent risks, soundly governing the Group’s activities and by seeking the highest standards of ethical conduct and service from employees.

The role and responsibilities of the board are formalised in the board charter. Some of the key matters the board has reserved for itself include:

  • appointment and terms of appointment of the Group Managing Director
  • approval of Group and business unit strategies, operating plans (including budgets) and financial expenditures and allocations, and changes to the Group’s capital structure above delegated limits
  • approval of new subsidiaries and subsidiary board members
  • setting and monitoring the Group risk management framework, control and accountability policies and systems

The role of the board is to promote and protect the interests of the Company and its members. It does so by taking intelligent risks, soundly governing the Group’s activities and by seeking the highest standards of ethical conduct and service from employees.

Role of Chair

The Chair, an independent non-executive director, is responsible for the efficient conduct of the board’s meetings, setting the agenda, facilitating the work of the board at its meetings and ensuring that the procedures and standards of the board are observed.

Meetings of the board

The board met on 14 occasions during the year under review. Each meeting usually took place over two days. Where necessary it met between scheduled meetings to deal with matters as and when appropriate. The board held a meeting to approve the strategic plan and its application to the year ahead. The board agreed a revised and strengthened process for evaluating the performance of the board, its committees and individual directors over a rolling three year cycle commencing in the 2017 financial year with the first assessment period covering calendar year 2016.

Avoidance of conflicts of interests

In addition to their standing notices, directors must declare any specific conflicts of interest arising from the business of a particular meeting.

Retirement and re-election of directors

During the 2016 financial year several significant changes occurred on the Company’s board, including the retirement of the Chair, Mr Glenn Barnes, and appointment of Mr Peter Promnitz as the Chair from 30 March 2016. Directors (other than the Group Managing Director) serve for a term of not more than three years from the conclusion of the annual general meeting at which they are elected. No director (other than the Group Managing Director) shall retain office past the third annual general meeting following the director’s appointment, although they may offer themselves for re-election at that time.


The board has established committees that are necessary to assist it in monitoring and, where relevant, advising the management of the Group on matters specific to the committee’s terms of reference. Each committee comprises individual directors determined by the board to be best suited to fulfil the committee’s terms of reference. Membership of all committees and the number of meetings held by each committee in this reporting period are detailed in the Directors’ report.

The Chair of the Company is a member of each committee. Each committee is chaired by a non-executive director appointed by the board. Each committee provides regular reports to the board about the activities of the committee. The minutes of the committee are tabled at the following board meeting. The current key committees established by the board to assist it in the performance of its duties are as follows.

Audit & Compliance Committee

The Audit & Compliance Committee (A&C Committee) approves the annual internal audit plan and monitors the Group Audit department’s performance against this plan. The main objective of the A&C Committee is to oversee the credibility and objectivity of financial reporting and the compliance with Group obligations. The A&C Committee assists the board in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices of the Group.

Risk Committee

The Risk Committee oversees the risk management framework for identifying, assessing, mitigating and monitoring material risks arising from the business activities of the Group, and promotes a greater awareness and commitment to risk management practices within the Group. The Risk Committee is also involved in shaping the Group’s risk appetite and guiding the Group’s strategy in line with its determined risk profile.

Investment Committee

The Investment Committee reviews and monitors the performance of Australian Unity’s investments and any investment managers utilised by it. It also approves the investment policies, strategies and other guidelines for the Group’s own investable assets. The Investment Committee plays a critical role in assessing and reviewing the Group’s investment approach and outlook to support their appropriateness and compliance with relevant covenants.

HR Committee

The Human Resources, Remuneration and Nominations Committee (HR Committee) is responsible for assisting the board and Chair in relation to remuneration, nomination and related matters. These matters include periodical evaluation of the performance of the board as a whole, its committees, individual directors and its governance process (Detailed Review). The HR Committee conducts a Detailed Review on an annual basis. They also include the identification and consideration of suitable candidates for board appointment as successors to current directors or to supplement and renew the skills and experience of the board. The HR Committee also recommends the performance measures, evaluation and remuneration of the Group Managing Director to the full board and approves the remuneration for Group Executives and financial control and reporting personnel as defined by the APRA standards.

The HR Committee also oversees the frameworks that enable the appropriate culture, workforce engagement, workplace diversity and representation of values, talent management and succession across the Group, and review the outputs of these frameworks at the appropriate time throughout the year.

The HR Committee works to ensure that the Group has remuneration policies and practices that fairly, responsibly and competitively reward executives and staff. The HR Committee’s considerations on reward structures are based on business performance, external competitiveness, compliance with legal obligations, and high standards of corporate governance. All members of the HR Committee are independent non‑executive directors. Further detail, including engagement of independent remuneration consultants, is contained in the Remuneration Report (contained in the Director’s Report).


Australian Unity’s remuneration policy, which was developed by the board on the advice of the HR Committee, sets the framework for rewarding all directors, officers and employees of the Group.

The Remuneration report (contained in the Directors’ report) sets out the key objectives and principles of the remuneration policy. The report also outlines the executive remuneration structure, which comprises fixed remuneration and at-risk remuneration components, in addition to details about non-executive directors’ remuneration and other information specifically required under the Corporations Act 2001 (Cth) (the Corporations Act).


External auditor

Ernst & Young (EY) has been appointed to conduct an audit of the financial report and to report to members in accordance with the requirements set out in the Corporations Act for the year under review. Its audit report is provided at the end of the financial report.

A representative from EY attended the October 2015 annual general meeting to answer any questions from members on the conduct of the audit, the preparation and content of the auditor’s report, accounting policies adopted in the preparation of the financial statements and EY’s independence in relation to the conduct of the audit of the Group’s financial statements.

Internal audit

The Group’s audit department provides independent, objective assurance and consulting services to the Group’s operations. The Group audit department assesses whether the Group’s network of risk management, control and governance processes are adequate and functioning in a manner that supports various aims including: the appropriate identification, reporting and management of risks; the accuracy, reliability and relevance of financial, managerial and operating information; and that employees’ actions are in compliance with policies, standards, procedures and applicable laws and regulations.

Risk management

The Company is committed to the identification and, where relevant, quantification of risk throughout its business units and controlled entities. The board, informed by the work of its Risk Committee, has established a comprehensive enterprise risk management policy and framework covering significant business risks and strategic considerations, and adopted a risk appetite statement. The underpinning processes are consistent with the principles of the relevant Standard (AS/NZS ISO 31000).

As part of the risk management framework, all business units regularly identify, evaluate and develop action plans to manage their business risks and maintain risk registers, which are regularly reviewed and updated not less than quarterly. Higher-rated risks are reviewed by the Risk Committee each quarter in addition to annual risk reviews by the board’s Risk Committee, including existing and emerging risks, associated mitigation strategies and status of implementation.

Business-related proposals to be considered by the board require proposing officers to be individually accountable for the identification, measurement and mitigation of all risk involved, and risk registers form part of the project management framework. There are also a number of programs in place to manage risk in specific areas, such as capital management, business continuity and emerging regulation.

The potentially adverse financial impacts associated with catastrophic risk exposures with regard to certain aspects of the Company’s activities, are also attenuated by the purchase of appropriate insurance cover.

The Group’s risk management framework is periodically revised to facilitate a continued proactive and consistent approach to risk management across all areas of activity.


The Company has a well developed and implemented compliance framework. Compliance managers are in place in specific business units where appropriate.

The focus of this function is to ensure ongoing compliance with all laws and regulatory requirements, with particular attention to industry specific requirements.

Financial overview

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.

Financial overview

If you have read this far into the annual report, you will hopefully have a good understanding of the Company’s achievements during the year. Put simply, this has been a year of strong revenue growth across the portfolio, accompanied by significant investments (and thus increases in operating expenses) to support the growth initiatives.

The following pages form the formal financial report to members, and should be thoroughly reviewed for a full picture of the Company’s financial position. Prepared in accordance with the requirements of the Corporations Act and the relevant accounting standards, they will be easy to navigate for people familiar with such material. This overview is intended to highlight some of the salient points and information found in the following pages, but is not meant to be a substitute for a full and proper analysis.

Consistent with these accounting standards, our financial report presents four key Financial Statements, shown on pages 64 to 67. These statements are followed by a set of notes that provide further, more detailed information (beginning on page 68).

The Consolidated statement of comprehensive income lists the income and expenses that produce the overall profit after tax of $35.6 million. This combines the results of all of the company’s operations from across the portfolio of businesses.

Readers can see from note 26 that the revenue presented in the statement of comprehensive income of $1.42 billion, combines the amount attributable to members of Australian Unity of $1.27 billion and the amount attributable to benefit fund policyholders of $0.15 billion. Note 26 also shows that revenue attributable to Australian Unity members has increased by 16 percent year on year, or $171.8 million.

As shown in note 2, this has largely been driven by the transfer of Home Care NSW from the NSW Government on 19 February 2016 for $109.4 million. This drove a 128 percent increase in Independent & Assisted Living fees and subsidies. Other strong contributors to the revenue increase included health insurance premium revenue up 4 percent, healthcare services revenue up 36 percent and fair value gains on investment property up 44 percent. The growth is especially pleasing given that it has come in a year when revenue associated with financial markets, investment income, is down 57 percent.

As one would expect with such strong revenue growth, expenses attributable to members of Australian Unity, excluding finance costs, refer note 26, have increased by 17 percent or $174.3 million compared to the prior year. The major contributor to this increase is the transfer of Home Care NSW. As detailed in note 3, this has seen an increase in employee benefit expenses year on year of 63 percent, or $113.3 million, and occupancy costs of 39 percent, or $4.6 million. Net health insurance claims have increased year on year by 2 percent, or $14.6 million.

The increase in depreciation and amortisation expense of 10 percent reflects the investments we have made into acquisitions and enabling technologies over the last few years. Similarly, the large increase in legal and professional fees of 69 percent or $8.9 million highlights, for the most part, the level of activity required to complete the Home Care NSW transfer and to mobilise the integration effort.

Finance costs expensed of $21.1 million only increased $0.5 million year on year despite the fact that corporate debt (excluding building society deposits) increased by 37 percent, refer note 9. This is due to the lower interest rate environment, the reduction in development finance loans and the swapping of the more expensive debt from the Retirement Village Investment Notes (RVINs) and the Australian Unity Notes (Notes) with the lower margin Australian Unity Bonds offer we introduced into the market in December 2015.

One way to examine the performance of each of the Group’s businesses is to look at note 1, the Segment Information, which demonstrates the importance of our portfolio of businesses and our strategy to build up the relative strength of the non-private health insurance (PHI) businesses.

The revenue growth story comes through strongly with the Investments and Personal Financial Services platforms each up 15 percent and Independent & Assisted Living up 109 percent. The contribution of the non-PHI businesses to revenue (excluding corporate functions and eliminations) has increased to 35 percent compared to 28 percent last year. In 2017, with a full year of Home Care NSW accounted for, we anticipate that this contribution will be closer to 50 percent.

In terms of adjusted earnings before Interest, Tax, Depreciation and Amortisation (adjusted EBITDA), health insurance also had another solid year with growth of 16 percent meaning its overall contribution is, consistent with last year, 53 percent of the Company’s adjusted EBITDA (excluding corporate functions and eliminations). Once the Home Care NSW business has been fully integrated into the Independent & Assisted Living business we anticipate that the overall contribution of the non-PHI businesses will be well above 50 per cent.

The Consolidated balance sheet details the company’s assets and liabilities, along with equity. An important measure of company strength is its gearing ratio, or how much debt the company is carrying.

This year saw a significant amount of treasury activity as we went to the debt markets with the issue of the first ASX-listed Simple Corporate Bond (SCB) in Australia, at a margin of 2.80 percentage points over the three-month bank bill swap rate. The $250 million raised by the Australian Unity Bonds was for the most part used to repay the previous debt instrument we had in the market—the $120 million Notes, which were due to be repaid by 14 April 2016—and to fund $100 million of the Home Care NSW transfer. Existing Noteholders took up 27 percent of the SCB offer with the balance coming from new investors, including some millions of dollars from Australian Unity members. The SCB will enable us to go back to the debt markets, utilising the same base prospectus, within the next three years.

There is a maximum covenant set on the gearing ratio of the SCB of 50 percent. Note 9 (a) defines the gearing ratio and reports the ratio as being 39.7 percent as at 30 June 2016. Corporate debt (Notes, SCB, RVINs, Development finance loans, Subordinated capital notes and Loan payable to related entity) of $343.9 million increased by 37 percent, primarily due to the $250 million SCB replacing the $120 million Notes. This increase has been offset to some extent by a reduction in the RVINs of $13.9 million and development finance loans of $16.8 million.

The Group’s continued investment in expansion can be seen in note 21, Business combinations, where acquisitions totalling $126.4 million (including $109.4 for Home Care NSW) were made during the year, compared to $26.8 million in the previous year.

Acquisitions totalling $126.4 million were made during the year, compared to $26.8 million in the previous year.

Intangible assets, refer note 14, have grown year on year by 118 percent to $350.5 million. The goodwill as a result of the Home Care NSW transfer is a significant part of this but the Group’s continued investment in technology is shown through the year on year growth in computer software of 25 percent.

Interest cover, or the proportion of earnings before interest, tax, depreciation and amortisation needed to make interest payments, was 3.81 times compared to 4.57 times the previous year.

Australian Unity ended the year with $916.7 million in cash and cash equivalents, compared to $903.3 million in the previous year. Cash from operating activities increased by $63.5 million, or 122 percent, with increased receipts from customers of $157.0 million and deposits of $57.3 million being offset somewhat by higher payments to suppliers and employees of $155.1 million. Cash outflow from investing activities increased by $101.1 million, primarily due to the net impact of the Home Care NSW transfer (reflected in Payments for business combination, net of cash receipt growth of $77.3 million). The funding for this can be seen in the increase in receipts from borrowings of $126.8 million.

After a very successful year we closed with members’ funds up almost 7 percent to $579.5 million.

Kevin McCoy signature

Kevin McCoy
Chief Financial Officer


The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.


Financial Report for the year ending 30 June 2016
Directors' report
Remuneration report
Financial statements
Notes to the consolidated financial statements
Directors' declaration
Independent auditors report to the members

The videos in this interactive report are provided in addition to the content of our annual report, but do not form part of it.