Kim Temple

12048212

ACCT11059

Accounting, Learning and Online Communication

Ass#1 – Step 3-6

Step 3

Firms Annual Report and Spreadsheet

Find my Company Excel Sheet - Ramsay Health Care.

Annual Reports

Download Annual Reports for 2014, 2015 and 2016.

Identify what my Firm does

My firm, Ramsay Health Care, from humble beginnings is a successful health care provider in the

Private Health Sector. Founded in Australia by Mr Paul Ramsay AO, Ramsay Health Care is rated as

one of the top 5 hospital operators in the world. The company operates over 220 hospitals and day

surgery’s worldwide and this number is continuing to grow. Not only do they acquire hospitals, they

also design and construct brownfields projects (construction speak for ‘building from scratch!’).

They also treat around 3 million patients each year and are solid performers on the Australian Stock

Exchange.

Note down Key Concepts and Questions (KCQ’s) and discuss with my peers

Blog Entry - https://templekim.wordpress.com/2017/07/23/may-you-find-health-wealth-and-

happiness-ramsay-health-care/

Know your firm

As mentioned in my blog, when discovering I was appointed Ramsay Health, I was very pleased. The

company was familiar to me for a number of reasons. I know the name from having been a patient

at one of the 220 hospitals and also, working in the construction industry, my company works with

Ramsay Health and has built/expanded some of their many hospitals. Currently, we are undertaking

works on St Andrews Hospital in Ipswich.

Upon researching Ramsay Health Care, I was surprised by the professional manner the company has

branded itself. They have a personalised YouTube channel, a well designed web site, frequently

issued newsletters and many positive company announcements. While I appreciate this is an

accounting course, a standout associated with Ramsay Health Care is the Paul Ramsay Foundation.

This foundation, in some way or another, has helped, enriched, and no doubt saved the lives of

many people that we know either personally or professionally. Paul Ramsay AO, established two

great organisations through Ramsay Health Care and Paul Ramsay Foundation and I will personally

be following the work of the foundation long after this course has concluded.

How was Ramsay Health Care Established? Is it an arm of a wider international company? Surely

one Australian man didn’t start this extremely successful business, did he?

If we return to the beginning of the company, it was established in Australia in 1964 and reached its

50 year milestone in 2014.

The founder, Paul Ramsay AO, was also the chairman and major shareholder of Ramsay Health Cate.

He was appointed as an officer of the Order of Australia and when he passed, he left a bulk of his

estate, said to be in the billions, to the Paul Ramsay Foundation.

In 2014, Ramsay Health Care was reported as being in the top 5 hospital companies in the world and

it has continued to maintain that ranking.

Ramsay Health Care was established with Paul Ramsay purchased a guest house in Sydney and

converted it into a private psychiatric hospital. The company has now grown to design, finance and

construct it’s own hospitals. They continue to grow through acquisitions of similar health care

companies. In 1997, they became a public company and ten years later, in 2007, Ramsay Health

Care expanded overseas to the United Kingdom. This has since further expanded to Asia and France.

The company has maintained it’s business strategy growth for the last 3 years

Financially, the company continues to go from strength to strength. Reading through the 2014

Annual Report, I found a large majority of it interesting reading. I like the way it was set out and

simplified for those who may simply want to skim through the 162 page document.

Recent news articles state it is diversifying into Pharmacies.

https://www.pharmacynews.com.au/News/Latest-news/Ramsay-set-to-roll-out-hundreds-of-

pharmacies

And the following article has a number of good points regarding Ramsay Health Care, share prices

and factors that may affect the company. http://www.fool.com.au/2017/07/19/3-reasons-why-the-

ramsay-health-care-ltd-share-price-is-a-buy/

What are the Risks Involved in Health Care? Would these risks be long or short-term risks?

Being in a construction company, we often identify risk and opportunity so I was curious to

understand the risks a company such as Ramsay Health Care had. These included Government

Policy and Regulations, Foreign Policy and Regulation, Acquisition, Health Funds, Relationships with

Doctors and Reliance on Nursing. Most of these mentioned were not areas I would have considered.

From a personal perspective, having private health, it was interesting to read one of the risks was

the Government Policy and Regulation as this was a direct link to private health insurance. I

considered over the last couple of years the increases and changes the government is undertaking in

relation to the costs associated and now understand how these changes not only affect individuals

but also businesses and shareholders. This was never something I had thought of previously. It was

only ever about me and ever increasing premiums I continue to pay for what is becoming almost a

luxury item. I also understood there was a relationship with Doctors and hospitals from a previous

personal experience however did not realise it was a high end risk worthy of being mentioned in

Annual Reports.

Given the success of the company and the growth experienced, what sort of remuneration could be

expected with a high performing company?

Upon reaching the page advising remuneration, I scanned through the first page to review the

salaries of the Directors and Board Members. Nope, nothing on the first page… nor second…nor

third. I was curious now why it was taking so long to establish and justify the packages until I

reached page 7 and saw the CEO was on a package equating to $9.562m per annum. I think we

should all pause for a minute and let that salary sink in…… Yes… $9.562 million.

I continued and found myself cynically reading the statement the retention of the Executive team

was beyond the remuneration they were receiving. Rather it was more ‘The Ramsay Way’ culture

and staff development… Hmmmm… Okay.

I then moved on to 2015 and 2016 and while the figures were again impressive in the financials, I

found quite a large majority of the information was verbatim from the previous years. I guess that is

what happens when you have a successful formula. If the company is facing challenges, they are not

divulging much information.

What are the challenges and issues faced in the financial statements?

After reviewing the annual reports, I did find it challenging to delve into the financial statements as

there was seemingly nothing to review. I didn’t feel there were areas of concern that needed

attention and reading through my financial statement would allow me to identify. However I

persevered and researched one of the items identified as a risk. I researched information regarding

the Australian Private Health Insurance and if there were any direct impacts within Ramsay Health

Care with changes to the way the Government funded Private Health with the introduction of means

testing the rebate on a sliding scale. This change was implemented prior to the annual reports

provided and as such there do not seem to be any flow on effect from this.

What observations were made within the Balance Sheet? And what is with all the footnotes?

Ramsay Health Care’s balance sheet from 2013 to 2016 has shown considerable growth. Almost all

line items show at least 100% growth. On almost all items there are footnotes. I find this term

mildly amusing, as there are 57 pages of footnotes. I had always believed to be small one-liners at

the bottom of a page. That said, I found the footnotes quite informative, giving further insight into

the breakdown in the Financial Statements. While the company has many subsidiaries, the financial

reporting is consolidated meaning Ramsay Health Care is the parent company. It notes within the

Annual Report these are 100% owned. I also scanned my firms statements for the terms ‘non-

controlling interest’ or ‘minority interests’ and note there is mention within the Changes in Equity

Statement however I am confused by this and will need to further investigate.

Ramsay Health Care Income Statement advises footnotes for each of the line items. Thinking there

may be further disclosure on the spending, I reviewed the relevant line items however these did not

go into detail, more providing justification of the figures and how it is being reported on and any

noting any high end costs.

If we were to apply the extended fundamental accounting equation to Ramsay Health Care it would

look like this;

Assets + Expenses = Equity + Revenue + Liabilities

Year Assets Expenses Total Equity Revenue Liabilities Total2013 4,063,752 (3,727,633) 336,119 1,541,815 4,183,98

22,521,937 8,247,734

2014 4,556,967 (4,410,990) 145,977 1,743,644 4,932,269

2,813,323 9,489,236

2015 7,621,685 (6,610,164) 1,011,521 1,837,794 7,366,523

5,783,891 14,988,208

2016 8,264,524 (7,860,083) 404,441 2,046,061 8,697,551

6,218,463 16,962,075

Reviewing the Changes in Equity statement, one of the first items I notice is the difference in the

dividends paid. There seems to be a large disparity between 2014 dividends and 2015. I am sure

once I become familiar with the breakdown in the coming weeks, this will make more sense.

I trust this has given you all a good insight into my company and hope you will ask many questions,

should you require further information.

Comments and Feedback provided on many Peer Blogs regarding Companies allocated

Favourite Blog and why

My favourite blog to date is

https://tiffanytreenaccounting.wordpress.com/

Tiffany has been really interactive and embraced blogging. Her openness in her blogs makes her

likeable and relatable and her gusto toward this course and life in general is apparent without being

over the top. Her blog is fun and her writing is easy to read. She has keep ahead of the course and

always inspires others with providing feedback and encouragement.

Top 3 blogs with opinions, supported with reasons and evidence.

My top 3 blogs are not the most obvious choices. While there are some obvious front runners in our

course with blogging, there are also the quiet achievers. Even though some of them do not have the

detail of others who are more active, they are blogs I will still have a look at on a regular basis to see

if they have updated.

https://valuationsbywendyarmstrong.wordpress.com/

I liked Wendys initial honesty in her ‘About’ page. Wendy opened up and provided us a great insight

into her life and her aspirations. Even though there isn’t much information on her page, the

information contained within is relevant and thoughtful.

https://kellyaccountantintraining.wordpress.com/

Kelly’s blog is similar to mine hence why I would naturally like it. Her blog is consistently updated

and easy to follow. Her writing style is clear and easy to read and she has shown a lot of detail

within her assignment.

https://sarielstories.wordpress.com/

Everytime I see an email advising there is an update on this blog, I stop and read it. I find Sarah’s

blog in line with the requirements of the course and detailed. It’s encouraging to see where she is at

and her structured approach has assisted with completing my assignment.

Step 4

Input Ramsay Health Care into Company Spreadsheet into Financial Statement Worksheet

(Attached separately)

Step 5

Chapter 2 Understanding the Game

Is Accounting Really a Game?

My initial considerations upon reading the Chapter 2 was when Martin posed the question whether

accounting is really a game? And should we manipulate and move numbers around to get the

numbers we want? My initial reaction to both was no. I don’t think accounting is a game, however

upon reading Chapter 2 there were some very specific thoughts occurring as I worked my way

through.

I consider the set of rules to support those outside of firms obtaining financial information and am

curious what rules they are. Is it a simple set of rules or more complex? As I read through, it became

very apparent the rules were not a simple, straightforward cookie cutter set of rules. There were

thousands of them, from several governing entities, ever changing and evolving…..Gulp!

This then took me back to my firm’s financial statement where within the footnotes there was

reference to New Accounting Standards and Interpretations and how these now apply to the

reporting required. It made specific note to the Australian Accounting Standards Board (AASB)

amendments for the reporting year.

Working for a larger company who issues an annual report, I will put my hand up and say I had never

shown any interest in reading, nor understanding the report, and I can’t help but consider if this was

due to not have an invested interest. It made perfect sense to me reading the disclosure of a firm’s

financial information has been driven by equity investors. If I had shares in a company, in any era, I

would definitely expect the firm to disclose how and what they were spending money on.

What is the difference between Management and Financial Accounting?

I had also never considered the two different types of accounting, Management and Financial

however it makes a lot of sense. Our Management Accounting in the company I work for is quite

detailed and often is broken down into areas that make sense to us, including cost codes and smaller

items important to our company, but not so important to others. It assists us with our day to day

running of the business and we are able to generate many, many reports however Financial

Accounting is more focused on the bottom line.

How many rules are we talking about?

GAAP was a new acronym for me. Reading this section addressed my consideration regarding rules

when first reading the chapter. Even now, the separate entities these thousands of rules are derived

from surprises me. And the closing statement of the paragraph of these rules not even being all the

rules sort of frightens me in relation to the responsibility we face as future financial people. As we

are dealing with money, there would always be consequence, either for or against, for not adhering

to these rules. I am exhausted just thinking about it. It also made me wonder who would sit down

and read all said rules for all entities and know where and how to apply them, given the sheer

volume and also they would be forever evolving.

In the readings in the book, I look forward to the summaries. I always find, even if I am getting lost

in the readings, the summaries or conclusions always bring it back together for me.

There was another statement about most businesses not producing financial statements and, like

most, it was never something I considered. Private companies and sole traders wouldn’t have a

need to produce an annual report nor statements however I consider the financial reporting they

would need to do for taxation and wonder if this would be considered a ‘kind of’ financial reporting?

Does it take a village to raise a Financial Statement?

The section on judgements, estimates and assumptions did make me feel uneasy initially however I

thought back to my employer and thought of the forecasting we do on a monthly basis and the

accruals and likened the statement to those activities. I also read with interest the section regarding

the AASB requiring the management preparing the financial statements of a company and

immediately thought back to a footnote on Ramsay Health Care when in 2015-2016 almost $3m was

spent on Auditing and Review through Ernst & Young. It lead me to liken the preparation of financial

statements to that of a village. There is no one person compiling these statements, it is most

certainly a combined effort of Management, Finance and external auditors complying with all the

rules and regulations.

Reading about collapse of Ansett took me back as we had flights booked when it went into

liquidation. I was also working at the time within an employment agency where Gate Gourmet, the

catering company for Ansett, were also deeply affected. To think a company the size of Ansett could

just run out of money is crazy. However, upon returning to the initial concept of judgements,

estimates and assumptions, one can only assume poor accounting practices and bad management

were contributing to the collapse.

I understand the section regarding the quality of the information provided, as it would be easy for

companies to ‘fudge’ numbers however, I do not believe they could hide behind them for long

especially with the level of auditing and governance required within businesses these days. Reading

about faithful representation and relevance took me back to my concerns regarding rules and

regulations and also made me consider the term ‘in good faith’. These terms, for some strange

reason, make me feel more comfortable instead of judgements and assumptions.

Chapter 3: Introducing Financial Statements

I approached this Chapter by first reading it in its entirety and highlighting the sections resonating

with me. I then went back to the highlighted section, with my Financial Statements in hand and

reviewed the areas indicated. I found this approach really helpful with addressing the ‘Know Your

Firm’ section of the assignment.

When reviewing the Balance Sheet, the reference to the information as at a certain date had me

visualising a company of managers and accountants all staring at a computer awaiting a certain time

on a clock to ‘freeze’. I do however know the reality of this is the complete opposite. Having

worked in Accounts with large monetary payments, financial year end is when a large push is on for

early payments and invoicing in time for year end.

I enjoyed researching of my company was a parent and whether the subsidiaries were 100% owned

or partial. I will need to further investigate my non-controlling interests as I am confused as they are

not showing clearly however I am confident by Ass#2 completion, I will have the answers.

A little off topic, I like the quote from David Suzuki regarding the bottom line as I too, believe this to

be true. It takes me back to a quote “…When the last tree is cut, the last fish is caught, and the last

river is polluted; when to breathe the air is sickening, you will realize, too late, that wealth is not in

bank accounts and that you can’t eat money…” by Alanis Obomsawin.

As previously mentioned, my statement referred to footnotes for most line items within my income

statement. Upon reviewing these, they did not go into further detail regarding the items, they were

more providing justification of the figures and how it is being reported. I also attempted to apply the

extended fundamentals of accounting and produced a table with the details however I must admit,

they do not make sense to me and would be very happy to receive feedback regarding how to read

the information?

The section regarding cash flow made me scramble through my report to see how much ‘cash’

Ramsay Health Care had. Almost $329m!!! That is impressive and not a bad asset to have. I do not

believe my firm will be going down the Ansett path anytime soon. I also am comfortable with the

Cash Flow Statement not including judgements. I like that it is straightforward, as it should be.

After being able to relate a lot of information from the previous sections in the Chapter, I really

struggled with the Making sense of financial statement. I did not quite grasp the Ratios section as I

could not liken it to anything and the Just do what works came across as more information based

rather than application.

What is the impact of Private Health Insurance in Australia to Ramsay Health Care?

There was a section within Use a structure where I thought about Ramsay Health Care and the

impact of Private Health Insurance within Australia and the Government rebates and I can’t help but

see a connection between the forever increasing insurance premiums and the rising profits of a

company such as Ramsay. With no relief in sight for Private Health and upon reviewing their

financial statements, Ramsay should, in the foreseeable future continue to flourish.

Step 6

Posted draft on blog

https://templekim.wordpress.com/2017/07/27/assignment-1-ramsay-health-care/

Provided link to blog on Feedback Forum

https://moodle.cqu.edu.au/mod/forum/discuss.php?d=241721

Posted a comment my Ass#1 is ready for student feedback. And specified areas you would like

feedback

https://moodle.cqu.edu.au/mod/forum/discuss.php?d=241721

Provide feedback to 3 other students and include/comment on feedback others may have given

https://accountingmywaytothetop.wordpress.com/2017/07/28/step-3-6/comment-page-1/

#comment-19 Mine was the first comment given to Margaret and it was only on the basis of her

denominations.

https://kristalmacleod.wordpress.com/2017/08/02/my-ass1/comment-page-1/#comment-12

There were no other comments, however I gave feedback to assist with the addition of KCQ’s.

https://talitha523.wordpress.com/2017/08/02/finished-ass-1-steps-2-6/comment-page-1/

#comment-2

Again, there was no comments from others however I feel like Talitha has done really well in her

interpretation of the assignment.

I have also been working with Wendy Armstrong assisting with her spreadsheet and providing

feedback for her assessment. This has been via email and a pdf of the transcript is attached.

Comment if feedback from other students was useful and why. How useful was the feedback.

https://templekim.wordpress.com/2017/07/23/may-you-find-health-wealth-and-happiness-ramsay-

health-care/

I received feedback from Sarah regarding news articles and made sure I put some in my assignment.

I appreciated the addition of these as it made this information more relevant and up to date rather

than just referring back to the financials.