Carol Altmann – The Terrier

Lyndoch Living’s full financial figures dropped late today and here is a quick snapshot:

Lyndoch last year posted a record loss of $4.029 million – almost $2 million up on the loss of the previous year.

In 2020, it posted a loss of $2.4 million.

In 2019, it posted a loss of  $1.88 million.

In 2018, it posted a loss of $1.77 million.

In 2017, it posted a $846,000 surplus.

Er, is this supposed to be how a not-for-profit operates? Not breaking even, but running at continual losses?

More importantly, Lyndoch’s net worth has dropped to $40 million in 2021, down from $48 million in 2020 and $69 million in 2015.

This net worth/equity figure  comes from adding up all of Lyndoch’s assets (around $100m), and subtracting all of its liabilities.

Lyndoch’s assets have hovered around the $100 million mark for several years now.

What has changed are the liabilities – they keep going up, up and up.

In 2018, Lyndoch’s liabilities were $37 million

In 2020, Lyndoch’s liabilities were $47 million.

In 2021, they were up to $60 million.

All of this cuts deep into Lyndoch’s overall financial position.

Lyndoch is borrowing big, it is taking risks, it is investing in a $22 million medical centre that is due to be finished mid-year, ploughing ahead with its $100m masterplan and somewhere in all of that is a whole lot of hope – by us – that it will all work out.

Hold on to your hats, me hearties.

[The full figures are available through the Australian Charities and Not for Profits Commission. I will pull apart the figures in detail in coming days.]

Carol Altmann – The Terrier

Long-standing Lyndoch Living board member Percy Eccles has resigned.

Mr Eccles, who has been a Lyndoch board member for nearly 10 years, said in a brief comment today that he resigned because he didn’t “feel I could have any more input, other than what I have already done”.

He declined to comment further.

Mr Eccles’ resignation comes as Lyndoch prepares to launch into building a $20-million-plus medical clinic on the former Tomlinson site that will house up to 20 GPs, a dentist, radiologist and education centre.

The ambitious project will be entirely funded by Lyndoch, including via bank loans and borrowing from Residential Aged Care bonds (as is currently allowed under federal aged care laws).

Mr Eccles’ resignation also comes as Lyndoch prepares to announce its new Chief Financial Officer, which will be its third CFO in five years, following the departures of David Knight and, later, Katie Wright who did not return from maternity leave.

Acting CFO Allan Conway – who filled in for Ms Wright – did not apply for the position and has also recently left Lyndoch.

Since Lyndoch first announced its $100 million masterplan in 2016, there has been growing concern over its ability to fund its rollout and the risks involved, particularly around the medical clinic which is due to open in 12 months.

A smaller, interim medical clinic is already under construction at Lyndoch, on the ground floor of the new Swinton Wing.

From what I am being told, there is a growing belief inside and outside of Lyndoch that the smaller medical clinic would be a far less risky investment and the larger medical clinic should be put on hold, if built at all.

In the meantime, we will have to wait and see if the board vacancy is advertised, or if a replacement for Mr Eccles will be appointed behind the scenes, as happened with the appointment of Prof Rob Wallis to replace former racing club CEO Peter Downs.

Carol Altmann – The Terrier

Oh a picture paints a thousand words.

Those of us who live or work near Lyndoch Living have this past week watched – and heard – Tomlinson Wing being razed right down to the last lounge chair left lying on its back in the rubble to make way for a multi-million dollar medical clinic.

Such is the secrecy around our community owned nursing home these days, we don’t know how much this clinic will cost – the last figure I saw published by an engineering firm was $24 million, but the plans have changed several times since then.

This clinic will house up to 20 GPs from the Warrnambool Medical Clinic, which Lyndoch now owns, and – presumably – by hiring GPs from elsewhere. It will also have a dentist, an x-ray and an acute care service.

To date, there has been no public discussion on how the business plan stacks up for such a huge investment, or the risks involved for Lyndoch, or the benefits it will bring to Lyndoch residents.

We are being asked to take it all on trust.

And trust is, frankly, in short supply around Lyndoch right now. That is what happens when you stop talking to the public and instead rely on spin.

Spin is how you turn a deficit into a surplus.

It’s how you get away with sponsoring a horse race and a corporate marquee at the May Races.

And it’s how you gouge up to 44% of a person’s home care package in admin fees.

So far, this gouging has helped Lyndoch build up a nice little nest egg of $3 million in cash.

No wonder Lyndoch is desperate to pump up its home care package clients: they are taxpayer-funded cash cows.

But is it sustainable? Is this really how home care packages are intended to work?

And, worse, is it a house of cards just waiting to crash, especially as the federal govt moves to close these loopholes?

Which brings me to this:

Last financial year, Lyndoch received almost $2 million more in taxpayer funds to pay for home care packages to help people stay in their own homes.

Did it spend almost $2 million more on supplying services?

No, it didn’t.

It spent almost exactly the same amount as the year before.

So where did this extra $2 million in taxpayer funds go?

Good question!

This was among the questions I asked Lyndoch yesterday in the ever-optimistic hope of a reply.

In the absence of any reply, I have perused Lyndoch’s figures and it appears this $2 million has been invested, which helps Lyndoch’s bottom line look better than it is.

The “surplus” for home care packages shot up from $234,398 in 2019 to $2.5 million in 2020.

A ten-fold increase in just 12 months.

The problem is, it’s smoke and mirrors.

This surplus is not Lyndoch’s money: it’s taxpayers’ money, given to Lyndoch, to provide home care packages.

It’s not supposed to be sitting around in a bank, earning interest and plumping up bottom lines.

It’s supposed to be helping people to bathe, or have their gardening done, or buy a new bed, or to supply hot meals, and if it is not being used for those purposes, then something is terribly wrong.

Fortunately the fed govt knows the system is buggered and is making long-overdue changes that it is rolling out as we speak.

A major change is that the home care money will no longer be paid in advance to places like Lyndoch.

It will be in arrears.

And by September, if new laws go through, the funds will only be paid for what has actually been spent, not sitting there waiting to be spent.

In other words, there will be no $2 million swashing around in Lyndoch’s bank account.

Given the demolition of Tomlinson, Lyndoch has a chance to reassure us that none of the changes planned by the fed govt (home care is just one of them) will make a jot of difference to its financial stability and it can plough on with its $100 million masterplan like there is no tomorrow.

If it doesn’t, or it can’t, then we should listen, very carefully, for the sound of the Queen of Hearts falling.

[Note: Lyndoch is about to hire a new Chief Financial Officer: its third CFO in five years.]

Sign up for new post alerts to your inbox. 

Tip Jar

Carol Altmann – The Terrier

Lyndoch Living, having recorded a fifth deficit in six years, is digging into residential bonds to fund its $100m masterplan.

And a warning – figures ahead, lots of figures – as we dive again into the swirling financials of Lyndoch Living.

One, two, three…jump!

When you bob up you will see that figures lodged by Lyndoch Living last week show an even greater loss – a $2.4 million deficit – than was reported at last October’s AGM (the one we were not invited to Zoom, but could watch later on YouTube).

The annual information statement lodged last week with the Australian Charities and Not for Profit Commission reveals a $600,000 increase on the $1.88 million loss reported at the AGM and in Lyndoch’s full financial statements to the commission.

The $2.4 m is the loss recorded by Lyndoch without taking into account the profit from the Warrnambool Medical Clinic, which it bought in 2019. Either way, it is the fifth deficit for Lyndoch in six years.

This doesn’t seem to trouble the board.

As reported here last November, Lyndoch’s overall asset base (assets minus its liabilities) also continues to slide and is now $47.6m down from $69m in 2015.

This doesn’t seem to trouble the board either.

There is a lot to digest in the 60-page financial statement, so I am going to break it into bite-sized chunks tonight and in follow-up pieces.

First, the report shows us that Lyndoch has funded at least part of its $13 million Swinton Wing expansion by doing something it has never done before, which is borrow money.

It has visited the bank and also borrowed a big chunk out of the $26 million it holds in residential bonds paid by residents.

From this $26 million in bonds, Lyndoch has thus far extracted $10,944,323.

By law, as long as an aged care provider can cover its residential bond refunds for the next 12 months, it can dig into the rest and repay it down the track.

If an aged care home defaults, the Federal Govt will pick up the tab, so it’s kind of a taxpayer-backed Ponzi scheme that relies on an aged care home doing the right thing.

It’s also cheap, interest-free money, but concerns about how these bonds are being used is one reason (among many) that the whole bond scheme is now under review as part of the Royal Commission into Aged Care.

The loans, of course, will need to be repaid at some point, including fairly substantial interest on the bank loans, despite low interest rates.

In 2018, Lyndoch paid zero interest on any loans.

In 2019, it paid $62,420.

In 2020, it paid $372,669.

As of 7 July 2020, Lyndoch signed up for another loan from the NAB for $3,386,000 which is due to be repaid by June 2022.

This was needed to fund the “redevelopment of a residential building” which, I assume, was the blowout in cost of the Swinton Wing.

That project, where residents are not allowed to hang any pictures on the walls despite paying huge bonds which helped fund it, grew from a budget of $10 million to $13 million.

Relying big on borrowed money is new territory for Lyndoch, which once upon a time used to spend only what it had, what the government gave it, and what it raised from the public.

But Lyndoch, as we know, is now a long way from those comfortable shores as it sails into a $100 million masterplan under the captaincy of a CEO and board that firmly believes you must spend money to make it.

This is why in 2019 Lyndoch bought the Warrnambool Medical Clinic, Health Spot and May Noonan Hostel, in Terang, for around $3.3 million.

(Lyndoch also recently hired JB Were – who will charge fees accordingly – to look after its complicated investment portfolio. We are not in Kansas anymore, Toto.)

The Warrnambool Medical Clinic last year turned over $3.8m in revenue, but had $2.8m in expenses.

According to the financials, the clinic returned a final profit of $539,249 to Lyndoch Living in 2020 which is not to be sneezed at… but $372,000 of this will be spent this year paying out the original owners of the clinic as the final instalment of the sale contract. Achoo!

The WMC was pretty much break even for last year.

As for this year, well this is when things get interesting, because Lyndoch has the wire fencing up and around its now-vacant Tomlinson Wing (built in 1991 with help from a generous donation from the Tomlinson family), all set for demolition to make way for a new, two-storey Lyndoch medical clinic to replace the existing WMC.

This clinic will have acute care, dentistry, an x-ray machine, up to 20 GPs, allied health, education rooms, a cafe, a chemist and no doubt wonderful indoor plants and a red-and-white colour scheme.

The cost? An estimated $24 million. Where is that money coming from?

The bigger question, however, is will Lyndoch Living thrive or dive under this grand expansion and multi-million dollar spend up? Time will tell.

More soon.

Carol “Alice” Altmann – The Terrier

Take my hand and follow me into the strange, alternative world of Lyndoch Living Wonderland, a sparkly world with a lovely colour palette, and where a deficit is “a good result”.

Lyndoch has just posted its fourth deficit in the past five years, but according to those who sit at the big table, there is no need for concern.

(Caterpillar: I don’t know what they’re smokin’ over there in the boardroom, but I want to try it!)

What’s more, Lyndoch CEO Doreen Power, who was appointed in 2015, has announced – without so much as a twitch of an eye – that we can expect our largest, fully-booked aged care home to run at a loss for another two to three years.

This means that by 2022, Lyndoch will have run at a loss for six or possibly seven years out of the past eight.

(Cheshire Cat: keep smiling everyone, keep smiling! Oh blast, here comes Alice with her practical facts…)

In 2014, the year former CEO Rhys Boyle retired, Lyndoch was comfortably in the black and recorded a $901,214 surplus, which came on top of surpluses in 2012 and 2013.

Here are the figures since:

2015: $208,707 deficit

2016: $130,037 deficit

2017: $846,563 surplus

2018: $1,573,98 deficit 

2019: $398,356 deficit

I think this tells us pretty clearly that Lyndoch is living beyond its means – each year it is spending more than it makes – but somehow an almost $400,000 loss like last year is a “good result”.

No it isn’t. It’s a bad result.

(Mad Hatter: Oh Alice, anyone knows a good result is better than a bad result which is better than a worserer result. Pour me some tea!)

If we push aside the spin and boil it down to the absolute basics, Lyndoch has one important job to do, which is to care for our elderly and infirm, for which it receives money from the Federal Government, the State Government, live-in residents, clients and its own investments.

From all these things, Lyndoch last year received a total income of $38.9 million.

It spent $39.3 million, in other words, it went over its budget…again.

On top of this, Lyndoch also confirmed a slightly awkward piece of news, which The Terrier flagged back in October, which was $11.3 million was wiped off its assets after certain, unnamed buildings were re-valued using a different method that, from what I can see, used market prices.

This is like owning a house you thought was worth $12 million, only to be told it is actually worth $1 million.

(Mad Hatter: Oh who cares? $1 million, $12 million, it’s only on paper! Tear it up and start over! More tea?)

Have a big sip of whatever you are drinking, because now we wade deeper into the forest of figures in search of the bottom line.

In 2015, Lyndoch had total assets of $96.5 million – this is whole shopping cart: the properties, the cash, the residential bond money, the investments, the cups and saucers, cutlery and cars.

At the same time, it had expenses, or liabilities, of $27.7 million, leaving it with a bottom line of $68.7 million.

By 2019, Lyndoch had total assets of $98.9 million – (White Rabbit: clap, clap, wonderful, magnificent! Well done!) – but….it also had liabilities of $47.7 million, leaving it with a bottom line of $51.1m.

This means Lyndoch’s overall bottom line has fallen from $68.7 million to $51.1 million in just five years.

(White Rabbit: Oh. But the cash, dear Alice, what about the cash?)

Lyndoch has plenty of cash: $48.7 million in cash and other investments, except they can’t touch most of it – around $30 million from my reckoning – because it is tied up in residents’ bonds.

(White Rabbit: So I can’t spend it on a shiny new pocket watch? Damn.)

As we know, other things have changed dramatically in the past five years too, including just about every member of the executive team being replaced, from the Director of Nursing, to the Chief Financial Officer, to the Human Resources head, with more than 80 staff having gone elsewhere.

I have since been told by a strong source that my figures are wrong and it’s closer to 120 staff, but I can’t verify this.

(Queen of Hearts: At last, at last, my walk on part…Off with their heads, I say! Off with their heads! Strike up the trumpets!)

No wonder the board wasn’t keen to trumpet all of this news at the annual general meeting last October, where written questions from the public were ignored, because they were not members of Lyndoch.

Anyone who has since tried to become a member has been rejected.

(Queen of Hearts: Close the gates! Don’t let the rabble in!)

And the crazy making thing is that despite these worrying figures, Lyndoch is not tightening its belt, but going on a spending spree: a $100 million masterplan that includes buying two medical clinics for a cost of $1.6 million, including $1.3 million for the Warrnambool Medical Clinic, so it can move them to a medical clinic that it will build.

(Mad Hatter: And don’t forget the horse race! We want to go to the races, so we bought the race! Giddyup Dormouse!)

I am worried, dear citizens, that we who own Lyndoch are being dragged deep into this wonderland and we won’t be able to find our way out, which is why we have to keep going.

(Caterpillar: Ah, chill baby and pass me the pipe.)

If you would like to support the Terrier, you can throw something in the tip jar below. 

The Tip Jar