INVESTMENT POLICY AND STRATEGY FOR THE MANAGEMENT OF RESIDENT BONDS OR RADs:

In these policies or statements, the word 'bonds' refers/means either bonds or RAD’s

PURPOSE:

This Investment Policy and Strategy stipulates the mandatory requirements for the management of Edgarley Home Incorporated (trading as Edgarley Assisted Living) resident’s accommodation bonds. All investment activities shall be exercised with due care, diligence and undertaken in a prudent manner.

Edgarley will not engage in any speculative investment activity or participate in schemes that are considered to be high risk or that expose the original principal sum to undue investment risk or potential loss.

The policy is intended to safeguard Edgarley’s cash and investments portfolio, strive to achieve appropriate earnings and manage cash resources to ensure sufficient liquidity to meet its obligations and requirements.

The policy reinforces Edgarley’s ongoing commitment to maintain a conservative risk and return investment portfolio as an important component of its ongoing prudent financial management practices.

The policy is intended to conform to Edgarley’s financial position and financial commitments, current legislative constraints and specifies our investment goals for the forthcoming years.

SCOPE:

Investment of funds is carried out under the guidance and approval of the Edgarley Home Inorporated Board of Management (the Board), through the Finance Sub-Committee. This policy applies to all managers, employees and sub-committee members who actively manage the investment funds or have the responsibility for employees who actively manage the investment funds.

All investments will be under the direct control of the Board unless this task is properly delegated or outsourced. The outsourcing of investments must be approved by a 75% majority vote of the Board or can be delegated to an appropriately licensed financial advisor as moved by a 75% majority of the Board. The motion and vote is to be recorded in the Board minutes.

INVESTMENT CONTROLS:

The following internal control practices are in place to ensure good governance and allow a transparent and clear investment performance measurement:

  • Policy content
  • Delegated authorities
  • Monthly reporting
  • Investment reviews
  • External audit
  • Annual meeting with financial institutions and external auditors

 Edgarley Assisted Living will maintain an appropriate level of fraud insurance as reviewed by the Board on an annual basis.

POLICY CONTENT:

Investments must be limited to deposits or investments in products offered in the normal course of business by authorised deposit-taking institutions (ADI) as approved by the Australian Prudential Regulation Authority eg banks.

All investments will be limited to the following products offered by ADI’s:

  • Cash-including fixed interest term deposits, bonds
  • Cash management trusts

Such investments are to be made in accordance with this policy, taking into consideration the following:

1. In determining appropriate investments the Board is to consider the allocated rating of the proposed  investment, and, as a minimum must invest in ratings no lower than long term AA or equivalent;

2. Having a low expectation of negative returns in any twelve-month period

3. Having proper regard to the risks associated with the investments given EHI’s objectives and cash flow requirements;

4. Having proper regard to the composition of Edgarley Home Incorporated’s investment portfolio, including diversification of the investments;

5. Having proper regard to the liquidity of Edgarley Home Incorporated’s investments, given its cash flow requirements,

6. Having proper regard to the ability of Edgarley Home Incorporated to meet its current and prospective liabilities, including potential resident bond refunds; and

7. Before investing in any particular asset, having due regard to the balance between risk and return so as to maximize the rate of return of Edgarley Home Incorporated’s funds subject to an appropriate level of risk; and

 In determining appropriate investments, the Board will be mindful of government guarantees that may cover deposits and cash management funds. Government guarantee arrangements may alter from time to time and the CEO is to monitor any changes and advise the Board of any guarantees that may cover any upcoming investments. Guarantee information will be included on the Statement of Investment sheet. 

 All investments will meet the legal requirements as outlined in the following Acts and Principles:

Aged Care Act 1997: Section 57, 17A, Division 8A of the User Rights Principles 1997

User Rights Amendment Act 2011: Schedule 1, Part 2

User Rights Principles 1997: Division 3, Subdivision 3.4

User Rights Principles 1997: Section 23.38A, 23.38B, 23.40, 23.42, 23.43 & 23.40(1)

DELEGATED AUTHORITIES:

The following process is to be adopted in investing funds of Edgarley and must be done so in accordance with the investment policy and strategy;

The CEO will prepare a statement of investment that includes amount to be invested, term of the investment, interest rate and name of financial institution. The statement is to be tabled at an Edgarley Home Incorporated finance sub-committee meeting for discussion. The investment, if recommended by the finance sub-committee, is submitted to the Board for their ratification. No investment can be made unless it is approved by the Board and duly minuted.

The CEO is responsible to ensure the investment is carried out as per the Board instructions.

Evidence of the investment will be tabled at the next available finance sub-committee meeting.

MEASUREMENT OF INVESTMENT PERFORMANCE:

Direct investments will be held through to maturity unless there is a need to access the investment. The decision to break an investment will be approved by the Board of Management or in certain urgent circumstances by the Chair of the Board, Chair of the Finance Sub-Committee and the CEO. This decision will be endorsed by the Board at its next meeting.

Investments will appear in the monthly financial statements, tabled at both the Finance and Board meetings.

DISCLOSURE STANDARDS FOR RESIDENTS:

A copy of this policy and strategy, together with a Disclosure Statement, will be sent to all existing residents of Edgarley Assisted Living and the new documentation will be included in Edgarley Assisted Living’s Resident Admission Pack for their information. Within seven (7) days of a request by any resident who has previously paid a bond, EHI will deliver a current copy of this policy.

REVIEW OF INVESTMENT POLICY AND STRATEGY:

This policy shall be reviewed by the Board annually and within a reasonable timeframe after the occurrence of one of the following events;

  • If there is a change to the executive decision makers
  • If there is a change in key personnel with responsibilities for managing accommodation bonds
  • If there is a change in the objectives of the investments
  • If there is a significant devaluation of any of the financial products invested in.

 AMENDMENTS:

Any amendments to this policy will require approval by 75% of the Board.