NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES – OPERATING AND INVESTING
RAMSAY HEALTH CARE LIMITED
16 Other assets (net) (Continued)
Nature and timing of provisions
The restructuring provision primarily relates to:
• the restructuring of the Group subsequent to acquisitions. Provisions are made in the year the restructuring plans are drawn up and
announced to employees; and
• restructuring of entities with the Group.
Insurance policies are entered into to cover the various insurable risks. These policies have varying levels of deductibles. The medical
malpractice provision is made to cover deductibles arising under the Medical Malpractice Insurance policy, including potential uninsured and
‘Incurred but not Reported’ claims.
EMPLOYEE LEAVE BENEFITS
Wages, salaries, and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting
date are recognised in other payables in respect of employees' services up to the reporting date. They are measured at the amounts expected
to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future
payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that
match, as closely as possible, the estimated future cash outflows.
This provision consists of VAT and other taxes payable on impaired right of use assets for certain leases.
LEGAL AND COMPLIANCE PROVISION
The legal and compliance provision primarily relates to amounts provided for litigation that is currently in the court process or a matter under
review by a relevant authority.
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in
the Income Statement net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Key Accounting Judgements, Estimates and Assumptions
The insurance provision is actuarially assessed at each reporting period using a probability of sufficiency between 80% - 95% based
on differing exposures to risk. The greatest uncertainty in estimating the provision is the costs that will ultimately be incurred which is
estimated using historical claims, market information and other actuarial assessments. Included in the insurance provision is an amount for
claiming handling expenses at between 5%-10% of the estimated Ramsay claim cost.
16.d Superannuation commitments
The Group contributes to industry and individual superannuation funds established for the provision of benefits to employees of entities within
the economic entity on retirement, death or disability. Benefits provided under these plans are based on contributions for each employee and
for retirement are equivalent to accumulated contributions and earnings. All death and disability benefits are insured with various life insurance
companies. The entity contributes to the funds at various agreed contribution levels, which are not less than the statutory minimum.
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