Promisia Healthcare : 2022 Promisia Annual Report (2.5MB)

Annual Report 2022

FOR THE YEAR ENDED 31 MARCH 2022

PROMISIA HEALTHCARE LIMITED

ANNUAL REPORT 2022

On behalf of the Board and management of Promisia Healthcare Limited, I am pleased to present the Annual Report for the financial year ended 31 March 2022 (FY22). This report can also be read online at https://www.promisia.co.nz/investor-centre/#reports-&-results.

Stephen Underwood

Chairman

30 June 2022

Our Business	4
Our Communities	5
Strategic Progress	6
Financial Snapshot	8
Chairman's Report	9
Our Strengths	13
Our Board & Leadership	18
Financial Statements	19
Notes to the Financial Statements	24
Independent Auditor's Report	48
Corporate Governance	51
Other Disclosures	59
Directory	63

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PROMISIA HEALTHCARE LIMITED

Caring for those

who need a helping hand

ANNUAL REPORT 2022

Our Communities

Our business is focused on delivering quality residential care services to the elderly.

Our values

We are committed to doing the right thing for senior New Zealanders. This entails offering the care that is appropriate and sensitive to people's individual requirements as they age.

We pride ourselves on providing personalised care, doing what we said we would do, behaving with integrity and respecting residents who have entrusted us with their care.

We operate four aged care facilities across the country, with more than 350 available care beds and 16 independent living villas, with a further 28 villas under construction.

Our facilities are in well-established and well serviced urban areas. They are integrated into their local communities and provide the best possible care for local residents looking to stay close to the home town they know and love.

We offer a range of community-style living arrangements catering for different health, social and personal requirements. Our facilities include retirement living in villas and care suites, rest home and hospital care. We also offer specialised care including dementia, palliative, respite and young disabled care.

Ranfurly Manor, Feilding

Beds152

Villas10

Staff168

SiteOwned

Nelson Street, Feilding

Beds49

Villas-

Staff45

StrongerAlways

TogetherNearby

Clear and	Supportive
Simple	and Personal

Following the acquisition of Aldwins House, which settled on 1 April 2022, all our facilities are fully owned by Promisia Healthcare Limited.

SiteOwned

Eileen Mary, Dannevirke

Beds58

Villas6

Staff58

SiteOwned

Aldwins House, Christchurch

Beds145

Villas-

Staff61

SiteOwned

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PROMISIA HEALTHCARE LIMITED

Strategic Progress

Our primary focus in FY22 was building occupancy of Aldwins House to achieve cashflow breakeven or better and strengthening the operational platform of the business. The latter included broadening the revenue mix and progressing with the Ranfurly Development to increase the independent living element of the business. Several potential acquisitions were also evaluated.

STRATEGIC OBJECTIVE	FY22 PROGRESS
Increase Occupancy at Aldwins House	• Increased occupancy to 87% of 100 available beds -
Growth of revenue through maximising occupancy	a further 45 beds to become available in FY23
	• Transfer of 32 residents from Rannerdale Village to
	Aldwins House in March 2022
Resident-Centric Care	• Continued to deliver high quality care within the
Deliver personalised care that focuses on respecting	challenges of the Covid-19 environment
and helping our residents who now need more of a	• The three established facilities received four-year
helping hand	accreditation from local DHBs. Aldwins, being new,
	has a maximum of three years
Broaden Our Revenue Mix	• Continued focus on dual purpose beds that can be
Increase the number of retirement villas to grow revenue	switched between rest home or hospital care as
required
from the sale of retirement village ORAs
Broaden the range of services offered at each facility and	• Increasing revenue from ORA sales as new builds at
increase the number of beds requiring higher levels of	Ranfurly are completed and units sold at higher prices
care and revenue (hospital and dementia) where there is
local demand
Brownfield Development	• Completed 10 care suites
Progress the development at Ranfurly Manor	• Sold and completed four of 32 planned villas
Acquisition	• Acquired Aldwins House in Christchurch which was
Pursue acquisition opportunities based on quality,	being operated by Promisia
geographic and cultural fit, demand for services, growth	• Identified a number of acquisition and development
potential and contribution to profitability.	opportunities subject to ongoing discussions

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ANNUAL REPORT 2022

Operating Highlights

• First full year as an aged care business with a very pleasing net gain for the period of $2.0m
• Greater Board industry experience through the appointment of Andrew Mitchell whose career includes 13 years with Ryman Healthcare
• Unconditional acquisition of the land and building at Aldwins House, Christchurch
• Focus on standardisation of systems across the group with execution to commence in FY23
• Building strategy to recruit, recognise, reward and develop staff
• Post-periodend: Appointment of experienced industry executive, Stuart Bilbrough, as Chief Executive Officer in May 2022

OPERATIONAL METRICS	FY22	FY20/211
As at 31 March 2022
Available care beds	359	299
Bed occupancy	86%	81%
EBITDAF per available care bed2	$9,833	($782)
Village units	16	12
Staff	335	288

1. The prior FY21/20 period covers the 15 months to 31 March 2021 and includes five months of operation at an aged care business.
2. EBITDAF is operating earnings before interest, tax, depreciation, amortisation and fair value adjustments and is a non-GAAP number.

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PROMISIA HEALTHCARE LIMITED

Financial Snapshot

FINANCIAL HIGHLIGHTS	FY22	FY20/211
NZ $000s
Operating Revenue	18,996	6,060
Gain on lease termination	943	-

ANNUAL REPORT 2022

Chairman's Report

Stephen Underwood, Chairman

Dear Shareholders

On behalf of the board of directors, I am pleased to present to you Promisia Healthcare's Annual Report for the year ending 31 March 2022. This has been our first full year operating as an aged care business following the successful acquisition transaction completed in October 2020.

Fair value movement	(222)	1,250
EBITDAF3	4,473	(234)
Net gain for the period	2,027	26
Total assets	51,535	58,227
Cash and cash equivalents	2,411	1,219
Debt	17,154	17,833
Net operating cash flow	3,755	566

Results reflect full 12 months' operation as an aged care business, compared to five months included in the prior year

Total income of $19.9m includes gain on lease termination of $0.94m Earnings excluding fair value movements (EBITDAF) were $4.5m Net gain after tax on continuing operations $2.0m

Total assets $51.5m, including cash and cash equivalents of $2.4m Net debt $17.2m as at 31 March 2022, in line with the prior year

3 EBITDAF is operating earnings before interest, tax, depreciation, amortisation and fair value adjustments and is a non-GAAP number.

FY22 STRATEGIC FOCUS

Last year we advised shareholders that there were four strategic objectives for the 2022 financial year:

• Increase occupancy of Aldwins House
• Strengthen the operational base of the company and broaden the revenue mix
• Commence the Ranfurly Development
• Identify and evaluate potential acquisitions

The directors are pleased to report that considerable progress was made with all strategic objectives during the year.

Aldwins House

We have maintained the progressive opening of new beds in the refurbished Aldwins House, despite the impact of Covid-19. Occupancy increased from 22 beds at the end of the previous year to 87 at the end of the 2022 financial year, with 100 beds currently available. A further 45 beds are expected to become available in FY23.

Occupancy was boosted by the transfer of 32 residents from Rannerdale Village in March 2022, as well as a short-term uplift in January 2022 when we took in approximately 40 residents and staff from an at-risk aged care facility during the floods on the West Coast.

In March this year, shareholders approved the acquisition of Aldwins House for $13m, which settled on 1 April 2022 and was funded by vendor finance and new debt facilities. This now means that all four of Promisia's facilities are owned by the company. We would like

to thank our shareholders for their support for this acquisition.

Aldwins House had been operating at a loss for much of the last financial year, however, with new management, increased occupancy and the replacement of rental for lower ownership costs, it is now operating at a cashflow breakeven position. We expect this situation to improve in FY23 as occupancy increases.

Strengthening Our Business

New Chief Executive

We were delighted to welcome Stuart Bilbrough as Promisia's new Chief Executive Officer from May 2022. Stuart has extensive experience in the healthcare sector and was previously the Chief Executive Officer (and before that, Chief Financial Officer) of NZX-listed Radius Residential Care. He has also held the role of Chief Financial Officer of Tamaki Health, New Zealand's largest network of primary care and urgent care medical clinics. Stuart's industry experience, together with a strong commercial background in strategy development and financial planning, make him well suited to lead the next stage of growth for our company.

Investment in Business systems

In recent months, we have been investing in our business infrastructure to integrate our four villages and create a strong foundation for growth. This integration includes standardising our systems across the group and investing in people and technology, particularly a new payroll and rostering system. This work is ongoing with continued investment planned in the current year.

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