Update on Ranfurly Development

NZX Release 22 March 2021 Update on Ranfurly Development Promisia Healthcare Limited (NZX: PHL) is pleased to advise that site preparation is now underway to enable construction of PHL's Ranfurly Development to begin. About the Ranfurly Development The Ranfurly Development involves the expansion of PHL's Ranfurly Residential Care Centre (RRCC) in Feilding. The development includes the construction of thirty-two new external units and ten new internal units (with the removal of one existing internal unit at RRCC) on bare land adjoining the existing facilities at RRCC. Once the construction of units is completed and Retirement Villages Act requirements are satisfied with RRCC's statutory supervisor, PHL will sell occupational rights agreements (ORAs) for the new units. A core growth strategy for PHL is to, over time, increase the proportion of revenue that it receives in the form of ORA sale proceeds. This revenue stream complements the recurring revenue that PHL earns from its rest home, hospital and dementia care services. PHL expects there to be strong demand for these new units due to the limited independent living facilities currently available in the Feilding area, and an aging demographic in Feilding and its rural surrounds. All current independent living units at RRCC are presently occupied. Financing of the Ranfurly Development The Ranfurly Development is being financed and constructed by Design Care Limited, a private New Zealand company associated with PHL director, Mr. Thomas Brankin. When PHL acquired RRCC and its other aged care facilities in 2020, PHL acquired title to the bare land on which the Ranfurly Development will occur. A separate purchase price of $14.18m was attributed to this bare land. That purchase price represents the aggregate, expected proceeds of sale for each new ORA at the Ranfurly Development. This purchase price has not been paid and is an interest free, limited recourse loan that is only repayable from the proceeds of sale from each ORA sold at the Ranfurly Development. PHL is only liable to make repayments from the proceeds of the first ORA sold for each new unit. PHL will be entitled to retain the proceeds of each subsequent ORA sale. Once the Ranfurly Development has been completed and an ORA sold for each new unit, the Loan will have been fully repaid. If sale prices reduce (by agreement with Design Care Limited) the loan amount also reduces so that the loan remains equivalent to the aggregate proceeds of sale of the new ORAs. If sale prices increase, the loan amount remains the same and PHL receives the benefit of that increase. Ranfurly Development Summary PHL should enjoy long term revenue benefits from the Ranfurly Development through the sale of subsequent ORAs. On completion of the Ranfurly Development, PHL should also see an increase in the capital value of RRCC (commensurate with the market value of the completed Ranfurly Development at that time). These benefits have no corresponding interest cost and PHL will not have any direct development/construction risk. PHL anticipates that the Ranfurly Development will be fully completed in the second half of 2023 and that the first ORAs at the Ranfurly Development will begin being marketed for sale by the end of 2021. Share Purchase Plan and Special Meeting PHL reminds shareholders that a special meeting is being held on Wednesday 24 March to consider resolutions approving the raising of new capital and the conversion of debt, all at 0.1c per share. These measures are intended to strengthen PHL's balance sheet and cash reserves. The directors look forward to discussing PHL's progress with shareholders at the meeting. PHL's share purchase plan (SPP) also remains open and closes at 5pm on 24 March. Shareholders may apply for up to $15,000 of shares at a price of 0.1c per share under the SPP, with an oversubscription facility available for shareholders who wish to subscribe for more than $15,000 of shares. Over $800,000 of applications have been received to date and the Board thanks shareholders for their support. ENDS For further information please contact Mr Stephen Underwood, Chairman on 027 499 3387. End CA:00369477 For:PHL Type:GENERAL Time:2021-03-22 12:27:45