Emeis · EURONEXT:EMEIS
Emeis — Orpea — FY2017 Earnings Presentation
48 slides from Emeis's earnings presentation, Mar 28, 2018
Slide 1: Full-year 2017 results
Full-year 2017 results 28 March 2018
Slide 2: Agenda
Agenda 1. Introduction 2. Training and innovation 3. Network and development 4. Full-year 2017 results 5. 2017 and 2018 openings 6. Strategy and outlook Appendix 2
Slide 3: Introduction
Paris 16th (France) Introduction
Slide 4: Comprehensive offering of mid-term and long-term care for physical and mental conditions
Comprehensive offering of mid-term and long-term care for physical and mental conditions Day Day hospitals and centres night hospitals Nursing Post-acute, rehabilitation homes and psychiatric hospitals Short stays Specialisations: musculoskeletal, Alzheimer’s units geriatric, addiction treatme
Slide 5: Results of ORPEA 10-year development strategy: 2007-2017
Results of ORPEA 10-year development strategy: 2007 - 2017 Over 10 years: +65,247 beds +€2.6bn of revenue +€450m of EBITDA +476% Revenue 600 +19% p.a. +461% EBITDA* +19% p.a. Pre-tax profit on +435% 500 +18% p.a. ordinary activities* Number of beds +305% +15% p.a. 400 300 200 100 2007 2008 2009 2010
Slide 6: FY 2017 Highlights
FY 2017 Highlights Network growth of 12%: 9,556 new beds (40% through acquisitions and 60% through the creation of new facilities) International expansion Diversification of the offering: Inoges (outpatient rehabilitation in Germany), psychiatric care in Spain, post-acute care and rehabilitation
Slide 7: Training and innovation
Paris 16th (France) Training and innovation
Slide 8: Innovative training to motivate and retain employees
Innovative training to motivate and retain employees Close to 550,000 hours of training provided in 2017 (up 30% vs. 2016) in Europe Training provided to help employees build a career Goals/Achievements ORPEA created its own training facility for Over 400 auxiliary nursing staff auxiliary nurses 1
Slide 9: Tangible example of innovation: harnessing virtual reality
Tangible example of innovation: harnessing virtual reality In psychiatric care: therapy through exposure to virtual reality CONCEPT IMMERSE the patient in a virtual environment RELEVANT CONDITIONS linked to his/her disorder Phobias, eating disorders, addictions and obsessive-compulsive disorders
Slide 10: Nursing home innovation for residents
Nursing home innovation for residents Fall detection assistance Background: sector average of 1.7 falls p.a. per nursing home resident, most commonly during transfers Key challenge: spot and treat high-risk residents individually Technology-based tool: rooms fitted with optical sensors (fall a
Slide 11: Network and development
Rio de Janeiro (Brazil) Network and development
Slide 12: A sector supported by strong fundamentals worldwide
A sector supported by strong fundamentals worldwide Projected growth in the over-80s Exponential growth in the elderly population requiring long-term care from 2016 to 20501 Surge in the number of over-80s worldwide: up 230% by 2050 (+290 500 China: 4.9% p.a. million) Brazil: 4.7% p.a. 400 WHO f
Slide 13: Network of 818 facilities / 86,650 beds in 12 countries
Network of 818 facilities / 86,650 beds in 12 countries Europe: 10 countries 804 facilities 84,325 beds Brazil* Germany 13 facilities Belgium 165 facilities 60 facilities 17,572 beds 2,185 beds 7,443 beds Poland 18 facilities France 2,080 beds 357 facilities 33,437 beds Czech Rep. China 17 facilitie
Slide 14: 2013-2017: strong acceleration in growth of the international network
2013 – 2017: strong acceleration in the growth of the international network with 6 additional countries Total network (number of beds) 86,650 X2 77,094 67,781 54,098 43,003 2013 2014 2015 2016 2017 International network Network maturity (Number of beds and % of total network) (Number of mature beds
Slide 15: +9,556 new beds
12% network growth in 1 year, through acquisitions and selective developments Total network +12% +9,556 new beds of which 60% by greenfield Greenfield Europe 86,650 Bolt-on Greenfield acquisitions Greenfield Brazil Portugal +2,386 beds +1,100 beds 77,094 +1,141 beds +2,185 beds +1,812 beds +932 beds
Slide 16: Illustration of the Group's expansion strategy
Illustration of the Group’s expansion strategy Selective acquisition in Poland (with real-estate) 211-bed geriatric care complex: nursing home, assisted-living residence, and post-acute and rehabilitation facility Facility very recently established in a historical building located right at the h
Slide 17: Expansion strategy outside Europe
Expansion strategy outside Europe Brazil China Active development through creation of Development through partnerships with new facilities and selective acquisitions leading Chinese investors Initial expansion into the country via a JV (49% ORPEA) Opening of a high-end showcase with SIS Group to
Slide 18: Growth pipeline of 13,379 beds under construction and being restructured
Growth pipeline of 13,379 beds under construction and being restructured Pipeline Beds Beds being Beds under opened restructured construction (% of beds in Breakdown of the development) pipeline by type France 31,214 1,130 1,093 7% Construction Germany 14,997 0 2,575 15% 12,115 beds 91% Austria 6,85
Slide 19: Full-year 2017 results
Zürich (Switzerland) Full-year 2017 results
Slide 20: Acceleration in international expansion since 2014
Acceleration in international expansion since 2014: +32,552 beds in 6 new countries Revenue (€m) EBITDAR* (€m) +61% +57% 3,138 846 2,841 769 2,392 652 1,949 538 2014 2015 2016 2017 2014 2015 2016 2017 Pre-tax profit on ordinary activities* (€m) Real-estate portfolio1 (€bn) +51% +79% 5.0 259 237 4.1
Slide 21: 2017: outperformed targets
2017: outperformed targets 2017 TARGETS 2017 ACHIEVEMENTS 1 Revenue increase: +10% (€3,125m) +10.5% €3,138m 2 Solid organic growth* +5.4% €151m 3 Strong EBITDA* margin +80 bps 17.5% 4 Reduction in cost of debt -10 bps 3.10% + €845m 5 Strengthening of real-estate portfolio1 €4,970m 21 1 Excluding the
Slide 22: Strong 2017 revenue growth: +10.5% to €3,138m
Strong 2017 revenue growth: +10.5% to €3,138m €m 2017 2016 Change France 1,775.1 1,695.4 +4.7% Annual revenues growth since IPO 57% 60% International 1,363.1 1,145.8 +19.0% 3,138 2017 = 43% 40% 3,000 +€296m 2,842 Germany 531.7 501.0 Austria 242.6 176.3 2,500 2,392 Belgium 167.6 162.1 CAGR = +22.2% R
Slide 23: Strong increase in EBITDAR margin for historical network
Strong increase in EBITDAR margin for historical network Acquisitions: Spitex, Sanyres Anavita and New countries Historical Dr. Dr. Wagner China, Czech EBITDAR margin: Rep. and Poland network Fall in rates 13.8% EBITDAR margin: Non-recurring -10% for post-acute, items rehab. and psy in France -50 bp
Slide 24: Analysis of margins by geographical region
Analysis of margins by geographical region 2017 2016 Comments €m Rev. EBITDAR* % Rev. Rev. EBITDAR* % Rev. France 1,775.1 531.6 29.9% 1,695.4 495.6 29.2% +30 bps exc. non-recurring items Germany 531.7 133.3 25.1% 501.0 133.5 26.7% -160 bps: restructuring of headquarters Austria 242.6 43.0 17.7% 176.
Slide 25: Recurring EBITDA up by 15.4%
Recurring EBITDA* up by 15.4% iIn €m 2017 2016 Chg. Revenue 3,138.2 2,841.2 +10.5% Staff costs -1,639.5 -1,467.3 +11.7% Procurement -562.9 -522.5 +7.7% Taxes and duties -104.4 -96.6 +8.2% Other income and expenses 14.8 14.5 N.A. EBITDAR* (i.e. before rents) 846.2 769.4 +10.0% % of revenue 27.0% 27.1
Slide 26: Solid increase in net profitability
Solid increase in net profitability1 In €m 2017 2016 Chg. Recurring EBITDA* 547.7 474.5 +15.4% Depreciation, amortisation and provisions -153.3 -126.5 +21.2% Recurring operating profit 394.4 348.1 +13.3% Net financial cost -135.4 -111.6 +21.4% Pre-tax profit on ordinary activities* 1 258.9 236.5 +9.
Slide 27: Cash flows
Cash flows In €m 2017 H2 2017 H1 2017 2016 EBITDA 548 289 259 475 Net cash from operating activities 398 231 167 346 Investments in construction projects -303 -148 -155 -250 Acquisitions of real-estate -631 -148 -483 -545 Disposals of real-estate 31 15 16 140 Net real estate investments -903 -281 -6
Slide 28: Sound financial structure
Sound financial structure Condensed balance sheet1 at 31.12.17 (€m) Goodwill 1,002 2,697 Equity Equity and quasi- Intangible assets 2,066 equity: €3,124m 427 Indefinitely Deferred Taxes Property, plant and equipment 4,970 4,413 Net debt and real estate under development 424 Other deferred taxes Othe
Slide 29: Diversified, long-term and real-estate related net debt
Diversified, long-term and real-estate related net debt Indicators 31.12.17 30.06.17 31.12.16 Covenants comfortably met Net financial debt* (€m) 4,413 4,366 3,680 Restated financial leverage1 Maximum % real estate debt 85% 85% 84% 5.56 authorized 5 Restated financial 2.1 2.3 2.3 4 leverage1 3 Restat
Slide 30: Successful inaugural public bond issue in 2018
Successful inaugural public bond issue in 2018 Continued Disintermediation initiated in 2012 with the Euro PP and Breakdown by country execution of the Schuldschein issues diversification strategy ORPEA’s size and robust position have enabled it to tap into this new market Outside France 56% Fra
Slide 31: Balance sheet improved over the past 3 years
Balance sheet improved over the past 3 years and strong acquisition-led expansion (operations and real estate) Equity strengthened in 2017 through early redemption of the ORNANE Euro PP and Schuldschein issues (since 2012) Improvement in financial leverage1 Stable gearing with increase in Fall i
Slide 32: Real-estate portfolio: €5.0bn (+20% in 1 year)
Real-estate portfolio: €5.0bn (+20% in 1 year) 31.12.17 31.12.16 Chg. Real estate ownership rate 45% 39% +6 pts Real-estate ownership rate by country Total value1 (€m) 4,970 4,125 +20% Surface area (sqm) 1,842,000 1,525,000 +21% 31.12.17 31.12.16 Chg. Average yield (properties valued by Cushman & Wa
Slide 33: Dividend growth of 10%
Dividend growth of 10% Proposed dividend to the 2017 General shareholder meeting: €1.10 / share 1.10 Increase in dividend per share: 1.00 71 +10% 0.90 61 0.80 54 0.70 44 Yield*: 0.60 39 1.1% 0.50 32 * Based on the closing price of the share as at 26.03.18 27 18 years without any dividend 0.23 0.15 P
Slide 34: Positive impact of the inflationary environment
Positive impact of the inflationary environment Inflation Interest rate rise Profitability Balance sheet Inflation impact Revenue Daily prices mostly indexed on CPI Procurement Increased bargaining power Inflation impact EBITDAR Valuation at 6% yield Real-estate Vs. 4.5% yield seen 50% of the leas
Slide 35: 2017 and 2018 openings
Poznań (Poland) 2017 and 2018 openings
Slide 36: 2017: 1,900 new beds opened
2017: 1,900 new beds opened Antwerp (Belgium) – 115 beds Auxerre (France) – 90 beds Nancy (France) – 105 beds Hanover (Germany) – 84 beds Stuttgart (Germany) – 80 beds Lake Maggiore (Italy) – 80 beds Kolin (Czech Rep.) – 131 beds Sitzenberg (Austria) – 80 beds Ardooie (Belgium) – 175 beds 36
Slide 37: 2018: 2,500 new beds opened
2018: 2,500 new beds opened Ostend (Belgium) – 157 beds Paris 16th (France) – 87 beds Callian (France) – 80 beds Brussels (Belgium) – 223 beds Zürich (Switzerland) – 80 beds Milan (Italy) – 120 beds Praha (Czech Rep.) – 224 beds Berlin (Germany) – 164 beds Genoa (Italy) – 141 beds 37
Slide 38: Strategy and outlook
Karlsruhe (Germany) Strategy and outlook
Slide 39: Outlook 2018
Outlook 2018 €3,400m Revenue +8.3% EBITDA margin = or > vs. 2017 Development (greenfields + acquisitions) 39
Slide 40: Execution of the longstanding value-creation strategy
Execution of the longstanding value-creation strategy Development in prime locations Creation of new facilities (locations with strong purchasing power) Selective and opportunistic acquisitions Optimisation of the existing network (extensions, specialisation, etc.) Internationalisation New developme
Slide 41: Appendix
Paris 16th (France) Appendix
Slide 42: Glossary
Glossary Organic growth reflects the following factors: 1. The year-on-year change in the revenue of existing facilities as a result of changes in their occupancy rates and per diem rates Organic growth 2. The year-on-year change in the revenue of redeveloped facilities or those where capacity has b
Slide 43: Long-term shareholders, dedicated to value creation
Long-term shareholders, dedicated to value creation Shareholding structure An 11 Board members with % of share capital at 31.12.17 complementary skills Board members: – Philippe Charrier – Non-executive Chairman CPPIB – Yves Le Masne – CEO 14.2% – Jean Patrick Fortlacroix – FFP Invest (Thierry Mab
Slide 44: Consolidated balance-sheet
Consolidated balance-sheet In €m 31-Dec-17 31-Dec-16 Non-current assets 8,216 7,131 Goodwill 1,002 982 Intangible assets 2,066 1,889 Property, plant & equipment and property under development 4,970 4,125 ASSETS Other non-current assets 177 135 Current assets 1,413 1,104 Of which cash, cash equivalen
Slide 45: ORPEA's dedicated real estate portfolio
ORPEA’s dedicated real estate portfolio - a key distinguishing feature and strength Business Dedicated real estate 86,650 beds (including 13,379 under development) Total value of the portfolio1 €4,970m Full-year revenue €3,138m - In operation €4,601m - Under construction €369m EBITDA = 2017 EBITDA –
Slide 46: Determination of daily prices for nursing homes
Determination of daily prices for nursing homes FRANCE BELGIUM SPAIN ITALY Dep.* 10% Public Regional Public Health Health Health Insurance Dep. Region Insurance Care Care + Insurance 20% Dep. 20% Care + 40% Acc. / Dep. Acc. / 45% Acc. / Care / Acc. / Services Services Services Services 55% 60% 70% 8
Slide 47: Ageing population: a challenge for any country
Ageing population: a challenge for any country 80+ between Number of Bed ratio (in % of Estimated beds 2016 and 20501 existing beds 80+ population) to be created +97% 25,000 by 2025 FRANCE 590,000 14% 8.1m in 2050 + 116,000 to rebuild +156% AUSTRIA 70,000 16% 30,000 by 2030 1.2m in 2050 +107% BELGIU
Slide 48: Stock market data
Stock market data Market data (12 months) Indices Average trading volume: 155,000 shares per day Compartment A of Euronext Paris (= €15m ) all platforms combined Share price: €102.35 Component of the MSCI Small Cap Europe, Stoxx Europe 600, CAC Mid 60 and SBF 120 indices 12-month high: €10