Emeis · EURONEXT:EMEIS
Emeis — Orpea — Investor Day (December 2018)
43 slides from Emeis's investor day presentation, Dec 3, 2018
Slide 1: ORPEA Management presentation
ORPEA Management presentation December 3, 2018
Slide 2: Agenda
Agenda 1. Organization principles 2. Germany and acquisition of Axion Group 3. Real estate and debt 4. New countries strategy 5. Global strategy and prospects 2
Slide 3: Organization principles
Organization principles
Slide 4: Looking back at where we come from: ~30 years of history
Looking back at where we come from ~30 years of history ~87 000 beds Creation 1989 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 4 France Outside France
Slide 5: Looking back at where we come from
Looking back at where we come from Structuration & Professionalization Strong growth, essentially through larger acquisitions 86,757 Structuration of the French head-office Entry of a new long- term shareholder Beginning of clinic activities Diversification into clinics (rehab & psychiatry) IP
Slide 6: Looking back at where we come from
Looking back at where we come from Structuration & International ventures into neighboring Professionalization countries & development in France 86,757 Independent countries Beginning of international expansion Managed by French-trained directors ~40 000 beds IPO 1989 1998 1999 2000 2001 2002 20
Slide 7: Looking back at where we come from
Looking back at where we come from Structuration & International ventures into neighboring Internationalization Professionalization countries & development in France & integration ~87 000 beds Strong growth, essentially through larger acquisitions Strong acceleration of international growth Stee
Slide 8: And now?
And now? ENTERING A NEW ERA IN ORPEA’S HISTORY 8
Slide 9: Tomorrow's organization must allow us...
Tomorrow’s organization must allow us… … to manage many more countries … to sustain our growth, and notably reinforce and accelerate greenfield developments … to implement and secure operational excellence on the long run VALUE CREATION & LONG TERM SUCCESS 9
Slide 10: Finding the right balance: decentralization & centralization
Finding the right balance: decentralization & centralization 10
Slide 11: Clear separation of Corporate Services from French head-office
Clear separation of Corporate Services from French head-office CORPORATE/FRANCE CORPORATE CORPORATE/FRANCE INTERNATIONAL INTERNATIONAL CLUSTERS & BUs Separation will also by physical (i.e. different locations in the building) Corporate teams to be 100% dedicated to corporate tasks, instead of al
Slide 12: What is a Cluster?
What is a Cluster? CLUSTER CEO An organization with a small, strong and complementary management team... CLUSTER CLUSTER COO CFO BU 1 BU 2 BU 3 BU 3 … managing one or several Business Units, whereby a BU can be a country or an activity field in a country (e.g. clinics or NH in a country)… 12
Slide 13: Typical Cluster head-office
Typical Cluster head-office CLUSTER CEO CLUSTER CLUSTER COO CFO Develop- Construc°/ Procure- Communi- Legal Quality Medical HR Catering Finance Controlling IT ment Maintenance ment cation … with a fully operational head-office in which all functions are represented by an experienced director 13
Slide 14: Internal Control
Internal Control Cluster Internal Controller follows up with the Clusters’ different departments on the implementation of and CORPORATE INTERNAL AUDIT, RISKS compliance with Group Internal Control Requirements & INTERNAL CONTROL OFFICER CLUSTER CEO CLUSTER CLUSTER COO CFO CLUSTER INTERNAL CONTROLLER
Slide 15: Germany and acquisition of Axion Group
Germany and acquisition of Axion Group
Slide 16: Overview of the German nursing care market
Overview of the German nursing care market Market is expected to continue to grow at 3.4%(1) p.a. going forward in 2015 - 2025. Resulting from favorable demographic development (aging population) as well as Overview continuously growing demand for stationary care The market was highly crisis res
Slide 17: Luxury nursing care market
Luxury nursing care market The German luxury nursing care market offers currently 25 facilities which are Overview considered premium(1). The facilities offer a hotel and spa like ambiente combined with a luxury atmosphere and service The premium segment is a niche market in the German nursing c
Slide 18: Brief description of Axion - Status quo
Brief description of Axion - Status quo Founded in 2001 by Mr Nikolaos Tavridis, the sole owner of the axion group (“Axion”). In the early days the company only advised external nursing home operators which was complemented by the acquisition of its first luxury assisted living facility in 2002. T
Slide 19: Management team and quality assurance
Management team and quality assurance Nikolaos Tavridis, CEO: Mr Tavridis has been active in the healthcare market for more than 25 years. Before he founded Axion, Mr Tavridis gathered extensive experience in the healthcare sector as CFO of a large care group in Germany. During the last years, he
Slide 20: Facility overview (1/3)
Facility overview (1/3) ER-Elbchausee (Hamburg – Luxury positioning): Premium assisted living facility with unique brand in the Consistently high occupancy over the last 8 years German market Average monthly rent and assisted living revenues per 8 high quality buildings linked by underground
Slide 21: Facility overview (2/3)
Facility overview (2/3) ER-Elbchausee (Hamburg – Luxury positioning): 21
Slide 22: Facility overview (3/3)
Facility overview (3/3) ER–Klein Flottbek (Hamburg – Luxury positioning): Premium nursing care facility (90 single rooms) Single largest nursing home in Germany without One of the highest income locations in Germany restrictions in regard to pricing and therefore most expensive nursing home in
Slide 23: Transaction scope
Transaction scope Structure Transaction scope 1. Luxury home transaction: 2. Classic home transaction Joint-Venture for developments in the luxury market Acquisition of 5 existing classic homes and 3 development projects In 2018, Orpea Deutschland enters JV by acquiring 75% of Axion’s 2 luxury
Slide 24: 1. Luxury home transaction
1. Luxury home transaction JV for luxury segment - Strategic rationale and anticipated structure 1. Purpose: Transaction structure Establishing the German market leader in premium quality services for nursing care and assisted living Utilize the existing homes and build new luxury facilities in
Slide 25: Luxury home transaction: attractive positioning through differentiation
1. Luxury home transaction JV for luxury segment – Attractive positioning through differentiation Luxury Segment Intermediate Basic Number of facilities The Joint-Venture allows Orpea Deutschland to become the leading operator of luxury nursing care facilities in Germany 25
Slide 26: Geographical add-ons
Geographical add-ons Existing luxury homes and classic homes Hamburg Brandenburg cluster cluster 1 1 4 2 Hamburg Berlin 2 3 Hamburg 4 5 5 6 Brandenburg 3 6 Hesse Frankfurt Strategic add-ons: 7 Expansion of Berlin cluster with three facilities in Brandenburg, leading to cost synergies Frankfurt C
Slide 27: Real estate and debt
Real estate and debt
Slide 28: Healthcare real estate: a rapidly growing asset base
Healthcare real estate: a rapidly growing asset base Investments in Healthcare real estate = CORE investment + with healthcare real estate in France (€ million) a highly attractive risk/reward profile 1 750 – Attractive yields: 4% to 6% 1 500 1 250 – Low risk profile owing to the resilience of occ
Slide 29: Healthcare real estate: yield trends
Healthcare real estate: yield trends Prime yields in France (outside Paris) 11% 9% 7% 50% decline in nursing 5,25% 5% 4,50% home yields in France 4,00% 3% over the past 15 years Nursing homes excl. LMP/LMNP status Post-acute, rehab. and psychiatry Surgery Source: Cushman & Wakefield 2017 investments
Slide 30: Real estate strategy for healthcare operators
Real estate strategy for healthcare operators Asset light model 100% ownership model Operators Most of the European operators A few family operators Reits, Insurance companies, family Lessors offices • Flexibility and security • No debt Advantage for • Increase the weamth of the company • High ROCE
Slide 31: Real-estate portfolio: €5.34bn (+16% in 1 year)
Real-estate portfolio: €5.34bn (+16% in 1 year) 30.06.18 31.12.17 Chg. Real estate ownership rate 47% 45% +2 pts Real-estate ownership rate by country Total value1 (€m) 5,344 5,042 +6.0% Surface area (sqm) 1,947,000 1,842,000 +5.7% 30.06.18 31.12.17 Chg. Average yield (properties valued by Cushman &
Slide 32: Diversified, long-term and real-estate related net debt
Diversified, long-term and real-estate related net debt Indicators 30.06.18 31.12.17 30.06.17 Covenants comfortably met Net financial debt* (€m) 4,818 4,413 4,366 Restated financial leverage1 Maximum % real estate debt 85% 85% 85% 5.5 6 authorized 5 Restated financial leverage1 2.3 2.1 2.3 4 3 Resta
Slide 33: New countries strategy
set I New countries strategy
Slide 34: Une double approche : fondamentale et terrain
Une double approche : fondamentale et terrain 1 2 Approche fondamentale Critères quantitatifs + Approche terrain Critères qualitatifs Analyse statistique avec données de Analyse beaucoup plus détaillée par la Banque Mondiale, grands cabinets, les experts ORPEA (développement, études génériques,…
Slide 35: L'approche fondamentale ou statistique
L’approche fondamentale ou statistique Identification d’indicateurs chiffrés objectifs Environnement économique PIB, PIB par habitant, inflation, déficit public, perspectives de croissance du pouvoir d’achat, taux d’intérêt, marché immobilier, fluctuation des monnaies,… et financier Environnement
Slide 36: L'approche terrain ou qualitative
L’approche terrain ou qualitative Les visites et RDV des équipes d’experts ORPEA Environnement réglementaire Rencontre avec les Autorités de Tutelle locales et fédérales pour identifier les besoins et l’attitude vis-à-vis d’un acteur privé étranger Marché existant et Visite de sites existants :
Slide 37: Le modèle d'implantation ORPEA dans un nouveau pays
Le modèle d’implantation ORPEA dans un nouveau pays •Activité : maison de retraite médicalisée, cliniques SSR et clinique Psy. •Offrir les plus hauts standards de Qualité indépendamment des normes du pays : Les bases du modèle procédures, contrôle, formation des équipes,… •Immobilier : meilleures lo
Slide 38: Exporter le savoir-faire ORPEA dans les nouveaux pays
Exporter le savoir-faire ORPEA dans le service et le soin dans les nouveaux pays L’ADN d’ORPEA a toujours été la qualité de ses services, de ses soins et de son projet médical. La stratégie d’ORPEA consiste ainsi à déployer ce savoir-faire unique dans des pays qui n’en bénéficient pas Des chartes
Slide 39: La triptyque du modèle économique ORPEA
La triptyque du modèle économique ORPEA Coût de l’immobilier Coût de la main d’œuvre Pouvoir d’achat (prix de journée) Nécessité absolue que les 3 indicateurs soient en adéquation 39
Slide 40: Global Strategy and outlook
Global Strategy and outlook
Slide 41: Strengths of the ORPEA business model
Strengths of the ORPEA business model REAL ESTATE PORTFOLIO OF €5.3BN Modern and recent facilities Prime locations: city-centres and area with strong purchasing power EXPERIENCED AND LOYAL UNIQUE GROWTH AND EARNINGS MANAGEMENT TEAM POTENTIAL Average tenure of the management: 13,300 beds unde
Slide 42: 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 43: Outlook 2018
Outlook 2018 Revenue > €3,400m EBITDA margin > vs. 2017 Development (greenfields + acquisitions) 43