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Emeis — Orpea — H1 2011 Earnings Presentation
44 slides from Emeis's earnings presentation, September 2011
Slide 1: 2011 First-Half Results
2011 FIRST-HALF RESULTS Dr Jean-Claude MARIAN, Chairman Yves LE MASNE, CEO Jean-Claude BRDENK , COO September 2011
Slide 2: Contents
CONTENTS 1. First-half 2011 highlights 2. ORPEA’s best practices in care services 3. First-half 2011 results 4. Targets and outlook Appendices 2
Slide 3: ORPEA: European leader in dependency care
ORPEA: European leader in dependency care ► Long-term care facilities ► Post-acute and rehabilitation care facilities Business ► Pyschiatric care facilities ► 364 sites – 33,700 beds across Europe ► Offer a high quality of care, accommodation and Mission services ► Ensure the well-being of residents
Slide 4: A high-growth and high-visibility sector
A high-growth and high-visibility sector ► Very strong growth in requirements in coming years, due to: 9 An explosion in the number of very old people (mechanical demographic effect) 9 An insufficient number of beds 9 The insufficient quality of many existing beds: increase in medicalisation the num
Slide 5: First-half 2011 highlights
1F IRST-HALF 2011 HIGHLIGHTS Grasse (06), Post-acute care clinic 5
Slide 6: Regulatory developments
Regulatory developments ► Several projects announced in the Paris region Competitive 1 ► Starting of process in 2012 across France bidding ► Assumptions: 7,500 beds in 2012 ► Reform deferred to early 2012 Reform of 2 dependency p y ► Continuingg development p of dependency p y care insurance p polic
Slide 7: Changes to shareholding structure: entry of FFP
Changes to shareholding structure: entry of FFP ► Investment of €88m representing 6% of ORPEA’s equity ► FFP: a prestigious shareholder making a long-term commitment 9 A family-owned investment company majority owned by Shareholding structure (% of equity owned) Établissements Peugeot Frères 9 Inves
Slide 8: Openings and developments
Openings and developments ► Openings from 1st January: 4 facilities, 367 beds Montélimar Italy (26) Casier (Venice area) Long-term care facility: Nursing g home: 104 beds 77 beds Sigoulès Mareuil-lès-Meaux (24) (77) Long-term care facility: P t Post-acute t care clinic: li i 80 beds 106 beds ► Remin
Slide 9: A leading European player in the dependency care sector
A leading European player in the dependency care sector 33,700 beds across 364 facilities in 5 countries including c ud g 24,512 ,5 beds in operation ope at o (e (excluding c ud g tthose ose u under de redevelopment) ede e op e t) France Belgium 27,014 beds 3,523 beds 302 ffacilities iliti 32 ffacil
Slide 10: The biggest growth reserves in the sector
The biggest growth reserves in the sector Network doubled in 4 years: +17,697 beds 33,700 28,073 26,526 23,656 9,188 37% 19,738 8 879 8,879 16,003 8,490 7,648 12,014 5,986 10,606 4,622 9,306 24,512 100% 8,134 2,821 , 3,750 18,036 19,194 1,926 2 517 2,517 13,752 16 008 16,008 11,381 6,208 6,789 7,785
Slide 11: Successful integration of Mediter Group
Successful integration of Mediter Group ► Roll-out of Orpea procedures at facilities opened from 1st quarter of 2011 9 Quality control procedures and care protocols 9 Management and budget monitoring tools 9 Centralisation of support functions ► Training and integration of employees ► Faster than ex
Slide 12: ORPEA's best practices in care services
2 ORPEA’ S BEST PRACTICES IN CARE SERVICES Douarnenez (87), Post-acute care clinic 12
Slide 13: Alzheimer's care
Alzheimer’s care ► Development of units, concepts, equipment and training specifically for Alzheimer’s care ► Protected units with 10-15 beds at nearly all of the Group’s long-term care facilities ► Active involvement in the Alzheimer mission’s development and calls for projects 9 Enhanced E h d Acc
Slide 14: Development of specialisation in post-acute and rehabilitation care
Development of specialisation in post-acute and rehabilitation care ► Specialisations in post-acute and rehabilitation care beds 9 9 specialisations recognised by supervisory authorities (Post-acute care decree 2008) ► Choice of specialisations at the ORPEA Group 9 Geriatrics: operating business uni
Slide 15: Psychiatry: care for children and young adults aged 11-25
Psychiatry: care for children and young adults aged 11-25 ► Child psychiatry: a not very well developed speciality area with considerable needs 9 Total number of beds open in France: just over 2,000 9 Considerable needs with the development of pathologies specific to children and young adults ► Roll
Slide 16: Development of scientific and medical research
Development of scientific and medical research ► Targets: 9 Enhance the Group’s reputation 9 Capitalise on the skills of Group staff 9 Participate in the development of new approaches in dependency care ► Creation of a Research and Medical Publications unit ► Publication of a Collège des Psychologue
Slide 17: Defibrillators installed across ORPEA's network
Defibrillators installed across ORPEA’s network ► Out-of-hospital cardiac arrests: a major public health issue 9 40,000 deaths a year in France (Source: INSERM, May 2005) 9 Rapid intervention thanks to defibrillator and cardiac massage: saves 10,000 lives a year 9 Need to extend roll-out of defibril
Slide 18: 2011 First-Half Results
3 2011 FIRST-HALF RESULTS Asnières-sur-Seine (92), Post-acute care clinic 18
Slide 19: H1 2011: new HY of profitable growth
H1 2011: new HY of profitable growth 2011 H1 2011 INITIAL TARGETS ACHIEVEMENTS Sales: €1,210M €594.2M +25,5% +26.6% Strong organic growth +8.5% Maintain a high level EBITDAR margin: 25.2% of profitability +100 bp Recurring operating margin Up-ramping of recent facilities of ORPEA excluding MEDITER*
Slide 20: Strong growth of sales in H1 2011
Strong growth of sales in H1 2011 In €m H1 2011 H1 2010 S% 525,7 413,3 +27,2% Sales France 88% 88% €594.2M International 68,5 55,8 +22,8% +26.7% 12% 12% Belgium g 33,5 , 27,1 , Spain 15,2 14,7 Italy 12,0 8,6 Switzerland 7,8 5,4 Strong organic growth Total 594 2 594,2 469 2 469,2 +26 6% +26,6% +8 5%
Slide 21: Sustained increase in profitability
Sustained increase in profitability In €m H1 2011 H1 2010 S% Sales 594.2 469.2 +26.6% EBITDAR (EBITDA before rents) 150.0 113.4 +32.3% Recurring EBITDA 105.6 83.3 +26.8% Recurring EBIT (Rec. Ope. Profit) 78.1 62.6 +24.8% EBIT (Operating Profit) 90.8 72.3 +25.6% Fi Financial i l result lt (31 7) (31.
Slide 22: Sound profitability in H1 2011
Sound profitability in H1 2011 In €m H1 2011 H1 2010 S% Sales 594.2 469.2 +26.6% Staff costs (297.8) (237.9) +25.2% Expenses p ((117.5)) ((93.3)) +25.9% Taxes and duties (26.8) (22.5) +19.1% Other income and expenses (2.2) (2.1) N.S. EBITDAR Margin EBITDAR (EBITDA before rents) 150 0 150.0 113 4 113
Slide 23: Change in rents
Change in rents In €m +1 4 +1.4 +8.8 +3.6 +0.5 44.4 30.1 Rents in Average increase Rents from Entry into the scope of Rents in H1 2010 in rents sold building consolidation H1 2011 MEDITER Other Average increase in rents: +1.7% 23 The limited examination procedures are currently underway
Slide 24: Significant improvement in profitability
Significant improvement in profitability H1 2011 H1 2011 H1 2010 In €m ORPEA MEDITER (excluding MEDITER) ORPEA Sales 68.0 526.2 469.2 EBITDAR (EBITDA before rent) 15.0 135.0 113.4 22.1% 25.7% 24.2% + 150 bp Rents (8 8) (8.8) (35 6) (35.6) (30 1) (30.1) Recurring EBITDA 6.2 99.4 83.3 9.1% 18.9% 17.8%
Slide 25: Geographical breakdown of profitability
Geographical breakdown of profitability H1 2011 H1 2010 In €m Recur. Recur. Sales EBITDA % Sales Sales EBITDA % Sales France 525.7 97.7 18.6% 413.3 76.7 18.5% Spain 15.2 0.9 14.7 0.6 Belgium 24.3 4.7 20.1 3.4 Italy 9.9 1.7 6.6 1.4 Switzerland 7.8 2.4 5.4 1.6 International, excluding heavy restructur
Slide 26: Sound financial structure
Sound financial structure In €m 30 June 2011 31 Dec. 2010 Fixed assets 3,440 3,234 Goodwill 274 431 Intangible assets 1,065 835 ETS Tangible assets & property assets under development 2,021 1,911 ASSE Other non-current assets 80 57 Current assets 372 527 Of which cash and cash equivalent & marketab
Slide 27: Debt ratios and financial flexibility
Debt ratios and financial flexibility Indicators 30 June 2011 31 Dec. 2010 Net financial debt* 1,723 1,571 1 Restated financial leverage 1 3.59 3.3 Net financial debt – Property debt EBITDA – (6% Property debt) Restated gearing 2 1 56 1.56 15 1.5 2 Net financial debt . Shareholders’ equity + quasi e
Slide 28: Net debt structure and cost
Net debt structure and cost Medium 600 and long-term debt, property leases and convertible bonds Bridge loans = financing for property under construction 500 9 Maturity schedule 400 OBSAAR bonds 9 €344m over 4 years OCEANE 300 9 Converted into: Loans and property leases – Property lease if owner 200
Slide 29: Operations: securing future growth
Operations: securing future growth Assets Liabilities ► Network of 33,700 beds ► Financing by medium-term 5 to 7- 9 24,512 operational year loans 9 3,350 operational but to be ► No significant maturity: loans renovated progressively repaid 9 5,838 under construction ► Hedged by derivatives: fixed-ra
Slide 30: Real estate: securing future profitability
Real estate: securing future profitability Total property assets* Net property debt* €2 021m €2,021m €1,344m Operating property: €1,510m Financing secured in the long term 9 Value in the balance sheet: +6% in 6 months 9 Finance lease and long-term long term loan (12-15 (12 15 years) (acquisitions an
Slide 31: Ambitious investments for a secured growth
Ambitious investments for a secured growth In €m H1 2011 H1 2010 ▲% Recurring EBITDA 106 83 +27% Net cash flow from operating activities 66 44 +50% Cash flow from Net investment cash flow (198) (160) +24% operating activities Property investments (186) (131) +52% Property sales 40 15 A Acquisitions
Slide 32: Outlook and targets
4O UTLOOK AND TARGETS Douarnenez (29), Post-acute care clinic 32
Slide 33: Next 6 months openings: 1,500 beds
Next 6 months openings: 1,500 beds Sainte Maxime Boussy Saint Anoine (83) (91) Long-term care facility Long-term care facility 90 beds 84 beds Osny ((95)) Saint Maur des Fossés Post-acute care clinic (94) 60 beds Long-term care facility 80 beds Roquebrune Cap Martin (06) Long-term care facility 110
Slide 34: Other development projects
Other development projects Clichy Batignolles Brasles (75) (02) Long-term care facility Long-term care facility La Garenne Colombes Berlaimont (92) (59) Long-term care facility Long-term care facility Cannes Montfleury Meyzieux (06) (69) Long-term care facility Post-acute care clinic Chamalières Mar
Slide 35: Development of the Group's governance
Development of the Group’s governance ► Reinforcing* the expertise of the Board of Directors with two proposed new directors Board of directors 9 FFP, represented by Mr Thierry Mabille de Poncheville, shareholder since July 2011, will provide its vision as a long- 7 members term investor and its exp
Slide 36: Pursuance of a profitable growth strategy
Pursuance of a profitable growth strategy Profitability Financial Sales Development Real Estate and d cashh flow fl fl ibilit flexibility ► Integration of ► Constant growth ► New ► Ownership of 50% ► Growth of the 9 188 beds under 9,188 of mature facilities authorisations of facilities number of red
Slide 37: Appendices
APPENDICES Neuilly-sur-Seine Neuilly sur Seine (92), (92) Long Long-term term care facility 37
Slide 38: Sector fundamentals in France: demand growing faster than supply
Sector fundamentals in France: demand growing faster than supply Trends in the number ► People aged over 85: 15% go to nursing homes of people aged 85+ 2 500 000 ► P People l aged d over 90 90: 25% go tto nursing i h homes Trends in 2,000,000 ► Increase in average age: 86 2 000 000 resident +800,000
Slide 39: Major financing issues for the public authorities
Major financing issues for the public authorities ► Construction budget to find for the sector in the next 5 to 10 years 9 Average construction (or redevelopment) cost: €90,000 per bed (€80,000 for private sector, €100,000 for public) ( itho t cost of land) (without 9 Number of beds: − to be created
Slide 40: Increase in elderly revenues
Increase in elderly revenues Comparison of nursing home cost vs. wealth €46 200 €46,200 Average cost of Assumptions: Average wealth care for a ► Average room cost: of people aged €135,000 resident €2,200 , per p month 85+ ► Average length of stay: 21 months Source: IGAS 2010 report: €110,000 to €160
Slide 41: A sector that remains fragmented in France
A sector that remains fragmented in France ► Low representativity of the private commercial sector: Out of a total of 540,000 beds 2001-2005 changes: 9 Public sector: -1.5% 55% 9 Non-profit Private sector: +3.5% 9 Private Commercial sector: +7.0% 25% As a reminder: 20% 9 UK: 70% for Private Commerci
Slide 42: Per diem price setting
Per diem price setting ► Long-Term L T Care C facilities f iliti ► Post-Acute P t A t Care C and dPPsychiatric hi t i clinics li i Direct reimbursement of Dépendance : 10% costs: 9 Dependent on the level of no profit margin dependency and resources 9 Mostly paid by the Local Authority (“APA”) with a
Slide 43: IFRS: amendment to IAS 17 on leases
IFRS: amendment to IAS 17 on leases ► Accounting g treatment of p property p y leases Principle ► Capitalisation at present value of lease payments for all the length of the lease contracts ► Strengthen transparency and clarity Objectives ► Facilitate comparability of financial statements independen
Slide 44: Stock market information
Stock market information ► Market data (last 12 months): € 9 A Average d daily il volume: l 56 905 shares 56,905 h 40 9 Price: €29.275 9 High (12 months): €36.94 35 9 Low (12 months): €28.03 9 Turnover: 35% in 12 months 30 9 Mkt Cap: €1,239m 25 9 Nb of shares: 42,352,795 sept.-10 nov.-10 janv.-11 ma