Clariane Se · EURONEXT:CLARI
Clariane — Korian — Investor Day (September 2016)
95 slides from Clariane's investor day presentation, Sep 15, 2016
Slide 1: Capital Market Day
CAPITAL MARKET DAY September 15ᵗʰ, 2016
Slide 2: Agenda
1. AN AMBITIOUS LEADING PLAYER 2. GROW 3. PERFORM • IMPROVE OPERATING PERFORMANCE • INVEST IN OUR PEOPLE • OPTIMIZE REAL ESTATE MANAGEMENT • “SUCCESS FOR GERMANY” – GERMANY FOCUS 4. INNOVATE • INNOVATE WITH NEW CONCEPTS – BELGIUM CASE STUDY • INNOVATE USING DIGITAL – ITALY CASE STUDY • INNOVATE IN C
Slide 3: An Ambitious Leading Player
AN AMBITIOUS LEADING PLAYER KORIAN SHA)
Slide 4: A Long Term Growth Story
A LONG TERM GROWTH STORY REVENUE (€M) Foyer de Lork Casa Reha Medica Senior Living Group c.3,000 Segesta 2,579 Medidep Phönix Curanum 2,222 1,356 IPO 1,015 1,108 781 851 923 478 520 608 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Capital Market Day September 15ᵗʰ, 2016 4
Slide 5: Positioning Korian as the #1 Player in Europe
POSITIONING KORIAN AS THE #1 PLAYER IN EUROPE # IN THE NURSING HOME SECTOR % MARKET SHARE 71,542 BEDS IN 711 FACILITIES #2 #1 4.9% 2.6% #1 3.4% EUROPEAN LEADER IN NURSING HOMES #2 61,407 beds in 572 residences 1.4% MAJOR PLAYER IN SPECIALIZED CLINICS, 4 countries SERVICE FLATS AND HOME CARE represen
Slide 6: Expertise & Excellence
EXPERTISE & EXCELLENCE 45,000 HIGHLY COMMITTED DELIVERING 95% SATISFACTION** PROFESSIONALS • Proud of their job for 92%* FOR 200,000 CLIENTS • Proud of serving clients for 92%* • Strong community of medical & paramedical staff: 572 doctors / 7,500 nurses STRONG VALUES • Benevolence • Accountability
Slide 7: Dependency & Care in Europe: A Growing and Resilient Market
DEPENDENCY & CARE IN EUROPE: A GROWING AND RESILIENT MARKET Strong Growing need A business immune demographic for long term care to economic downturn trends with strong barriers to entry Capital Market Day September 15ᵗʰ, 2016 7
Slide 8: Major Evolutions to Come
MAJOR EVOLUTIONS TO COME Evolving clients’ needs Digitalization New public financing & expectations regulations E-medicine, Digital service platform Capital Market Day September 15ᵗʰ, 2016 8
Slide 9: Dependency & Care in Europe: An Evolving Market
DEPENDENCY & CARE IN EUROPE: AN EVOLVING MARKET Increase in highly Nursing Home Public financing Client choice dependent elderly capacity shortfall constraints for autonomy Nursing Homes SPECIALIZATION OF NURSING HOMES 1 ON HIGH DEPENDENCY AND GREATER AGE (> 85) more medicalised & Clinics and local
Slide 10: Dependency & Care in Europe: An Evolving Market
DEPENDENCY & CARE IN EUROPE: AN EVOLVING MARKET N° of people >85 years SERVICE FLATS +3% over next 15 years HOME CARE HIGH SERVICE FLATS HOME CARE DEPENDENCY NURSING HOMES ONLY NURSING HOMES Low to medium dependency High dependency 2015 Capital Market Day September 15ᵗʰ, 2016 10
Slide 11: Size and Leadership Bring a Decisive Competitive Advantage
SIZE AND LEADERSHIP BRING A DECISIVE COMPETITIVE ADVANTAGE CLIENT REAL ESTATE BRAND RECOGNITION BARGAINING POWER EMPLOYEE FOOTPRINT BRAND ATTRACTION Decisive EXCELLENCE competitive STRONG LOCAL AND QUALITY PLATFORMS advantage SYNERGIES & PROCESS RELATIONSHIP OPTIMIZATION WITH AUTHORITIES Capital Mar
Slide 12: Our Positioning: Be a Full Senior Care Provider
OUR POSITIONING: BE A FULL SENIOR CARE PROVIDER HEALTHCARE PROVIDER FULL SENIOR CARE SERVICE PURE PLAYER NURSING HOME Focusing on post acute and long Care service provider for ageing Focusing on Nursing Homes as term care to highly dependent people leveraging on our existing the key business and con
Slide 13: Our Ambition: Be the European Leader in Senior Care Services
OUR AMBITION: BE THE EUROPEAN LEADER IN SENIOR CARE SERVICES Capital Market Day September 15ᵗʰ, 2016 13
Slide 14: Leverage Value Creation Through a Joined-Up Approach
LEVERAGE VALUE CREATION THROUGH A JOINED-UP APPROACH STAND ALONE ADDING VALUE VALUE CREATING BUSINESSES THROUGH A JOINED-UP APPROACH Service Nursing Flats Homes Service Nursing Home Clinics Home Flats Homes Care Clinics Care • Connecting our different activities at local level to leverage asset base
Slide 15: Our Strategy at a Glance
OUR STRATEGY AT A GLANCE Grow our market share in European senior care services market Develop innovative joined-up approach to answer client choice & autonomy Leverage our expertise in care and our unique facility network through Korian’s brand reputation Manage performance to deliver best in class
Slide 16: 5-Year Key Objectives
5-YEAR KEY OBJECTIVES* REVENUE (€) BEDS Average 2,500 to 3,000 new beds p.a* CAGR: c. +5% c. 3.8 bn FINANCIAL EBITDA margin: OBJECTIVES c.14.0% in 2019 to c. 3.4 bn c.14.5% in 2021 Operating Free Cash Flow: c. 3 bn up 50% by 2021** Dividend: 2016 2019 2021 maintain existing policy * Excluding strate
Slide 17: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 18: Grow
KORIAN SEA)
Slide 19: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 20: c. 5% Average Annual Growth Objectives
c. 5% AVERAGE ANNUAL GROWTH OBJECTIVES* SCOPE: c. 2% c. €3.8 Bn ORGANIC: c. 3% Bolt-on Greenfield & Brownfield Volume & Pricing c. €3.0 Bn 2016 2021 An objective of 2,500 to 3,000 new beds p.a annum* * Excluding strategic M&A Capital Market Day September 15ᵗʰ, 2016 20
Slide 21: Grow, Restructure and Leverage Our Network
GROW, RESTRUCTURE AND LEVERAGE OUR NETWORK • Expand in Nursing Homes and specialized clinics • Service Flats offer x2 GROW with greenfields and bolt-on (4,000 new / 50% in Germany) NETWORK • Strengthen our position in Service Flats and Home Care • Home Care revenue x2 • Improve economic performance
Slide 22: Greenfield Combining Nursing Homes and Service Flats
GREENFIELD COMBINING NURSING HOMES AND SERVICE FLATS ON THE SAME LOCATION HASSELT, BELGIUM • Nursing Home • Independent Service Flats • Shared “back office” services (kitchen, laundry, medical support…) • Urban Access, premium positioning • Occupancy rate ≈ 100% Capital Market Day September 15ᵗʰ, 20
Slide 23: Greenfield Combining Nursing Homes and Service Flats
GREENFIELD COMBINING NURSING HOMES AND SERVICE FLATS UNDER THE SAME ROOF BRESCIA, ITALY • Medicalized Nursing Home + rehabilitation clinic + medicalized Service Flats for shortand long stay • Premium positioning and entirely private pay • Opened in March 2016: still in ramp up phase Capital Market D
Slide 24: Specialized Clinic Optimization: Toulouse Case Study
SPECIALIZED CLINIC OPTIMIZATION: TOULOUSE CASE STUDY CLOSING OF CLINIC 10 BEDS “VAL DES CYGNES” TRANSFERRED TOULOUSE, FRANCE FROM CLINIC • Built in1973 “LE CHÂTEAU” • 100 beds / 3,500 sqm 15km South • 15km South of Toulouse of Toulouse NEW CLINIC “ONCOPOLE” Opening in H2 2018 TOULOUSE, FRANCE • 95 b
Slide 25: Nursing Home Network: Rouen Optimization
NURSING HOME NETWORK: ROUEN OPTIMIZATION ROUEN, FRANCE VILLA SAINT DO BOIS-GUILLAUME BIHOREL • Close to the local hospital • High specialization on dementia ROUEN LES 100 CLOCHERS • Centre of the city • Access premium SOTTEVILLE-LES-ROUEN • 1 Facility Director & Central admission program LE JARDIN •
Slide 26: Perform
WV, (QYKORIAN SHAY
Slide 27: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 28: Improve Operating Performance
IMPROVE OPERATING PERFORMANCE 2012 – 2019 EBITDA MARGIN* FRANCE • Merger impact behind us • Adapt to Specialized Clinic new tariff scheme over the next 5 years 14.1% GERMANY • Forthcoming new care regulation (PSG II, WTG) will bring opportunities & some constraints c. 13.7%** during transition that
Slide 29: Improve Operating Performance
IMPROVE OPERATING PERFORMANCE GERMANY PURCHASING SG&A OPERATIONS PERFORMANCE PLAN • Capture Group • Reduce support • Focus on the lowest • A plan to recover & country level functions to 4% performing facilities Curanum’s operating synergies of revenues performance as a maximum level • Optimize asset
Slide 30: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 31: Invest in Our People
INVEST IN OUR PEOPLE 45 000 highly Largest cost base committed The heart of quality care (52% of revenues) professionals • Employer brand reputation CULTIVATE • Staff recognition STAFF • Career development LOYALTY • Proactive staff management Ensure best • Easy support access & availability quality
Slide 32: Invest in Our People
INVEST IN OUR PEOPLE RECRUIT & RETAIN LEARN & TRAIN • Systematic mapping of future needs • General training programs on Care & Services • Attract and retain key resources – Mandatory for care managers and care area managers in Germany – Develop caregivers apprenticeship : from 0% to 3% of staff by 2
Slide 33: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 34: Optimize Real Estate Management
OPTIMIZE REAL ESTATE MANAGEMENT THE BACKBONE ADD VALUE TO THE OFFER OF OUR ACTIVITIES • Attractiveness of our positioning • Quality of fixtures & fittings Nursing Homes IMPACT THE COST STRUCTURE Specialized HOSPITALITY • Real Estate costs 2nd highest after employee costs Clinics BUSINESSES • Facilit
Slide 35: A Significant Real Estate Ownership
A SIGNIFICANT REAL ESTATE OWNERSHIP GEOGRAPHICAL SPLIT OF OWNERSHIP Real Estate portfolio valuation* : €980 M 11% 1% 11% Ownership: 14% of operating assets Real Estate debt: €390 M 77% generating 14% of 2015 Loan to value: c. 40% revenue France Italy Germany Belgium 437,000 sqm / 98 buildings Averag
Slide 36: A Powerful Tenant with Significant Bargaining Power
A POWERFUL TENANT WITH SIGNIFICANT BARGAINING POWER GEOGRAPHICAL SPLIT OF RENTS Effort rate on rented portfolio: >50%; significant discrepancies between countries 11% 8% 39% Rentals: 86% 80% of rented assets of operating assets 42% owned by institutional generating 86% of 2015 investors revenue Fran
Slide 37: Better Control Our Real Estate Portfolio
BETTER CONTROL OUR REAL ESTATE PORTFOLIO ACTIVE PORTFOLIO INTERNALISE REAL BUILD STRATEGIC OWNERSHIP MANAGEMENT ESTATE KNOWHOW PARTNERSHIPS OF FLAGSHIPS • Portfolio arbitration • Control design • Set up global • Privileged urban areas and building process partnership with • Renegotiate lease • Benef
Slide 38: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 39: Success for Germany
SUCCESS FOR GERMANY
Slide 40: Korian's Leadership Across Germany with a Global Care Service Offer
KORIAN HAS DEVELOPED ITS LEADERSHIP ACROSS GERMANY WITH A GLOBAL CARE SERVICE OFFER Nursing Homes 225 Nursing Homes & 25,216 beds c. 4% of beds c.21% of beds Service Flats c. 2,600 flats c. 21% of beds Home Care 25 entities Capital Market Day September 15ᵗʰ, 2016 40
Slide 41: An Attractive Market Offering Size, Growth and Solvency
AN ATTRACTIVE MARKET OFFERING SIZE, GROWTH AND SOLVENCY 2015-2035 ELDERLY POPULATION ESPECIALLY INCREASE IN ELDERLY POPULATION IMPACTED BY THE INCREASE >75 TO GROW BY c. 30%, IN DEMENTIA >85 TO GROW c. 55% N° of people aged 75+ N° of estimated dementia (million) people (million) • Largest population
Slide 42: Major On-Going Evolution to Reshape the German Market
MAJOR ON-GOING EVOLUTION TO RESHAPE THE GERMAN MARKET • Nursing Homes to focus more on highly dependent people (PSG II, PSG III) PUBLIC FINANCING: • Foster alternative solutions for less dependent people FUNDS FOCUSED (day care, assisted living, home care) ON DEPENDENCY • Local authorities to have a
Slide 43: Korian Situation in Germany
KORIAN SITUATION IN GERMANY 2012 – 2015 EBITDAR MARGIN WHERE WE STAND • Need for structures and stabilized organizations, 30.1% 30.2% after successive mergers and rapid growth 28.0% 27.8% • Very committed teams in facilities • Good quality of service COMPREHENSIVE STABILIZATION & PERFORMANCE PLAN 20
Slide 44: Improve Performance Through Active Topline Management
IMPROVE PERFORMANCE THROUGH ACTIVE TOPLINE MANAGEMENT ADAPT OUR CARE OFFER TO CUSTOMER NEEDS AND REGULATORY CHANGES • Grow business through a full range of care offer • Manage PSG II and PSG III laws, jointly with local care authorities and health insurers (i.e. adapt facilities and services to more
Slide 45: Grow Our Business Through Full Range of Care Services
GROW OUR BUSINESS THROUGH FULL RANGE OF CARE SERVICES NURSING HOMES SERVICE FLATS HOME CARE Bolt-on acquisitions Bolt-on acquisitions Bolt-on acquisitions _ _ _ Greenfields Greenfields Greenfields _ (standalone facilities) _ Day-care development New services DEVELOPMENT THROUGH A JOINED-UP APPROACH
Slide 46: Success for Germany: A Project with a Dedicated Team
“SUCCESS FOR GERMANY”: A PROJECT WITH A DEDICATED TEAM LEVERED BY 4 DRIVERS c.€25 M POSITIVE EBITDAR CONTRIBUTION BY 2019 INCLUDING CASA REHA SYNERGIES PURCHASING SUPPORT FUNCTIONS PORTFOLIO OF FACILITIES HUMAN RESOURCES • Capture Group • Leverage Curanum / • Full performance • Map 3 / 5 years needs
Slide 47: Capital Market Day
CAPITAL MARKET DAY September 15ᵗʰ, 2016
Slide 48: Innovate
INNOVATE WV (QYKORIAN SHAY
Slide 49: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 50: Korian Structures and Invests on Its Path for Innovation
KORIAN STRUCTURES AND INVESTS ON ITS PATH FOR INNOVATION CONCEPT DIGITAL MEDICAL & HEALTH • Senior ecosystems • Client relationships • Deploy and solidify best practices • Private Public Participation • Digitalization of operations • Pursue our Research initiatives in facilities through the “Institu
Slide 51: Innovate with New Concepts: Belgium Case Study
INNOVATE WITH NEW CONCEPTS BELGIUM CASE STUDY
Slide 52: A Market with Strong Potential for Organic Growth and Consolidation
A MARKET WITH STRONG POTENTIAL FOR ORGANIC GROWTH AND MARKET CONSOLIDATION 74 FACILITIES GEOGRAPHICAL MARKET OVERVIEW 7,921 BEDS DISTRIBUTION • Population: 11.3 M BELGIAN • c. 18% over 65 years old NURSING HOME MARKET • 142,482 nursing home beds 31% Public • 141 beds per 1,000 people > 75 y Flanders
Slide 53: How Will We Drive a Successful Roadmap?
HOW DO WE SUCCEED? HOW WILL WE DRIVE A SUCCESSFUL ROADMAP? DRIVING MARKET DEVELOP NEW FACILITIES / CONSOLIDATION REFURBISH / EXPAND ACQUISITIONS OF BEDS* GREENFIELDS REFURBISHMENT since 2014 since 2014 1,621 NEW PROJECTS & CONCEPTS 303 60 726 BEDS 137 BEDS 2014 2015 H1 2016 (*): Including FdL Capita
Slide 54: Case Study: Senior Ecosystem Hasselt
CASE STUDY “SENIOR ECOSYSTEM” HASSELT Our expertise in 2017 expansion to Home Care + operating combined facilities - Nursing Homes & Service Flats + business and leverage on district local networking Nursing Homes of 47 beds & 55 Service Flats • Multi segments under one roof In cooperation with Real
Slide 55: Case Study: PPP of Wijgmaalbroek / Leuven
CASE STUDY: PPP OF WIJGMAALBROEK / LEUVEN PRIVATE - PUBLIC - PARTICIPATION Service Flats 26 Service Flats Nursing Homes 120 rooms PUBLIC OPERATOR PRIVATE OPERATOR • Financial limitations • More efficient (Income Expenses ) • Economy of scale • Operational • More flexible limitations Building & co
Slide 56: Our Takeaways
OUR TAKEAWAYS A COUNTRY WHERE BEING INNOVATIVE IS KEY TO CAPTURE GROWTH DEVELOPMENT/ BROWNFIELD GREENFIELD ACQUISITION CONSOLIDATE PROJECTS PROJECTS OF NEW CONCEPTS Consolidate Expansion Tracking Expand through a fragmented market and restructuring authorizations new partnerships to get better prici
Slide 57: Innovate Using Digital: Italy Case Study
INNOVATE USING DIGITAL ITALY CASE STUDY
Slide 58: Italian Market at a Glance
ITALIAN MARKET AT A GLANCE MARKET OVERVIEW 54 FACILITIES – 5,447 BEDS HOW WE SUCCEED • Population: 60.9m, 21%>65 yrs • Location is a key success factor • 340,000 Nursing Home beds • Restructuring out network • 64 beds per 1,000 people > 75yrs to drive profitability • Korian market share: 1.4% ITALIA
Slide 59: A Dedicated Global Connectivity Platform to Manage Business
A DEDICATED GLOBAL CONNECTIVITY PLATFORM TO MANAGE BUSINESS RISTOCLOUD EQUIPE CRM TOOL COMBINED ACCOMODATION WITH A MANAGEMENT AND CATERING TOOL TOOL COVERING ACTIVITY Improve quality of care Enhance team efficiency Increase performance Capital Market Day September 15ᵗʰ, 2016 59
Slide 60: Opening of Brescia Facility Is an Innovative Breakthrough
OPENING OF BRESCIA FACILITY IS AN INNOVATIVE BREAKTHROUGH A NEW A NEED FOR LOCATION A PREMIUM OPEN CUSTOMERS FOR TARGETD ONE STOP SHOP TO PUBLIC LIFE CLIENTS Capital Market Day September 15ᵗʰ, 2016 60
Slide 61: Geo-Intelligence System, Big Data Analysis
GEO-INTELLIGENCE SYSTEM, BIG DATA ANALYSIS: A SOURCE OF NEW BUSINESS AND CONCEPT VALIDATION TARGET POTENTIAL INDEX GEO-INTELLIGENCE SYSTEM TPI 50 A BIG DATA ANALYSIS TOOL ADAPTED FROM RETAIL INDUSTRY IMPROVE FACILITIES TPI 80 TPI 30 CLIENT SERVICE VALIDATE NEW CONCEPTS TARGETING REPOSITIONING Capita
Slide 62: Our Takeaways: Digital Is Key
OUR TAKEAWAYS: DIGITAL IS KEY • Improve operational performance • Target future clients & locate facilities • Drive profitability Digital concepts to be deployed progressively across Korian Capital Market Day September 15ᵗʰ, 2016 62
Slide 63: Innovate in Care: Medical Focus
INNOVATE IN CARE MEDICAL FOCUS
Slide 64: Who Are Our Patients and Residents?
WHO ARE OUR PATIENTS AND RESIDENTS? > 200,000 PATIENTS & RESIDENTS ANNUALLY NURSING HOMES NURSING HOMES • Age: Men c.84 yrs, Women >85.5 • >60% dementia issues • Average length of stay: 3 years • >30% functional rehabilitation needs • >25% at risk of disruptive behaviour SPECIALIZED CLINICS SPECIALI
Slide 65: Quality of Care to Offer Best Quality of Life
QUALITY OF CARE TO OFFER BEST QUALITY OF LIFE POSITIVE Based on systematic identification and evaluation of: • Needs and wishes from the resident and their relatives APPROACH • Abilities and competencies TO CARE • Potential sensory impairments FUNCTIONAL COGNITION BEHAVIOUR • Physical exercises • Ho
Slide 66: Quality of Care to Offer Best Quality of Life
QUALITY OF CARE TO OFFER BEST QUALITY OF LIFE A brand recognition label with a 100% target facilities by 2020 DRUG NON DRUG DOMESTIC ENTERTAINMENT THERAPIES THERAPIES AND SOCIAL ACTIVITIES LEISURE Physicians Psychologists ASG Animation coach Nurses Occupational therapists ASD/AMP Physiotherapists Sp
Slide 67: Enhancing the Quality of Care Using Medical Connectivity
ENHANCING THE QUALITY OF CARE USING MEDICAL CONNECTIVITY E-MERGENCY E-XPERTISE Permanent on-line medical support 24/7 provided by both Korian medical team On-line Specialist medical advice & and external doctors consultation provided by both Korian medical team and external doctors Avoid unnecessary
Slide 68: Facilitating the Quality of Care Using Connectivity
FACILITATING THE QUALITY OF CARE USING CONNECTIVITY DOCTORS PATIENT HOSPITALS/ RADIOLOGY CLINICS CARE EFFICIENCY THROUGH CONNECTIVITY LABORATORIES PHARMACY Capital Market Day September 15ᵗʰ, 2016 68
Slide 69: Implement
IMPLEMENT (QKORIAN Sms/
Slide 70: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 71: Comprehensive Implementation Plan
COMPREHENSIVE IMPLEMENTATION PLAN ORGANIZED TO PERFORM CONTROL PROCUREMENT MANAGEMENT IT STRATEGY Capital Market Day September 15ᵗʰ, 2016 71
Slide 72: A Decentralized & Agile Model
A DECENTRALIZED & AGILE MODEL 5 EMPOWERED CORPORATE FOCUSED BUSINESS UNITS ON 4 PRIORITIES • 5 fully empowered BU/country • Strategic governance managers incentivized on strategic plan • Risk management & control • A deliberate option to ensure • Performance improvement closeness and reactivity with
Slide 73: Group Organization
GROUP ORGANIZATION Group CEO GROUP BUSINESS UNITS France Senior CFO Human Resources France Healthcare Medical & Quality Germany Real Estate Belgium Communication Marketing & Digital Italy Capital Market Day September 15ᵗʰ, 2016 73
Slide 74: Incentivize
INCENTIVIZE • For all managers VARIABLE • Including EBITDA and OFCF Generation targets (representing at least 50% of total) REMUNERATION • Variable remuneration from at least 10% of fixed annual salary up to 120% for CEO • For top executives (HQ & countries) LONG TERM • Based on 3 years rolling targ
Slide 75: 15 Key Projects
15 KEY PROJECTS Offering restructuring Success for France and new services development by BU Success for Germany Brand strategy Korian preferred employer and customer promise GROW PERFORM REAL Digital CRM INNOVATE Rentals contracts ESTATE and customer community renegotiations Korian online services
Slide 76: Comprehensive Implementation Plan: Control
COMPREHENSIVE IMPLEMENTATION PLAN ORGANIZED TO PERFORM CONTROL PROCUREMENT MANAGEMENT IT STRATEGY Capital Market Day September 15ᵗʰ, 2016 76
Slide 77: Control Is a Key Priority
CONTROL IS A KEY PRIORITY DECENTRALISED & AGILE MODEL ROBUST CONTROL FRAMEWORK Capital Market Day September 15ᵗʰ, 2016 77
Slide 78: Reinforce Control & Financial Management
REINFORCE CONTROL & FINANCIAL MANAGEMENT REPORTING & ACCOUNTS MANAGEMENT & PROCESSES RULES & APPROVALS • Formalize & Harmonize KPI’s • Regular visits and reviews • New Group Internal Control with countries Rules • New format of the country monthly reporting pack • New CFO community • Group Investmen
Slide 79: Comprehensive Implementation Plan: Procurement
COMPREHENSIVE IMPLEMENTATION PLAN ORGANIZED TO PERFORM CONTROL PROCUREMENT MANAGEMENT IT STRATEGY Capital Market Day September 15ᵗʰ, 2016 79
Slide 80: Key Levers for Purchasing Savings
KEY LEVERS FOR PURCHASING SAVINGS LEVERAGE FROM DEFINE REINFORCE PROMOTE OUR WHOLESALERS COMPLIANCE CONTROL & INNOVATIVE BARGAINING TO DIRECT RATE TARGETS ENGAGEMENT APPROACHES POWER MANUFACTURERS AND IMPLEMENT PROCESS - CONTINUOUS (STRONGLY AWARD RELATIONSHIP MONITORING SUPPORTED MORE NATIONAL BY P
Slide 81: Accelerate Countries Synergies with a Group Approach
ACCELERATE COUNTRIES SYNERGIES WITH A GROUP APPROACH CATEGORIES STILL TO ADDRESS WITH MULTI-COUNTRY CONTRACTS CATEGORIES ALREADY ADDRESSED WITH MULTI-COUNTRY CONTRACTS Uniforms and linen DELIVERED IN 2016 Maintenance Medical supplies, Oxygen Hygiene products Travel Agency Office supply Elevator Main
Slide 82: 2021 Targeted Additional Savings Included in Plan
2021 TARGETED ADDITIONAL SAVINGS INCLUDED IN PLAN c. €500 M 2016 ADDRESSABLE YEARLY SPENDING c. -5% c. €125 M CAPEX -10 M c. €115 M CAPEX c. €375 M OPEX c. €360 M -15 M OPEX 2016 2021 Capital Market Day September 15ᵗʰ, 2016 82
Slide 83: Comprehensive Implementation Plan: IT Strategy
COMPREHENSIVE IMPLEMENTATION PLAN ORGANIZED TO PERFORM CONTROL PROCUREMENT MANAGEMENT IT STRATEGY Capital Market Day September 15ᵗʰ, 2016 83
Slide 84: IT Strategy
IT STRATEGY COUNTRIES GROUP KEY PRINCIPLE 1 unique system + 1 set of processes aligned with Group principles • Integrated Group reporting module providing fully detailed situation by country with harmonized KPI’s • Local applications fit well with local sourced directly from local systems requiremen
Slide 85: Financial Discipline
FINANCIAL DISCIPLINE WV (QYKORIAN SHAY
Slide 86: Levers to Manage Successfully Our 5-Year Plan
LEVERS TO MANAGE SUCCESSFULLY OUR 5-YEAR PLAN Boost value-added internal growth Improve operating performance COMPREHENSIVE IMPLEMENTATION PLAN Invest in our people Optimize real estate management STRICT FINANCIAL DISCIPLINE Focus innovation on medical care and digital Capital Market Day September 1
Slide 87: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES OPERATING FREE CASH FLOW (OFCF) = cash generated from business after maintenance capex, WCR, financial charges & taxes DEVELOPMENT CAPEX ACQUISITIONS DIVIDENDS Invest Priority given to selective Maintain an attractive in organic growth projects and accretive bolt on sha
Slide 88: Our Cash Generation Model
OUR CASH GENERATION MODEL 1 2016 OFCF c. €150 M 4 60 cents / share dividend policy pursued WCR 2 = €50 M dividends in cash Mainten ance 3 c. €100 M cash available with priority given to growth Capex Action plan engaged to optimize current cash 4 generation Financial expenses EBITDA Taxes 1 2 Dividen
Slide 89: Improvement of Cash Generation
IMPROVEMENT OF CASH GENERATION >6% of sales > €225 M c. 5% of sales OFCF +50% c. €150 M OFCF OFCF OPERATING FREE CASH FLOW 2016 2021 Capital Market Day September 15ᵗʰ, 2016 89
Slide 90: Strict Decision Process for Development Investments
STRICT DECISION PROCESS FOR DEVELOPMENT INVESTMENTS CLEAR GOVERNANCE QUANTITATIVE FOR DEVELOPMENT PROJECT APPROVAL CRITERIA • Group Investment Committee • IRR* between 1.5x and 2.0x WACC supervised by CEO/CFO for all projects minimum (depending on risk profile of project) • Board of Directors Invest
Slide 91: Financial Resources Allow to Deliver the 5-Year Plan Objectives
STRICT FINANCIAL DISCIPLINE Korian's financial resources allow to deliver the objectives of the 5-year plan Heading to restated leverage* of c. 3.5x by 2021 * = (Net Debt – Real Estate Debt) / (EBITDA – (6.5% x Real Estate Debt)) Capital Market Day September 15ᵗʰ, 2016 91
Slide 92: Capital Market Day
CAPITAL MARKET DAY September 15ᵗʰ, 2016
Slide 93: Conclusion
<— ers - S" CONCLUSION ef ett = KORIAN SEA)
Slide 94: Key Takeaways
KEY TAKEAWAYS Grow our market share in European senior care services market Develop innovative joined-up approach to answer client choice & autonomy Leverage our expertise in care and our unique facility network through Korian’s brand reputation Manage performance to deliver best in class profitabil
Slide 95: Our Ambition: Be the European Leader in Senior Care Services
OUR AMBITION: BE THE EUROPEAN LEADER IN SENIOR CARE SERVICES Capital Market Day September 15ᵗʰ, 2016 95