Creating the European leader of the elderly care sector NOT FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA

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1 Creating the European leader of the elderly care sector

2 DISCLAIMER Important information This presentation does not constitute and shall not be construed as an offer or the solicitation of an offer to purchase, sell or exchange any securities of KORIAN and MEDICA. In addition, it does not constitute an offer or the solicitation of an offer to purchase, sell or exchange of securities in any jurisdiction (including the US and the United Kingdom) in which it would be unlawful or subject to registration or qualification under the laws of such jurisdiction. In connection with the proposed transaction, the required information documents will be filed with the Autorité des Marchés Financiers ( AMF ). Investors and shareholders are strongly advised to read, when available, the information documents that have been filed with the AMF and any other relevant document that has been filed with the AMF as well as any related amendment if any and/or supplements because they will contain important information. Shareholders and investors may obtain free copies of documents Forward-looking statements This presentation contains information and statements that might be deemed forward-looking information and statements with respect to KORIAN AND MEDICA and the aggregate operations of both companies once the transaction would have been completed. They do not constitute historical facts. These information and statements include financial projections that are based upon certain assumptions and assessments made by KORIAN and MEDICA s management in light of its experience and its perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. Forward-looking statements include statements typically using conditional and containing verbs such as expect, anticipate, believe, target, plan, or estimate, their declensions and conjugations and words of similar import. Although the KORIAN and MEDICA s management believes that the forward-looking statements and information are reasonable, the KORIAN and MEDICA shareholders and other investors are cautioned that the completion of such expectations is by nature subject to various risks and uncertainties may of which are difficult to predict and generally beyond the control of KORIAN and MEDICA. These risks could cause actual results and developments to differ materially from those expressed in or implied or projected by the forward-looking statements. These risks include those discussed or identified in the public filings made by KORIAN and MEDICA with the AMF. Such forward-looking statements are not guarantees of future performance. Neither KORIAN nor MEDICA undertakes any obligation to update or revise the forward-looking statements and information except to the extent legally required. Aggregate financial information This press release contain certain financial information resulting from the aggregation of revised historical financial information. This information is given for indicative purposes only and does not constitute pro forma financial information and has not been audited. 2

3 KORIAN MEDICA European leader of the elderly care sector A NEW MARKET LEADER BETTER EQUIPPED, TO STRENGTHEN AND EXPAND ITS GEOGRAPHICAL REACH MORE POWERFUL, TO SEIZE EVERY GROWTH OPPORTUNITY MORE DIVERSIFIED, FOR BETTER MANAGEMENT OF REGULATORY DEVELOPMENTS OBJECTIVE OF CA. 3Bn REVENUES BY

4 KORIAN MEDICA European leader of the elderly care sector France / Germany / Italy 34,347 beds France / Belgium / Italy 22,817 beds Leader in four key European markets 57,164 beds 321 facilities Market capitalization: 881m (1) facilities = Market capitalization: 959m (1) 597 facilities 39,800 employees Market capitalization: 1,840m (2) Figures as of September 30, 2013, including SLG beds and facilities (1) Based upon market quotations as of November 15, 2013, from Euronext website (2) Implied, based upon market quotations as of November 15, 2013, from Euronext website 4

5 NEW LEADERSHIP EXECUTIVE MANAGEMENT Yann Coléou, CEO of Korian Medica Yann Coléou CEO of Korian Medica BOARD OF DIRECTORS Jacques Bailet, Chairman of Korian Medica for the first year after the merger The Board of Directors would be composed of an equal number of representatives of key shareholders and independent Directors Jacques Bailet Chairman of Korian Medica 5

6 NEW LEADERSHIP Short- to mid-term evolutions BOARD OF DIRECTORS Christian Chautard, Vice Chairman, would become Chairman a year after the merger Christian Chautard Vice Chairman of Korian Medica MEDICA S EXECUTIVE MANAGEMENT Christine Jeandel, Deputy CEO of Medica until the merger Christine Jeandel Deputy CEO of Medica 6

7 SUMMARY TERMS OF THE MERGER TERMS AND CONDITIONS n The transaction would take the form of a statutory merger ( fusion-absorption ) between Medica and Korian, whereby Medica would be merged into Korian. Medica shareholders would receive 10 Korian shares for every 11 Medica shares they own n Terms of the memorandum of understanding have been unanimously approved by the Boards of Directors of Korian and Medica n Korian Medica shares would be listed on Euronext Paris n Transaction subject to the approval of the Autorité de la Concurrence (Competition Authority) in France n Korian has agreed with its principal lenders the refinancing of the Medica s syndicated loan under terms similar to Korian s 2010 syndicated loan, should the transaction be successfully completed NEXT STEPS At the end of the information and consultation process with the relevant employee representatives, and if both parties approve the transaction, a merger agreement would be signed The merger would be submitted for approval to shareholders of both companies at Extraordinary General Meetings that would be held in the first quarter of

8 EXECUTIVE SUMMARY STRONGER LEADERSHIP A PLAN FOR GROWTH PERFORMANCE OPTIMIZATION 8

9 1 STRONGER LEADERSHIP EUROPEAN LEADER OF THE ELDERLY CARE SECTOR COMPLEMENTARY GEOGRAPHIC COVERAGE EXPANDED MARKET OPPORTUNITIES 9

10 LEADERSHIP Korian Medica, leader in four key European countries 1 EUROPE REVENUES (1) ( m) Korian Medica 2,247 1 France revenues (1) ( m) Germany revenues (1) ( m) Italy revenues (1) ( m) Belgium revenues (1) ( m) Korian Medica 1,351 Korian Medica 446 Korian Medica 268 Korian Medica 183 (1) Cumulated 2012 unaudited figures of both companies, adjusted for 2013 divestments and acquisitions Korian: reported figures as of December 31, months of Curanum based on 2012 Curanum accounts 12 months of facilities divested in 2013 Medica: reported figures as of December 31, months of SLG based on 2012 SLG accounts 10

11 LEADERSHIP Korian Medica, complementary geographic coverage 2012 revenues (1) by country Korian Medica KORIAN MEDICA Germany 33% Italy 14% France 53% + Belgium 20% France 71% Italy 9% Germany 20% Belgium 8% Italy 12% France 60% 1,345m 901m 2,247m (1) Cumulated 2012 unaudited figures of both companies, adjusted for 2013 divestments and acquisitions Korian: reported figures as of December 31, months of Curanum based on 2012 Curanum accounts 12 months of facilities divested in 2013 Medica: reported figures as of December 31, months of SLG based on 2012 SLG accounts 11

12 LEADERSHIP Korian Medica, complementary geographic coverage Combined 2013 capacities (1) by country 47 facilities 5,481 beds 125 facilities 15,709 beds 366 facilities 29,480 beds 59 facilities 6,494 beds (1) Figures as of September 30, 2013, including SLG beds and facilities 12

13 LEADERSHIP Expanded market opportunities Strong potential for organic growth and consolidation A growing market, with secured public funding Solid fundamentals Facilities located within the most attractive regions 13

14 2 A PLAN FOR GROWTH OBJECTIVE OF CA. 3Bn REVENUES BY 2017 POTENTIAL FOR GROWTH IN THE GROUP S CORE BUSINESS AND IN NEW REGIONS DEVELOPMENT OF A COMPREHENSIVE RANGE OF SERVICES IN ALL COUNTRIES POTENTIAL GROWTH AREAS IN THE NEW SILVER ECONOMY 14

15 GROWTH Potential for growth in the group s core business POTENTIAL FOR ORGANIC GROWTH POTENTIAL FOR EXTERNAL GROWTH FINANCIAL FLEXIBILITY FOR GROWTH n Secured pipeline, creation, renovation and restructuration of beds in nursing homes (EHPAD) and post-acute care (SSR) n Management of public or charity-run nursing homes (EHPAD) Opportunities to be seized in order to gain market share in particularly attractive regions in our four markets and build a more relevant range of services Increased credibility to strengthen our business development in other regions with strong potential A solid financial structure A leverage offering possibility to tap multiple sources of financing High-quality property assets 15

16 GROWTH Potential for development by supplementing our range of services in each country FRANCE GERMANY ITALY BELGIUM Post-acute care (SSR) Homecare (MAD/ HAD) Intermediate residences Nursing homes DEVELOPMENT THROUGH TRANSFER OF BUSINESS MODELS Emerging activity Moderate activity High activity Opportunity for new entry 16

17 GROWTH Potential growth areas in the new silver economy DEVELOP THE BRAND OF REFERENCE FOR AGEING WELL... TO BUILD TOMORROW S NEW SERVICES n Build a strong unified brand in our four countries which can be used n as a catalyst for the development of new services to support marketing targeted at elderly people n Strengthen relationships with health authorities and local communities Ø Work together to build effective accommodation solutions Ø Better meet the changing needs of elderly people Address the aspirations of elderly people Include new services and equipment (ergotherapy, e-services, home automation, e-medicine, etc.) Develop new ways of preventing the effects of old age and maintaining independence 17

18 3 PERFORMANCE OPTIMIZATION A DENSER NETWORK IN FRANCE AND ITALY OPTIMIZATION OF REVENUES AND PROCESSES COST OPTIMIZATION WITH 15m OF EFFICIENCY SAVINGS IN YEAR THREE 18

19 PERFORMANCE A denser network in France and Italy + Korian KORIAN MEDICA = Medica x Korian, no. of EHPAD/SSR x Medica, no. of EHPAD/SSR Total no. of facilities <10 >10 & <20 > facilities x Korian, no. of EHPAD/SSR x Medica, no. of EHPAD/SSR facilities facilities Total no. of facilities <5 4 4 >5 & <10 >10 32 facilities 27 facilities 59 facilities Figures as of September 30,

20 PERFORMANCE Optimization of revenues and processes OPTIMIZATION OF REVENUES OPTIMIZATION OF PROCESSES Shared commercial platform and best practices (management of customer files, caregivers and prospective clients, etc.) Systematization of yield management implementation and optimization Optimization of revenues through a greater ability to specialize, and the resulting differentiation Ø Differentiation from offers in the hotel sector Ø Specialization by disease (Alzheimer s, Parkinson s, disability, geropsychiatry) Continued work to improve margins (e.g. medical centres, etc.) Reinforced care quality through the sharing of best practices (e.g. reductions in the number of drugs, etc.) Creation of a leading employer brand to attract the best talent, develop training and professional development opportunities and ensure improved employee loyalty 20

21 PERFORMANCE Cost optimization with 15m of annual efficiency savings in year three Sources of efficiency savings Increase in net efficiency savings (1) ( m) Run-rate Increased operational leverage and bargaining power with suppliers Modernization of post-acute care segment Purchasing Operating costs Year 1 Year 2 Year 3 (1) Including estimated implementation costs. 21

22 CONCLUSION A leader for value creation 22

23 A LEADER FOR VALUE CREATION GROWTH POTENTIAL PERFORMANCE TO BENEFIT PROFITABILITY IMPROVED SERVICES FOR CLIENTS AND CAREGIVERS BETTER PERFORMING TEAMS n Dynamic markets on which the enlarged group would make the most of both organic and external growth opportunities n A denser network for better revenues optimization, through specialized and differentiated services, etc. n And for better cost optimization, through the sharing of best practices and 15m of annual efficiency savings by year three n A more targeted range of services and improved relations through denser networks n Improved quality of service through the sharing of best practices n Better employee follow-up: improved recruitment processes, better training, better development and greater loyalty, through the creation of a strong employer brand and sharing of best practices 23

24 APPENDICES KEY FINANCIAL DATA OVERVIEW OF KEY MARKETS 24

25 APPENDICES - KEY FINANCIAL DATA Combined key data m Korian Medica KORIAN MEDICA 2012 revenues (1) 1, , EBITDAR (1) EBITDAR margin % 26.3% 26.2% 26.3% 2012 EBITDA (1) EBITDA margin % 12.2% 15.4% 13.5% Leverage (1)(2) 3.0x 3.2x (1) Cumulated 2012 unaudited figures of both companies, adjusted for 2013 divestments and acquisitions Korian: reported figures as of December 31, months of Curanum based on 2012 Curanum accounts 12 months of facilities divested in 2013 Medica: reported figures as of December 31, months of SLG based on 2012 SLG accounts (2) Korian Leverage: (Net financial debt real estate debt) / (EBITDA (7,0% x real estate debt)) Medica Leverage: (Net financial debt real estate debt) / (EBITDA (6,5% x real estate debt)) 25

26 APPENDICES - KEY FINANCIAL DATA Illustrative post-transaction shareholding structure KORIAN MEDICA Predica 20.4% Others 36.8% Monroe/Batipart 16.1% ACM Vie 4.2% Groupe MACSF 4.2% Covéa 11.9% Groupe Malakoff-Mederic 6.4% Note: Based on exchange ratio for the contemplated transaction, and on current shareholding structures of both companies, as far as the companies are aware. Rounded figures. 26

27 APPENDICES - KEY MARKETS France Nursing home market Market overview Population: 65.7m Ca. 17% over 65 years old 684,000 nursing home beds 127 beds per 1,000 people over 75 years old Korian Medica market share: 3.4% French nursing home market Features of attractiveness Ageing population: increase of 17% in the over 60s over the next 10 years Licenses Increase in the number of people suffering from pathologies related to old age Ca. 35% of nursing home costs (1) and 80% of clinical costs (1) reimbursed by public authorities 10 leading private operators 15% Charity-run 29% Other private operators 7% Public 49% 366 facilities 29,480 beds Solid market fundamentals Number of facilities as of September 30, 2013 Source: INSEE, DRESS, World Bank (1) Korian figures 27

28 APPENDICES - KEY MARKETS Germany Nursing home market Market overview Population: 81.9m Ca. 21% over 65 years old 876,000 nursing home beds 114 beds per 1,000 people over 75 years old Korian Medica market share: 2.0% German nursing home market 125 facilities 15,709 beds Features of attractiveness Main European market: 2.3m dependents Increase of 28% in the over 80s over the next 10 years 200,000 beds in medicalised nursing homes to be created in 10 years Ca. 50% of the total daily cost reimbursed by the social security Other private operators 26% Public 6% 10 Leading private operators 11% Charity-run 57% Number of facilities as of September 30, 2013 Source: Pflegestatistik, World Bank A growing market supported by sound public funding 28

29 APPENDICES - KEY MARKETS Italy Nursing home market Market overview Population: 60.9m Ca. 21% over 65 years old 340,000 nursing home beds 64 beds per 1,000 people over 75 years old Korian Medica market share: 1.4% Italian nursing home market Features of attractiveness Increase of 29% in the over 80s over the next 10 years 50% of the total daily costs reimbursed by social security Public authorities intend to transform clinics/hospitals into medicalised nursing homes Licenses 6 Leading private operators 5% Other private operators 13% Public 47% Charity-run 35% 59 facilities 6,494 beds Number of facilities as of September 30, 2013 Source: Istat, Euromonitor, World Bank Facilities located in the most attractive regions 29

30 APPENDICES - KEY MARKETS Belgium Nursing home market Market overview Population: 11.1m Ca. 18% over 65 years old 135,000 nursing home beds 139 beds per 1,000 people over 75 years old Korian Medica market share: 4.0% 47 facilities 5,481 beds Features of attractiveness The population in nursing homes set to grow by 2,500 individuals per year by 2025 Licenses 44% of the total daily cost reimbursed by social security Belgian nursing home market Other private operators 31% Public 31% 5 Leading private operators 13% Charity-run 25% Number of facilities as of September 30, 2013 Source: Medica, LEK, World Bank A market with strong potential for organic growth and market consolidation 30

31 APPENDICES - KEY MARKETS Breakdown of the standard daily costs in nursing homes FRANCE GERMANY ITALY BELGIUM Cost breakdown Payment breakdown Social security Healthcare 25 % Residents Others 7% Residents and APA (1) Dependence 10 % Healthcare 60 % Pflegekasse Ca. 50 % Regional social security Healthcare 50 % Social security Healthcare 44% % Residents Entrance costs not set Accommodation /services 65 % Services 25 % Real estate 15 % Residents or public funding Ca.50 % Residents Costs not set Accommodation /services 50 % Residents Costs set at entrance (+ inflation after) Accommodation /services 49 % Source : Korian, Medica et LEK (1) Allocation Personnalisée d Autonomie 31

32 APPENDICES Korian Medica project With over 57,000 beds, close to 600 facilities, combined revenues of 2.2bn, and a leading position in four key European markets, France, Germany, Italy and Belgium, the Korian and Medica merger would result in the creation of the European leader in the care of elderly people. In the event that the merger is completed, Korian and Medica will be able to build an ambitious growth plan: organic growth in dynamic markets; external growth in markets with strong consolidation potential; growth through the transfer of expertise and business models. Together, we would share our know-how, best practices and the experience which our complementary geographical presence provides, to improve our processes and to develop our performance. We would have the power to develop new activities, services and processes. We would channel this power into implementing the same vision: ensuring that our care for elderly people has, as its central tenet, the idea of maintaining independence for as long as possible, and thereby preserving the dignity of elderly people. We are now setting out on a great shared adventure: the adventure of a French-based group with world resonance, recognized for its expertise and care quality, with a strong growth plan that is at once a great human endeavor, useful to our societies, and a platform to build upon the services of tomorrow that will address the challenges of population ageing. Yann Coléou, CEO of Korian Jacques Bailet, Chairman and CEO of Medica 32