2016 FULL-YEAR RESULTS. March 16ᵗʰ, 2017

Transcription

1 2016 FULL-YEAR RESULTS March 16ᵗʰ, 2017

2 2016 OVERVIEW 2016 FULL-YEAR RESULTS March 16ᵗʰ, 2017

3 2016: A NEW STEP IN KORIAN INTERNATIONAL EXPANSION REVENUE ( M) Casa Reha Foyer de Lork Medidep Segesta Phönix Curanum Medica Senior Living Group 2,222 2,579 2,987 IPO ,015 1,108 1,

4 A PERFORMING EUROPEAN LEADER IN THE SENIOR CARE AND SERVICE MARKET # IN THE PRIVATE NURSING HOME SECTOR 2,987 M revenue 4 BUSINESS LINES #2 #1 72,000 beds Service Flats Nursing Homes #1 #2 715 facilities Home Care Post Acute Clinics 4 countries with #1 or #2 market positions VALUE CREATION THROUGH A JOINED-UP APPROACH 4 countries representing more than 50% of the EU population >75 International business 47% of revenue Deploying enriched client paths Leveraging our strong asset base and interconnecting business 4

5 2016: A YEAR OF STABILISATION AND RECOVERY Solid financial performance in line with objectives Top Line objective achieved 3 Bn Sales growth: +15.8% including +3.8% organic Strong international organic growth dynamic: +6.7% EBITDA margin in line with target 14.1% vs 13.3% published in 2015 Above restated guidance of 14.0% (Sept. 2016) Strong focus on basics to make the company fit for the future 5

6 2016 ACHIEVEMENTS 2016 FULL-YEAR RESULTS March 16ᵗʰ, 2017

7 2016 TOP ACHIEVEMENTS STABILISE & CONSOLIDATE PREPARE FOR THE FUTURE 1 Stabilise and reinforce Korian management team 5 Design 5-year strategic plan Korian Improve monitoring & control, performance management and IT 6 Secure financing for the next 5 years 3 Start portfolio optimization 7 Deliver value creative Bolt-On operations 4 Stabilise German business and launch Casa Reha integration 8 Revisit Korian Real Estate strategy 7

8 STABILISE & CONSOLIDATE 1 A STABILISED AND REINFORCED MANAGEMENT TEAM Renewed Group Management Board Group Management Board S.Boissard CEO Reinforced country management teams on key positions (Operations, HR, Sales and Marketing) Creation of a top 50 community An organization promoting decentralization and empowerment of the network FRANCE SENIOR CA.Pinel FRANCE SANTE N.Merigot GERMANY R.Stiller ITALY M.Rossini BELGIUM B.Bots FINANCE L.Lemaire HR R.Boyer MEDICAL & QUALITY D.Armaingaud MARKETING COM. C.Jolly REAL ESTATE F.Durousseau 2016 FULL-YEAR RESULTS March 16ᵗʰ,

9 STABILISE & CONSOLIDATE 2 ACTION PLAN TO CONSOLIDATE MONITORING & CONTROL, PERFORMANCE MANAGEMENT AND IT MONITORING & CONTROL PERFORMANCE MANAGEMENT IT Comprehensive monthly reporting review (including cash performance & reforecast process) Purchasing actions (first European categories ) and efficiency initiatives (energy & fluids, maintenance ) Stabilisation of critical situations (France and Germany) New internal control Group rules framework deployed Synergies over delivered on Korian/Medica merger (15M initially planned by end 2016) Catch up and upgrading CRM (France Italy Belgium) New platform for operations (Italy and France Santé) 9

10 STABILISE & CONSOLIDATE 3 FIRST PORTFOLIO OPTIMIZATION ACTIONS Disposal of the French loss-making facility (CHC) finalized Operations discontinued in 5 non performing facilities in Italy and Germany 10

11 STABILISE & CONSOLIDATE 4 GERMANY: STRATEGIC MARKET FOR KORIAN HIGH GROWTH POTENTIAL MARKET Largest senior market in Europe (9 M people > 75 years) with the most robust economy Very favourable demographics: > 75 Y: +3%/year + People requiring care: +4.5%/year Sound and growing financing for Dependency (32 bn public funding +20% vs 2016) Opportunity to deploy new business models combining Dependency & Healthcare financing KORIAN GERMANY WELL POSITIONED Korian by far #1 on the private senior market (>1.5 x # 2) Already a broad portfolio of activities: nursing homes + service flats + home care and a large network of 222 facilities to leverage A strong growth potential over the next 5 years 11

12 STABILISE & CONSOLIDATE 4 GERMANY: ADAPT OUR BUSINESS TO NEW REGULATIONS PRICING & STAFF KEYS PSG II & III (new dependency classification and new rate scheme starting 1/1/2017) Rate renegotiation completed by Dec.2016 for all facilities Price effect in 2017 : +2.0% to 2.5% (partly offset by increased staff keys for higher dependency level) REAL ESTATE LHG (new rules relative to real estate and comfort & equipment standards) Bavaria Starting 2017 for new facilities; progressive application over the next 5 years for existing facilities No business impact foreseen in 2017 NRW Starting mid facilities to be adapted with some transitory business impact in 2017 Bade-Wurtemberg Starting facilities to be adapted with some transitory business impact in 2018 Total Capex required 15 M over 3 years Total estimated net impact -300 to -800 beds 12

13 STABILISE & CONSOLIDATE 4 GERMANY: SUCCESS 2020 EFFICIENCY PLAN STARTED WITH FIRST FINANCIAL BENEFITS IN H2 SUCCESS 2020 = A COMPREHENSIVE EFFICIENCY PLAN ENCOMPASSING INTEGRATION PROCESS PERFORMANCE MANAGEMENT IT platform stabilized and ready for migration start Global integration roadmap designed (organization, headquarter, key positions, IT, SG&A reduction ) for the next two years Occupancy rate progressing in 2016 on mature scope on both entities Significant interim reduction at Curanum: H divided by 2 vs H Purchasing action plan Specific plan implemented for the less performing facilities First financial benefits in H2: EBITDA margin H >H

14 PREPARE FOR THE FUTURE 5 DESIGN KORIAN YEAR STRATEGIC PLAN 14

15 PREPARE FOR THE FUTURE 6 FINANCING SECURED & HEDGED FOR THE NEXT 5 YEARS New credit facility signed for 1,300 M until July 2021 New Euro Commercial Paper program of 300 M Solid interest rates hedging strategy implemented in H2 15

16 PREPARE FOR THE FUTURE 7 DELIVER VALUE CREATIVE BOLT-ON ACQUISITION Strengthening market position in Belgium from #3 to #2 18 new facilities + Home Care business entry Innovative integrated concept to be replicated: Nursing Home + Service Flats + Home Care pilot concept for the rest of the Group Acquisition of FOYER DE LORK + OTV in Belgium Robust pipe-line for the years to come (1,400 beds) 16

17 KORIAN REAL ESTATE PORTFOLIO OWNERSHIP RENTS GEOGRAPHICAL SPLIT OF OWNERSHIP (IN M) Ownership: 14% of operating assets GEOGRAPHICAL SPLIT OF RENTS (IN SQM) Rentals: 86% of operating assets 11% 11% 1% 77% Real Estate portfolio valuation : 980 M 8% 42% 11% 39% 80% of rented assets owned by institutional investors 3.3 million sqm / 614 buildings France Germany Italy Belgium 437,000 sqm / 98 buildings France Germany Italy Belgium Length of rentals: 9 to 27 years NB: All figures as of 30th June

18 PREPARE FOR THE FUTURE 8 REVISIT KORIAN REAL ESTATE STRATEGY KEY PRIORITIES ACTION TO COME Regain control over the development phase of greenfields & relocation 50+ projects in the next 3 years Be asset smart rather than asset light : Owning quality asset when gap between yield and fixed interest rate > bp Favoring active portfolio management to speed up brownfield reconfiguration Up to 500 M to be invested in real estate in the next 3 years (subject to market conditions) ownership rate increase from 14% up to 20% Financed through Real Estate Debt ( 900 M permitted vs 370 M utilized end 2016) very limited impact on adjusted leverage Creation of a dedicated asset vehicle by country enabling future partnership and arbitration under optimized conditions Rents renegotiation action plan defined on a first set of 150 buildings 5% savings expected by

19 2016 FINANCIALS 2016 FULL-YEAR RESULTS March 16ᵗʰ, 2017

20 REVENUE BY COUNTRY REVENUE 2015 ( M) 2016 ( M) Growth (%) Organic Growth (%) France 1, , % 1.9% International 1, , % 6.7% Germany % 8.4% Italy % 1.8% Belgium % 9.1% Total 2, , % 3.8% Network increased by beds of which beds from Casa Reha acquisition In France, organic growth driven by the nursing home segment. Flat rehab clinic segment revenue due to regulatory pricing decrease In Germany and Belgium, organic growth is driven by ramp up of new facilities and improved occupancy rate on mature facilities In Italy, revenue evolution driven by portfolio optimization actions (-4 facilities) * See definitions 20

21 EBITDAR PERFORMANCE BY COUNTRY EBITDAR value EBITDAR % of sales 2015 ( M) 2016 ( M) Growth (%) 2015 (% of sales) 2016 (% of sales) Change France % 26.7% 27.2% 0.5% International % 25.9% 26.1% 0.2% Germany % 27.8% 27.0% -0.8% Italy % 23.1% 23.0% -0.1% Belgium % 25.4% 26.8% 1.4% Total % 26.4% 26.7% 0.3% Solid progression in France (+ 50 bp) strongly supported by efficient purchasing actions Very strong progression in Belgium (+140 bp) thanks to ramp up acceleration and very efficient cost management Italy grew by +50 bp excluding the opening impact of Brescia facility Excluding Germany, EBITDAR progressing +50 bp In Germany, situation has improved in H2 2016: +180 bp vs H / -350 bp in H vs H * See definitions 21

22 OPERATING PERFORMANCE 2015 ( M) 2016 ( M) Change (%) Revenue* 2, , % Personnel costs % of sales Other charges % of sales EBITDAR % of sales External rents % of sales EBITDA % of sales (1,319.6) (1,561.0) 18.3% 51.2% 52.3% 1.1% (579.5) (628.7) 8.5% 22.5% 21.0% -1.4% % 26.4% 26.7% 0.3% (338.2) (375.0) 10.9% 13.1% 12.6% -0.6% % 13.3% 14.1% 0.9% Excluding Germany, staff costs grew by 30 bp stable in France / declining in Belgium / progressing in Italy because more internal staff in 2016 vs externalized (stable on a global basis) Staff costs in Germany stabilized: flat in H vs H to be compared with an increase of +440 bp in H vs H Other charges: improvement of 140 bp (120 bp excluding 7M favorable non recurring effects) External rents: minored by 5 M non recurring favorable effect Do not include rental recurrently reclassified under IAS 17 for Casa Reha Excluding the + 12 M ( 7 M + 5 M) non-recurring items, underlying EBITDA margin is 13.7% * See definitions 22

23 2016 EBITDA MARGIN BRIDGE Mainly events from H1 14.1% 14.0% Same impact as in H1 13.7% +0.4% ONE-OFF GAINS 13.2% +0.4% EXTRA IAS17 IMPACT VS MARCH 2016 HYPOTHESES +0.1% FROM OPERATIONS 2016 FY initial roadmap* Underlying performance 2016 FY As Reported 2016 FY Last September 2016 FY revised roadmap * On the basis of 2016 yearly Group expectations from March

24 PROFIT & LOSS 2015 ( M) 2016 ( M) Change (%) Revenue* 2, , % EBITDA % Depreciation & Provisions (123.8) (156.0) 26.0% EBIT % % of sales 8.5% 8.9% 0.5% Other net operating charges (39.2) (25.4) -35.4% Operating income % % of sales 6.9% 8.1% 1.1% Financial result (65.0) (123.3) 89.9% Income Tax (53.0) % Minority interests (2.3) (1.9) -18.2% Net profit Group share % * See definitions Depreciation & P. evolution mainly linked to consolidation of German acquisitions and IAS17 accounting rules Other net operating charges includes non recurring items related to the French loss-making facility disposed, complementary provisions on German HR past events and German reorganization costs eligible for booking in 2016 Financial result evolution is predominantly driven by: German acquisitions ( 40 M), which includes significant financial charges related to IAS17 real estate debt Exceptional charges for 17 M mainly non cash Income tax includes the one-time net favorable impact (+ 72 M) of the voted change in the French income tax rate (28,9% by 2020) on our net differed tax liabilities (no cash impact) IAS17 unfavorable impact on net profit: - 5 M (no cash impact) Net Profit restated from tax impact & IAS17: 65 M, +10% vs

25 CHANGE IN NET DEBT 2016 ( M) Cash flow after cost of financial debt Change in WCR 4.2 Operating Capex (maintenance ) (69.8) Free Cash Flow Development Capex & Bolt Ons (87.4) Net Free Cash Flow 53.0 Dividends paid (28.7) Real Estate Investments (52.0) Strategic acquisitions (366.8) Net debt impact of change in perimeter & others (276.0) Change in Total Net Debt (670.5) Opening Total Net Debt 1,644.9 Closing Total Net Debt 2,315.4 Change in WCR: positive evolution despite French negative regulatory impact Operating Capex = 2.3% of revenue Development Capex & Bolt On include Foyer de Lork operation Real Estate Investments corresponds to an acceleration in the detention with 6 key operations mainly realised in France Strategic acquisitions mainly correspond to scope evolutions in Germany Change in perimeter is mainly linked to Casa Reha consolidation and IAS17 new debt 25

26 FINANCIAL POSITION AS OF 31 DECEMBER /12/2015 ( M) 31/12/2016 ( M) Change ( M) Syndicated loan Bonds & bilateral debt , Revolving credit facility Treasurery loans, bank overdraft & others Gross Financial debt 1, , Cash & cash equivalent (208.9) Net Financial debt 1, , Real Estate Debt Total net debt 1, , * See definitions Syndicated loan increase related to the term loan of new credit facility signed in July 2016 Decrease in cash and cash equivalent is mainly due to Casa Reha acquisition cashing out Increase in Real Estate Debt is driven by accounting impact of acquisition of Casa Reha under IAS17 rules ( 240 M) Group Real Estate Debt is 370 M excluding IAS 17 operating leases Average cost of Financial debt + Real Estate Debt (excl. IAS 17) 3.0% Restated leverage*: 3.9x (covenant max: 4.5x) 26

27 SECURED & WELL HEDGED FINANCING Secured Financing Well hedged Financing A new Syndicated loan of 1,300 M maturing July 2021 implemented in July M of undrawn committed RCF line end M of Euro Commercial Paper program of which 250 M undrawn No major repayment before 2021 Additional interest rates hedging implemented in October 2016 at very favorable conditions If interest rates increase 115 bp by 2021, the Group financing rate would remain below the level anticipated for 2017 ( 3%) (based on the debt profile of the plan K 2020 ) Authorized Real Estate Debt = 900 M 370 M drawn 530 M available for new operations 27

28 GROUP DEBT MATURITY PROFILE AVERAGE MATURITY 5 YEARS NO MAJOR REPAYMENT BEFORE Other debt Syndicated loan Euro PP 2015 SSD

29 BALANCE SHEET 31/12/2015 ( M) 31/12/2016 ( M) Change ( M) Goodwill 1, , Intangible fixed assets 1, , Property, plant & equipment 1, , Long-term financial assets Non-current Assets 4, , Deferred tax assets (541.9) (490.6) 51.3 Working capital requirement (463.2) (526.0) (62.8) Assets held for sale Total Assets 3, , Total shareholder's equity 1, , Provisions for pensions Other provisions Financial instruments (3.1) Total Net debt 1, , Total liabilities 3, , Major changes in Goodwill, tangible fixed assets, provisions and Net financial debt are mainly driven by Casa Reha and to a lower extent Foyer de Lork consolidation 29

30 DIVIDEND PROPOSED FOR / per share with a share payment option 30

31 OUTLOOK FULL-YEAR RESULTS March 16ᵗʰ, 2017

32 2017: BUILDING THE NEW KORIAN FOCUS ON STABILISATION & RECOVERY START BUILDING THE NEW KORIAN 1 st YEAR OF KORIAN YEAR PLAN 32

33 2017 KEY PRIORITIES BOOST VALUE-ADDED GROWTH OPTIMIZE REAL ESTATE MANAGEMENT IMPROVE OPERATING PERFORMANCE Strong focus on organic growth in France and Italy with dedicated 3-year action plan Accelerate Home Care business development: +50% (mainly in Germany and Belgium) Pursue rental renegotiation (new set of 50 buildings) Increase owned portfolio (10-15 potential acquisitions) Structure dedicated asset vehicles Germany: implement Success 2020 performance plan Purchasing action plan: in line with K2020 roadmap IT: pursue catch up actions to improve productivity FOCUS INNOVATION ON MEDICAL CARE AND DIGITAL Positive Care by Korian to be deployed in 150 facilities Korian Generation App to be deployed in all French NH by Q1 INVEST IN OUR PEOPLE Train: E-learning program throughout the company / Training and development program for facility managers / Apprenticeship Retain: Building professional communities (physicians, nurses, cooks ) 33

34 REVITALISE ORGANIC GROWTH: FOCUS IN FRANCE OUR GOAL Double French organic growth momentum to reach 4% within 3 years SPECIFIC PLAN DESIGNED BY BUSINESS SEGMENT France Senior France Santé 34

35 FRANCE SENIOR 2016 FULL-YEAR RESULTS March 16ᵗʰ, 2017

36 KORIAN FRANCE SENIOR : 1 ST NURSING HOME NETWORK IN FRANCE 24,000 beds 294 Nursing Homes of which 60% in cities >100k inhabitants Broad range of complementary offer and services 14,800 employees Occupancy Rate >95% 36

37 3 KEY LEVERS TO BOOST ORGANIC GROWTH Upgrade our Customer Value Proposition Increase Commercial Performance Fasten Network Growth Opportunities Clarify and harmonize our offer Develop adapted services for each target groups Improve value for money perception Leverage average price through revenue management approach Increase direct sales and build a complete customer centric approach INNOVATION & DIGITAL Reconfiguration program with some relocations on 50% of the sites Leverage residual constructability potential to develop add. beds and assisted living 1000 bed/unit openings 45% of additional organic growth 55% of additional organic growth 37

38 FRANCE SANTE 2016 FULL-YEAR RESULTS March 16ᵗʰ,

39 KORIAN FRANCE SANTE Type of facility Number Acute care and rehabilitation facilities 68 o/w specialised clinics 36 Psychiatry 7 Hospitalisation homecare 6 TOTAL 81 #2 operator in the commercial private sector with 15% of the market by number of facilities Specialised services focusing on geriatrics and orthopaedics rehabilitation 5,200 employees Geographic concentration: 50% of facilities are located in three regions: PACA, Rhône-Alpes and Ile-de-France Geographic distribution of Korian post acute and rehab. facilities Comprehensive Comp. - Geriatrics Other Comp. - Neurology Neuro + Musculo-Skeletal Hospitalisation homecare In the last 3 years, decreasing rates and capacity limitation have constrained the revenue growth 39

40 GROWTH OPPORTUNITIES Increasing demand for services Development of out-patient care Demand for higher quality Activity based charging (DMA) 40

41 4 KEY LEVERS TO BOOST ORGANIC GROWTH Restructure network Develop out-patient care services Develop hospitality services Maintain high-quality 20 facilities restructured supporting case mix improvement 100% of facilities providing out-patient care Services to account for 20% of total revenue 90 % of facilities with HAS A and B certification 41

42 2017 OBJECTIVES IN LINE WITH 5-YEAR PLAN ROADMAP Revenue Growth >5% with H2 expected to be more dynamic than H1 >2,500 new beds Greenfields mostly located in Germany and Belgium Most of them to be opened in H2 EBITDA margin 13.7% stable vs 2016 underlying performance Investments to support top line acceleration Greenfield opening costs and ramp up impact (Belgium & Germany) Full impact of German Success 2020 expected from EBITDA% aligned with K2020 plan * As reported. For 2016 based on guidance on recurring as in H1 ** For 2016 based on recurring margin expectation as announced in H

43 CONCLUSION Solid financial performance in 2016, in line with objectives Strong revenue increase (+15.8%) driven by international expansion and solid organic growth (3.8%) EBITDA margin of 14.1% with underlying performance at 13.7% vs 13.3% in 2015 Solid free cash flow generation with working capital improvement and capex under control Group financing secured and well hedged Korian well positioned to benefit from strong market potential in the next 3-5 years Favourable demographics fostering high demand Need for enriched services and new approaches Leadership position on 4 key European countries Further consolidation opportunities and deliver on strategic plan Korian 2020 Basics consolidated in 2016 First benefits in 2nd half of ambitious efficiency plan deployed in Germany Investing on people, innovation and quality 43

44 APPENDIX 2016 FULL-YEAR RESULTS March 16ᵗʰ, 2017

45 DEFINITIONS REVENUE: including other income. EBITDAR: the interim performance indicator selected by the Korian group to monitor the operating performance of its entities. It consists of gross operating surplus of the operating sectors before leasing expenses. EBITDA corresponds to the EBITDAR defined above minus rental expenses. Current net profit/(loss) attributable to owners of the Group: it represents net profit/(loss) attributable to owners of the Group - (other operating income and expenses + gains and losses on acquisitions and disposals of subsidiaries)* (1 - standard corporate income tax of 34%), or net profit/(loss) attributable to owners of the Group restated for non-recurring items. RESTATED LEVERAGE: (Net debt Real estate debt) / (EBITDA adj. (6.5%* Real Estate Debt)). 45

46 DISCLAIMER This document was prepared by Korian (the Company ). The information contained in this document has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed upon, the fairness, accuracy, completeness, or correctness of the information or opinions contained in this document and the Company does not accept any liability or responsibility in this respect. This document contains certain statements that are forward-looking. These statements refer in particular to the Company business strategies and growth of operations, future events, trends or objectives which are naturally subject to risks and contingencies that may lead to actual results materially differing from those explicitly or implicitly included in these statements. Such forward-looking statements are not guarantees of future performance and the Company expressly disclaims any liability whatsoever for such forward-looking statements. Information relating to risks and contingencies relating to the Company are included in the documents filed by the Company with the Autorité des marchés financiers. The Company does not undertake to update or revise the forward-looking statements in this presentation to reflect new information, future events or for any reason and any opinion expressed in this presentation is subject to change without notice. A detailed description of the business and financial position of the Company as well as the risk factors related to the Company is included in the reference document of the Company and its 2016 half-yearly financial report, which may be obtained on the website of the Company ( This presentation should be read in conjunction with such documents. This document does not constitute an offer or invitation to sell or purchase, or any solicitation of any offer to purchase or subscribe for, any shares of the Company. Neither this document, nor any part of it, shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. Neither this document, nor any copy of it, may be taken, transmitted or distributed, directly or indirectly, in the United States, Canada, Japan or Australia. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes should make themselves aware of the existence of, and observe, any such restrictions. The shares of the Company have not been, and will not be, registered under the Securities Act of 1933, as amended, (the Securities Act ) and may not be offered or sold in the United States except pursuant to any exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company does not intend to register any portion of the proposed offering in the United States, nor does the Company intend to conduct a public offering of its shares in the United States. This document speaks as of 16 March Neither the delivery of this document nor any further discussions of the Company with any recipients thereof shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. 46