Covid-19: extreme vigilance while preserving
social life
H1 2020: business and profitability strongly
resilient
- Revenue: €1,904m (+3.5%)
- EBITDAR: €453m (-5.5%)
- Net profit attributable to shareholders:
€73.0m (€79.1m restated for IFRS 16)
Real-estate portfolio of €6.25
billion
- Increase of +€233m over the half
year
- €295m in arbitrage since the beginning of
H2
Acquisition of 50% interest of Brindley
Group: ORPEA becomes no. 2 in Ireland
Regulatory News:
The ORPEA Group (Paris:ORP), world leader in long-term care
(nursing homes, post-acute and rehabilitation hospitals, mental
health hospitals, and home care services), today announces its
consolidated results (limited review in progress) for the first
half of 2020 (six months to 30 June), as approved by the Board of
Directors on 22 September 2020, as well as the acquisition of 50%
of the Irish Group, Brindley.
Management
of the Covid-19 outbreak: extreme vigilance and development of
social life
The ORPEA Group and its teams remain extremely vigilant in
managing the Covid-19 health crisis. Since the end of H1, ORPEA is
continuing to apply strict barrier measures across all sites
(wearing of masks, physical distancing, heightened hygiene
measures, etc.) while resuming social interactions within its
facilities (meals in the restaurant, family visits, events and
entertainment, etc.)
In addition to barrier measures, the Group also applies its
systematic testing policy in the event of any suspected cases or
contact cases, testing everybody present within the facility
(residents, patients and employees). In the event that one person
tests positive, certain temporary restrictions may be reintroduced
as a precautionary measure, such as dividing mealtimes at the
restaurant into small groups or limiting visits to patients’ and
residents’ rooms.
The Group’s aim is to provide a graduated response, adapted to
each facility, as close as possible to the situation on the ground,
enabling the safety and preservation of its residents’ social
interaction (families, employees, external service providers).
ORPEA implemented three procedural levels, depending on local
pandemic indicators, in order to bring appropriate solutions to
each facility:
- Procedure “Coro 1” for facility located in a department
classified as low in terms of virus circulation, with no suspected
or confirmed cases in the facility: general barrier measures; -
Procedure “Coro 2” for facility located in an epidemic zone where
the virus is actively circulating, with no suspected or confirmed
cases in the facility: additional measures such as weekly PCR test
on around a third of employees, adjustment of the frequency of
visits and of outdoor social interaction; - Procedure “Coro 3” for
facility with at least one confirmed case of COVID-19 (employee or
resident or independent contractor): alert healthcare authorities,
“zoning” of the facility.
The health situation is currently under control within the
network: the number of positive cases remains low (0.4% of
residents and patients at 15 September 2020) and more than 90% of
these positive cases are asymptomatic. More than 97% of the Group’s
facilities thus currently have no Covid-19 cases.
In order to thank them for their commitment during the health
crisis, ORPEA paid its employees a bonus, in addition to any
government bonuses received.
Moreover, in order to understand the sentiment within its teams
during this crisis, from June 2020 the Group partnered with an
international consulting firm to carry out an employees’ survey
covering approximately 22,000 members of staff in France. The main
conclusions of this survey show:
- a sense of great usefulness for 90% of employees; - close to 9
out of 10 employees consider that the protective measures
implemented were appropriate.
At the same time, a satisfaction survey regarding the management
of the public health crisis was carried out at Group level among
residents’ families, by independent external companies: 37,000
questionnaires were sent out, with a response rate of 46%. 92.5% of
those who responded said they were satisfied or very satisfied with
the information and measures introduced to ensure the safety of
residents.
ORPEA and its teams remain ready and committed to ensuring the
best possible protection of its residents, patients and employees.
The safety and quality of care of its stakeholders remain the
Group’s priority.
H1 2020
results strongly resilient
2020 half-year results are presented in accordance with IFRS
norms, including IFRS 16, in conformity with existing regulations
and recommendations.
In €m
(IFRS)
H1 2020
H1 2019
Change
Revenue
1,904.2
1,840.6
+3.5%
EBITDAR (EBITDA before rental
expenses)
453.4
479.7
-5.5%
EBITDA
439.0
464.5
-5.5%
Recurring operating profit
196.8
244.1
-19.4%
Net interest expense
-113.3
-106.3
+6.5%
Profit before tax
98.8
153.2
-35.5%
Net profit attributable to Group
shareholders
73.0
114.6
-36.3%
Revenue for H1 2020 was up +3.5% at €1,904.2 million,
driven by strong external growth, in particular in Ireland (TLC),
Latin America (SIS) and France (Sinoué), which more than offset the
limited decline of -0.9% in organic growth.
EBITDAR (EBITDA before rental expenses) was down -5.5% to
€453.4 million, representing a margin of 23.8%. The 230 bp decline
compared with H1 2019 was due to the impact of the Covid-19
pandemic, which totalled a gross amount of €147 million (loss of
business, additional costs relating to personal protective
equipment and staff bonuses). Taking into account compensation
received, net cost stood at €53 million. These compensations are
recognised in recurring operating profit, whether as an income in
“other products” for those related to loss of business, or as a
reduction in costs for those related to additional costs. in The
most affected geographical regions were Eastern Europe (due to the
temporary closure of Austrian clinics) and the Iberian Peninsula
and Latam, Spain in particular. Conversely, the France Benelux and
Central Europe regions proved resilient, with limited declines.
EBITDA fell 5.5% to €439.0 million, with a margin of
23.1% of revenue. EBITDA margin restated for IFRS 16 stood at
14.9%, taking into account external rental expenses of €169.5
million.
Recurring operating profit stood at €196.8 million
(-19.4%) after depreciation, amortisation and provisions of €242.3
million (+9.9%), reflecting the growth of the real-estate portfolio
held by the Group.
Net non-recurring gains were stable at €15.3 million, compared
with €15.4 million in H1 2019.
Net interest expense reached €113.3 million, representing a
limited increase of +6.6% despite sustained investments.
After accounting for an income tax expense of €28.3 million,
net profit attributable to Group’s shareholders fell 36.3%
to €73.0 million. Excluding IFRS 16 impacts, consolidated net
profit attributable to Group’s shareholders was €79.0 million.
These results demonstrate the Group’s excellent resilience and its
ability to maintain strong cash generation despite the
unprecedented Covid-19 pandemic.
Strong
real-estate policy combining reinforcement and
arbitrage
During H1 2020, ORPEA continued its strategy of holding
real-estate assets in the best locations, notably with the
acquisition of facilities in Dublin, Riga and the Netherlands.
At 30 June 2020, the real-estate portfolio was valued at €6,250
million1, i.e., an increase of €233 million over H1 alone, and had
a total surface area of 2.2 million sqm. The capitalisation rate
remained unchanged at 5.7%, still cautious compared with recent
market transactions on the same type of assets.
ORPEA thus now owns 49% of its facilities, compared with 47% on
30 June 2019.
The Group also started disposing of real-estate assets in July
2020, with €145 million sold to Icade and an additional €150
million currently being finalised with other investors. Boosted by
the resilience of its occupancy rates, the Group’s facilities
continue to attract many international real-estate investors under
conditions that remain very attractive. Commitments received on the
disposal programme for a portion of facilities to be delivered over
the 2020-2024 period total €2 billion.
Strengthening the financial structure
Net debt stood at €5,958 million2 at 30 June 2020, compared with
€5,535 million1 at 31 December 2019, a modest increase considering
the level of investment in both real estate and operations, notably
with the acquisition of Sinoué in France and TLC in Ireland.
The share of real-estate debt reached 87%, compared with 85% at
31 December 2019. Debt ratios restated for IFRS 16 remain well
below their covenants, with financial leverage restated for
real-estate assets of 2.8 (5.5 authorised) and restated gearing of
1.7 (2.0 authorised).
Since the beginning of 2020, and at a time when the health
crisis had a major impact on global financial markets, ORPEA has
continued to actively strengthen its financing capacity, with new
bank financing and non-banking transactions (Schuldschein and Euro
PP) totalling €344 million at the end of July. At 30 June, the
Group’s cash position stood at €902 million.
Borrowing cost stood at 2.4% at 30 June 2020, a 30 basis point
decrease compared with 2019. Net debt is still fully hedged against
the risk of an increase in interest rates.
ORPEA
becomes no. 2 in Ireland with the acquisition of 50% of Brindley
Healthcare
Following the acquisition of the TLC Group in January 2020,
ORPEA has stepped up its presence in Ireland with the acquisition
of 50% of the fourth largest national nursing home operator,
Brindley Healthcare. ORPEA has an option to buy the remaining 50%
by 2022.
Founded in 2000, Brindley Healthcare has a home care business
and operates 10 facilities (574 beds) across six counties which are
complementary to the county of Dublin where TLC operates, thus
providing ORPEA with a national platform for growth. Brindley is
recognised by the Health Authorities for its high-quality offering
implemented by a management team with more than 20 years of
experience. In 2019, the group generated revenue of almost €25
million.
ORPEA thus becomes no. 2 in Ireland, with a strong platform for
growth, combining TLC’s expertise in terms of acquisitions and
Brindley Healthcare’s know-how in terms of creating new facilities.
The Group intends to continue expanding its assets in this country
where the current offering is insufficient and an additional
10,000+ beds need to be built by 2031.
Strategy
and outlook
More than ever, the Group’s strategy remains focused on the
quality of care and services provided to its residents and
patients, as well as the safety and well-being of its employees.
ORPEA therefore continues its growth in its five geographical
regions, by favouring value-creating acquisitions and the opening
of new facilities in prime locations in major European and Latin
American towns and cities.
Since the start of H2, business has picked up significantly
across all facilities:
– at post-acute and rehabilitation hospitals and at mental
health hospitals, occupancy rates have almost returned to
pre-Covid-19 levels; – the momentum of nursing home new admissions
is also strong and occupancy rates in most countries are expected
to return to almost pre-Covid-19 levels within the next six months,
providing current health situation do not worsen.
The Group will present its new 2020 revenue target (the previous
one having been temporally withdrawn the 5th of May 2020) when
ORPEA publishes its Q3 revenue.
Yves Le
Masne, Chief Executive Officer of ORPEA, commented:
“H1 2020 was unprecedented due to the scale of the health
crisis. During this period, ORPEA has demonstrated strong
resilience thanks to the commitment of its 65,000 employees. Team
spirit combined with professionalism represent the foundations on
which the Group’s future is built.
ORPEA continues to develop its employees’ skills, in particular
through the introduction of innovative training programmes and the
creation and acquisition of training schools.
ORPEA is equipped with all the necessary resources, both human
and financial, to comfortably continue its growth and strengthen
its position as a world leader in long-term care. In that sense,
since the beginning of 2020, ORPEA has completed four structuring
acquisitions (Sinoué, Clinipsy, TLC and Brindley) which, in the
long term, will represent an additional 2,750 beds and €220 million
in revenue.”
Next press release: Q3 2020 revenue 3
November 2020 after market close
About ORPEA (www.orpea-corp.com)
Founded in 1989, ORPEA is one of the major world leaders in
long-term care, with a network of 1,028 facilities comprising
105,443 beds (21,137 of which are under construction) across 22
countries, which are divided into five geographical regions:
- France Benelux: 523 facilities/46,277 beds
(of which 4,957 are under construction) - Central Europe: 249
facilities/26,491 beds (of which 4,885 are under construction) -
Eastern Europe: 136 facilities/14,621 beds (of which 3,647 are
under construction) - Iberian Peninsula/Latin America: 119
facilities/17,914 beds (of which 7,648 are under construction) -
Rest of the world: 1 facility / 140 beds
ORPEA is listed on Euronext Paris (ISIN code: FR0000184798) and
a constituent of the SBF 120, STOXX 600 Europe, MSCI Small Cap
Europe and CAC Mid 60 indices.
Glossary:
Organic growth
Organic growth reflects the following
factors:
- The year-on-year change in the revenue of existing facilities
as a result of changes in their occupancy rates and per diem
rates
- The year-on-year change in the revenue of redeveloped
facilities or those where capacity has been increased in the
current or year-earlier period
- Revenue generated in the current period by facilities created
in the current or year-earlier period, and the change in revenue at
recently acquired facilities by comparison with the previous
equivalent period
EBITDAR
EBITDA before rents, including provisions
related to external charges and staff costs
EBITDA
Recurring operating profit before net
additions to depreciation and amortisation, including provisions
related to external charges and staff costs
Net debt
Non-current borrowings + current
borrowings - cash and short-term investments
Financial leverage restated for
real-estate assets
(Net debt - Real-estate debt)/(EBITDA -
(6% x Real-estate debt))
Restated gearing
Net debt/(Equity + Deferred taxes
available indefinitely on intangible assets)
Capitalisation rate
The real-estate capitalisation rate or the
rate of return is the ratio between the rental amount and the
building’s value
Consolidated income statement (Auditors’ review in
progress)
In €m
H1 2020
H1 2019
H1 2020 Restated for IFRS 16
H1 2019 Restated for IFRS 16
Revenue
1,904.2
1,840.6
1,904.2
1840.6
Purchases used and other external
expenses
-357.1
-338.9
-512.2
-485.8
Staff costs
-1,080.0
-986.5
-1,080.0
-986.5
Taxes other than on income
-72.3
-61.7
-72.3
-61.7
Depreciation, amortisation and charges to
provisions
-242.3
-220.4
-112.6
-98 8
Other recurring operating income and
expenses
44.3
11.0
44.3
11.0
Recurring operating profit
196.8
244.1
171.3
218.8
Other non-recurring operating income and
expenses
15.3
15.4
15.3
15.0
Operating profit
212.1
259.5
186.6
233.8
Net interest expense
-113.3
-106.3
-79.8
-73.7
Profit before tax
98.8
153.2
106.8
160.1
Income tax expense
-28.3
-42.6
-30.2
-44 1
Share in profit/(loss) of associates and
joint ventures
1.8
4.1
1.8
4.1
Net profit attributable to Group’s
shareholders
73.0
114.6
79.1
120.1
Consolidated balance sheet (Auditors’ review in
progress)
In €m
30-June-20
31-Dec-19
Non-current assets
13,031
12,440
Goodwill
1,338
1,299
Intangible assets
2,680
2,469
Property, plant and equipment and
properties under development
6,250
6,017
Right of use assets
2,387
2,334
Other non-current assets
377
321
Current assets
1,845
1,699
Cash and short-term investments
902
839
Assets held for sale
475
400
TOTAL ASSETS
15,351
14,539
Equity attributable to ORPEA’s
shareholders and deferred taxes available indefinitely
3,569
3,513
Equity attributable to ORPEA’s
shareholders
3,009
3,014
Deferred taxes available indefinitely on
operating intangible assets
561
499
Non-controlling interests
-3
-3
Non-current liabilities
9,337
8,849
Other deferred tax liabilities
508
529
Provisions for liabilities and charges
204
199
Non-current liabilities
6,301
5,859
Lease commitments
2,323
2,262
Current liabilities
1,973
1,780
o/w current financial liabilities (bridge
loans and real estate porting)
559
515
Liabilities associated with assets held
for sale
475
400
TOTAL EQUITY AND LIABILITIES
15,351
14,539
Cash flows (Auditors’ review in progress)
In €m
H1 2020
H1 2019
Net cash from operating
activities
245
244
Investments in construction projects
-168
-206
Acquisitions of real estate
-194
-174
Disposals of real estate
1
0
Net investments in operating assets
-293
-226
Net cash generated/(used) by investing
activities
-654
-606
Net cash generated/(used) by financing
activities
472
541
Change in cash over the period
63
179
Cash at end of period
902
947
-------------------------------------------------------------------------
1 Excluding the impact of €415 million in real-estate assets
held for sale as of 30 June 2020. 2 Excluding €475 million and €400
million in debt associated with assets held for sale at 30 June
2020 and 31 December 2019 respectively.
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version on businesswire.com: https://www.businesswire.com/news/home/20200922005865/en/
Investor Relations ORPEA Steve Grobet Finance
Corporate Secretary steve.grobet@gmail.com
Hélène de Watteville Investor Relations Officer
h.dewatteville@orpea.net
Investor Relations NewCap Dusan Oresansky Tel.:
+33 (0)1 44 71 94 94 orpea@newcap.eu
Media Relations Image 7 Laurence Heilbronn Tel.:
+33 (0)1 53 70 74 64 lheilbronn@image7.fr
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