LNA Sante : 2020 half year results

Presentation of the half-year results

September 2020

Contents

1. LNA SANTÉ, a strong identity
2. COVID-19:mobilisation at all times
3. Regulatory intelligence supporting the health sector
4. 2020 half-year results
5. Outlook

LNA Santé, Treating and Providing Care

An inviolable mission and values at the heart of our project

5 BASIC AND MEANINGFUL VALUES

1

RESPECT

52

INITIATIVESERVICE

43

COMMITMENT TRUST

• LNA Santé's Mission
• • Treating and Providing Care
  • Improving the quality of life for temporarily or permanently dependent people, in a welcoming and caring environment, adapted to individual needs, regardless of age
• A concrete desire to contribute to the development of health policies

LNA SANTE, Treating and Providing Care

A leading player

providing care for dependent people

72

establishments

6,700

employees

+ 8,000

Patients/residents per day

30 years

of expertise and innovation in the service of residents and patients

54%

ALF

Assisted living facilities/rest

and care home

54 %

of revenue

from

Long-Term Care

36%	10%
Aftercare and	HaH
rehabilitation	Hospital at Home
Aftercare and rehabilitation
services/psychiatry

46%

of revenue

from

4

Medium-Term Care

LNA Santé, Treating and Providing Care

Family-based and entrepreneurial governance

Family-owned capital

guarantee of stability and permanence

Shareholder executives

& managers

who share our values and contribute to performance

17.8% Managers and investors

3.6% Weinberg Capital

7.5%

Mérieux

Développement

3.6% Executives and managers

36.7%

Float

	30.8%
Industrial families	Family shareholders

acting together to promote growth

Shareholders' agreement

63.3%

5

% of voting rights in June 2020

Contents

1. LNA SANTÉ, a strong identity
2. COVID-19:mobilisation at all times
3. Regulatory intelligence supporting the health sector
4. 2020 half-year results
5. Outlook

COVID-19

Thank you to everyone:

• To our employees, for their commitment, courage and exceptional mobilisation
• To the patients, residents and their families, for the many messages of support received
• To our suppliers, for continuing to provide their services, thereby helping us to ensure the safety of patients and residents
• To our local partners, municipalities, regional healthcare agencies and the departments for their support and the solidarity measures introduced
• To our investors, shareholders and lenders, for their loyalty and support

7

COVID-19: a fully-mobilised Group

• Strong measures to anticipate, protect and support

	COMPREHENSIVE ORGANISATION
	DEPLOYED FOR PATIENTS AND
	RESIDENTS
Confinement and	Protocols and
personal
formalisation
protective
measures
Multidisciplinary crisis unit	Reinforcement and
Anticipation	internal mobility from
and coordination	western France
	to Ile-de-France
Procurement and inventory	Communication with
management (PPE)	families/social
	connections
Daily visual management	Managerial and
and video conferences	psychological support	8

COVID-19: a fully-mobilised Group

• From June, a priority action plan drawn up jointly in close collaboration with the teams

1 STRONG PERSONAL

PROTECTIVE MEASURES DEPLOYMENT OF TESTING/PROTOCOLS/ WEEKLY CRISIS UNIT MEETINGS

2	RECOGNITION OF THE		3		4
					SUPPORT FOR TEAMS				LESSONS LEARNED REVIEWS
		MOBILISATION OF TEAMS
					(MANAGERIAL,
		(INCLUDING COVID-19
					PSYCHOLOGICAL)
		BONUSES)

5 RECOVERY OF THE MEDICO-

SOCIAL AND HEALTHCARE BUSINESS (ORGANISATION OF ESTABLISHMENTS)

6		7	OBTAIN COMPENSATION FOR		8
	MEDICO-SOCIAL AND				LOSS OF BUSINESS AND
	HEALTHCARE MARKETING				ADDITIONAL COSTS DUE TO
					THE CRISIS

RESTART FACE-TO-FACE AND REMOTE TRAINING COURSES/ INTERPROFESSIONAL DAYS

March-May	June-September	October-November
Peak of the health crisis	Revival of the businesses	Resumption of projects
		Successes (agility, decompartmentalization, digital
		technology, in the service of...)

Continuous vigilance, agile functioning	9

Growing Together 2022: 6 key themes for a central plan

10

Contents

1. LNA SANTÉ, a strong identity
2. COVID-19:mobilisation at all times
3. Regulatory intelligence supporting the health sector
4. 2020 half-year results
5. Outlook

Regulatory intelligence to redesign the health sector

"SÉGUR DE LA SANTÉ"

• Consultation of players in the healthcare system conducted from May to July 2020 and led by the Minister of Health
• 33 measures to accelerate the transformation of the healthcare system, based on 4 mainstays

1

2

3

4

TRANSFORM THE PROFESSIONS

AND IMPROVE CARER STATUS

DEFINE A NEW INVESTMENT AND FINANCING

POLICY TO IMPROVE THE QUALITY OF CARE

SIMPLIFY THE ORGANISATIONS AND DAILY WORK

OF HEALTH TEAMS SO THEY CAN FOCUS

FIRST OF ALL ON THEIR PATIENTS

FEDERATE THE HEALTHCARE PLAYERS	12
IN THE REGIONS FOR THE BENEFIT OF USERS

Old Age and Autonomy Law expected in 2021

• Major topics at the centre of the discussions

RETHINK NATIONAL AND

LOCAL GOVERNANCE

FINANCIAL RESOURCES

CREATION OF A 5TH SOCIAL SECURITY BRANCH

=> +1 billion euros in 2021 (supplementary social security contribution - CSG)

TRANSFORMATION OF THE OFFERING

TOWARDS ALFs,

PLATFORMS FOR EXPERTISE AVAILABLE TO THEIR REGIONS

• A sector central to public policies

13

Contents

1. LNA SANTÉ, a strong identity
2. COVID-19:mobilisation at all times
3. Regulatory intelligence supporting the health sector
4. 2020 half-year results
5. Outlook

H1 2020 - Impact of COVID-19

HEAVY EXPOSURE OF THE NETWORK TOTHE PANDEMIC

• COVID-19 epidemic very virulent in Ile-de-France(representing 30% of the ALF capacity and 40% of the health facilities of LNA Santé)

STRONG COUNTER-MEASURES TAKEN

• Full business continuity with the closure of one site, little use of short-time work and reinforcements between facilities
• Introduction of a major crisis management plan
• Numerous signs of gratitude both from within and outside the Group for the tremendous commitment of our teams
• Use of state guarantees covering the loss of business

MAJOR IMPACT MAINLY ON H1

• Gross impact of COVID-19 expenses linked to the epidemic: €17.4m/Net: €9.9m

▸ Pending financing and compensation in the	2nd half of 2020
(PPE and reinforcements)

• Delays in business caused (restriction of Long-Term Care admissions) or suffered (cancellation of hospital surgery) totalling over €11m

OCCUPANCY UNDER GREAT PRESSURE SINCE APRIL 2020

• Fall in occupancy of 8.9 points between H1 2020 and H1 2019
• Long-TermCare: insufficiently occupied at 01/09/20 by 5 points, i.e. -250residents/5,000 targeted, 70% of the delay being concentrated in Ile-de-France and Brussels
• Aftercare and rehabilitation: insufficiently occupied at 01/09/20 by 10

points, i.e.-200 patients/2,000 targeted, 75% of the delay being

concentrated

outside

Ile-de-France

A SUDDEN SLOWDOWN IN BUSINESS IN Q2 2020

• Slowdown in organic growth at 2.8% in H1: 0.7% in Q2 vs 4.9% in Q1
• Mixed situations depending on the business
• HaH business up by 16%
• Growth in the aftercare and rehabilitation business stopped dead at +1.3%
• Gradual slowdown in growth in ALFs at +1.6%
• Growth in business sluggish in Belgium at +0.8%

	Half-year organic growth
5,5%	in revenue
4,5%
3,5%

15

2,5%

S1 17

S1 18

S1 19

S1 20

H1 2020 - Impact of COVID-19

Loss of business, additional costs and compensation

IMPACT ON THE BUSINESS

	Loss of		Net loss
	revenue	Compe		Loss
In €m	of
due to	nsation		EBITDA*
	revenue
	COVID-191
Impact	(11.2)1	6.9	(4.3)		(2.9)2
Medium-term care France	(8.1)	5.2	(2.9)		(1.7)
Long-term care France	(2.8)	1.4	(1.4)		(1.2)
Long-term care Belgium	(0.3)	0.2	(0.1)		-

*Loss of business after deducting variable expenses saved included in a non-financialrestatement in the presentation

Gross impact of the pandemic €28.6m, net impact €12.8m2

ADDITIONAL COSTS DUE TO COVID

	COVID-	Compens	Loss of
In €m	19	operating
ation
	costs2	income**
Additional costs by sector	(17.4)1	7.5	(9.9)2
Medium-term care France	(6.5)	2.8	(3.6)
Long-term care France	(10.5)	4.7	(5.8)
Long-term care Belgium	(0.2)		(0.2)
Other	(0.2)		(0.2)

** Exceptional additional costs recognised in the published operating income

Additional costs by type	(17.4)	7.5	(9.9)
Protective equipment	(2.0)	-	(2.0)
Staff reinforcements	(3.0)	-	(3.1)
Covid-19 state subsidies	(7.2)	7.2	0.0
Covid-19 LNA bonuses	(3.6)	-	(3.6)
Transport, hotels, tests etc.	(1.6)	0.3	(1.3)

16

H1 2020 - Impact of COVID

Loss of business, additional costs and compensation

IMPACT ON MARGINS

In €m excluding impact of IFRS 16

			H1 19			H1 20										H1 20			Adjusted
																margin
			published			published			Additional			Subnormal			ajdusted
Operations			%								%		variation
		excluding		excluding			costs due to			capacity			excluding
		revenue								revenue		excluding
			impact of IFRS		impact of IFRS			Covid			usage			impact of IFRS
			16			16										16			impact of IFRS
																16
Revenue		230.5			252.1							- 4.3			256.4			n/a
EBITDAR		59.0	25.6%		61.2							- 2.9			64.2	25.0%		- 58 BPS
EBITDA			26.2	11.4%		26.4							- 2.9			29.3	11.4%		+ 5 BPS
COI		21.6	9.4%		21.1							- 2.9			24.0	9.4%		+ 2 BPS
Operating			22.9	9.9%		9.9			-9.9			- 2.9			22.7	8.9%		- 107 BPS
income
						H1 2019 published	Loss of business			Pro-forma	H1 2020 published
Operations in €m			excluding impact of	excluding impact of excluding impact of
		due to COVID-19
						IFRS 16								COVID-19			IFRS 16
Revenue			230.5				- 4.3	25.9		252.1
EBITDA			26.2					- 2.9	3.1		26.4
EBITDA margin			11.4%			- 97 BPS			+ 5 BPS		10.5%
Variation in margin											- 92 BPS

17

Resilience of the EBITDA and COI excluding additional costs for Covid-19

H1 2020, Key figures for the Group

REDUCTION IN PROFITS DUE TO COVID-19

In €m, excluding impact of

IFRS 16

+ 8.9%

30/06/2019

30/06/2020

Exploitation

Immobilier

+10.6%

excluding loss of

- 2.9%

business (1)

215

278,3

-

5.4%

- 55.2%

207

+7.3%

excluding loss of

+7.4%

business (1)

+1.1%

28,7 27,9

excluding loss of

excluding loss of

business (1)

business and Covid-19

- 73.6%

costs (2)

137

22,9 21,6

22,8

141

+5.5%

11.2% 10.0%

excluding loss of

x 1.49*

255,5

Revenue Revenue

business and Covid-19

x 1.20*

8.9%

costs (2)

8.9%

7.8%

11,3

10.9%(1)

Revenue Revenue

Revenue

10,2

8.7%(1)

3.7%

79

4.4%

Revenue

65

Revenue 3,0

8.2%(2

1.1%

Revenue

4.2%(2

CA

EBITDA

ROC

ROP

Rn

pg

A2019

S2020

NET DEBT

18

(1) The loss of business represents the loss of revenue linked to admissions not carried out for the part not compensated for by the state

(2) Additional costs due to Covid are recognised under non-current items in the operating income, for a total of -€9.9m

* Leverage: Operating net debt/Operating

EBITDA

H1 2020 earnings for Operations + Real Estate

In €m, excluding impact of IFRS 16	30 June	30 June 2019	Variation
2020
Revenue	278.3	255.5	+ 8.9%
EBITDA	27.9	28.7	- 2.9%
EBITDA margin	10.0%	11.2%	- 122 BPS
EBITDA restated for the loss of business	30.8	28.7	+ 7.3%
EBITDA margin restated for the loss of business	10.9%	11.2%	- 34 BPS
Current operating income	21.6	22.9	- 5.4%
Current operating margin	7.8%	8.9%	- 118 BPS
COI restated for the loss of business	24.5	22.9	+ 7.4%
Current operating margin restated for the loss of business	8.7%	8.9%	- 26 BPS
Operating income	10.2	22.8	- 55.2%
(including exceptional costs for COVID-19 totalling -€9.9m)
Operating margin	3.7%	8.9%	- 526 BPS

Resilience of the EBITDA and of the current operating income

Revenue up by 8.9%, driven by the 2

businesses

• Operating revenue: + 9.4%
  Real estate revenue: + 4.8%

EBITDA down 2.9% due to Real Estate (-€ . i.e. -39%)

▸ Operating EBITDA remained stable (+0.5%) in spite of the

COVID-19 pandemic and compensation of some of the loss of business by the authorities

Resilience of the COI down by 5.4%:

• Reduction in the COI for Operations limited to -€0.5m(-2.2%)
• Decline in the COI for Real Estate of - €0.8m

Operating income down by 55% due to non- recurring costs caused by the Covid-19pandemic totalling €9.9m

19

19

H1 2020 profit and loss account for Operations + Real Estate

EFFECT OF COVID-19 CONCENTRATED ON Q2

In €m, excluding impact of IFRS	30/06/2020	30/06/2019	Variation
16	(%)
Operating income	10.2	22.8	- 55.2%
Net financial result	(2.9)	(3.5)	- 15.4%
Earnings before tax	7.3	19.3	- 62.3%
Tax expense	(4.1)	(7.7)	- 47.1%
Apparent rate of corporate tax	- 55.9%	-39.8%	-16.1
points
Overall net income	3.2	11.6	- 72.4%
Net result (Group's share)	3.0	11.3	- 73.6%
Net margin as % of revenue	1.07%	4.41%	- 334 BPS

Focus on Group tax	2020/06	2019/06
Theoretical tax rate	32.0%	32.0%
Apparent tax rate	55.9%	39.8%
Spread	23.9%	7.8%
Permanent differences	23.9%	7.8%
Impact of CVAE	27.7%	9.7%
Change of rate	- 1.2%	- 1.4%
Other differences	- 2.6%	- 0.5%

• The added-value contribution (CVAE) represented 27.7 points in the corporate tax rate at 30 June 2020 compared with 9.7 points at 30 June 2019, since this tax on production is hardly affected by the variation in earnings

Finance charges down by 15%, due to rigorous debt management Earnings before tax down by 62% in line with the operating income

Corporate tax rate of 56% including the impact of the added-value contribution (CVAE), set to decrease when the tax rate is cut in on 1 January 2021 under the "France Recovery" plan

in the Net result (Group's share) of 74% linked to the impact of COVID-19 on Operations (loss of business, additional costs to COVID-19 and CVAE expense)

20

Operating revenue

INCREASE IN BUSINESS IN ALL OPERATING SECTORS

Revenue

30/06/2020

30/06/2019

Distribution of

Total variation

Organic Growth

%

%

By activity

In €m

In €m

organic growth

revenue

revenue

Long-term care France

122.4

49%

118.3

51%

+ 3.5%

+ 1.6%

+ 0.8%

Long-term

+ 3.2%

+ 1.5%

Care

Long-term care Belgium

13.5

5%

13.4

6%

+0.8%

+0.8%

+ 0.05%

Aftercare/Psych

90.2

36%

76.2

33%

+18.3%

+ 1.3%

+ 0.4%

Medium-term

+17.7%

+ 4.5%

Care

HaH

24.8

10%

21.4

9%

+15.6%

+ 15.6%

+ 1.5%

Other

1.2

0%

1.1

0%

-

-

-

TOTAL

252.1

100%

230.5

100%

+ 9.4%

+ 2.8%

+ 2.8%

▸ 3.2% growth in long-term care revenue

▸ Evenly balanced contribution of organic and external growth

▸ Stabilization of revenue from rest homes in Belgium

21

▸ Big increase of 17.7% in medium-term care revenue

▸ Total growth of 18.3% for aftercare and rehabilitation supported by the acquisitions, and of 15.6% for

21

HaH thanks to the extension of the offering in the regions where it is present during the Covid-19 crisis

• Organic growth of 4.5% split between 1.3% for aftercare and rehabilitation centres and 15.6% for hospital at home

Operating EBITDA

In millions of euros, excluding the	30/06/2020	30/06/2019	Variation (%)
impact of IFRS 16

Revenue	252.1	230.5	+ 9.4%
External purchases and expenses	(48.7)	(41.3)	+ 17.9%
Payroll expense	(134.8)	(124.4)	+ 8.4%
(excluding reinforcements and COVID bonuses)
Taxes and duties	(8.6)	(8.7)	- 1.5%
Miscellaneous revenue and	1.2	3.0	-58.1%
expenses
EBITDAR	61.2	59.0	+ 3.8%
Restated EBITDAR (1)	64.2	59.0	+8.7%
Rent	(34.9)	(32.8)	+ 6.4%
EBITDA	26.4	26.2	+ 0.5%
EBITDA margin	10.5%	11.4%	- 92 BPS
Restated EBITDA (1)	29.3	26.2	+ 11.7%

FROM REVENUE TO OPERATING EBITDA: CONTROLLED EXPENSES

• Increase in external purchases and expenses linked to inclusions in the scope of consolidation
  EBITDA margin down by 92 BPS due to COVID
  Restated EBITDA margin strong at 11.4%

1. Restatement of the loss of business represented by the loss of revenue linked to admissions not carried out for the part not compensated for by the state

	Restated EBITDA margin (1)	11.4%		11.4%	+ 5 BPS
		Variation in rent				Variation in the payroll expense
		Indexation		(N-1)
			Effet périmètre
							Organique						22
	0,7%				3,8% (3,1%)
						2,8%
	(0,8%)							Croissance
											22
		Evolution capacitaire			Montée en gamme			externe
						5,6%
		1,5% (2,4%)				0,3% (1,7%)

Focus on Established Facilities

Data excluding impact of IFRS 16 in	Established Facilities	Other facilities
€m
	H1 2020			H1 2020
Facilities & beds				H1 2019						H1 2019
Restated for		Including		Restated for		Including
	Loss of		Loss of			Loss of		Loss of
	Business		Business			Business		Business
Number of facilities/Total	63/72	60/69		9/72			9/69
Number of beds	7,041	6,519		1,115		1,028
Operating revenue	219.8	200.4		31.1			29.0
EBITDA of the facilities	25.3		25.6		-0.9			0.2
				≠ 13 points
EBITDA/Revenue	12.2%		11.5%	12.8%		0.5%		-3.0%		0.6%
Current operating income	21.3		22.0		-1.5			-0.1
				≠ 12 points
Current operating margin/revenue	10.4%		9.7%	11.0%		-1.2%		-4.7%		-0.3%
Capex	2.7		2.0		1.6			1.6
Capex/EBITDA affordability ratio	10.6%	7.8%		NS			NS
Free Cash Flow* as % of revenue	6.6%	6.8%		-5.4%		-5.6%

* EBITDA - Capex - Financial charges - Corporate tax

A strong and lasting model for transformation of the offering

▸ The	margin	for
established	facilities
absorbs	the	impact	of
COVID-19 and retains a
margin differential of 13
points	with	facilities
undergoing
restructuring:	i.e.	a
source	of earnings	on
completion	of	the
transformations

23

23

Income and net margin for Operations including the impact of Covid-19

In €m, excluding impact of IFRS 16	H1 2020	H1 2019	Variation (%)
EBITDA	26.4	26.2	+ 0.5%
Restated EBITDA (1)	29.3	26.2	+ 11.7%
Current operating income	21.1	21.6	- 2.2%
Current operating margin	8.4%	9.4%	-99 BPS
Current operating income (1)	24.0	21.6	+ 11.4%
Current operating margin (1)	9.4%	9.4%	+ 2 BPS
Operating income	9.9	22.9	- 56.9%
Financial result	(1.9)	(2.5)	- 22.8%
Earnings before tax	7.9	20.4	- 61.1%
Income tax expense	(4.2)	(7.9)	- 46.8%
Net income 100%	3.7	12.4	- 70.2%
Net result (Group's share)	3.5	12.1	- 71.4%
Net margin (Group's share)	1.38%	5.26%	- 3.9 points

(1) Restatement of the loss of business represented by the loss of revenue linked to admissions not carried out and not compensated for by the state

• Operating income down by 57% taking into account the exceptional additional costs due to COVID-19totalling €9.9m
• Improvement in the financial result due to variations in hedging
  instruments and rigorous management
• High income tax expense due to the increase in the CVAE, unrelated to the change in earnings
• Net result (Group's share) down by 71% at €3.5m, i.e. a net margin (Group's share) of 1.38%

24

24

Cash flow (excluding impact of IFRS 16)

In €m		H1 2020	H1 2019	Variation in
	value
Opening cash balance		140.1	121.6	18.5
NET CASH FLOWS FROM ACTIVITIES		32.3	37.1	(4.8)
EBITDA	(1)	27.9	28.7	(0.8)
Other cash items	(2)	(12.3)	(2.1)	(10.2)
Change in WCR	(3)	27.4	4.8	22.6
Payment of corporate tax	(4)	(10.7)	5.6	(16.3)
NET CASH FLOWS FROM INVESTING ACTIVITIES		(34.2)	(19.4)	(14.8)
Development investments - Operations	(5)	(24.9)	(9.0)	(15.8)
Sustaining capital expenditures - Operations		(4.6)	(4.7)	0.1
Investments - Real estate		(3.4)	(4.7)	1.4
Net financial investments		(1.3)	(0.9)	(0.4)
NET CASH FLOWS FROM FINANCING ACTIVITIES		(8.2)	(8.2)	0.0
Dividends paid		(0.8)	(0.7)	(0.1)
Variation in financial debts		(2.2)	(4.7)	2.5
Net interest cost paid		(2.1)	(1.9)	(0.2)
Net purchases of own shares		(3.1)	(0.9)	(2.2)
Closing cash balance		130.0	131.1	(1.1)
Including Operating		125.1	125.6	(0.5)

• Cash Flows form activities of
  .3m based on strong EBITDA
  .9m)
• Before taking into account exceptional COVID-19 costs (- 9m)
• (3) Positive change in the WCR due to cash advances received from the authorities totalling €28.8m
• (4) Increase in the corporate tax expense paid of €16.3m due to a repayment received in 2019
• (5) Development investments totalling €24.9m for acquisitions in the health and medico-social sector

Cash flows benefiting from resilient EBITDA and WCR advances from the CPAM

25

Optimised capital structure

Debt structure and maturity

250	Consolidated net debt
	215
	207
200	195

2

1,8

1,6

Gross debt :

345.4

NEU CP 81.9 (0.3 years)

RCF 105 (4.6 years)

Redeemable 53.1 (5.2 years)

Euro PP 51.2 (2.1 years)

Rental loan 28.4 (15.9 years)

Real estate credit 12.5 (4.3 years)

Sundry 13.3 (1 year)

Net debt : 215.4

Cash 130.0

	185					1,5x
150	1,2x	1,2x		1,2x
	128	134	141	137
100
50						79
	57	61	65
0
2017	2018	2019		S1 2020
			Exploitation		Immobilier		Levier

1,4

1,2

1

0,8

0,6

0,4

0,2

0

Highly flexible capital structure

Cost of debt

100% of the operating debt covered by a fixed rate

3,5%
2,5%						2,6%
1,5%						1,9%
0,5%						0,8%
2014	2015	2016	2017	2018	2019	2020 S1

Expl. Immo. Global

Leverage	Ceilings
4.25	authorised

1.49

			Gearing
0.28	1.25

26

Rigorous debt management

Contents

1. LNA SANTÉ, a strong identity
2. COVID-19:mobilisation at all times
3. "Ségur de la Santé": policies that are already standard
4. 2020 half-year results
5. Outlook

Transformation of the offering by LNA - A total of 72 establishments

At 30 June 2020 excluding new developments

ALF/rest and care

home*

Beds in	Beds being
EF*	restructured
4,787	399
4,232/555	399/0

5,186

14%

en RS

86% 8,156

en RC beds

HaH

Beds in EF*	Beds being
423	restructured
	50
	473

• + 108 beds in ALF
• + 414 beds and places in aftercare and rehabilitation centres

Aftercare/Psych

Beds in EF*	Beds being
1,831	restructured
666
	2,497

• EF: Established Facilities
• MRS: Rest and care home

28

Growth already in progress

• Transformation of existing capacity into established facilities

excluding new development projects

2018

2019

2020

2021

2022

2023

2024

6,519 beds

6,163 beds

7,041 beds

8,300 beds	8,500 beds	8,900 beds

7,800 beds

Capacity in established

facilities

29

1,850 beds to reach maturity between 2020 and 2024

LAUNCH OF THE 4TH ELEGANCE ALF IN THE CITY OF BORDEAUX

CURRENT ALF - LE BOURGAILH IN PESSAC (77 BEDS)

• Takeover of additional beds in June 2020 for a new ALF to be built in Pessac with a total of 120 beds
• Start of work in October 2020 for delivery in December 2022

30

OPENING OF A NEW AFTERCARE AND REHABILITATION CENTRE AND A HEALTH CENTRE IN ACHÈRES

New establishment in the Yvelines

Investment of €40m

Business on completion of almost €22m

Achères Rehabilitation Centre (164 beds and places)

• 4 specialities:
• • neurology
  • orthopaedics
  • geriatrics
  • pneumology

Health Centre

► Services:

‣	general medicine
‣ orthodontics - dental surgery
‣	cardiology
‣	neurology	31
‣	gynaecology
‣	midwife consultations

CLINIQUE DÉVELOPPEMENT: A PLANNED ACQUISITION

Clinique Développement

LNA Santé has been holding exclusive discussions since 18 June 2020 with the shareholders of Clinique Développement, for a possible acquisition of the whole of the Group.

The conclusion of an acquisition agreement is subject to examination by the Competition Authority, in accordance with the legislation.

32

Clinique Développement

900

employees

6

establishments

828

Beds and

places

€76m

33

Revenue

in 2019

An investment approach for LNA Santé

1

2

3

4

REINFORCED REGIONAL COVER

GROWTH IN HIGH- QUALITY ASSETS

ATTRACTIVE OPERATIONAL AND FINANCIAL PERFORMANCE

ENTREPRENEURIAL GOVERNANCE

• Reinforcement of the Group's regional presence in Normandy
• Potential for organic and external growth in the region
• A complete range of local healthcare (aftercare and rehabilitation/HaH/Medicine, Surgery and Obstetrics)
• Recognised and specialised technical support centers
• Opportunities for organic growth via sharing of best practices between LNA/CDEV establishments
• Several business development projects in progress
• High quality real estate assets, in particular in Granville and Deauville
• A margin profile, proof of a high level of maturity
• An appropriate pricing policy for aftercare and rehabilitation speciality offerings
• An structure with moderate central costs limiting duplication and efforts for convergence
• An entrepreneurial culture and a heavily involved management

34

Map of the location of Clinique Développement + LNA Santé sites in the north-west zone

35

Consolidate the Group's financing with its lenders

DEVELOP OUR BUSINESS PLAN AIMED AT GROWTH

► Investment process with a long-term view

► Wide range of ALF/aftercare/Psych/HaH services makes the LNA Santé model more resilient ► Track record for selecting and integrating acquisitions

GIVE THE CAPITAL STRUCTURE ADDITIONAL MEANS

► Operating equity of €201m

► Diversified sources of financing and credit profile strengthened over the last 10 years

► Leverage of 1.5 at 30/06/2020 giving flexibility for a structuring and accretive acquisition

► Debt under control after the acquisition of Clinique Développement, below the covenant of 4.25

HAVE FURTHER AIMS FOR THE PERIOD 2020-2030

► Acquisitions: raise the limits in line with the Group's aims, abilities and achievements
►	Partnerships: consolidate LNA's position as an innovative operator, that makes proposals
►	Real estate: ability to carry out arbitrage for targeted assets, while maintaining the primary interest of	36
	Operations

Confirmed outlook

A health sector player

recognised for the quality of its services, its medical expertise and its ability to innovate

By 2022 we aim to be...

An independent and committed family

business, grouping together about a

hundred facilities

and more than 8,000 professionals

						An employer recognised
				A group whose facilities
				work in synergy and are		for its professionalism, its
				involved in		corporate culture and its
				their region		quality of working life

37

Thank you!

Appendices

Strong presence in target territories

40

Distinctive features of our company

41

Analysis of Operating EBITDA (excluding impact of

IFRS 16)

S1 2020, in €m		Holding	Long-term	Long-term	Medium-	including	including
Operations	care	term care	Aftercare/P
excluding impact of IFRS 16	company	care France	HaH
	Belgium	France	sych
EBITDA	26.4	2.0	12.9	0.6	10.8	7.2	3.7
Margin	10.5%	Confort:	10.5%	4.7%	9.4%	7.9%	14.9%
		€0.7m
		Elégance:
Margin variation 2020 - 2019	- 92 BPS	€12.2m	- 195 BPS	+ 254 BPS	- 149 BPS	- 202 BPS	+ 52 BPS
No. of beds in operation at 30/06/2020	8,156	-	4,631	555	2,970	2,497	473
Beds in established facilities H1 2020 (% total)	7,041 (86%)	4,232 (91%)	555 (100%)	2,254 (76%)	1,831 (73%)	423 (89%)
Reminder Beds in established facilities	7,547	Confort:	4,433	555	2,559	2,086	473
-
H1 2019 (% total)	6,519 (86%)	9.7%	4,124 (93%)	555 (100%)	1,840 (72%)	1,417 (68%)	423 (89%)
Elégance:
Margin for established facilities at		12.1%
11.5%		11.7%	4.7%	12.3%	11.3%	15.1%
30/06/2020
Var. in margin for established facilities	- 128 BPS		- 120 BPS	+ 254 BPS	- 224 BPS	- 288 BPS	- 29 BPS
2020 - 2019
Restated margin for established facilities	12.2%		12.5%	4.8%	12.8%	12.0%	15.1%
(1)
Restated var. in margin for established	- 60 BPS		- 34 BPS	+ 270 BPS	- 171 BPS	- 216 BPS	- 29 BPS
facilities (1)

1. Restatement of the loss of business represented by the loss of revenue linked to admissions not carried out for the part not compensated for by the state

• The margin for Long-term care France fell mainly due to the crisis (closure of day care, reduction of admissions)

►

Increase of 2.5 points in the EBITDA margin in Belgium mainly thanks to Résidence des Tamaris, the level of performance of this sector remaining low

42

• Decline in the margin for Medium-Term Care: the performance of HaH driven by volumes offset the decline in the margin for aftercare and rehabilitation centres affected by the crisis (closure of day care centres and reduced flow of admissions) as well as by low increases in the charge per day

Operations + Real Estate balance sheet

30/06/2020

31/12/2019

Goodwill

Intangible assets

Property, plant and equipment

Rights of use

Real estate inventory

Other (1.4)

Cash

96,5

289,7

56,6

455,1

100,6

130,1

		Goodwill	96,3
	Sharehold
190,7
ers' equity
38,6	Net deferred taxes	Intangible	268,0
75,6	WCR (negative)	assets
		Property, plant	56,4
		and equipment
495,2	Lease
obligations
		Rights of use	463,0
	Provisions (12.4)
		Real estate
		inventory	111,1
317,3	Gross debt
	Other (1.6)
		Cash	140,3

196,8

39,7

67,3

502,6

318,0

Sharehold ers' equity

Net deferred taxes

WCR (negative)

Lease obligations

Provisions (12.4)

Gross debt

43

Structure of net debt at 30/06/2020 (excluding impact of IFRS 16)

►Flexible capital structure

in €m, excluding impact of IFRS 16	Operations	Real estate	Total
Total gross debt	203.8	141.6	345.4
Net cash	125.1	4.9	130.0
Net financial debt at 30/06/2020	78.7	136.7	215.4
Operating leverage at 30/06/2020	1.49
Cost of debt	2.6%	0.8%	1.9%
Net financial debt at 31/12/2019	65.5	141.5	207.0
Operating leverage at 31/12/2019	1.20

Leverage covenant restated for the impact of IFRS 16 and controlled under 4.25	44
► Slight increase in operating leverage at 1.49 (financing of acquisitions during the period)

Optimised debt structure

Reference rate	30/06/2020		31/12/2019
Average 3 month Euribor rate (rolling 6 months)	-0.35%		-0.36%
5-yearMid-Swap	-0.36%		-0.12%
Group debt	30/06/2020		31/12/2019
1	- Cost of gross debt	1.9%		1.9%
2	- Disintermediated portion	SFAF 09/2020	30/06/2020	SFAF 04/2020	31/12/2019
65%		42%	42%		51%
	- Fixed rate and variable rate portion covered
3	80%		76%
Operating debt	30/06/2020		31/12/2019
4	- Portion of the debt for Operations/consolidated debt	37%		32%
5	- Cost of gross debt	2.6%		2.6%
6	- Fixed rate and variable rate portion covered	100%		95%
7	- Maturity of the debt for Operations	4.1 years		4.3 years
8	- Operating financial charges/operating EBITDA	7%		8%
Banking covenants	30/06/2020		31/12/2019
9	- Operations gearing *	x 0.28		x 0.23
10 - Leverage (operating net debt/operating EBITDA)	x 1.49		x 1.20
Available cash and credit	30/06/2020		31/12/2019
11 - Net cash position for Operations	125.1		136.6

* Operating net financial debt for operations/operating equity and deferred taxes

45

IFRS 16 - Impact at 30/06/2020

• Impact on the operating margins

	Before IFRS 16	Impact of	After IFRS 16
	IFRS 16
In millions of euros	Operation	Margin	Operations	Operation	Margin
	s			s
EBITDA	26.4	10.5%	30.0	56.4	22.4%
Current operating income	21.1	8.4%	5.1	26.2	10.4%
Cost of financial debt	-1.9		-6.4	-8.4
Net income of the consolidated group
3.7	1.5%	-0.6	3.1	1.2%

• Impact on the operating debt

	Before IFRS 16	After IFRS 16
	Operation	Lender		Lender	Adjusted
In millions of euros	Operations	lender
	s	leverage		leverage	leverage
Net debt	78.7	1.49	571.2	5.06	1.49

Current operating margin increased by

.0 points to 10.4% with 8.4%

the 100% regime

margin reduced 23 BPS due to the

maturity of the agreements (reversed on expiry of the agreements)

increased by the amount of lease

wholly

for the covenant

46

Large facilities

Synonymous with quality and efficiency

Change in the average size of the facilities in operation at 30/06/2020

Established

facilities in

2023

variation

06/2020

variation

2013

Average

for the

industry

107

4%

103

19%

85

ALF

< 80

145

4%

139

31%

106

BRH

< 80

172122

10%3%

156	118
30%	24%
116	93
Aftercare and	All sectors
rehabilitation

< 70 (including 80 for private)

47

An important choice for economies of scale and critical size

Resilience of the mature facilities

5 493

						4 796
					4 293		79%
			3 421	3 675
	3 064	3 191
				69%
2 790
				68%
	76%	71%	64%	69%			30,7
74%				27,1	27,5	29,1
			22,0
		16,4
13,4	16,3
	12,2%	11,7%	13,4%	14,1%	13,2%	13,1%	12,6%
11,3%

7 041

6 519

6 163

85%86%

83%

45,9

37,2

12,5% 12,9% 11,7%

Established facilities

Nb lits

% en croisière du parc exploité

Cash flow (EBITDA-Capex)

% EBITDA / CA

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020E

48

Glossary

Glossary

WCR

• Working Capital Requirement

Revenue

• Revenue

CPAM

• Local Sickness Insurance Fund (Caisse Primaire d'Assurance
  Maladie)

Organic growth

Corresponds to the change in turnover:

• between N-1 and N for facilities existing in N-1,
• between N-1 and N for facilities opened in N-1 or in N,
• between N-1 and N for facilities restructured according to LNA Santé specifications or whose capacity increased in N-1 or in N,
• in N, compared with the equivalent period in N-1 for facilities acquired in N-1.

CVAE

• Tax on the added value of companies

Net financial debt

• Gross financial debt, excluding lease obligations introduced by IFRS 16, less cash and cash equivalents

Net financial debt from operations

• Represents gross financial debt from Operations, excluding lease obligations introduced by IFRS 16, less cash and cash equivalents and shareholders' equity contributed to the real- estate activity

EBITDA

• Earnings Before Interest, Taxes, Depreciation and Amortization, after rent and provisions and reversals of provisions for depreciation of real estate

EBITDAR

• Earnings Before Interest, Taxes, Depreciation, Amortization and Rents, after provisions and reversals of provisions for depreciation of real estate

ALF

• Assisted Living Facilities - France

PPE

• Personal Protective Equipment

Established facilities

• A facility that has been extended (if necessary) and renovated, with 100% of its authorised capacity
• Human organisation and method of management in line with Group standards
• Facilities undergoing restructuring or being opened
• Facilities taken over or opened within about 1 year
• Renovation and/or extension work in progress
• Implementation of the Group's standards

FCF or Free Cash Flow
▪ EBITDA less capex, financial charges and corporate tax	50

Glossary

Operating gearing

• Ratio of the operating net financial debt to the adjusted operating equity. The adjusted operating equity corresponds to the consolidated equity from Operations, excluding the impact of IFRS 16, plus operating deferred tax liabilities, excluding the impact of IFRS 16, mainly linked to the valuation of intangible operating assets

Financial leverage, operating leverage

• Ratio of net debt from operations to operating EBITDA, measures the company's ability to reimburse its debt. It shows how long (in years) it will take the company to reimburse its debt based on its EBITDA

Beds to be installed

• Beds authorised but not yet in operation.

Medicine, Surgery and Obstetrics

• Medicine Surgery and Obstetrics

MOC

• Current operating margin: ratio of current operating income to revenue

BRH

• Rest home in Belgium, equivalent to ALF in Belgium

MRPA

• Rest home for the elderly, equivalent to ALF in Belgium

MRS

• Rest and care home, equivalent to ALF in Belgium

NEU-CP

• Negotiable European Commercial Paper: short-termnegotiable securities, previously called commercial papers

Established facilities, EF

• See Established facilities

Taken over during the year

• Facilities that were not included on 1 January of the current year
• New facilities opened during the year

Restructuring, RST

• See "Facilities undergoing restructuring or being opened"

RCF

• Revolving Credit Facility

COI

• Current Operating Income

Operating income

• Operating income

Aftercare and rehabilitation

• Aftercare and rehabilitation services

Net cash position

• Cash and cash equivalents less bank loans and overdrafts.

51