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    ORP   FR0000184798

ORPEA

(ORP)
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ORPEA : Interim financial report to 30 June 2021

10/18/2021 | 12:32pm EST

INTERIM FINANCIAL REPORT

Six-month period from 1 January 2021 to 30 June 2021

This financial report has been prepared in accordance with Articles L. 451-1-2 of the French Monetary and Financial Code and 222-4 to 222-6 of the AMF's General Regulation.

It will be distributed in line with the standards in force. It is available on the Company's website at www.orpea-corp.com.

CONTENTS

1 - INTERIM BUSINESS REPORT

PAGE 2

  1. - Highlights
  2. - Business growth
  3. - H1 2021 financial results
  4. - Balance sheet, debt and real-estate portfolio
  5. - Cash flows
  6. - The ORPEA Group's short- and medium-term outlook

2 - FINANCIAL STATEMENTS

PAGE 10

Income statement

Balance sheet

Cash flow statement

Statement of changes in equity

Notes to the financial statements

3

- STATEMENT BY THE PERSON RESPONSIBLE FOR THE INTERIM REPORT

PAGE 60

4

- STATUTORY AUDITORS' REPORT

PAGE 61

Société anonyme (public limited company) with a Board of Directors and €80,769,796.25 in share capital - Registered

office: 12 rue Jean Jaurès 92813 Puteaux Cedex, France

1. INTERIM BUSINESS REPORT

1.1 HIGHLIGHTS

Covid-19: the sanitary situation is under control thanks to the success of the vaccination campaign

Driven by the global vaccination campaign launched at the end of the 2020 financial year, the sanitary situation saw a marked improvement with a sharp and rapid fall in the number of positive cases among patients, residents and employees. This decrease, which has been clear since February, has continued in a significant manner, stabilising during Q2 at a very low number of positive cases among patients and residents (less than 0.2%). At the end of June 2021, almost none of the Group's facilities had a case of Covid-19. Moreover, the cases recorded were, for the most part, asymptomatic.

Thus at 20 September 2021, more than 90% of residents and 85% of employees were fully vaccinated (this figure standing at 99% in France).

This change of paradigm, coupled with constant care and caution, has allowed facilities to become safe places again, where the virus is not circulating and social interactions have regained their importance: meals in the restaurant, events, entertainment, outside trips, and visits with friends and family in bedrooms have been possible again and have driven a recovery in nursing homes admissions.

Development

During H1 2021, the ORPEA Group has completed 2 selective external growth transactions which will perfectly complement the geographical network and care pathway in the countries in question, i.e. Ireland and Switzerland. Moreover, these acquisitions have common characteristics which highlight ORPEA's approach in terms of acquisition-led growth:

  • Quality assets, most of which are recent, in excellent locations;
  • An excellent reputation with regard to the quality of care provided to residents and patients at local and national level;
  • Medium-sizedgroups, which are easier to integrate and meet ORPEA's strict financial criteria.

Acquisition of the remaining 50% stake in Brindley Healthcare

After having acquired 50% of the share capital in July 2020, ORPEA acquired during H1 2021 the remaining 50% stake in Brindley Healthcare's share capital. Founded in 2000, this Group operates 10 facilities (574 beds) across 6 counties adjacent to Dublin, and generated 2020 revenue of €25 million.

Acquisition of Sensato AG

Founded in 2008, Sensato AG is one of the leading private Swiss groups with a network of 7 modern facilities (443 beds) in the north and northwest of the country (cantons of Aargau, Bern and Thurgau) and a dual offering of nursing homes and senior assisted- living facilities, providing strong geographical complementarity as well as the potential for synergies with the existing ORPEA care network (Senevita) in Switzerland.

2021 Interim financial report

Page 2 of 62

The acquisition of Sensato AG perfectly corresponds with ORPEA's value creation criteria: quality and excellence in care, modern buildings built less than 5 years ago and in excellent locations. Moreover, with almost a third of the network in the roll-out phase, Sensato offers significant potential for increasing business volume and optimising operational performance.

In 2020, Sensato AG posted revenue of €20 million. Thanks to this acquisition, ORPEA has strengthened its position as the second largest player in Switzerland with a total network of 47 facilities and 4,367 beds.

Continued organic growth with the opening of new beds

Since the beginning of the 2021 financial year, ORPEA has continued its premiumisation strategy which focuses on the creation of new facilities at the heart of large cities. In this regard, the Group opened 1,276 new beds which will contribute to future organic growth.

1.2 BUSINESS GROWTH

H1 2021

H1 2020

Chg.

France Benelux

1,277.8

1,136.6

+12.4%

Central Europe

516.4

499.6

+3.3%

Eastern Europe

192.7

170.3

+13.1%

Iberian peninsula and Latam

81.1

96.4

-16.0%

Rest of the world

1.5

1.5

N/A

Total revenue

2,069.5

1,904.4

+8.7%

Of which organic growth1

+5.2%

Composition of the geographical zones: France Benelux (France, Belgium, Netherlands, Ireland, United Kingdom), Central Europe (Germany, Italy and Switzerland), Eastern Europe (Austria, Poland, the Czech Republic, Slovenia, Latvia, Croatia, Russia), Iberian Peninsula and Latam (Spain, Portugal, Brazil, Uruguay, Mexico, Colombia, Chile), Rest of the world (China).

In H1 2021 ORPEA posted revenue of €2,069.5 million, an increase of +8.7%.

1 The Group's organic revenue growth includes: 1. The year-on-year change in the revenue of existing facilities as a result of changes in their occupancy rates and per diem rates; 2. 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; 3. Revenue generated in the current period by facilities created during the current or year-earlier period, and the change in revenue of recently acquired facilities by comparison with the previous equivalent period.

2021 Interim financial report

Page 3 of 62

The Group therefore achieved organic growth of +5.2% for H1, notably thanks to strong momentum in new nursing home admissions and record activity levels at mental health facilities, mostly due to the psychological consequences of the various restrictions imposed over the last 18 months.

  • FRANCE BENELUX

The France Benelux geographical zone includes operations in France, Belgium, the Netherlands, Ireland and the United Kingdom. Revenue growth in this region reached +12.4% at €1,277.8 million. This performance was driven by the excellent momentum from the recovery in activities in nursing homes and hospitals, coupled with the contribution from acquisitions carried out in 2020 in France (Clinipsy, consolidated since 1 July 2020, and Sinoué since 1 April 2020) and in Ireland (Brindley Healthcare, consolidated since 1 January 2021).

This geographical zone represents almost 62% of the Group's business at the end of H1 2021.

  • CENTRAL EUROPE

The Central Europe geographical zone encompasses operations in Germany, Italy and Switzerland. This region posted an increase of +3.3% at €516.4 million, driven by the premiumisation of its offering, notably in Germany. In 2020, Germany and Switzerland were less affected by the first wave of the Covid-19 pandemic.

Central Europe is the Group's second-largest geographical zone in terms of revenue and represented 25% of the Group's business during H1 2021.

  • EASTERN EUROPE

The Eastern Europe geographical zone is made up of operations in Austria, Poland, the Czech Republic, Slovenia, Latvia, Croatia and Russia. Revenue in this region climbed an impressive +13.1% to €192.7 million. As post-acute and rehabilitation hospitals in Austria were closed during Q2 2020, this increase was mainly due to the return to normal levels of activity within these facilities.

This geographical region represented 9% of the Group's business over the period.

  • IBERIAN PENINSULA AND LATAM

The Iberian Peninsula and Latam geographical zone includes business in Spain, Portugal, Brazil, Mexico and Uruguay. Revenue for this region, which is mainly generated in Spain and in particular in Madrid and Barcelona which were hit hard by the first wave of the Covid-19 pandemic in 2020, was down -16.0% at €81.1 million. Nursing homes have yet to see a return to pre-pandemic levels of activity.

This geographical zone represented 4% of the Group's business at the end of H1 2021.

  • REST OF THE WORLD

Operations in China make up the Rest of the world region, with €1.5 million in revenue deriving from the facility in Nanjing.

2021 Interim financial report

Page 4 of 62

1.3 H1 2021 FINANCIAL RESULTS

Chg.

In €m

H1 2021

H1 2020

H1 2021/

H1 2020

Revenue

2,069.5

1,904.2

+8.7%

Purchases used and other external expenses

-373.8

-342.7

+9.1%

Staff costs

-1,181.2

-1,080.0

+9.0%

Taxes other than on income

-79.7

-72.3

+15.8%

Other recurring operating income and expense

80.1

44.3

N/A

EBITDAR

514.9

453.4

+13.6%

Rental expenses

-15.5

-14.4

+7.7%

EBITDA

499.4

439.0

+13.8%

Depreciation, amortisation and charges to provisions

-268.7

-242.3

+10.9%

Recurring operating profit

230.7

196.8

+17.3%

Other non-recurring operating income and expense

11.6

15.3

N/A

Operating profit

242.3

212.1

+14.2%

Net interest expense

-109.2

-113.3

-3.7%

Profit before tax

133.1

98.8

+34.9%

Income tax expense

-30.9

-28.3

+9.2%

Share in profit/(loss) of associates and joint ventures

-0.3

1.8

N/A

Attributable to non-controlling interest

-0.5

-0.8

N/A

Net profit attributable to ORPEA's shareholders

102.4

73.0

+40.3%

H1 2021

H1 2020

Restated

Restated

for

for IFRS 16

IFRS 16

2,069.5

1,904.2

-377.1

-342.7

-1,177.2

-1,080.0

-83.8

-72.3

  1. 44.3
  1. 453.4
    -186.2-169.5
  1. 283.9
    -123.5-112.6
  1. 171.3
  1. 15.3

213.2 186.6

-70.0-79.8

143.2 106.8

-33.2-30.2

-0.3 1.8

-0.5-0.8

110.1 79.1

  • RECURRING OPERATING PROFIT

EBITDAR (EBITDA before rental expenses) was up +13.6% at €514.9 million, representing a margin of 24.9%, due mainly to the marked growth in the Central Europe region which posted a margin that exceeded that prior to the Covid-19 pandemic (26.6%). Moreover, the Iberian peninsula and Latam region stood out, thanks to a significant increase in profitability (EBITDAR margin of 19.8%, i.e. +970 bps), despite a decline in activity levels. The Eastern Europe region also enjoyed a steady improvement in its EBITDAR margin from 10.7% in H1 2020 to 15.2% in H1 2021, thanks to the reopening of Austrian clinics which were closed during Q2 2020. The EBITDAR margin for the France Benelux region stood at 26.0% compared with 27.0% in H1 2020, due to lower occupancy rates in nursing homes in France and Belgium.

The whole of H1 continued to be affected by the pandemic, with a gross Covid-19 impact of €133 million (loss of business, additional costs relating to personal protective equipment and staff bonuses). Taking into account compensations received, net costs stood at €35 million, representing a decrease of 34% compared with H1 2020; 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.

H1 2021 EBITDA was up +13.8% at €499.4 million, representing a margin of 24.1%, up 100 bps compared with H1 2020.

Recurring operating profit stood at €230.7 million (+17.3%) after depreciation, amortisation and charges to provisions of €268.7 million (+10.9%) reflecting the growth of the real-estate portfolio held by the Group.

2021 Interim financial report

Page 5 of 62

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Orpéa SA published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2021 16:31:03 UTC.


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