Clariane: Half Year 2023 Results

Regulatory News:

Clariane (CLARIA.PA – ISIN FR0010386334) announces its 2023 half-year results.

Key operational highlights

Long-term care: €1,539.6m revenue, i.e. 62% of Group revenue, with a 9.1% reported growth and 9.3% organic growth

• Continued increase of occupancy rates:
  • +2 points between H1 22 and H1 23
  • 89.2% end of July, fuelled by a well oriented activity trend, notably in France and in Belgium
• Significant adjustments of regulated tariffs, notably in Germany, contributing to around 2/3 of organic growth
• Delivery of 23 new or refurbished facilities during H1 2023

Healthcare: €658.6m revenue, i.e. 27% of Group revenue, with a 17.5% reported growth and 6.0% organic growth

• Post-acute: continued modernisation of the network, with 8 projects to be delivered in 2023, including 5 already delivered
• Mental health: closing of the acquisition of the Spanish platform Grupo 5 to strengthen the mental health activity, to represent c.€330m revenue in 2023 (France, Spain, Italy)
• Continued strong increase in the number of patients cared for: +17%

Community care: €286.6m revenue, i.e. 12% of Group revenue, with a 17.7% reported growth and 16.7% organic growth

• Continued development of Clariane shared housing concepts, with 693 beds opening over the semester, essentially fuelled by the Ages&Vie roll-out
• Continued high growth in the homecare network, with 264 Petit-Fils agencies as of June 2023, and +28% clients served in June 2023 vs June 2022

At end June 2023, Group’s network is composed of 91,862 beds, an increase of c.3,000 beds compared to December 2022, related to Grupo 5 acquisition and 987 beds from greenfield projects.

ESG and social performance

Annual General Meeting on 15 June 2023 has voted, at 99.9%, the transformation into a purpose driven company, with the creation of a mission committee, made up of representatives of patients and residents, employees and qualified personalities. This committee, which has already held a meeting in July 2023, is fully at work.

The Clariane University, regrouping all training and graduating programmes accessible to the Group employees, has been launched on July 6 in France (www.universite-clariane.fr)

The extra-financial performance is in line with objectives set in the ESG 2019-2023 roadmap.

In terms of service quality, the different external audits and satisfaction survey conducted during the semester reflected in the continued improvement of our services reputation and the level of satisfaction of its families.

This ESG policy is also fully reflected in the Group financing strategy, as demonstrated by the issuance of a second sustainably-linked private placement of €40m in July, integrating ESG features inspired by our purpose-driven company initiatives.

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The Clariane Board of Directors met on July 27, 2023. During this meeting, the Board reviewed the condensed consolidated financial statements for the first half ending June 30, 2023. Limited review procedures were completed with respect to the condensed consolidated interim financial statements, and an unqualified review report is in the process of being issued by the statutory auditors.

The consolidated financial statements were prepared in accordance with the IFRS 16 standard. For purposes of comparability, the financial information below is presented excluding the application of IFRS 16.

2022 figures restated to reflect the impact of IFRS5 discontinued operations

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Q2 Revenue

Revenue in Q2 2023 increased by 12.5%, at 1,266.6 million euros. The organic growth was high at 9.7%. This was driven notably by activity recovery in the Long-Term Care activities, with c.2.5 points rise in occupancy year on year over the quarter. As in Q1 2023, it is also reflecting the increase in tariffs in an inflationary environment.

Half year revenue and results 2023

In the first half of 2023, revenue totalled €2,484.8 million, up 12.2%, with organic growth at 9.3%. The 2.9% external growth is mainly related to Grupo 5 acquisition in Spain, reinforcing Clariane’s European mental health platform.

The Group’s EBITDAR in H1 2023 is € 538.3 million, up 2.9% and broadly stable in amount vs H1 2022, and progressing in all countries except in Germany, where tariff adjustments have partially covered cost inflation.

By country:

• In France, revenue amounted to €1,096.0 million, up 7.0% with 5.9% organically, supported by nursing homes progressive occupancy recovery, to 89% end of July 2023, as well as continued growth of the Healthcare activity, of which around a third from outpatient activity. The EBITDAR amounts to €266.7m, an increase of 5.4% notably driven by higher nursing home occupancy.

• In Germany, revenue reached €573.0 million, an increase of 7.8% and 13.0% organically, reflecting the tariff increase following the significant salary reset effective from September 2022. Limited reported growth is the effect of the disposals of 21 facilities during 2022. The EBITDAR amounts to €102.9m, vs €134.2m in H1 2022, as tariff adjustments obtained in H2 2022 proved to partially cover increased costs in Germany. A new campaign of tariff negotiations is ongoing.

• In the Benelux² region, revenue totalled €367.9 million. The reported growth remained high at 15.7% driven by the dynamic occupancy progress in Belgium as well as the organic expansion in the Netherlands. Organic growth is 15.9%. The EBITDAR amounts to €79.1m, up 24.9% driven by continued ramp-up in Netherlands and improved occupancy in Belgium.

• In Italy, revenue reached €311.5 million, up by 13.9%, supported by acquisitions of 2022. Organic growth was at 8.0% and EBITDAR amounted to €64.9m, up 17.9%, on the back of high nursing home occupancy rate and dynamic healthcare activities.

• In Spain and the United Kingdom³, revenue amounted to €136.4 million, up 101.2% due to Grupo 5 acquisition in Spain. Organic growth of 6.4% was driven by price increase and ramp-up in the United Kingdom. EBITDAR was at €24.7m vs €17.5m in H1 2022.

Clariane’s EBITDA totalled €285.3 million in H1 2023, up 0.1% on H1 2022, impacted by rental cost increase.

Net profit from continued activities totalled €32.3 million, versus €24.6 million in H1 2022.

Operating Free Cash Flow amounted to €45m, vs €95m in H1 2022, impacted by negative working capital, notably in Germany due to the lengthening of payment delays from public payors, in a context of significant evolutions of the regulatory framework, and to a lesser extent in France.

A €3.2bn real estate portfolio

Clariane real estate portfolio updated valuation⁴ has been calculated on the basis of a 5.5% capitalisation rate (vs 5.4% in December 2022), reflecting the resilience of the healthcare asset class in countries where Clariane is present. This evolution has no impact on the assets valuation in the Group accounts, which are accounted at historic value.

Due to the change of control of Ages&Vie as of 30 June 2023, the Ages&Vie assets and debt have been removed from the portfolio (value of €299m as of 30 June 2023).

Financial structure

The amount of investments excluding maintenance, in H1 2023, was € 375 million, corresponding to the end of a cycle of investments previously committed, with notably the Grupo 5 acquisition closed in January 2023.

Clariane has now finalised its investment cycle, and expects net investments to amount to around €50m in H2 2023, enabling the Group to be self-financed.

Net financial debt was up €237m versus end of 2022, and is expected to decrease over H2 2023. Financial leverage is at 4.1x and Loan to Value is at 58%, reflecting the impact of capitalisation rate on the portfolio value as of June 2023. This constitutes a high point before realisation of the real estate monetisation expected in 2023.

Financing

Clariane has announced on 25 July 2023 the signature of the extension to May 2026 of its term loan for an amount of €505 million, in line with the maturity of the existing Group Revolving Credit Facility (RCF) of €492.5m.

All existing banks remain part of the extended term loan, and two new banks have joined the syndicate. Some Schuldschein lenders have transferred their positions into the extended term loan.

In addition to this operation, Clariane has issued a privately placed €40m sustainability linked bonds with Eiffel Investment Group focused on the key drivers for the sector, notably the quality of care and the well-being of the staff.

This financing is aligned with the purpose driven company ambition and roadmap of the Group and includes ambitious and innovative ESG commitments. A highly incentivising structure depending on the achievement of its extra financial objectives has been implemented with an adjustment, downward and upward, of the interest rate.

Clariane continues the roll out its real estate debt according to plan and has contracted an amount of €150m since the beginning of the year.

As stated on 23 June 2023, Clariane has also raised €120m in equity from a group of investors composed of Amundi Immobilier, Covéa, Crédit Agricole Assurances and Malakoff Humanis, through their investment into a real estate vehicle holding a pan-European portfolio of 46 assets, valued c.€ 500 million according to the latest expertise.

Level of liquidity is at €0.9 billion as of June 30, 2023, including undrawn €500m RCF.

Perspectives - Guidance confirmed for 2023

Clariane confirms its financial objectives for 2023 i.e.:

• Expected organic growth of revenue more than 8%
• Stable EBITDAR in amount
• Progressive deleveraging path, with a financial leverage expected around 3.5x in December 2023, subject to completion calendar of planned Real Estate monetisation transactions

Presentation HY 2023 results Thursday 27^th July 2023 at 6:45 pm CET

The link to access the live video webcast is available below. The presentation document will be available on Clariane website

https://channel.royalcast.com/landingpage/clariane-fr/20230727_1/

APPENDICES

Quarterly revenue

1^st quarter 2023

* Including €150.0m revenue in Belgium in Q1 2023 vs €130.5m in Q1 2022; and €30.6m in the Netherlands in Q1 2023 vs €22.6m in Q1 2022

** Including Spain for €53.6m in Q1 2023 vs €23.9m in Q1 2022 and UK for €13.8m in Q1 2023 vs €8.7m in Q1 2022

2^nd quarter 2023

* Including €153.6m revenue in Belgium in Q2 2023 vs €140.4m in Q2 2022; and €33.6m in the Netherlands in Q2 2023 vs €24.4m in Q2 2022

** Including Spain for €53.4m in Q2 2023 vs €24.5m in Q2 2022 and UK for €15.6m in Q2 2023 vs €10.8m in Q2 2022

1^st half 2023

* Including €303.6m revenue in Belgium in H1 2023 vs €270.9m in H1 2022; and €64.3m in the Netherlands in H1 2023 vs €47.1m in H1 2022

** Including Spain for €107.1m in H1 2023 vs €48.4m in H1 2022 and UK for €29.4m in H1 2023 vs €19.4m in H1 2022

Group income statement

Group cash flow statement

About Clariane

Clariane is the leading European community for care in times of vulnerability. It has operations in seven countries: Belgium, France, Germany, Italy, the Netherlands, Spain and the United Kingdom.

Relying on their diverse expertise, each year, the Group’s 67,000 professionals provide services to over 800,000 patients and residents in three main areas of activity: long-term care nursing home (Korian, Seniors Residencias, Berkley, etc.), healthcare facilities and services (Inicea, Ita, Grupo 5, Lebenswert, etc.), and alternative living solutions (Petits-fils, Les essentiels, Ages et Vie, etc.).

In June 2023, Clariane became a purpose-driven company and added to its bylaws a new corporate purpose, common to all its activities: “To take care of each person’s humanity in times of vulnerability”.

Clariane has been listed on Euronext Paris Section A since November 2006 and is included in the following indices: SBF 120, CAC Health Care, CAC Mid 60, CAC Mid & Small and MSCI Global Small Cap

Euronext ticker: CLARI - ISIN: FR0010386334

¹ Loan to Value = real estate debt / real estate portfolio value
² Including €303.6m revenue in Belgium in H1 2023 vs €270.9m in H1 2022; and €64.3m in the Netherlands in H1 2023 vs €47.1m in H1 2022
³ Including Spain for €107.1m in H1 2023 vs €48.4m in H1 2022 and UK for €29.4m in H1 2023 vs €19.4m in H1 2022
⁴ 57% of the portfolio has been revalued by Cushman & Wakefield

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