MEDICA - First-Half 2013 Results

Regulatory News:

The Board of Directors of MEDICA (Paris:MDCA), a leading provider of long and short-term dependency care in France, met on Monday 9 September 2013 under the chairmanship of Jacques Bailet. At the meeting, which was attended by the Statutory Auditors, the Board approved the consolidated financial statements* for the first half of 2013.

* The consolidated interim financial statements have been the subject of a limited review by the Auditors, whose report will be issued for the publication of the interim financial report.

Jacques Bailet, Chairman and Chief Executive Officer, said: "MEDICA’s first-half results are very satisfactory. Our revenue growth and high profitability demonstrate once again the validity of our model of growth. These good performances were accompanied by much recognition of our social initiatives. The acknowledged robustness of our balance sheet has enabled us to acquire SLG, the leading Belgian operator, which we will fully consolidate as early as 1^st October 2013 ⁽¹⁾. This operation fits perfectly with our strategy and the strong presence in Belgium gives MEDICA new development prospects, in a country offering opportunities for organic growth and consolidation. Our solid first-half business combined with the consolidation of SLG leads us to expect revenue of at least €825 million in 2013."

MAINTENANCE OF A HIGH PROFITABILITY MODEL

REVENUE UP 9.3%, BUOYED BY ACTIVITIES IN FRANCE

Consolidated revenue amounted to €381.5 million in the first half of 2013, representing a rise of 9.3% compared to the first half of 2012. Organic growth over this period amounted to 7.5%.

The first six months of the 2013 financial year were marked by a strong advance of activity in France, which generated revenue of €342.1 million and 8.1% organic growth.

• The long-term care sector in France generated revenue of €248.0 million, representing a rise of 12.2%. In addition to the ramp-up of facilities opened in 2011 and 2012, the 10.2% organic growth bears out MEDICA’s choice of geographic locations and regular investments in improvements to its facilities.
• The revenue of the post-acute and psychiatric care sector in France amounted to €94.2 million, representing a rise of 5.2% compared to the first half of 2012. MEDICA is continuing its diversification strategy in home care, which should help accelerate revenue growth in the medium term.
• In Italy, revenue growth has accelerated since the beginning of 2013. Revenue totalled €39.4 million, representing a rise of 2.6% (+4.2% in Q2 alone).

As at 30 June 2013, MEDICA operated a portfolio of 17,132 beds in 226 facilities, with the occupancy rate* remaining broadly unchanged at the high level of 96.3%.

⁽¹⁾ Subject to the usual conditions precedent.

* Occupancy rate: number of days billed divided by the number of billable days for facilities that have been open for more than 12 months

CONTINUED HIGH LEVEL OF PROFITABILITY

EBITDAR (EBITDA before facility rental expense) stood at €104.5 million in the first half (+14.2% compared to 2012) and represented 27.4% of revenue.

Profitability in France continued to improve due to:

• The significant increase in EBITDAR in the long-term care sector in France, which benefited from the rapid ramp-up and integration of new facilities over the last 24 months, as well as the good control of its operating costs.
• Expertise in the post-acute and psychiatric care sector in France, which consolidated its high margin as part of its strategy of specialised facilities, as well as continued restructuring of facilities. The home care business is profitable, and will benefit the overall profitability of the sector when it reaches maturity.
• In Italy, profitability improved thanks to the return of revenue growth over the period.

CONTINUED IMPROVEMENT IN NET MARGIN

EBITDA stood at €63.7 million, representing 16.7% of revenue, a rise of 12.2% compared to the previous year.

• Employee expenses (€174.5 million) rose by 9.1% but held steady as a proportion of revenue (45.7%), while the external charges share is decreasing due to less use of subcontracting.
• Rental expenses amounted to €40.8 million (10.7% of revenue), up 17.6%. This rise was due to the growth in the number of facilities still in their ramp-up.

Operating income advanced 9.5% to €48.9 million.

Net income attributable to shareholders amounted to €28.0 million, up 15.2%. The slight deterioration in net finance costs was offset by an improvement in the tax rate, which amounted to 37.5% (vs 40% in H1 2012), mainly due to the positive impact of the CICE.

⁽¹⁾: The entry into force of the revised IAS 19 standard on 1 January 2013 led to a change in the recognition of retirement benefits in the consolidated financial statements of the MEDICA Group. Under IAS 8, this change of method has to be applied retrospectively in order to allow comparison of financial statements between the different reporting years. The comparability of the accounts will be detailed in the consolidated interim financial statements.

A WELL-MANAGED BALANCE SHEET

As at 30 June 2013, net debt totalled €465 million, compared to €448 million as at 31 December 2012. Gross debt decreased to €605 million (vs €685 million as at 31 December 2012) and cash and cash equivalents amounted to €140 million. The financial leverage stood at 2.1⁽¹⁾, flat as compared to the situation as at 31 December 2012.

SLG: MAJOR GEOGRAPHIC DIVERSIFICATION

On 29 July, MEDICA announced the acquisition of Senior Living Group, the leading private provider of long-term care in Belgium. This acquisition, combined with MEDICA’s strong domestic position and successful establishment in Northern Italy, represents a major step forward in the Group’s development in Europe.

After the completion of this transaction, which is expected at the end of September, the network operated by MEDICA will comprise 22,613 beds. MEDICA’s organic growth pipeline will also be strengthened with a portfolio of 3,537 beds being restructured or built. Given SLG’s operating profitability and the optimal financing conditions, this operation should be accretive for MEDICA’s shareholders as early as 2014, the first full year of SLG’s consolidation.

2013 REVENUE EXPECTED TO EXCEED 825 MILLION

MEDICA expects to generate full-year revenue in excess of 825 million in 2013, due to organic growth of at least 7% and the integration of SLG from 1^st October 2013.

A meeting for analysts and investors will be held this morning at 9:00 am (Paris time).

NEXT EVENT

Publication of Q3 2013 revenue on 22 October 2013 before start of trading.

⁽¹⁾ : Financial leverage = (Net Debt – Property Debt) / (EBITDA – (6.5% x Property Debt))

ABOUT MEDICA

Formed in 1968, MEDICA is a leading provider of long- and short-term dependency care in France. It operates both in the long-term care sector, with nursing homes in France and Italy, and in the post- acute and psychiatric care sector. In these two sectors, the Group operated a total of over 17,100 beds and employed over 10,800 people as at 30 June 2013.

MEDICA has been listed on the NYSE Euronext Paris stock exchange since February 2010 – Compartment B – Eligible for the Deferred Settlement Service, long only.

MEDICA is included in the SBF 120, Euronext CAC Healthcare, MSCI France Small Cap and Gaia indices.
Code: MDCA - ISIN: FR0010372581 - Reuters: MDCA PA - Bloomberg: MDCA FP
Website: www.groupemedica.com

(1): The entry into force of the revised IAS 19 standard on 1 January 2013 led to a change in the recognition of retirement benefits in the consolidated financial statements of the MEDICA Group. Under IAS 8, this change of method has to be applied retrospectively in order to allow comparison of financial statements between the different reporting years. The comparability of the accounts will be detailed in the consolidated interim financial statements.