MEDICA - 2010 Annual 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, 28 March 2011, 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 year ended 31 December 2010.

Jacques Bailet, Chairman and Chief Executive Officer, said:

"We are very satisfied with the quality of our results in 2010 and, with revenue up by more than 12%, we exceeded our growth target. During the year, we increased the operated base by 1,800 beds, while maintaining a high operating margin and strengthening our balance sheet. Based on our secure expansion pipeline, our robust business performance in the first months of the year and the commitment of our teams, we are confident and now expect to increase revenue by at least 15% in 2011.”

*The consolidated financial statements have been audited. The Auditors’ Report will be issued for the publication of the annual financial report.

REVENUE

Consolidated revenue amounted to €538.9 million in 2010, an increase of more than 12% compared with 2009.

Revenue by sector may be analysed as follows:

All of the business segments contributed to the robust revenue growth for the year, as follows:

• Revenue from long-term care facilities in France rose by 15.6% to €334.6 million, a strong performance that was led by organic growth of 8.4% and the gradual integration of facilities acquired since the beginning of the year.
• Revenue from post-acute and psychiatric care facilities in France increased by 2% to €144.2 million. The restructured beds delivered during the year should begin having an impact in 2011.
• Revenue from operations in Italy surged by nearly 21% to €60.1 million, lifted by the acquisitions made in late 2010.

Occupancy rates^* remained high, at 97.0% at 31 December 2010 compared with 96.7% at 31 December 2009.

In 2010, MEDICA increased the number of beds under management by 1,804 units, to a total of 13,185 beds in 173 facilities as of 31 December.

FINANCIAL REVIEW

INCOME STATEMENT

• EBITDAR (EBITDA before rental expense) stood at €143.3 million, or 26.6% of revenue, versus €127.3 million and 26.5% in 2009.

External charges (other than rental expense), which include sub-contracting costs and purchases not taken into inventory, remained perfectly under control at €95.1 million or 17.7% of revenue, versus 18.0% in 2009.

Employee benefits expense rose to €246.8 million or 45.8% of revenue from €214 million and 44.5% the year before, reflecting the increasing number of medical staff in the long-term care sector.

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

EBITDAR by sector may be analysed as follows:

• EBITDA rose to €95.0 million from €84.6 million in 2009, and was stable at 17.6% of revenue. Rental expense edged up by just 0.6% at constant scope of consolidation, reflecting the favourable lease renegotiations in 2009.
• EBIT (corresponding to operating profit before non-recurring items) improved by around 11% to €71.2 million from €64.1 million the year before, and represented a little more than 13% of revenue.
• Operating profit stood at €68.9 million or 12.8% of revenue for the year, compared with 12% in 2009. It included €30.2 million in other operating income and €32.6 million in other operating expense, primarily related to the disposals of property assets during the year.
• Net finance costs improved sharply during the year, to €33.2 million from €80.7 million in 2009. The nominal cost of debt after hedging fell significantly to €25.5 million, from €64.8 million in 2009, reflecting the reduction by more than half in net debt and the decline in interest expense. Successful negotiations with the banks helped to narrow the average spread on debt to 1.5%. Following the set-up of interest-rate swaps, the average cost of debt stood at 3.2% as from 1 January 2011.

*€350 million in fixed-rate swaps, of which €250 million expire on 30 June 2014 and €100 million on 31 December 2013.

• Income tax expense totalled €11.6 million, compared with a €10.4 million tax benefit in 2009.
• Attributable net profit ended the year at €23.2 million, versus a €13.4 million net loss in 2009. In the second half, net profit stood at €20.3 million, a clear improvement over the first-half.

BALANCE SHEET/FINANCIAL STRUCTURE

• Property, plant and equipment amounted to €334.3 million at 31 December 2010. The 30% of the operated facilities that are directly owned were valued by an independent expert at €345 million, or €93,000/bed, in 2010. These assets have not been measured for fair value and are still carried in the balance sheet at €273 million as of 31 December 2010.
• Intangible assets comprised €557.7 million in intangible non-current assets (almost entirely operating permits) and €367.4 million in goodwill. In both cases, most of these assets are primarily related to the Group’s acquisition in 2006 by funds advised by BC Partners
• Net debt stood at €365.0 million at 31 December 2010, versus €748.6 million a year earlier. At year-end 2010, it represented 3.8 times EBITDA (unadjusted for the value of property assets) and 60% of equity. When adjusted for property assets, net debt amounted to 1.6 times EBITDA.

GROWTH IN THE OPERATED BASE

In 2010, MEDICA increased the number of beds under management by 1,804 units, to a total of 13,185 beds in 173 facilities as of 31 December.

The long-term care – France sector increased the operated base to 8,810 beds from 7,636 at year-end 2009, while operations in Italy rose to 2,058 beds from 1,428 a year earlier, primarily as a result of the Laetitia acquisition.

As of 31 December 2010, MEDICA operated:

• 8,810 beds and 111 long-term care facilities in France
• 2,317 beds and 36 post-acute and psychiatric care facilities in France
• 2,058 beds and 26 facilities in Italy

EXPANSION PIPELINE

To support its expansion plan, MEDICA has a growth pipeline representing some 3,200 identified beds, as follows:

• 900 operated beds being restructured.
• 2,300 beds being built.

As of 11 February 2011

OUTLOOK

For 2011, MEDICA is confident in its strategic vision and ability to grow its business.

Backed by its secure expansion pipeline, it aims to increase revenue by 15% over the year.

The company is also committed to maintaining its solid profitability.

ABOUT MEDICA

Created in 1968, MEDICA is a leading provider of long and short-term dependency care in France. It operates in both 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 MEDICA Group operated a total of around 13,800 beds and employed some 7,400 people as of 11 February 2011.

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

MEDICA is included in the CAC Mid 100, MSCI France Small Cap and Gaia indices.
MDCA – ISIN: FR0010372581 – Reuters: MDCA PA – Bloomberg: MDCA FP
Website: www.groupemedia.com