Clariane SE (CLARI) Earnings Call Transcript

[Interpreted] Ladies and gentlemen, dear investors and analysts, I'm very pleased to welcome you to this webcast for the release of the 2020 earnings results for Korian. 2020 was from all respects an extraordinary year, very difficult one. All of Europe, starting in March, experienced an unprecedented pandemic, which hit most hard the fragile and vulnerable and elderly population, but it was also a gratifying year. It was a foundational year because we saw great dedication, professional conscience and cohesion amongst the men and women, who work for Korian across Europe. To start off this morning, I would indeed like to allow you to listen to the men and women, who work for Korian, via a documentary that was made last June by the company called Elephant following the first wave of COVID. [Presentation]

[Interpreted] Ccourage. solidarity, adaptability. Those are really the biggest learnings of this collective ordeal. And this morning, I'd like to express how grateful and respectful I am to those that lost a dear one to COVID and my gratitude and respect to all the employees of Korian across Europe for how they were able to cope with a pandemic because this indeed was an unknown threat that we were faced with exactly a year ago, a pandemic, which brought 2 simultaneous successive waves across all of the geographies in Europe where we're present. At the beginning of the first wave in a very uncertain environment, we focused on 2 priorities: first of all, protect our patients and employees; secondly, ensure operational continuity of care. Very quickly, we set up a crisis organization at European level, totally reorganized our supply chain since our usual suppliers were no longer able to supply us with personal protective equipment. At the same time, we set up centralized recruitment teams to provide backup to teams working in the field. We also very quickly defined our own COVID standards across Europe. In order to achieve that, we worked with medical experts, our own medical experts as well as our health and safety staff and our training staff until we were able to deploy all of these standards across our European networks and get them audited by Bureau Veritas to ensure that they were properly enforced. 98% of our facilities were certified and earned the excellent or very good grade with the standards that are checked on 26 very strict points. Third priority was be there to support hospitals and local health care staff, who were just overworked, submerged by the first wave of COVID. There was also a support platform, which we deployed to support our own facilities in France. It served as a model -- as a reference model for French authorities when they built the geriatric platform that was then deployed nationally across the industry. So over 1,600 beds in nursing homes and clinics were made available to local authorities during the first wave, over 5,600 people then received care and support during the first weeks of COVID when they got the virus. This was made possible only thanks to the very solid IT systems that we had heavily invested in over the past years. So we were able to switch from work -- switch to working from home, over 2,000 people across Europe. The IT system also allowed us to deploy means of communication during the very strict lockdown last spring, enabling us to stay in contact -- for patients to stay in contact with their families, us with our patients in nursing homes and clinics. And lastly, we deployed teleconsultation, remote evaluation systems across our nursing homes in Europe. So that was the first wave. Then during the summer, we realized that no COVID time was passed before it was never going to come back and that we had to durably set up an environment where we could cope with a virus that would be in circulation and get organized in order to be able to continue working in a COVID environment. So there were 3 main changes. First of all, we fully incorporated massive screening tests across our nursing homes. 100,000 tests are conducted every week across the European network. We then prepared to deploy very quickly the first vaccination campaign as soon as vaccines would become available. And on December 27, we were highly prepared in all of our facilities across Europe. And today, over 75% of residents in nursing homes have received their shots and over half of our employees as well, thanks to excellent cooperation with the local health authorities. At the end of this first quarter, we will have completed the first wave of vaccination and will be ready to continue with the campaign because the inoculation is probably the best way that we can protect ourselves against the virus today, the best available method. We also adapted our health protocol so that we could continue caring for taking on new patients, caring for patients and residents safely. So that meant an application of very strict preventive methods and reorganizing the health care chain, working with visitors and the family members without ever shutting down our centers. We wish to avoid this at all costs, but still stay safe against the circulating virus. And all of this is working. In the summer between the 2 waves, we were able to get back close to normal in terms of activity across our medical and social care network as well as in our care homes, our clinics. And I'm confident that this is exactly what is going to happen this next spring and that we will be able to fight back the virus, in particular thanks to vaccination campaigns. In order to incorporate COVID in our processes, not that this is something we're happy about, but it's something we need to do, at the end of spring, we had a feedback session to talk with our stakeholders and extract the key learnings from the first wave, so that we could be better armed to continue working cohesively. 2,000 people took part in giving their feedback: patients, residents, their relatives, loved ones, but also people across -- from our teams across Europe, representatives from our unions, and we were able to extract 2 key learnings. First of all, there was extreme gratitude shown by families and residents when they saw our commitment and the professionalism exhibited by our teams during the first wave. And this translates into the excellent results of a survey of over 1,000 people last spring and summer. 95% of people surveyed in France said they were highly satisfied with our engagement and mobilization. This also translates in our customer satisfaction surveys that we do yearly across Europe. And we progressed by 400 basis points in terms of the net customer satisfaction index. So you take the highly satisfied families and extremely satisfied families, take out the number of nonsatisfied families, this gives you the index, and we progressed by 400 basis points. The second key learning was also to show that our teams are extremely dedicated, are extremely engaged, and that's how they were able to withstand and to stay strong. And that -- it's sort of a capital that we want to nurture and protect today and develop via skills training, in particular, a program that targets all of our facility managers across Europe. The aim being to help them strengthen their individual and collective resilience because we are really living through an ordeal with this pandemic. And so this really refocused us on our fundamental purpose, being there to support and care for fragile, elderly people and their families, while respecting their dignity and contributing to their quality of life. And this brought us together around our values around Europe. And following COVID, we reexpressed our values, rerooted them in our company around 3 pillars. First of all, trust, the trust that the fragile, elderly place in us when they need our services, the trust that teammates need when they need to face these difficulties, initiative that you need to show when you're faced with something totally unknown and a spirit of responsibility, which is at the core of our jobs as carers. And all of this translates into Korian's culture via managerial attitudes, which correspond to our very deep-seated DNA, and we're going to continue building on that in the future. This very strong resilience capacity that shone through throughout 2020 also are reflected in our economic and financial results. The company showed true resistance and resilience, robustness. We see this in our growth trend, 7.2%, which includes 2% organic growth. All of our countries contributed to this organic growth. Germany, firstly, because it was less exposed during the first wave than other countries, but also France and Benelux, with the exception of Italy because there were huge disruptions there, in particular, amongst the clinics. And for the first time, Italy is posting organic growth decline for the first time in 5 years. Our margin rate declined by 100 basis points because we were exhibiting underactivity, where we were underemployed during the restriction and lockdown, but it's still very solid, 13.6%, excluding nonrecurring COVID costs. This is reflected in our briskly growing net -- in our net income, which includes nonrecurring COVID costs and is down by 50% compared to 2019. But we still generate very robust free cash flow, 43%. And combined with our equity strengthening operations as well via the Inicea acquisition and the capital increase in October, along with real estate partnership that I will describe gives us a strong position. So we have a sound financial position compared to 2019 with a leverage factor of 3. So we have wiggle room. We have enough capacity to develop sustainably, profitably on these growing markets. There are big needs in the pipeline, and markets are consolidating, and we intend to be one of the major players. We also progressed in terms of creating real estate value. Our portfolio now amounts to over EUR 2.7 billion, up 30% compared to 2019. This is a reflection of robust real estate investment, but it also reflects that we've been able to create organic value. And Philippe Garin is going to talk about that in a few minutes. So this operational health-related economic resilience was made possible by the very substantive work we have been doing over the past few years, in particular as part of our program we presented in 2019 In Caring Hands. The plan is simple. It's about bringing forward excellence in our business across all of our activities, allowing us to have a higher capacity to innovate, diversifying our services in order to cover all needs and all situation in terms of aging and chronic diseases. And so we progressed a lot in 2020 despite the crisis or thanks to the crisis. In fact, in terms of HR policies, we are proud to have been designated top employer by an independent organization that gives out this award in Germany. We are the first care company to have received this distinction. And I hope that after Germany, other countries will follow in 2021. Also, all along 2020, we've seen more diversification in our activities, concerning care in the home, medical services. And all of this gave us greater resilience and gave us a greater capacity to generate value. So we have seen a lot of growth in these new activities in our portfolios. For example, in-home services up 20% and medical activities, 40% contribution to reported growth. And this is -- so I've talked about how this translates in our economic, financial performance, but also in our nonfinancial performance. Last year, if you remember, for the first time, I was presenting our corporate social responsibility road map with 15 commitments corresponding to the expectations formulated by our 5 main stakeholders: patients, residents, employees, public opinion and all of society because we're faced with the longevity challenge, also local regions where our care homes are located and the entire planet, as far as the environment is concerned. So last year, we drafted our 2023 road map, which incorporates a number of milestones. And I'm happy to report that we are aligned. And in fact, early in meeting some of these commitments, I'll mention 3. Skills training. Last year, our goal was to incorporate 4% of our employees in training programs and bring that forward to 8% by 2023. Well, we've achieved that doubling in 1 year. So our new target for 2023 is 10%. We also set the 70% local sourcing target in those countries where we have operations. Well, we have reached 80%. So we are above our target. Another target was to have 100% of our sites, our facilities, clinics involved in local community projects. Well, today, 97%, i.e., almost all of our facilities have embarked on local community projects because that ties in with their values. And this demonstrates to what extent the corporate social responsibility policy is fully integrated in the strategic vision we have with the -- In Caring Hands policy. It underpins much more than the 15 commitments I pointed out, such as a number of examples, promoting female empowerment. We are a women-run company. Over 80% of our employees are women. And last year, we signed the United Nations Empowerment, Women's Empowerment charter. We are also committed to youth employment. COVID has come with an economic crisis, and it is becoming difficult for young people to find a good job quickly, getting the qualifications, embarking on a career that will bring them value. Well, we offer that. We are very pleased to have set up the first apprenticeship training -- in-company training program, 500 apprentices are -- have embarked on this program -- have been included in this program. We are also part of an operation launched by the French government, One Youth, One Solution. We're also fully committed to supporting medical research against COVID and infectious diseases. We are contributing EUR 1 million to the fund for caregivers that was introduced last year. The CSR approach also ties in with our financial strategy. I'll recall the Euro PP that we subscribed last year in June, EUR 230 million. The rate of this Euro PP is directly related to achieving the performance targets that we have set ourselves in terms of CSR, quality, skills training and reducing GHG gases. I think we are the first company in the nursing home sector to have accepted this commitment, tying in our funding conditions with nonfinancial commitments. And I think that really illustrates our integrated position. CSR is really at the heart of our purpose and our corporate care project. So these efforts have started to be appreciated by rating companies, and our rating has increased. It is -- ISS, MSCI, for example, have upped our rating. We're also very glad to see that our ecosystem is supporting us, and are embarking on the same type of CSR commitment. Our suppliers, for example, who are now part of the EcoVadis certification scheme, the EcoVadis labeling scheme and -- have agreed to be held to a number of socially responsible standards. So it's a whole collective effort we work with an ecosystem of players who believe in CSR. Resilience, resistance. Transformation was also the keyword for 2020. We experienced deep transformation. We simply continued putting even more effort into our transformation, a road map, the In Caring Hands road map. Our aim with this road map is to shift our focus from elderly care and medical social care to something broader, a multidisciplinary care offering that is integrated, that is close to the community, that can help people in a situation of vulnerability, who are aging, of course, but who also suffer from chronic diseases. So the need is there. It was already there before COVID across Europe. We expect that by 2030, the number of fragile patients will double, in particular the number of chronic patients, and we need to prepare across all our geographies. So we have a very dense network, 1,000 facilities across 6 European geographies at present. That means that we need to diversify into related services. So medical care, such as continuing -- specialized continuing care, outpatient care and a solution which is an alternative to staying at home or assisted living for people, who are fragile but independent as well. So our objective is clear. In 2016, 80% of our revenue came from our nursing homes. By 2030, we want this share to represent only 60%. 40% would come from new activities. So we want these new activities to double by 2023 compared to the situation in 2016. And we are on track. In 2020, we made major investments, both organic and nonorganic in response to this need for diversification. And there are 3 main pillars or investment segments. First of all, we want to have a stronger presence in specialized ongoing care, in particular respiratory care and locomotor care, health -- mental health, which is a new activity for us and digital health because if we want to offer an integrated health care chain, we need to be able to support patients by having data, robust data, and this means targeted investments in order to engineer the IT network that will make this possible. Today, I'd like to talk about one major strategic step forward that we did in 2020, and that's in the area of mental health. Mental health issues that come through as addictions or behavioral issues, food-related issues, but also deeper psychiatric conditions are one of the main causes of chronic illness in Europe. It is estimated that 50% of the population in the countries where we have operations suffer from one of these illnesses, and these illnesses are set to increase, in particular because of the present crisis. So there is extreme critical care and our installed capacity will not be enough, and I'm really talking about public health capacity. We need outpatient care to support patients, who live at home or who are in outpatient care. We need multidisciplinary teams to deal with these connected illnesses, and we need more collaboration between private stakeholders and public stakeholders and outpatient care really has a role to play. So in 2020, we decided to go for a major investment in France, in -- our first country, by acquiring the Inicea platform. It has recognized expertise in combining full hospitalization and outpatient solutions via 12 clinics, 7 outpatient hospitals, 1,200 beds, EUR 100 million revenue in 2020 and a very solid hospital -- outpatient hospital development pipeline across these facilities. Inicea, combined with the 12 centers that Korian already had to deal with these issues and illnesses makes us one of the major private actors in mental health in France, amongst the top 3, with 30 clinics, a pipeline of 12 centers and outpatient hospitals that should open by 2024 and growth of at least 6% in the years to come with a huge consolidation opportunities. What we did in France, we will do again in 2021 across our other geographies because the need is there, and we feel that we have the skills, expertise and capacity to meet these needs. And another area of huge development as we pursue strategic diversification is geographic extension -- expansion. In 2019, you'll remember, we decided to start operations in new geographies over and above our 4 historic countries by opening operations in Spain and the Netherlands. We started to start with baby steps with high-quality teams in order to -- for this to serve as a basis for consolidation, both organic and nonorganic as part of a buy-and-build strategy. And this strategy has given us good results and shows a good value creation potential. In Spain, we doubled the network from what we bought initially in 2019 in the south of Spain in Andalusia with 16 facilities. It works well -- it weathered the pandemic very well. Revenue grew by 30% in 2020. The Netherlands growth was even brisker with a number of targeted acquisitions mostly focusing on small-sized facilities to support people with cognitive issues, Alzheimer's disease. These are the size facilities that families and patients are looking for. Well, the Dutch platform multiplied by close to 5 revenue in 2020, and it operates over 1,000 beds. And we are on track in the Netherlands to make EUR 100 million revenue by 2022. So this progressive build-and-buy strategy of targeted platforms that correspond to market niches makes sense. And in 2021, we're going to apply that to a seventh geography, the U.K. Now we've been looking at the U.K. for a number of years already. It is a very broad market. There are future needs for the elderly that are set to grow. The over 80 or 85 population is set to double in the 20 years to come. Today, the market truly needs new facilities because the existing nursing home or care home market is aging itself. Today, people are looking for more modern concepts. They are looking for smaller scale facilities with the level of comfort and care that is a little higher. So there is going to be a need for additional facilities, representing about 75,000 beds by 2030. At the same time, the market is still highly fragmented. There are high-end operators that own their own real estate that do offer integrated solutions. And the multiples there are still very attractive, lower than 10. And demand is solid, depending on the market position that you're going for. So we've decided to acquire a small platform or company Berkley. They are a care home operator that operates in Southern England, not too far from London. And that really meets all the criteria that we had set ourselves, i.e., a high-quality operator recognized for its leadership, that Berkley Homes are rated excellent by the CQC, an independent authority that measures customer satisfaction. It's really best-in-class. The group has a very well-designed concepts, both in terms of real estate and services. Management is experienced. And in the years to come, it will be there to support our development. Locations are well positioned in places where there's need and very good organic growth potential with a pipeline of projects to come and inorganic pipeline, where we will be able to bolt on other care homes that meet the same specifications. So our objective is very clear. We are in exclusive negotiations with Berkley, and we hope that we'll be able to sign by the -- or sometime in March, and we want to achieve the same results as in Spain and the Netherlands. So we are hoping to achieve EUR 100 million revenue with an accretive margin effect across the group in the 3 years to come. The diversification strategy and this local growth strategy is strongly supported by our real estate strategy that we set up in 2016, which we called Asset Smart. It really rests on 5 pillars. First of all, our capacity to rework our existing network to develop new capacities, outpatient care in our clinics, rebuilding our aging facilities, creating value at every step and constantly repositioning our network to make sure that we're aligned with the health care needs. And it's been working. In 2020 despite the crisis, despite COVID, despite restrictions, 72 facilities were rebuilt or totally refurbished. It's a record. Over 1,500 new beds or extensions that were handed over. So that's a true acceleration compared to the pace we were going at over the past few years. It really shows that we've been doing some in-depth work. And there's the ability to coordinate new construction. We have acquired true technical skills in the area of BIM, building integrated modeling. So digital modeling. So we'll be able to optimize deadlines and to apply life cycle management to all of the buildings that we open, optimizing services and economic performance. So we'll also be able incorporate low-emission standards. And this allows us to industrialize our building methods. There are many projects today that are based on modular construction, and I'm sure that this is going to become the dominant model, and it's going to allow us to accelerate our organic development rhythm and extend our network. Today, we have a family of 4 concepts that are well defined, well positioned across our geographies. So we have care communities, so small-scale facilities of the Ages & Vie type in France for fragile, elderly people, but who are still independent. These concepts work very well. And we saw that during the COVID crisis, it's really going to be what is the best idea post COVID. We also have retirement homes, nursing homes that also offer local services, outpatient services. There is a service residence part, but also an ongoing clinic part to those. They all have outpatient capacity and consultation capacity and they work with our service residences that are downtown. So these 4 concepts are giving us a robust pipeline. 10,000 beds today that are being commissioned. And by 2023, we are looking at 3,000 beds across these 4 families every year. And all of this couldn't work without a solid financial strategy. I think that we really have gone through a foundational stage in 2020 through our partnership with Cardif BNP Paribas and EDF Invest. So what is this about? We made a proposal to BNP Paribas via Cardif and EDF Invest, offering them to take on a minority stake in one of our real estate companies that manages about EUR 1 billion in assets, so that we can share the equity impact that these real estate -- high-intensity real estate activities have and also to reuse the equity that we thus free up for our operational development and future real estate development. So this is a strategy that allows us to truly control our working tool and our value creation, to coordinate our development, sharing its financing without being overburdened by debt. And all of this is part of a very cautious LTV strategy, about 50% to 55%. So you see that this contributes both to the future growth of the group and quality of service, but it also contributes to creating financial value. Our portfolio in a few years rose from just under EUR 1 billion to EUR 2.7 billion this year and about 25% of the wholly owned portfolio. So I'll now hand over to Philippe Garin to present 2020 earnings results. Over to you.

[Interpreted] Good morning to you all. The group generated in 2020 revenue of EUR 3.9 billion, up 7.2%, of which 2% organic growth. Growth was strong even if the crisis weighed on our activity, both in volume as well as in the EBITDA rate that was reduced by 100 basis points to come in at 25.2%. As for June 30, we estimated losses after compensation stemming from COVID, they account for EUR 100 million in revenue. That's about 3% growth. This loss in revenue after savings on variable cost represents an EBITDA of EUR 75 million. Last year, in regards to one-offs, the net impact stands at EUR 27 million. All in all, on the 2 metrics, revenue and EBITDA was slightly above our targets. Geographic performance depends essentially on the exposure of each country to the first wave. France, Italy and Benelux were all impacted and lost about 150 basis points because of the pandemic. Italy that suffered hugely in H1 recovered well in H2, thanks to the dynamism of its medical activity. The Benelux performance reflects the significant number of institutions in ramp-up phase in the Netherlands. Germany, spared overall in the first wave, delivers a high-quality year with a margin up by 50 basis points on the year. We see the same results by type. Staff costs grew by 10%, reflecting our resolve to improve our structure of permanent staff, the management of certain institutions and training costs. We were, therefore, during the course of this year of crisis able to retain and strengthen the quality of our human resources. As for the other expenses, their increase was limited to 3%, thanks to savings plans. The rental expense is not flexible with significant real estate acquisitions at the end of the year and a growing share of greenfields, whose impact is far longer. Three comments on the other P&L items. Nonrecurring costs, excluding one-offs, which, as announced, were very low in H2, integrating essentially M&A costs and restructuring costs. They are rather high, but demonstrate our dynamism in terms of acquisition and transformation. The financial expenses up in spite of a further drop in the cost of debt that we're able to bring down under 2.3%. Consequently, the increase stems from the increase in the debt, driven by our growth and the overliquidity that was necessary to weather the crisis. Lastly, the tax expense is down, but not only because of the earnings drop but also thanks to the decreased tax rate, notably in France and the effort undertaken to reduce the friction between certain entities. It's interesting to focus on the very good cash generation during the year. Free cash flow was negatively impacted by one-offs and decrease in EBITDA. The other items are broadly flat. We were able to maintain the conversion rate at about 43%. And that's been the case now for some 3 years. This year, investment was very significant and was marked, as Sophie said, by an acceleration in medical sphere with the acquisition of 5 Santé, Inicea, but not only because development CapEx concern to a significant extent the medical network. We're therefore extending at this stage in France and Italy, our skill set, our specialties and our service capabilities. Now investments are only possible through a particularly active balance sheet management, the capital increase and opening up our property company to investors allows it to end the year with over EUR 1 billion in cash and reduced our leverage to 3. The opening up of our property company has allowed us to double our investment resources, by at the end of the day investing only 25% of the total value of our real estate acquisitions. As we indicated at the CMD, if the inclusion of real estate partners is key, the compliance with average multiples is all the more so. We're very selective in our M&A. This acquisition in the U.K. illustrates this with a lower multiple, whereas margins will be accretive as of 2021 for the group. I'm delighted that we can announce this acquisition, which is the result of a long effort of our teams and fits fully with our expansion strategy. But the best multiples come from greenfields, and I'm pleased to share with you our progression in this field. In our pipeline of 14,500 beds, 10,500, that's over 75% are greenfields and we're arriving at a significant increase in annual deliveries. This year, 1,500 beds; next year between 1,800 and 2,000 beds; and in '22, reaching the level of 3,000. Those should be reached steadily as of that date. If we now view our pipeline overall, that is both greenfields and bolt-ons, 2020 will have seen an increase of close on 6,000 beds taking to close to 89,000, the number of beds in service and over 102,000 the total number of beds. Our ambulatory capacity increased strongly in France and Italy, respectively, growing by 30% and 70%. As mentioned earlier, we were able to reduce our leverage to 3 whilst keeping at 55% of our real estate value, the corresponding level of debt. As regards our debt profile, our maturities are well spread over the coming years. In conclusion, strong results corresponding to a year that, of course, marked by the health crisis, but also the expansion and transformation of our group. Turning now to the dividend. We're proposing EUR 0.30 this year, which represents 50% of the dividend paid in respect of 2018 and 2019 or 50% of 2020 earnings. Back to Sophie.

[Interpreted] 2020 demonstrated both the resistance and resilience of our group, its ability to adapt faced with an unprecedented ordeal and the relevance of our strategy of business and geographic diversification. I'm confident in our ability to reach the targets announced last September when we did the Inicea transaction. That is revenue in 2022 will exceed EUR 4.5 billion, driven by the onboarded growth from the various acquisitions achieved in 2019 or '20, the contribution of our pipeline and, of course, a gradual return to normal activities across our networks, medical and health as the pandemic normalizes in 2021. And our margin targets, operating margin after rent, which will return and exceed its pre-crisis levels 15.5% in '22, driven by the return to normal on the very core of our network and the accretive contribution of acquisitions in mental health and in new geographies. I'm also very confident in our ability to achieve our various nonfinancial targets, which is part of our ESG road map announced a year ago. And in fact, this year, for the very first time, we're including in all our targets in the managers of Korian, 5 of these key objectives, continuous improvement of the net customer satisfaction score with an increase of 100 bps expected in '21, an improvement of the quality of work indicator, combining goals in terms of training, add some tiers of reduction and loyalty building, objectives in terms of reducing energy consumption as part of the low-carbon road map, certification goals and gender equality within top management by 2023, 50-50. All this supported, integrated in the In Caring Hands road map presented in 2019 with its twofold objective: excellence on the one hand, service excellence, quality in all areas and innovation to meet all the needs in terms of public health and supporting the vulnerable everywhere where we are established. Korian 2020/'21 is a company that's fully activated, ready prepared to operate care for lastingly in a COVID environment. It's resolutely committed to its transformation. Senior, elderly care to supporting the vulnerable through a diversity of care integrated locally to allow patients to choose the best possible care for their individual situation, a company that is fully embarked on its sustainable and profitable growth pathway, thanks to our robust financial strategy, strengthened in 2020, thanks to the strength of our venture and our nonfinancial road map that is championed by the whole community. And I look forward to seeing you to deepen these issues on our next investor day on the 16th of June. I thank you for your attention. And together with Philippe, we are available to answer your questions. Thank you.

[Operator Instructions] We have our first question via the chat, Sophie and Philippe. [Audio Gap] the level of government grants received in 2020 and expected in 2021. The evolution of the tariffs for '21 and the best guess in terms of evolution of sales and margin?

[Interpreted] Okay. So as regards support subsidies received by governments, we lost EUR 200 million in revenue on 2020, offset half compensation, that's EUR 100 million. That's a net loss of activity of EUR 100 million. That's about 3% growth that we should have had that we did not achieve. That's the first category of compensation in terms of activity to offset -- to compensate underactivity. I'm incapable of giving you the amount that we'll have for 2021. If only that so far in Q1 2021, all our geographies have -- the extension of compensation will have the same type, I can't give you the amount as those received in 2020. As regards compensation for additional costs, we had essentially in the first half and more specifically Q1 and Q2 linked to bonuses paid at the request of governments in France and Germany. And the additional costs incurred for PPE. Same thing, overall, we had a net cost of some EUR 30 million borne by the group that we classified as one-off. The gross amount needs to be supplemented by some EUR 60 million. All in all, the additional cost borne totaled EUR 90 million and compensated to the tune of EUR 60 million. On that portion, I don't believe there will be additional -- further additional costs in '21. So no new compensation insofar as the PPE have returned to price levels consistent to what they were pre-crisis or broadly similar. And today, we have very efficient management of those PPE stocks. In terms of additional bonus, we don't expect to have to pay additional bonuses. On the prices, tariffs, that's going to be probably an increase of 1% to 2% depending on the geography. And then the price effect that may occur is far broader. In Germany, there's a key factor in the price, which is the care mix. That's to say more, we achieve a good level of qualified staff, the more we can receive vulnerable people, our care mix increases and so our tariff increases. That was a significant factor these past 3 years and should continue to play over the next 3 years. Even in France, the specialization of our medical network leads to a tariff increase year after. If you recall that 2019 saw the increase of the order of 10% of our medical activities in France, of which 6% or 7% was organic growth. Same thing, that impact will probably be very dynamic in '21 and '22, given the number of specializations that we expect and the number of openings of day hospitals, that will be for volume. And then third price factor that can play significantly, the campaigns to increase pay. We have Segur in France, and we're beginning to see specifically what its impact might be, but we're set to have the same type of measure in Belgium and Germany. In Belgium -- in Germany, it's going to be integrated in the tariffs. In Belgium, discussions are still open. As soon as we have a clearer vision in terms of margin -- absolute value of the margin, that shouldn't have any impact normally. I mean it's certainly won't be -- it could have an impact in terms of the margin rate, if it's a full pass-through. At CMD, we expect to have a clearer view, and we'll tell you what the impact of those flows of increase of care appropriations by states to increase salaries. We'll let you have that.

We now have another question.

[Interpreted] Two questions from my side. Could you give me an update on the health situation of the group, COVID cases, and we're already seeing positive impacts linked to vaccination? Second question concerns Berkley, is that kind of competitive transaction? Could you give us a brief update on the situation of the U.K. market by the control authorities regarding authorizations, price changes and levels? Still on Berkley, could you give us the cap rate at which the real estate was acquired?

[Interpreted] Thanks, Bruno. Well, I'll answer those 2. So on the health situation, as we speak, we see a quite significant reduction work after we -- the number of institutions, nursing homes that have at least 1 COVID case. Today, it's the order of 16% of the network, of which half have just one single case. So today, that demonstrates that we have a really good capability of limiting infection risk and about 8% of the network has 4 cases or more. So there's no further spread in our institution. Vaccination, it's soon to say, but we measure that day after day, week after week, we can, however, say that in those individuals who are COVID plus positive, the number of cases with acute respiratory syndromes, constantly decreasing. We're at 93% of people who are diagnosed of COVID positive amongst the elderly or vulnerable who are asymptomatic, and the share of symptomatics with respiratory difficulties is decreasing week after week. We're today at 7%, a very small proportion, and we expect that in all likelihood, that reflects the immunization and protection effect of vaccination, which, of course, doesn't delete the risk of infection, but gives more immunity to curb the serious forms. And we'll, of course, keep you informed of developments. Berkley, now this is an agreed transaction. We've been looking at the -- a one-to-one transaction. We're looking at the U.K. for a number of years. We wanted to start small by owning our real estates on new concepts, future concepts, not legacy concepts. The U.K. market, it's one of the 4 leading markets in terms of service to the elderly and dependence, 12 million people over 85 years, a growth estimated 3% every year doubling of the elderly over the next 20 years, market of renovation. There are great many concepts today that don't meet the standards or expectations of the elderly or their families, very strong demand in a segment of care homes, nursing facilities, access premium or high end. We sought to find the right partner in terms of management, recognized care quality, robust concepts that replicated all terms of geographic location. That's the case of Berkley. Today, it's an operation of over 400 beds, 6 institutions, 6 homes own that property, new constructions, 2013, 2 introduced in 2020 in the ramp-up phase, and we've acquired the whole setup that is operations management that will remain with us to operate and to develop Berkley and the property. There's only one that is rented. Valuation, we did at cap rate levels that are continental. And of course, it's on that basis that we'll operate going forward. We do not wish to enter a scheme in which we would commit for unreasonable periods with landlords who would preempt 3/4 of the margin. That's not our concept. We'll operate reasonably, an operation of about EUR 30 million and gradually build on this concept of high-end care homes, small format with very good price points and costs and occupancy levels and a price increase, which in the U.K. market is around 4% price impact per year allows us to achieve EBITDA margin, EBITDA and EBITDA with a valuation with continental cap rates, very accretive at group level. And in terms of regulation, forgive me, Bruno, there's no number of regulatory licenses, which have a capacity to open care homes without having to seek prior licenses to operation, of course, through all the constraints linked to urban planning permission. But next to Berkley, we have a pipe of projects that will support our growth. And furthermore, there's very strict regulational quality within independent body, CQC that I mentioned that every year rates the quality of service and customer feedback and Berkley is one of the best-rated players far and away on the U.K. market. So it's obviously, something that is a key performance factor over time. I didn't sufficiently underscore that it was a one-to-one transaction, that was not competitive.

We have a question from Patrick Jousseaume.

[Interpreted] Yes, can you hear me?

Yes, very well, please go ahead.

[Interpreted] We can hear you, loud and clear.

[Interpreted] So 2 questions from my side. Could you return to organic growth at Q4, which was particularly sustained, giving us some color by country and also the impact possible Segur or other impacts included in that organic growth? That's the first question. Second, real estate. So EUR 2.168 billion. If that EUR 2.168 billion includes the EUR 336 million of the deal announced at the end of last year?

[Interpreted] I'll maybe answer those questions first. So just to return more generally to the real estate transaction, yes, the investment of our partners is included in the JV because we retain control. The term JV is almost inappropriate. They have a significant part. It's a vehicle, fully managed, administered by Korian with a possibility for asset management. So they've entered in the form of a minority holding, gives them -- entitles them to minimum regular return or maximum return. So if by happenstance or extraordinary design, there was a very strong increase in real estate, we would retain the additional gains. It's just like receiving a minority in a JV or very often when we buy companies, we retain a minority share for years. It's the same type of operation. That's not quite the case for the other JVs. I'm thinking of that we set up in Netherlands, Aedifica, it's a legal structure that allows us to have a fully fledged JV. As in previous times, 50-50 each given the legal specificity of the entity, we only book 50% of the JV. Further questions? Oh, yes, Q4 growth. Well, Q4 growth, there are several factors. There's the Segur that accounts for 0.5 point, not very significant, but nevertheless as in the Q4, we had essentially 2 impacts. We had a volume effect in Italy where medical growth held up particularly well with an obvious catch-up in Qs 3 and 4. From Q2, we had a very good level, both in volume and price for medical segment France. So medical activities performed particularly well. The other factor is typically more strongly this year, finance transactions unfolded in Germany or unwound, where a number of negotiations that were taking place. Because in Germany, there was no limit between compensation and financing. The Germans ease their customary financing to meet the cost overruns and reduced activity. And those factors notably in Germany were booked at the end of the year, to a lesser extent in France. So there's a price effect of the financing and a price and volume effect for the medical portion.

From the English line Jules Bloch calling from JPMorgan.

Could you just comment on like the occupancy rate? Are you able to accept people back into your facilities already and do you think that once the vaccination is over that we accelerate? And second question on sort of real estate partnerships. Do you intend to do more partnerships like this in the future? And how much equity could you potentially relieve from such operations? And also, could you explain what you will use the proceeds for?

[Interpreted] I'm afraid, could you please repeat the second part of your question?

On the vaccination or...