Posted Sep 28, 2022, 7:59 PMUpdated on Sep 28, 2022 at 8:17 PM
Orpea continues to clean up internally. His accounts have been swept away. The group of private nursing homes has unveiled half-year results marked by massive asset write-downs, which plunge it into the red. At the end of June, it recorded a net loss of 269 million euros against 102 million net profit in the first half of 2021.
“The company has been severely affected by both the shortcomings and unethical behavior of its former leaders, by too rapid international and real estate development”, explains its new general manager Laurent Guillot in a press release. This has weakened the financial situation of Orpea and “the net result is thus strongly affected by the depreciation of assets”, continues the manager.
Receivables with related parties
The scandal caused by the book “Les Fossoyeurs” on the practices of the group’s French nursing homes reduced their occupancy rate by 5% between January and April 2022, before a gradual increase. Despite this decline in occupancy in France, half-year revenue of 2.3 billion euros increased by 11% over one year at the end of June (+6.4% excluding acquisitions).
Profitability suffered from inflation. But it is asset write-downs that will hold the market’s attention. These depreciations are “unrelated to the crisis experienced by the group in France”, underlines Orpea, in allusion to the scandal.
At the end of June, non-current charges were 251 million. Including only 20 million charges relating to the management of the crisis triggered by “Les Fossoyeurs”. Impairment of assets (186 million) related to intangible assets, 79 million to goodwill in Brazil (on Brazil Senior Living and on the group’s historical activities whose development prospects are slower than planned), and for 49 million on establishment authorization values. In addition, a depreciation of 58 million was recorded on receivables with related parties, mainly in Belgium. Doubtful debts which illustrate the indelicacy of employees discovered by the new team.
Transformation plan
Orpea is not at the end of its problems. He himself warns that other impairments are not excluded because “the accounts as of June 30, 2022 do not include the possible accounting consequences of the strategic review in progress, as well as the outcome of negotiations currently being conducted with historical partners. of the group “.
In addition, on 4.1 billion euros of financing (including bonds), Orpea has “covenants”, it must meet certain financial ratios every six months. However, the group warns that the operating margin rate for the second half of 2022 could well be lower than that of the first half, “which would require Orpea to approach the creditors concerned to renegotiate the impacted financial covenants”.
The company does not yet see the end of the tunnel and continues its transformation. The series of measures taken this summer, including greater autonomy for the directors of nursing homes, and the renewal of its management was “a first step which will be followed by a transformation plan presented in the fall”, promises Laurent Guillot.
