Opgestart begin 2005 is Senior Living Group door een intensieve buy-and-buildstrategie in een versnipperde markt uitgegroeid tot één van de marktleiders binnen de commerciële ouderenvoorzieningen. Doorheen de afgelopen 10 jaar is niet alleen het overnameproces, maar ook het integratiemodel verder geëvolueerd tot een geoliede machine. CFO Dominiek Beelen gunt U een inside van hoe Senior Living Group zich doorheen deze jaren heeft ontwikkeld tot een mature en solide onderneming.

1. BELGIUM’S SPECIALIST IN AGING
WELL
M&A story 2005 - 2016
08/01/2016

2. 2
Agenda
• Facts & figures
• M&A path
• Acquisition and integration process
• Organizational evolutions
• Evaluation past 10 years

3. 3
Senior Living Group
• Dominiek Beelen : CFO and administrator since
01/01/2006
• Belgian private company (SA) founded in 2004 by
Waterland Private Equity Fund, acquired by Medica
09/2013 and merged with Korian SA 04/2014
• Mission is to take a leading role in the elderly care
market as well as in volume as in quality.

4. 4
SLG: Facts and Figures
• Second largest NH operator in BE
– Facilities: 56
o Flanders (36), Wallonia (10), BRU (9), DG (1)
– Current capacity (active + licenses) :
o Beds in NH: ca 6.530 (active + licences)
o Assisted living : 610
– Beds in exploitation YE 2015 : 6.545
– Work force 2015 avg : ca 2620 FTE
– Turnover 2015 (BEGAAP) : 220,5 Mio €

5. 5
SLG: Facts and Figures
WZC Service flats/AW WZC met SFL/AW Greenfield
9
Brussels
• Geographical presence

6. 6
Snapshot market elderly care
• Very fragmented market  3 largest commercial
players solely 15% of commercial market (including part of
charity market)
• Nursing homes
– N° of beds: 132.538 (2011)
– N° of NH: 1.552 -> avg 85 beds/NH
– Market shares :
o Public 30%,
o charity 36%,
o commercial 34%
• Assisted Living
• N° of units : 22.000
• Market shares :
o Public 40%,
o charity 31%,
o commercial 29%

7. 7
SLG: Growth strategy
• Organic growth (approx 20%) :
– Extensions to existing homes
– Refurbishments of existing homes
– Management of newly built homes, preferably in partnership with a real estate player
– Additional services such as (adult) day care, short stay, service flats
• Acquisitions (approx 80%) :
– Large privately owned homes
– (Real estate) and operation
– High quality housing, services and care
– Only regulated nursing homes
• Cooperation public & social profit (1 project to be realized april 2016)
– Concession of services
– Concession of Public Works (DBFMO)

8. 8
SLG: Evolution
• Exponential growth
4
8
17
22
26 27
42
45
47 48
56
0
10
20
30
40
50
60
N° of facilities
18.3
27.3
71.7
91
112.5
120.7
166.1
182.6
199.8
207.3
220.5
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F
Turnover Mio €
8,2% FY11-FY15F CAGR

9. 9
Snapshot acquisition parameters
• Average scale individual targets
– 100 residents
– Revenues : 12 mio €
– FTE : 40 to 45
o 67% care staff
o 33% others
– Accounting/financial follow-up externalized
• Staff :
– Social committed – loyal staff
– No (material) mgt overhead
o Owners often operationally involved
• Strongly regulated sector (federal >< regional) :
– Care financing a.o. based on minimal staffing
– Yearly inspections
•  synergies mainly purchasing cycle + operational excellence

10. 10
Findings throughout M&A phase
• Elderly care market is still in professionalisation modus
• 1st consolidation of the commercial market segment is
realized by acquisition of mainly stand-alone nursing
homes
 No major issues related to a.o.
o double mgt functions
o Change management / integration processes
• 2nd consolidation flow will appear :
– Consolidation of commercial “groups”
– PPP-projects
• How will the relatively new commercial organizations react
?

11. 11
Financing structure : evolved by leverage ratio
+ strategical decision related to real estate
• First steps in the market financed through secured mortgage from real
estate previous add-on
• Growth plans >< leverage ratio
• End 2006 first Sale and Leaseback structure in elderly care market
– Triple net LT lease 27 years
– BEGAAP : off balance leasing
• Since 2007 : “Asset light growth”
• 2014 (after merger with Korian) :
– Discussions about off balance character  IFRS
– Alternative LT lease structure
• 2016 : Keep a minimum of real estate in possession ?
– Alternatives : bonds … ?

12. 12
Financial structuring new add-ons :
• Stand-alone projects mostly real estate + operations :
– If target holds real estate and operations in 1 entity : 2
possibilities for S&L-back :
o Partial split of the company into an immoco and opco, after 1 year sale of
the immoco as share deal
o Alternative : sale of real estate as asset deal (subject to registration
duties – 10% to 12,5%)
– In Flanders most common structure =
o Real estate company in a limited liability company
o Operations in a not for profit organisation with a lease agreement with
immoco
• Larger groups : probably operations (real estate already
externalized)
o Quid valuation of not for profit organisations ?

13. 13
SLG: Acquisition process
Operational and financial integration
4
Preliminary due diligence to
perform valuation analysis
1
Letter of Intent - comprehensive due
diligence checklist
2
Acquisition by SLG
3
 First question list with basic data
 Operational DD
 Finance and Tax DD
 Social/HR DD
 Building/technical/
environmental DD
 Real Estate valuation
 Legal DD
 Insurance DD
 Focus on quality services and
reputational aspects
 Migration to SLG suppliers
 Integration of KPI reporting
systems
 Integration of financial
reporting systems
 SPA negotiation
 Bank / Korian financing
 Closing

14. 14
Key elements integration process
• Prepare integration process during due diligence phase :
– Define priority list integration processes
– Quid key mgt ?
– Double functions ?
– (major) operational issues ?
• ASAP after closing date organize staff meeting
• Involve local (key) management in integration process
• Do not change just for change :
– Can current (IT) systems (temporary) provide necessary information to
mgt reporting dashboard
• Stick to company standards as much as possible

15. 15
Integration process SLG
Prior focus on dashboard KPI and financial control
Implement quick wins  gain confidence
Closing date Month X+1 Month X+2 Month X+3 Later
x x x x x
Financial integration
KPI-reforecasting procedure
Implement month close process
Switch to std accounting system
SLG --> add-on > june
Implement cash-flow forecasting
Switch to std payroll agency
Switch to SLG IT-cloud
Operational integration
Switch framework agreements
Implement monthly operational report
HR integration
Meet with local (key) management Implement performance appraisals
1 year after acquisition : satisfaction
survey
Remediation of major identified operational issues
Verify KATZ scale residents
SLG "causerie"
Implementation
internal control procedures
Switch to std accounting system
SLG --> add-on < june
Change of signing authority
Standard KPI-dashboard
Implement cash-pooling

16. 16
SLG : Organizational structure
SLG
WZC WZCWZC WZC WZCWZC
WZC WZCWZCWZC WZC WZCWZC
WZC WZC WZC WZC WZC WZCWZC
WZC WZC WZC WZC WZC
Decentralized model
Local unity = central
“guided authonomy”

17. 17
SLG: Management approach
• Every facility is unique:
– Distinct resident profile, culture and care approach
• Decentralized management
– By professionals with relevant experience
– Local operational responsibility
o HR, administration & invoicing, purchase and logistics
– Local budget responsibility BUT reporting standards:
o Monthly KPI & MIP reporting (financial and operational) +
monthly closing & reforecasting
o Monthly formal management meeting for each facility
– Decentralized, regional financial hubs

18. 18
SLG: Management approach
On group level
• Strategical decisions (financing, acquisitions, insurances, organisation)
• Check and guide operational / administrative / financial procedures
• Define financial reporting model and standardized templates
• Internal audits (operational / financial)
• Economies of scale (framework agreements suppliers / construction and
maintenance teams / operational best practices)
• Support of local management by:
– Marketing and Communications
– Human Resources
– Quality Management
– Real Estate Management and Construction
– ICT
– Hotel Services
– Regulatory and Legal Counselling
– Contacts public authorities

19. 19
SLG: Evolution overhead
• Evolution from a “private equity” overhead structure to a more
business continuity model :
• Overhead 2016 : approx 1,5% total number FTE’s
4
8
12 13
15
24
26
30
40
42
44
0
5
10
15
20
25
30
35
40
45
50
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
N° overhead

20. 20
SLG: Evolution organizational structure
• Evolved by “fall and rise”
• At first head-office financially focused
• New overhead functions through the years : hospitality, education,
Marketing, Quality, real estate development …
• For 2016 further development to a mature organization :
– Central HR manager, sales manager …
• 2005 – 2007 : lean organization with focus on local mgt
– CEO/CFO in direct contact with local mgt and local admin
– M&A analyst
– 1 operational mgr and 1 controller
• 2007 : first “explosion in M&A  organisation structure not prepared

21. 05-01-2009 - 21
SLG head-office structure
(2008 – 2011)
RVB
CEO
CFO
ICT
Op. Mngr
/HRM
Op. Mngr/
Techn Dir
Op. Mngr
Fin Analyst
Controller
BD Mngr
Off. Mngr
RVT
Op. Mngr
Controller

22. 22
SLG head-office structure (2011 – 2015)

23. 23Chapitre 01 –
SLG head office structure 2016 onwards
CEO
Business
Dévelopment
HR
CFO
Finances and
Adminstration
Real Estate COO
Corporate
M & A
Senior
Controller
Communication
HR
Assistant
KDV
Project
Mngt
Assistante
Procurement
Legal
Financial
Analysis
IT
SR Reg
controller
Account Controller Controller
Regular
Operations
OMA
OMA
OMA
OMA
OMA
OMA
Integration
Greenfield
Action Plan
Acquisition
Manager
Hotel Service
INAMI
Specialist
Regl / INAMI
Social
Admin
Dvlpt RH
Training
Assistant
Acc
Controller
Business
development
Marketing and
Communication
Sales
Quality
To be recruited

24. 24
Evolution of the finance department in the
decentralized philosophy
• Evolution from locally based accounting & admin to regional decentralized
financial hubs
• Local admin more marketing oriented

25. 25
Round-up – evaluation past 10 years
• Do not forget to prepare the own organisation for future growth
• Do not loose yourself into details after acquisition :
– Focus on the main KPI-drivers and try to get as soon as possible control
over the financial processes/situation
– Focus operationally on the main identified issues
• Pay enough attention to change management whilst holding on to
the companies business processes
• Do not forget to build a HR climate once the integration is mature
• Intensive acquisition pace  keep the company structure “clean”
by taking into account fiscal and legal requirements/limitations

26. Any questions ?