Clariane : Shareholders' meeting notice - General Meeting on June 10, 2024

Shareholders' meeting notice

Combined General Meeting

Monday, June 10, 2024 at 10:00 am

Salle Apostrophe,

83 avenue Marceau,

75016 Paris

CONTACT US

By post/e-mail

Clariane

Secrétariat Général Groupe

21-25, rue Balzac - 75008 Paris

[e-mail]

Uptevia General Meetings Department

Uptevia

Service Assemblées générales

90 - 110 Esplanade du Général de Gaulle

92931 Paris La Défense Cedex

On our website

You can find all the documents relating to the General Meeting (mail-in or proxy voting form, 2023 Universal Registration Document, prior notice of meeting, Statutory Auditors' reports, etc.) on our website at www.clariane.com, in the "Investors" section under "Shareholders", "General meetings" and then "2024".

Contents

Message from Chairman of the Board of Directors � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 2

Message from Chief Executive Officer � � � � � � � � � 3

1

Summary of the Group Clariane's activity � � � � � � 5

2

Composition of the governance bodies � � � � � � � 17

3

Agenda of the Combined General Meeting � � � 19

4

Draft resolutions � � � � � � � � � � � � � � � � � � � � � � � � � � � � �20

5

Board of Directors' report

on the draft resolutions � � � � � � � � � � � � � � � � � � � � � � 27

6

How to participate in the General Meeting?� � �38

7

Request for documents � � � � � � � � � � � � � � � � � � � � � �45

8

E-convening option form � � � � � � � � � � � � � � � � � � � �47

- Shareholders' meeting notice

1

• MESSAGE

Jean-Pierre

Duprieu

Chairman of the

Board of Directors

In 2023,

the Board

of Directors remained highly mobilised

Dear Shareholders,

In 2023, the Board of Directors, whose commitment to your Company I would like to salute, remained highly mobilised in monitoring the implementation of Clariane's strategy by the Chief Executive Officer and her teams at operational level, and in analysing and promptly resolving the sudden deterioration of Clariane's access to financing markets in the third quarter of the year.

On the governance front, 2023 was marked by the creation of the Mission Committee, whose members were appointed by the Board of Directors on the recommendation of the Chief Executive Officer, and which is tasked with overseeing the implementation of Clariane's mission.

As you decided at the 2023 General Meeting, the mission has become the Clariane Group's compass and our governance has been adapted to it.

In record time, Clariane's management achieved a tour de force of establishing not only Clariane's purpose, but also its social and environmental commitments and the Mission Committee.

In 2023, the Board also pressed ahead with its in-depth review of a number of key challenges for the Group, including quality of care indicators, cybersecurity strategy and the Group's financial position.

Following the sudden deterioration of Clariane's access to financing, the Board of Directors, at its meeting of

13 November 2023, adopted a four-part €1.5 billion plan to strengthen the Group's financial structure and restore access to financing. Two of the four components have already been completed.

At the General Meeting of 26 March 2024, you overwhelmingly approved the third component of this plan, namely a capital increase with preferential subscription rights aimed at raising

a gross amount of €300 million. This capital increase, to which all shareholders may subscribe, is an essential component of the Company's refinancing plan as it will strengthen Clariane's equity.

The Board is confident in the ability of the Chief Executive Officer and her teams to successfully implement the plan to strengthen Clariane's financial structure, while maintaining the focus on operational performance.

Thank you for your trust and loyalty.

2 Shareholders' meeting notice -

• MESSAGE

Sophie

Boissard

Chief Executive Officer

Trust is key in our business

Dear Shareholders,

2023 was in many ways a paradoxical year for Clariane, characterised both by a very solid operating performance and, from the third quarter, by the emerging crisis in access to financing. To overcome this obstacle, we launched a plan on 14 November to strengthen our equity and reduce our financial leverage.

2023 - A year of resilience

2023 was undeniably testament to the resilience of our business in an environment marked by a spike in inflation, particularly in Germany.

We are enjoying dynamic growth across all businesses and geographies. Our specialised nursing homes are returning to pre-Covid occupancy levels. Our healthcare activities are benefiting from strong growth in outpatient care. And our home care services continue to grow steadily.

I would like to pay tribute to the remarkable commitment of the

60,000 professionals of the Clariane community, who cared for around 900,000 patients and residents in our facilities or at home in 2023. I am delighted with the regular improvement in all our quality indicators, but above all

the Net Promoter Score (NPS), which reached an unprecedented average of +44 in 2023 - a stellar achievement.

We are also ahead of schedule in implementing the various environmental, social and governance commitments we made in 2019.

This is particularly true for quality, skills development and employee health and safety at work, as well as for the reduction in our carbon footprint, which is down more than 30%

since 2019.

More than ever, the adoption of purpose-driven company status, which you approved by a very large majority at the 2023 General Meeting, is giving meaning to our Group and is forming the cornerstone of our strategy.

The commitment of Clariane's community of professionals has been remarkable

- Shareholders' meeting notice

3

• MESSAGE

Third quarter of 2023 - Sudden deterioration in access to financing

Since 2020, our industry has been confronted by an unprecedented series of events, from the Covid pandemic, of course, to the sharp rise in inflation and interest rates from 2022 onwards - two particularly sensitive factors in a regulated industry such as ours - and lastly, the knock-on effects of the near bankruptcy and subsequent safeguard procedure experienced by an industry player.

In the third quarter of 2023, this resulted in a sudden deterioration in Clariane's access to financing, which led the Group to announce a €1.5 billion plan to strengthen its financial structure on

14 November 2023. The first two components - the creation of two real estate partnerships and the setting up of a real-estate bridge loan - had already been completed by December 2023. We are now focusing on the two outstanding components, namely the €300 million capital increase

and the implementation of an asset disposal plan, on which we have already made substantial progress.

At the General Meeting on

26 March 2024, you overwhelmingly approved the proposed €300 million capital increase with preferential subscription rights. Predica,

our largest shareholder, has demonstrated its long-term commitment to the Company by undertaking to subscribe in the amount of €200 million.

This plan will help put us back on a path of long-term development that creates value for all stakeholders, especially our shareholders.

2024 will be a landmark year for the transformation and renewal of your Group around our three main businesses on a geographical platform recentred on a smaller number of countries. And the entire Clariane community remains as committed as ever to our common purpose: "Take care of each person's humanity in times of vulnerability".

The entire Clariane community remains committed to our common purpose: "Take care of each person's humanity in times of vulnerability"

4 Shareholders' meeting notice -

1	Summary of the Group
Clariane's activity

Significant events in 2023

At 31 December 2023, the network, all activities combined, consisted of 1,327 care homes and nursing facilities compared to 1,195 in 2022, representing almost 92,000 beds versus around 88,000 in 2022. In 2023, the Group's 60,000 healthcare professionals cared for 900,000 residents and patients in the seven European countries in which it operated.

The Long-Term Care segment, which accounted for 61.7% of the Group's activity in 2023 compared to 64% in 2022, generated revenue of €3,116 million, up from €2,922 million in the previous year, representing reported growth of 6.7% and organic growth of 8.0%.

This growth reflects price adjustments in response to cost inflation, particularly in Germany, France and Belgium, and a further rise business volumes, especially in the mature network with the occupancy rate averaging 88.5% compared to 86.6% in 2022 on the back of a gradual return to normal operating conditions and the ramp-up of newly introduced capacity. In December 2023, the occupancy rate in this segment was 89.4%.

The Specialized Care segment generated revenue of €1,305 million in 2023, 25.9% of the Group total, equating to reported growth of 17.4% and organic growth of 6.4%. In France (under the Inicea brand), Italy and Spain, the Group's healthcare facilities cared for more than 700,000 patients during the period.

Activity for the Specialized Care segment breaks down as follows:

• medical and rehabilitation care: new technical platforms came into service and new areas of specialist care were developed, particularly in oncology and neurology;

ESG and social performance

The 2023 financial year was characterised by a solid ESG performance. The Group has achieved or exceeded all targets set in 2019 as part of its first 2019-2023 ESG roadmap, which was strengthened in 2023 by the adoption of purpose-driven company status and the establishment of a Mission Committee.

• As regards care provided to residents and patients, the
  Group rolled out its Positive Care approach (non-drug therapies and related training) across all care homes that have been part of the Group for more than two years
  (compared to 72% in 2019).

• mental health: the integration of Grupo 5 in Spain strengthened the Group's position in the mental healthcare sector;
• revenue from outpatient activities (consultations and partial hospitalisation) rose by more than 25% (11% on an organic basis) across this segment.

Revenue in the Community Care segment, whose brands include Petits-Fils and Ages & Vie, amounted to €626 million in 2023, representing 12.4% of the Group total and growth of 25.3% (15.4% on an organic basis). Over the period as a whole, some 80,000 patients used Clariane's services in this segment.

This momentum reflects:

• ongoing development of the shared living solutions offering, with 38 new Ages & Vie residences;
• further strong growth in the homecare network, with
  20 new Petits-Fils branches.

In addition, on 14 November 2023, Clariane announced a plan to secure and accelerate its debt reduction and benefit from a financial structure adapted to a more challenging economic environment due to inflation, rising interest rates and tighter debt and real estate markets, and ultimately to provide room for manoeuvre in the execution of its strategy. The four components of this plan are described in more detail in section 5.3.2 of the 2023 Universal Registration Document.

• As regards implementing consistent quality standards across all of its networks, in 2023 the Group completed the ISO 9001 certification programme it had begun in 2020: 100% of facilities that were part of the Group's scope in 2019 had ISO 9001 certification from independent third-party organisations (e.g., AFNOR Certification in France, DNV in Italy and Spain, Dekra in Germany) at the end of the year versus 8% in 2019.
• As regards employee health and safety, the accident frequency rate was reduced significantly to 37, compared to 52 in 2019.

- Shareholders' meeting notice

5

1	Summary of the Group Clariane's activity
Analysis of revenue

• As regards skills development, 7,274 staff members took part in qualifying training in 2023, i.e., some 12% of the Group's workforce compared to 4% in 2019.
• Team stability continued to improve, with an average length of service of 7.5 years in 2023 versus 6.7 years in 2019.
• The residents, patients and families NPS, measured by an independent third-party organisation based on the responses of more than 93,000 people, was 44, up 8 points compared to 2022, with increases in all of our business areas and 10 points higher than the Group's main comparable peers in the same geographies as measured by the same independent third-party organisation.

During the period, the Group also continued to work on the quality of its dialogue with residents and families and with the Company's Mission Committee, which met three times in 2023, with the following results:

• mediation arrangements in place in all countries in which the Group operates;
• Stakeholder Councils established in five countries and in the process of being set up in Spain;
• forums for dialogue with residents, patients and families in 97% of sites (Social Life Committee and User Relations Commission in France, equivalent forums in other countries).

As regards the environment, in 2023, the Group significantly reduced its environmental impact by continuing to adjust practices and refurbish real estate properties in order to emit less greenhouse gas and consume fewer resources.

Carbon intensity fell by 36% between 2019 and 2023. Clariane reaffirmed its commitment to the environment by submitting carbon emission reduction targets aligned with the Paris Agreements to the Science Based Targets initiative (SBTi);

• the improvement in facilities' energy efficiency is contributing to the Group's pathway for reducing scope carbon emissions, in line with the targets submitted to the SBTi:
• • energy consumption (kWh) down 14% versus 2021;
  • energy intensity (kWh/sq.m.) down 16% versus 2021;
  • significant reduction in residual waste generated by our business activities (down 16% versus 2019) due to improved waste sorting in facilities and the introduction of new waste collection and recovery methods in certain countries (e.g., biowaste recovery in France);
• 100% of real estate plans submitted to the Investment
  Committee comply with HQE standards or equivalent.

In early 2024, Clariane received Top Employer Europe 2024 certification from the Top Employers Institute, becoming the first group in the healthcare and nursing industry to achieve European level certification. This recognises the Clariane Group's commitment to employees' working conditions and career development. Five of the Group's countries also obtained Top Employer certification. In Germany, Clariane obtained certification for the fourth consecutive year, in France for the third, in Belgium and Italy for the second and in the United Kingdom for the first time.

Analysis of revenue

ANALYSIS OF REVENUE

					United Kingdom		Spain
5.6%			5.6%
					Italy
12.1%				France
								44.4%
Benelux(1)
14.8%
								Germany
								23.1%
(1) Including the Netherlands.

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Summary of the Group Clariane's activity	1
Analysis of revenue

	Group	France
In millions of euros	2023	2022	2023	2022
Revenue	5,047.5	4,534.1	2,243.0	2,080.9
EBITDAR excl. IFRS 16	1,126.8	1,090.7	557.2	544.6
Margin (as a % of revenue)	22.3%	24.1%	24.8%	26.2%

						Spain and
Germany	Benelux(a)	Italy	United
Kingdom
2023	2022	2023	2022	2023	2022	2023	2022
1,166.1	1,082.0	747.8	667.0	609.4	559.0	281.2	145.2
220.4	253.9	167.4	142.0	129.3	117.2	52.5	32.9
18.9%	23.5%	22.4%	21.3%	21.2%	21.0%	18.7%	22.7%

1. Including the Netherlands.

Revenue in 2023 totalled €5,047.5 million, representing growth of 11.3% on a reported basis and 8.4% like for like.

Reported revenue growth was supported by:

• growth in business volumes, which had a net positive €134 million impact (higher occupancy rate in mature facilities, additional capacity coming onstream), with €171 million of additional revenue more than offsetting the non-recurrence of compensation payments, which had a negative impact of €38 million compared to 2022;
• price increases had a positive €243 million impact, particularly in France, Germany and Belgium;
• changes in scope had a net positive €137 million impact resulting mainly from the acquisition of Grupo 5 in Spain, partly offset by disposals (Germany and France) and the closure of facilities and networks, particularly in Belgium
  (Brussels) and Germany.

EBITDAR excluding IFRS16 was €1,127 million in 2023, versus €1,091 million in 2022, representing reported growth of 3.3%.

EBITDAR in France amounted to €557 million in 2023, versus €545 million in 2022. Amid high cost inflation only partly offset by higher prices and a decrease in the contribution of real estate activities, the EBITDAR margin fell 140 basis points in 2023 compared to 2022.

EBITDAR in Germany amounted to €220 million in 2023, versus €254 million in 2022, pushing down the EBITDAR margin by 460 basis points. Accordingly, the Group is continuing to refocus its network in Germany. Between 2023 and 2024, the Group will discontinue operations at 11 loss-making facilities, helping to restore profitability.

In the Benelux region, given the limited impact of cost inflation, EBITDAR came out at €167 million in 2023, compared to €142 million in 2022, and the EBITDAR margin increased by 110 basis points.

In Italy, taking into account the limited impact of cost inflation, EBITDAR totalled €129 million in 2023, versus €117 million in 2022, and the EBITDAR margin increased by 20 basis points.

In Spain and United Kingdom region, EBITDAR amounted to €52.5 million in 2023, compared to €33 million in 2022. The change in the business mix resulting from the integration of Grupo 5 weighed on the EBITDAR margin, which contracted by 400 basis points.

- Shareholders' meeting notice

7

1	Summary of the Group Clariane's activity
Review of consolidated results and financial position at 31 December 2023

Review of consolidated results and financial position at 31 December 2023

Consolidated results

The key financial indicators Clariane uses to monitor its performance exclude IFRS 16.

Simplified consolidated income statement

EBITDAR is Clariane's main indicator for measuring operating performance independently of its real estate strategy. It is calculated as operating income before

lease expenses not eligible for accounting under IFRS 16, depreciation, amortisation, impairment and provisions, and other operating income and expenses.

EBITDA corresponds to EBITDAR after lease expenses, reflecting the performance of the Group's real estate strategy.

	2023	IFRS 16	2023	2022	IFRS 16	2022	Change
	incl.	incl.	2023 vs.
	excl. IFRS 16	adjustments	IFRS 16	excl. IFRS 16	adjustments	IFRS 16	2022
Revenue and other income	5,047.5	-	5,047.5	4,534.1	-	4,534.1	11.3%
EBITDAR	1,126.8	(31.1)	1,095.7	1,090.7	(18.4)	1,072.3	3.3%
as a % of revenue	22.3%	-	21.7%	24.1%	-	23.6%	- 180 bps
External rents	(513.2)	438.8	(74.4)	(483.5)	414.5	(69.0)	6.1%
EBITDA	613.6	407.6	1,021.2	607.1	396.1	1,003.2	1.1%
as a % of revenue	12.2%	-	20.2%	13.4%	-	22.1%	- 120 bps
Operating income	141.6	21.6	163.2	239.5	33.0	272.5	-40.9%
Net financial expense	(156.2)	(83.1)	(239.3)	(144.2)	(70.4)	(214.6)	8.3%
PROFIT (LOSS) BEFORE TAX	(14.6)	(61.6)	(76.2)	95.4	(37.4)	57.9	-115.3%
ATTRIBUTABLE NET PROFIT/	(63.2)	(42.0)	(105.2)	52.0	(30.0)	22.1	-226.0%
(LOSS)

EBITDA excluding IFRS16 amounted to €614 million versus €607 million in 2022, equating to reported growth of 1.1%. This performance reflects resilient margins despite persistently high inflation in 2023, in all regions except Germany where margins fell significantly due to particularly tough industry conditions and delays implementing the new pricing framework intended to offset inflation.

The increase in EBITDA was driven by the positive impact of:

• higher business levels (positive €68 million impact);
• higher prices (positive €243 million impact);
• the net impact of changes in scope (positive €9 million impact).

These positive effects more than offset the negative impact of:

• a decrease in compensation payments for loss of business
  (negative €38 million impact);
• cost inflation, net of subsidies (negative €269 million impact);
• a decrease in the contribution of real estate activities
  (negative €7 million impact).

As a result, EBITDA margin came out at 12.2% in 2023, compared to 13.4% in 2022.

Two-thirds of the decrease in the EBITDA margin was attributable to the specific situation in Germany.

The Group made a €49 million net loss from continuing operations in 2023, versus net profit of €67 million in 2022.

The €116 million decrease in this item was mainly due to the following factors:

• a €15 million increase in depreciation, amortisation, impairment and provisions from €292 million in 2022 to €307 million in 2023, chiefly attributable to the opening of new facilities;
• a €12 million increase in financial expense from €144 million in 2022 to €156 million in 2023, with the impact of higher interest rates only partly offset by the positive effect of unwinding the Group's hedging positions;
• an €89 million increase in non-recurring expense to €165 million in 2023 from €76 million in the prior year, including €60 million in impairment of assets held for sale (mainly in the United Kingdom and the Netherlands), as well as around €30 million of restructuring and reorganisation costs in Germany and Belgium.

8 Shareholders' meeting notice -