MediCare Servicegesellschaft mbH

Orpea S.A.

Puteaux

Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

contents

1. Presentation of the ORPEA Group and its markets

1.1 ORPEA's key figures

1.2 Presentation of the ORPEA Group

1.3 Key pillars of ORPEA's business model

1.4 A sector with high barriers to entry buoyed by growing demand

2. 2021 management report

2.1 2021 overview

2.2 Review of the consolidated financial statements for the year ended 31 December 2021

2.3 Review of the individual financial statements for the year ended 31 December 2021

2.4 Other financial information

25 Outlook and events after the reporting date

2.6 Five-year financial summary

3. Risk factors and internal control

3.1 Risk factors and risk management

3.2 Internal control

4. Non-Financial Statement

4.1 CSR at the heart of ORPEA's strategy

4.2 Acting within an ethical framework

4.3 Ensuring the well-being, care and safety of patients, residents and beneficiaries

4.4 Providing an attractive environment that promotes employee engagement and development

4.5 Limiting the Group's environmental footprint

4.6 Building sustainable and responsible partnerships

4.7 Being actively engaged in its communities

4.8 Duty of Care Plan

4.9 Non-financial performance assessment

4.10 GRI, SASB cross-reference tables

4.11 Methodological note

4.12 Report of one of the Statutory Auditors appointed as an independent third party on the consolidated non-financial statement

5. Corporate governance

5.1 Membership and operating procedures of the Board of Directors

5.2 Executive management

5.3 Remuneration and benefits awarded to corporate officers

5.4 Specific instructions for shareholders to participate at Annual General Meetings

5.5 Agreements entered into between a corporate officer and a subsidiary

5.6 Factors liable to have an impact in the event of a public offer

5.7 Appendices

5.8 Statutory Auditors' report on related-party agreements

6. Consolidated financial statements for the year ended 31 December 2021

6.1 Consolidated financial statements for the year ended 31 December 2021

6.2 Statutory Auditors' report on the consolidated financial statements

7. Individual financial statements for the year ended 31 December 2021

7.1 ORPEA SA financial statements for the year ended 31 December 2021

7.2 Statutory Auditors' report on the individual financial statements

8. Additional information

8.1 Key provisions of the Articles of Association

8.2 Share capital

8.3 Person responsible for the Universal Registration Document

8.4 Statutory Auditors

8.5 Publicly available documents

8.6 Cross-reference tables

2021 Universal Registration Document

Including the annual financial report

The ORPEA Group's mission which it has been til for more than 30 years, is to provide day-to-day support to people suffering from hd temporary or long-term loss - of physical or psychological independence, by providing them with personalised treatment and life pathways in suitable facilities: post-acute and rehabilitation hospitals, mental health hospitals, nursing homes, assisted-living facilities and home care.

2021 key figures

71,676 employees at 31 December 2021

€8.1bn in real estate assets

€ 4,299m in revenue

€1,070m in EBITDAR

23 host countries

983 facilities open and in operation

255,000 residents and patients

Our story

The first ORPEA Residences nursing home opens in France in 1989 in Charente-Maritime. The Group's medical and care expertise has since been extended to cover all forms of health vulnerabilities. ORPEA is now present in Europe, Latin America and China. The Group operates in 23 countries.

1989

• The ORPEA Group is founded by Dr Jean-Claude Marian.

• First ORPEA Résidences nursing home opens in Saujon.

1999

A post-acute care and rehabilitation offering and mental health hospitals are developed under the CLINEA brand.

2002

ORPEA is floated on Euronext Paris, in compartment A. This step enables ORPEA to accelerate its development.

2004

• ORPEA expands in Europe, focusing on countries facing the challenge of an ageing population and featuring a fragmented and insufficient supply of care for the elderly.

• ORPEA opens its first two facilities in Italy.

2005

Institut de Formation d'Aides-Soignants (I.F.A.S.) Domea is created in France.

2006

• European expansion continues.

• The Group opens its first facilities in Switzerland, Belgium and Spain.

2014

International expansion begins in German-speaking countries (Switzerland, Germany, Austria) as well as the Czech Republic, Poland, the Netherlands, the United Kingdom and Ireland.

2017

The Group establishes its first locations in Latin America (Brazil, Chile, Uruguay).

2019

The ORPEA Corporate Foundation is created in France.

2020

• ORPEA signs the United Nations Global Compact.

• The SeneCura Academy Lakeside campus, a training centre for nurses and physiotherapists, opens in Austria.

2021

• The Improving Tomorrow strategy is rolled out based on the Group's top 17 CSR commitments.

• The Group becomes No. 1 in Ireland, No. 1 in Spain (in post-acute care and mental health) and No. 2 in Switzerland thanks to six further acquisitions in these countries.

A word from the Chief Executive Officer

"The unprecedented commitment and professionalism of our staff on the ground reflect the quality of our support and care."

Last year we welcomed more than 255,000 residents or patients in our 983 facilities around the world. ORPEA achieved a solid performance in 2021 with growth of 9.6% (including 5.5% on an organic basis) as our businesses recovered, despite the challenge of dealing with the health crisis for a second consecutive year. These figures, which we owe to the unprecedented commitment and professionalism of our staff on the ground, reflect the quality of our support and care. Residents, patients and their families have put their trust in us, and I would like to thank them most sincerely.

This trust is as precious as it is fragile, as we have seen during the unprecedented crisis that our Group experienced in France in the first half of 2022.

Several investigations, including those carried out by the Group, have uncovered wrongdoing at headquarters, as well as misconduct at the highest level of the organisation. I apologise again to the residents, families, staff and anyone who was legitimately affected by these actions.

Fully acknowledging our responsibility, we immediately decided to be transparent with all our stakeholders. We very quickly put in place an action plan combining emergency measures with more structural decisions in order to increase efficiency, eliminate inadequacies, sanction individual errors and bring cases before the competent courts. We also reached an agreement with our banks on a secured syndicated loan of €1.7 billion, the first step in overhauling the Group's refinancing strategy.

Additionally, we have drawn the consequences of the crisis in terms of governance, with the appointment of new directors to the Board planned for our Annual General Meeting in July and the appointment of Laurent Guillot as Chief Executive Officer, effective 1 July 2022.

Furthermore, in a spirit of openness, this spring I launched a General Meeting of the Elderly in each of our nursing homes in France and invited all of our stakeholders to take part. A forum for free expression, it is designed to give voice to criticism and solutions with regard to our social and societal responsibility. The summary findings, which will be delivered in the autumn, will feed ORPEA's reflection on its internal improvement and transformation plan.

These initial measures are the beginning of a larger project, which is currently being developed and will be implemented in particular through:

We have decided to place this transformation under the leadership of Laurent Guillot, whose arrival will open up a new chapter in the Group's history, enabling it to take its rightful place in the evolving elderly and healthcare sector.

He will be able to leverage six solid fundamentals to achieve this. The first is that, however brutal, the crisis concerns nursing homes in France, i.e. less than a quarter of our business, without any major impact on the Group's other business lines and operating regions. It does not call into question the underpinnings of our business, which remain solid and explain its remarkable resilience. Even in France's nursing home segment, the recovery is under way after a slight downturn in the first three months of the year, and growth is particularly strong for hospitals.

The second fundamental is the staff who make up our teams on the ground and who support patients and residents on a daily basis. Because they are the holders of our expertise and know-how, they are our Group's most important asset. Despite the organisation's trials and tribulations and the difficulties staff face on a daily basis, their commitment remains intact. We will support them by reaffirming the meaning of their work, recreating conditions that foster their sense of pride in belonging and improving their training and day-to-day work conditions.

The third is our facilities, their locations, their operational quality and the excellent reputation they enjoy in all operating regions. We will empower facility directors to respond even better to the expectations of patients and residents.

The fourth fundamental is our recognised expertise and know-how, which are built on more than 30 years of experience in a wide variety of medical specialities and the product of ORPEAs role in driving change in its operating segments, especially through innovative care for residents and patients.

The fifth is the complementarity of our businesses, with a comprehensive mid- and long-term care offering for physical and mental conditions, as well as a diversified geographical footprint across more than 20 countries, enabling us to disseminate best practices across borders.

The last fundamental is no less essential, as it relates to the very nature of our business. I strongly believe that the right balance can and must be found between well-being and human factors, on the one hand, and the effective management of the Group's facilities on the other. Generating profit and ensuring the well-being of patients, residents and staff are not mutually exclusive. First and foremost, we have a mission. Ours is one of the most noble and ambitious: adding life to years, not just years to life.

It is by constantly revisiting the meaning of this mission and the sense of pride we derive from it that we will be able to move forward.

"It is by constantly revisiting the meaning of this mission and the sense of pride we derive from it that we will be able to move forward."

Helping to rise to the major challenges facing our sector

Since its inception in 1989, the Group has ensured that its offering responds in an innovative and sustainable way to changing expectations and needs in the face of major societal and environmental trends.

Three megatrends are profoundly transforming society and impacting our mission: the demographic transition, the climate emergency and digital acceleration. This is happening in conjunction with a sharp deterioration in mental health worldwide and a loss of attractiveness among our professions.

The demographic transition is affecting the whole world

By 2050, the number of people aged 80 and over is expected to triple compared with 2020, representing 4% of the world's population and 10% of the European population. The global population of people aged 60 and over will double by 2050 to reach 2.1 billion ^*.

With this trend, society is faced with a growing rate of neurodegenerative and systemic diseases that impair physical and psychosocial abilities, correlating with higher levels of dependency.

Our mission is to anticipate and design strategies to meet these challenges.

In 2021, our Group:

x3 Number of people aged 80 and over by 2050

^* Source: WHO.

32% of those aged 75 or over are internet users ^*

Adopting new technologies faster for everyone's benefit

Adopting new technologies faster means the Group can increase the number of value-added services designed to improve the well-being and standard of living of patients and residents as well as the working conditions of its employees.

In 2021, the Group:

The healthcare sector is first in line to face the climate emergency

Controlling the impact of our activities on the climate and the natural environment is a priority for our healthcare activities.

In order to rise to this challenge, in 2021 our Group:

5% reduction in energy consumption by 2023 ^**

^* Source: Insee, L'usage des technologies de I'information et de la communication par les ménages entre 2009 et 2019. Published on: 1 April 2020
^** See Chapter 4 of this document (section 4.5.1).

A sharp deterioration in mental health worldwide

The WHO estimates that 450 million people today suffer from mental illness and addiction to toxic substances. The Covid-19 pandemic has had a major impact on mental health worldwide with emerging cases of multiple addictions, concomitant illnesses and depression.

In 2021, our Group:

450 million people have a mental illness and substance addiction problem ^*

The attractiveness of the care professions

Our business largely hinges on teams working in direct contact with residents and patients. Their Jobs are considered difficult, yet are positively perceived among the general population. The pandemic over the last two years has helped to reinforce this positive image.

In 2021, the Group:

^* Source: WHO.

Maintaining independence:

a priority issue throughout Europe.

In all the countries surveyed, independence appears to be the key challenge in "ageing well".

In order to inform its thinking and actions, the Group conducted a vast survey in October and November 2021 of a sample of the population in France, Spain, the United Kingdom, Italy and Austria, as well as of residents in nursing homes in France.

Answers to the question:

"For you, ageing well means..."?

Remaining autonomous

50% of Europeans cite "remaining independent" as their main criterion

Being integrated into society

60 % of Europeans consider that those aged 80 and over are well integrated in our society.

Enhancing the attractiveness of jobs in elder care and support

72% of Europeans surveyed have a positive image of these professions and consider them to be useful and important for the future.

In total, 5,959 people were interviewed ^*.

^* Source: Odoxa survey on ageing well.

Solutions for accommodating and caring for vulnerable people:

an essential mission in the public interest

ORPEA plays a major role in addressing the many societal and environmental challenges.

Our mission puts us at the heart of an ecosystem that serves people.

Over the years, the Group has broadened its offering to form a continuum of care that complements public health policies and is deeply embedded in the communities where it operates. The connections we have established with public hospitals, the quality of the public/private partnerships developed by our teams in the field and the links our medical and paramedical teams have with various academic and research environments make ORPEA a recognised player in the European healthcare landscape.

We are strengthening our solutions around three key priorities: building specialised expertise at our facilities and in our teams, developing preventive and home care solutions and strengthening partnerships with public authorities to broaden geographic coverage for the care offering, including outpatient care and day and night hospitalisation.

In terms of specialised expertise, our post-acute and rehabilitation hospitals have become vital relays for hospitals and medicine, surgery and obstetrics [MCO] units. The amount of time patients stay in these facilities is steadily decreasing as increasingly specialised care is provided. This trend is also reflected in the High Dependency units of the Group's nursing homes.

In order to meet changing expectations and needs in terms of prevention and home care, we are designing therapeutic education programmes, both in post-acute care and rehabilitation and in mental health. Their objective is to transfer skills to patients so they can independently manage their conditions and treatment, preserve their remaining abilities and maintain or improve their quality of life.

All of our developments are modular and flexible and fit into patients' course of treatment. They also meet the expectations of public authorities, who are calling for the development of day (and night) hospitals for temporary care or alternatives to full-time hospitalisation.

These efforts meet three objectives:

This integrated strategy is part of all our activities: hospitals, development of assisted living facilities and home care services.

Thanks to our international presence and complementary offerings, we are developing a cross-disciplinary approach that accelerates the "cross-fertilisation" of programmes, systems and innovations.

255,000 residents and patients in the Group's facilities in 2021

"Lifestyles continue to evolve based on the major expectation that independence will be maintained for as long as possible."

More than 60,000 patients supported directly in their homes

We are developing our offering around the priority objectives of prevention, home care and highly modular solutions.

Business model

To face the demographic and health-related challenges of an ageing population and shifting trends in pathologies, ORPEA aims to provide a full range of suitable and diverse care solutions. They are tailored to meet the needs of every geography where the Group operates as well as uphold the essential values of care - well-being, ethics and safety.

By relying on the resources and stakeholders that make up the Group's business model, ORPEA endeavours to create value over the long term - for residents, patients and employees, as well as for society as a whole and for the environment.

The following diagram illustrates the ORPEA Group's business model.

In 2020, ORPEA defined its CSR objectives for 2023, the interim results for 2021 are presented in section 4.1.1.2.

A special focus on the Group's contribution to the United Nations Sustainable Development Goals is also presented in section 4.1.3.

RESOURCES AND STAKEHOLDERS

Human capital and stakeholders

• 71,676 employees in 23 countries

• 82% women in the workforce

• Organisational structure by geographical area

• Regular dialogue with all stakeholders, including residents and patients, family and friends, employee representatives, employees, supervisory authorities, local communities, financial partners, etc.

• A collaborative network of partners (suppliers, medical and paramedical partners, local authorities, start-ups, etc.) allowing for a highly agile response at any level

Intangible capital:

expertise

• More than 30 years of experience in providing for all kinds of dependencies, whether temporary or permanent

• Quality procedures: at least 200 criteria monitored on an ongoing basis

• Crisis management protocols (Covid-19, flu, heat waves, etc.)

• Major capacity for innovation through a Group-level Innovative Project Management Committee

Physical capital:

real estate and equipment

• €8.1 billion in real estate assets

• 983 facilities open and in operation

• Advanced cutting-edge technology, especially in psychiatric hospitals and post-acute and rehabilitation hospitals

• Buildings and equipment designed for specialised care in mental illness, rehabilitation, neurodegenerative diseases (protected unit) and for High Dependency patients

• Eco-designed buildings as part of the Group's Green Building Strategy (GBS)

Financial capital

• 2/3 of earnings reinvested in maintenance, refurbishment and development

• Long-term shareholders

• Robust balance sheet

ORPEA'S core business

Looking after people with impaired independent living skills due to physical or mental health conditions, by providing them with the essential care they require for their well-being while respecting their individuality

VALUE CREATION

Well-being and safety of residents and patients (see section 4.3)

• Support for 255,000 patients and residents per year at various stages of dependency, whether temporary or permanent

• Resident satisfaction survey: 90% satisfaction rate and 93% recommendation rate (see section 4.3.4.2)

Employee development and inclusion (see section 4.4)

• 14 training hours per employee per year

• 68% of senior management jobs held by women

• Over 8,000 employees on apprenticeships and work/study programmes

• Diverse age profile: 10% of employees are under 25 and 20% are over 55

Controlling the environmental footprint (see section 4.5)

• Carbon footprint measured at Group level on Scopes 1,2 & 3

• Structuring a carbon emissions reduction strategy

• Waste management and fighting food waste

• Responsible procurement policy (see section 4.6)

Community engagement in support of the regions

• Recruitment and local job creation nearly 16,000 new hires in 2021 across 23 countries

• Cooperation with all local public- and private-sector healthcare players and integration in care and treatment pathways

• Participation in scientific research: 15 scientific articles published in renowned journals (see section 4.7.3.1)

• Deep presence in local communities: local community outreach programmes (advice to caregivers, collaboration with local non-profits and local health professionals)

Responsible and sustainable partnerships

• Responsible procurement policy

• Open Innovation policy: 115 projects in progress at 31 December 2021

Financial and non-financial performance

• Revenue: up 37% in five years

• 17 commitments made as part of the Group's CSR policy through the Improving Tomorrow strategy

CSR at the heart of the Group's businesses

Our mission is to support vulnerable people in need of care on a daily basis. This mission is at the very heart of our business model and our actions. Social responsibility provides the basis for our strategy and values and has guided our organisation.

Our role becomes more important every day as vulnerabilities increase around the world.

Supporting dependent people in their daily lives

We have designed our roadmap based on the needs of our stakeholders. A human-centred, interconnected and thriving ecosystem that anchors our strategy and actions.

The priority issues for each of these areas have been defined in collaboration with all of the Group's subsidiaries and activities, so that every ORPEA stakeholder is represented in light of their business and development realities.

By naming its CSR strategy "Improving Tomorrow", the Group aims to go further in its structuring and adoption. This genuine company project aims to bring people together to build a more sustainable world that is in line with the planet's limits, that is constantly changing and that encourages improvement every day. In order to bring this strategy to life on a daily basis in all facilities, Improving Tomorrow is structured around five programmes which represent all the actions and stages necessary to achieve the quantified objectives that the Group has set itself in its CSR roadmap for 2023.

Our roadmap

In response to its main challenges and in order to pursue its CSR ambitions, the Group has already begun to reflect on its future roadmaps, in particular by adding commitments relating to catering or the reduction of carbon emissions aligned with the Paris Climate Agreement. These roadmaps will be rounded out in light of the Group's materiality analysis and the development of the improvement and transformation plan in 2022.

Well-being BE WELL

Career development BOOST!

Inclusion and diversity

Environmental impact GO GREEN

Building a better world

ACT BEYOND

⁽¹⁾ LEED: Leadership in Energy and Environmental Design, a North American standardisation system for buildings with high environmental quality.
⁽²⁾ BREEAM: Building Research Establishment Environmental Assessment Method, a British certification standard for analysing a building's environmental impact.
⁽³⁾ Global, multinational, national and regional suppliers.

The Group's achievements in 2021

2021 was the second consecutive year shaped by the heightened commitment of the teams in our facilities to preserve everyone's health while the Covid-19 pandemic continued to disrupt operations. Nevertheless, the Group continued its development, fuelled by the many initiatives carried out by the teams of all our facilities around the world.

Our medical expertise

Sharing medical expertise among our subsidiaries lifts the quality of the care and treatment offered:

In 2021, the Group:

• conducted 74 health education programmes [therapeutic education] for patients, residents and caregivers, both in mental health and in post-acute care and rehabilitation;

• organised the first International Psychiatry Seminar to bring together the community of doctors from the Group's mental health hospitals. This first edition brought together seven countries, 75 institutions and 14 speakers on the topic of "Psychiatry of the future and the future of psychiatry";

• rolled out Post Covid or Long Covid units in post-acute and rehabilitation hospitals (Germany, Austria, France);

• created the International Research department, which has shaped its roadmap around the following three focuses:

• supported 29 research projects in its various subsidiaries and promoted 79 papers in national and international conferences.

74 health education programmes

OUR ACHIEVEMENTS

ORPEA Excellence Awards Ceremony

In Clinical Ethics, in Research and in Care Innovation

The International Scientific and Ethics Council (ISEC) organises the annual ORPEA Excellence Awards to recognise the Group's teams that have proposed a project in the categories of "Research", "Clinical Ethics" and "Care Innovation".

A dynamic of participatory innovation was demonstrated in 2021 by the submission of 44 projects led by teams from 12 countries. This increasing figure testifies to the commitment of the employees in an environment still overshadowed by the health crisis.

The winners of the 7 ^th annual awards were:

"Research" category:

• ORPEA in Germany - "Virtual reality applications to reduce social isolation and loneliness".

"Clinical Ethics" category:

• ORPEA in China on behalf of Xianlin, International Care Centre, Nanjing: the facility's team remained fully committed to the residents by deciding to confine themselves to their places of employment for over 35 days.

"Care Innovation" category:

(2 ex-aequo)

• ORPEA in Poland for "Resident to Resident - let me help you around" (ORPEA Residence Antonina, Piaseczno).

• ORPEA in Spain for the intervention with visually impaired elderly people by means of adaptations in care homes (ORPEA Residence Malaga).

N.B.: The International Scientific and Ethics Council (ISEC) was established in 2015. It is composed of an independent faculty and of health professionals. Its mission is to analyse ethical cases referred to it by institutions and examine several different lines of thought.

5 work areas defined for the innovation roadmap

Participatory innovation and open innovation

Two effective levers for the benefit of residents, patients and employees.

• Five areas to work on defined for the innovation roadmap:

• 115 projects in progress as at 31 December 2021, resulting from the Group-wide participatory approach.

The Group also promotes open innovation, which involves the entire ecosystem, as closely as possible to the needs and expectations of users. This process is taken to the highest level through the CSR and Innovation Committee of the Board of Directors, which makes strategic decisions.

In 2021, the Innovation department used the design thinking method, involving over 60 employees from ten different countries to co-construct its roadmap and projects.

It has also deployed a new platform, E-Novea, on which innovations from the field are reported.

115 active projects as at 31 December 2021, the result of the collaborative process led at Group level

68% of senior positions are held by woman (up 2 percentage points since 2020)

Ethics

The Group strives to create and maintain an environment conducive to dissemination of and respect for ethical principles and internal control. In 2021, the Group:

^* Survey conducted in each institution with relevant health care staff, including nurses, care workers, doctors, psychologists, physiotherapists and administrative staff.

Human resources

Our human resources policy is based on several key concepts. Among these, listening to our teams, training them and developing their skills were the subject of major developments in 2021.

• Launch of the first major Group-wide employee engagement survey, involving over 71,000 employees. This survey, which will be repeated every two years, highlights our organisation's main strengths: motivation at work, a strong spirit of collaboration and career opportunities.

An overall employee engagement rate of 65% ^*

• Supporting all women in developing their skills and career paths is a priority focus given the very high percentage of women in the overall workforce [82%]. This is why we launched the "Be successful as a woman" programme last autumn. Amid the launch of this programme, ORPEA signed the United Nations Women Empowerment Principles [WEPs] charter the same year.

• In Austria, the teams launched the SeneCura campus, a large project bringing together:

71,676 employees

15,673 hired on permanent contracts

(up 14.6% vs. 2020)

41% of managers

(regional directors, facility directors and head nurses) are promoted from within

1,017,836 hours of training provided, equal to 14 hours of training per employee

^* Survey conducted by an external independent body among all of the Group's employees in the different geographical areas. Response rate of 52%.

Environment

2021 will have been defined by faster implementation of our environmental roadmap.

100% of facilities are inspected internally every six months and nearly 200 criteria are inspected on an ongoing basis.

Quality

Being of service to people is our business, which means being committed and engaged. This is why we place the management and control of our operations at the heart of our systems.

Our residents:

90% general satisfaction rate and 93% recommendation rate from residents and their families for nursing home activities ^*.

Our patients:

89% overall satisfaction rate for hospital activities and an overall recommendation rate of 94% ^**.

^* In nursing homes, these surveys are conducted annually by an independent external company. 61.000 families were contacted (by e-mail or post) in 2021. The return rate was 50%. i.e., over 30.600 questionnaires.
^** In hospitals, these surveys are carried out during the stay or upon the discharge of each patient. Response rate of 63% to a total of 81,062 questionnaires sent out.

Our residents:

90% general satisfaction rate and 93% recommendation rate from residents and their families for nursing home activities ^*.

Our patients:

89% overall satisfaction rate for hospital activities and an overall recommendation rate of 94% ^**.

"1,000 Smiles" Award

For the second year in a row, we invited teams from all our facilities worldwide to compete for the "1,000 Smiles" Award.

This award, launched in 2020, aims to reward the extra dedication of the teams during the periods marked by the pandemic and lockdowns, to unite and give smiles, optimism and energy to patients, residents and staff.

51 applications from 14 different countries were submitted for the second annual competition.

"International Cooking Award"

1 ^st ever international cooking awards held in 2021

Bringing together the seven winners of the national competitions held in France (two winners), Belgium, Italy, Germany (two winners) and Spain, this event is part of a long-standing partnership with DUCASSE Conseil. Dominique Lory, a three-starred chef, was the president of the jury for this one-day competition.

6 MAJOR ACQUISITIONS IN 2021

in Switzerland

in Spain

in Ireland

1. Presentation of the ORPEA Group and its markets

1.1 ORPEA's key figures

1.1.1 Revenue

1.1.2 Network expansion

1.1.3 Share data

1.2 Presentation of the ORPEA Group

1.2.1 History of the ORPEA Group's development

1.2.2 The ORPEA Group's core activities: a range of services covering the full spectrum of long-term care requirements

1.3 Key pillars of ORPEA's business model

1.3.1 Strong core values

1.3.2 Quality at the heart of development

1.3.3 An international, expansion-driven organisation

1.3.4 A diversified real estate strategy at the heart of development

1.4 A sector with high barriers to entry buoyed by growing demand

1.4.1 Demand underpinned by an ageing population and the increase in neurodegenerative illnesses

1.4.2 Overview of the sector

1.4.3 Growing need for medical services and facility specialisation, for both nursing homes and hospitals

1.4.4 A regulated and controlled sector of activity

1.4.5 A controlled pricing system

1 Presentation of the ORPEA Group and its markets

ORPEA's key figures

The ORPEA Group offers integrated long-term care services at home or in residential facilities for individuals with physical or mental health vulnerabilities. It meets the needs of residents and patients for better and easier access to care, as well as satisfying the requirements of local supervisory authorities. ORPEA currently offers a comprehensive range of services and additional care covering the full spectrum of patient ages and loss of independent living skills in:

At a time of accelerated population ageing worldwide, ORPEA has become a global leader in long-term care since its creation in 1989, with nearly 90,000 beds in operation at 31 December 2021, across 983 facilities in more than 20 countries.

1.1 ORPEA's key figures

1.1.1 REVENUE

Composition of geographical areas:

1.1.2 NETWORK EXPANSION

INTERNATIONAL NETWORK

(number of beds as a % of the total network)

63% of beds located outside France

(up 6 pts since 2017)

BEDS IN OPERATION BY GEOGRAPHICAL AREA OVER THE PAST TWO YEARS

⁽¹⁾ Number of beds installed, which may differ from the number of beds authorised under operating licences for the relevant countries and/or activities.

1.1.3 SHARE DATA

INDICES

HISTORICAL ANNUAL PERFORMANCE DATA

^* Volumes including Euronext and the alternative platforms (Chi-X, Turquoise and Bats).

1.2 Presentation of the ORPEA Group

1.2.1 HISTORY OF THE ORPEA GROUP'S DEVELOPMENT

1.2.2 THE ORPEA GROUP'S CORE ACTIVITIES: A RANGE OF SERVICES COVERING THE FULL SPECTRUM OF LONG-TERM CARE REQUIREMENTS

The ORPEA Group is built on the strength of its expertise in providing all forms of long-term care to the physically, intellectually, permanently and/ or temporarily impaired, irrespective of how advanced their conditions are. Its solutions cater for loss of independent living skills due to ageing and rehabilitation after a health event or as a result of a chronic illness.

ORPEA has developed a comprehensive offering of care solutions and services through four complementary activities:

1.2.2.1 NURSING HOMES FOR DEPENDENT ELDERLY PEOPLE

Diversified accommodation solutions

Long stays, short stays and day care

• Units specially designed to provide care for people with Alzheimer's disease and related disorders.

• Temporary stays for elderly people requiring long-term care and still living at home.

• Units for high dependency.

All in all, a nursing home offers every resident the following services:

• personalised support with their daily living requirements and an individual care programme meeting their needs and desires, forming the basis for all their accommodation and care;

• logistic and residential services such as accommodation, catering, laundry and room cleaning services, as well as various therapeutic workshops and daily individual and group activities.

Special care for patients with neurodegenerative conditions such as Alzheimer's

ORPEA`s facilities are equipped to look after the needs of residents with Alzheimer's and related conditions because they have living areas including units specially designed to provide appropriate care. Certain facilities are entirely dedicated to looking after patients with these illnesses.

The ORPEA Group gives the care requirements of this type of patient a great deal of consideration. ORPEAs Medical department has defined architectural principles for these units based on its knowledge of the issues associated with Azheimer's disease and the following guidelines:

A range of furniture has also been specially designed for these accommodation units based on an understanding of the illness and the risks it poses.

These protected units aim to maintain social relationships throughout a resident's stay and reduce all the environmental factors that may exacerbate their condition, to protect their safety and their well-being.

1.2.2.2 POST-ACUTE AND MENTAL HEALTH HOSPITALS

Post-acute care: areas of specialisation

The ORPEA Group's post-acute hospitals, which are located in France, Ireland, Switzerland, Italy, Germany, Poland, Portugal, Brazil and Austria, care for patients requiring functional rehabilitation or balanced treatment ' administered by medical or paramedical teams, and technical units specially i designed to cater for each area of specialisation.

The aim is to maximise the patient's chances of recovery and of regaining as much independence as possible, so they can prepare to return to their social and working life [the fundamental role of a rehabilitation hospital in Germany, for example] and move back home.

Geriatric rehabilitation

Oncogeriatrics

Geriatric care after a stroke

Treatment of neurodegenerative diseases

Prevention of the risk of loss of autonomy

Undernutrition

Health education for caregivers

Preparation for scheduled surgery and post-surgical recovery

Neurological rehabilitation

Stroke

Multiple sclerosis

Parkinson's disease

Neuropathic pain

Health education

Rehabilitation for chronic and metabolic diseases

Diabetes

Heart disease

Respiratory failure

Arterial disease leading to disabilities

Chronic ulcers

Obesity

Health education

Addictions

Prevention of frailty

Malnutrition

Therapeutic education

Co-morbidity

Orthopaedic rehabilitation

Post-trauma care

Post-operative care for osteoarthritis

Post-amputation care

Back diseases

Health education

Cardiological & respiratory rehabilitation

Long stays

Ventilated patients

Cancer follow-up care

Nutrition

Pain

Stomal therapy

Palliative care

Minimal consciousness and comatose states

Mental health care offering

The Group's mental health facilities in France, Switzerland, England, Germany, the Netherlands, Austria, Spain and Italy accommodate patients with mental health conditions.

PSYCHIATRIC SPECIALITIES

• Mood disorders:

depression, bipolar disorder

• Anxiety disorders:

obsessive compulsive behaviour, panic attacks, anxiety, social phobia

• Addictions

• Eating disorders

• Sleep disorders

• Post-traumatic stress disorder (PTSD)

• Burn-out

SPECIALISED UNITS

• For children, teenagers and young adults aged 5 to 25 (Austria, Spain and France)

• Special mother-child psychiatric rehabilitation units

(Austria and Germany)

• Geriatric psychiatry units

• Long-term mental health disorders requiring 24-hour protection and support (France, Netherlands, Italy)

• Perinatal psychiatry

1.2.2.3 HOME CARE SERVICES

To meet the expectations and needs of people with temporary or permanent loss of independent living skills owing to health conditions or disabilities, the Group offers complementary home care services in France, Ireland, Austria, Switzerland, Germany, the Netherlands and Brazil, and in-home hospitalisation services in Switzerland.

These services may be useful after a hospital stay or for the elderly, whether or not with loss of independent living skills, and they provide personalised support tailored to their home.

ORPEA offers a range of services for the elderly keen to carry on living at home:

REDUCED MOBILITY

• Care needs due to an accident in life

• Temporary disability

• Loss of independence

• Post-hospitalisation

Long-term mental health disorders

• Help with getting up

• Help with washing and dressing

• Preparing and helping with meals

• Help with taking medication

1.2.2.4 SENIOR ASSISTED-LIVING FACILITIES

In Belgium, Switzerland, Germany and France, the Group has also developed senior assisted-living facilities providing accommodation suitable for independent or semi-able-bodied elderly people who want to continue leading independent lives. These facilities do not provide medical care, but staff are on hand around the clock and can arrange all the services requested by residents, such as hairdressing, events and entertainment, meals, etc. The senior assisted-living facilities have common areas encouraging conviviality and an active social life.

Senior assisted-living facilities for those able to live independently

• Apartments for independent seniors.

• Additional services [housekeeping, activities and events, concierge], logistic assistance seven days a week and a rich social life with regular activities, while maintaining independence.

1.3 Key pillars of ORPEA's business model

1.3.1 STRONG CORE VALUES

Since its inception in 1989, the ORPEA Group has built its development on a strong culture and shared values. These values, which have been adopted and communicated to the teams through the Code of Conduct - Ethics and Corporate Social Responsibility, are the foundations that define ORPEA, linking all its employees and empowering them on the path to responsible and sustainable development, placing people at the heart of its identity and vocation.

- Professionalism

For all of the Group's teams, professionalism means combining solid professional skills with a strong sense of responsibility and a consistent focus on the quality of services provided.

This is done both individually, through the diligence and commitment demonstrated by each individual in their work, and collectively, through the implementation of effective procedures, our quality policies and our training policies.

- Compassion

The well-being of all patients and residents in the Group's facilities, and of all the people cared for at home by our teams, is our absolute priority. It involves providing quality care and accommodation, but also forging a trust-based relationship with vulnerable people and their families, whose care we are committed to. This relationship is founded on a daily commitment to positive treatment that is respectful, empathetic and always compassionate.

- Loyalty

We believe that loyalty is essential to maintaining trustworthy, healthy and sustainable relationships with all stakeholders involved in the long-term success of the Group.

This loyalty translates into honest, exemplary behaviour, discussions in good faith, and respect for our commitments to all stakeholders, from whom we expect the same.

- Humility

"Humans are imperfect, and dependent beings, who unceasingly aspire after something better and greater." This quote from the philosopher René Descartes echoes our own approach to our activities: since people are at the heart of the Group's work, it is essential to accept imperfections and with this knowledge, commit to a process of continuous improvement and respond swiftly and creatively to the challenges we face on a daily basis.

1.3.2 QUALITY AT THE HEART OF DEVELOPMENT

1.3.2.1 QUALITY POLICY

The ORPEA Group's quality-led approach has always been a fundamental part of the Group's business strategy, which is why it has implemented a proactive and exacting quality policy in all its facilities.

The ORPEA Group's quality policy is predicated on:

1.3.2.2 STRUCTURE OF THE QUALITY PROGRAMME

In order to safeguard the quality policy and ensure that it is implemented on a daily basis, a Quality department has been set up in every country where ORPEA operates (a quality manager has been appointed in locations that are not yet mature). The quality teams work in close collaboration with the Operations departments and the various departments (Medical, Catering, Maintenance, etc.) that support the facilities.

The Quality department's tasks are to:

In this way, the Quality department provides facilities with support on programme implementation, a solution for monitoring and controlling the measures taken, and methodological assistance with devising tools to help manage the programme consistently across the entire Group.

Quality indicators are monitored at facility level every month and sent to the Quality and Operations departments, helping to track the quality programme's continuous improvement process so that any potential risks can be detected and prevented.

The monitoring and tracking of Group facilities by the Quality department and Medical department help to provide a secure environment for residents, patients and employees and to control all aspects of accommodation, comfort, care and safety.

1.3.3 AN INTERNATIONAL, EXPANSION-DRIVEN ORGANISATION

1.3.3.1 AN ORGANISATION LEVERAGING CORPORATE OFFICES TO SUPPORT THE FACILITIES

To enable the facility directors to focus most of their energy on delivering care to residents and patients and managing their teams, support functions are centralised at headquarters.

Accordingly, the Group's organisation is underpinned by two main principles:

1.3.3.2 AN ORGANISATION GEARED FOR INTERNATIONAL EXPANSION

In order to establish an organisation suited to the Group's increasingly international profile, ORPEA began a major overhaul of its organisational structure in 2017.

ORPEA is structured around geographical areas, with Business Units running one or more countries.

Each of these units has its own internal management team and an administrative headquarters encompassing the full range of support functions (finance, legal, development, construction, quality, human resources, internal control, IT, etc.). The heads of each support function are in charge of deploying ORPEA standards throughout all Business Units within their scope.

The Business Units have a dedicated operational team and a quality manager with in-depth knowledge of the applicable local regulations and robust experience of the relevant economic, demographic and cultural issues. Support functions are limited according to needs, specific requirements (e.g., regulatory, linguistic, etc.) and the size of the country, and placed under the operational authority of the supranational organisation to foster convergence/consistency of practices, thereby securing business activities and facilitating oversight. The aim of this tri-tier structure is to strike the right balance between:

To manage the risks associated with this broader decentralisation, the Group's Audit, Risk and Compliance department is guiding all teams (Executive Management, Corporate Services and local teams) in identifying and managing risks.

1.3.4 A DIVERSIFIED REAL ESTATE STRATEGY AT THE HEART OF DEVELOPMENT

The ORPEA Group's real estate design teams, in close collaboration with the Medical and Operations departments, aim to design quality buildings that enable care professionals to carry out their work in a suitable and safe environment.

1.3.4.1 QUALITY BUILDINGS IN ATTRACTIVE LOCATIONS

ORPEA selects locations based on where they are geographically situated. Most of the Group's facilities are located in attractive surroundings with the aim of fostering close ties with families and referring doctors, as this is essential for a high standard of care.

The Group also pays particular attention to the interior and exterior architectural quality of its buildings. Many of the buildings were designed and developed by the Group. This means it can provide living and working environments that best meet the needs of its stakeholders and the latest quality standards.

The Group implements innovative designs and services in its buildings, including new technologies, all tailored to the usage needs and profiles of the residents. In this way, architectural design serves to enhance the satisfaction and well-being of residents and patients, as well as employees, by fostering the "Spirit of the Place" (embedding the design in its environment by taking into account local history and culture).

Furthermore, through its choices in building design and renovation, the Group contributes to the ecological transition. It complies with high environmental standards including ambitious trajectories for reducing its carbon footprint and energy consumption. As part of its CSR strategy, ORPEA aims to earn environmental certifications (i.e., Building Research Establishment Environmental Assessment Method (BREEAM) and Leadership in Energy and Environmental Design (LEED) certification) for all of its new constructions initiated in 2021.

1.3.4.2 STRATEGY OF REAL ESTATE OWNERSHIP

For many years, ORPEA's real estate strategy has been to retain ownership of a large proportion of its properties to:

At the end of 2021, the ownership rate stood at 46%, and ORPEA had €8.1 billion in real estate assets (including assets under construction) adjusted for the €347 million in assets held for sale. This represents an increase of €1.1 billion over 12 months.

All operating real estate assets are carried at fair value. Assets under construction are measured at the cost of construction and the land is measured at cost.

The robustness of the occupancy rates characterising the healthcare real estate assets attracts international financial investors, offering ORPEA the opportunity to optimise its sales of real estate assets.

Irrespective of the buyer, ORPEA's strategy is to secure attractive leasing and rent indexing terms and conditions on asset disposals in order to tightly control its rental costs over the long term.

1.4 A sector with high barriers to entry buoyed by growing demand

Faced with the challenges posed by the ageing of the global population and changing lifestyles (urbanisation, sedentary living), private operators of nursing homes and hospitals play a crucial role, complementing public action. In the majority of countries where ORPEA operates, the sector is governed by a strict regulatory framework that constitutes a real barrier to new market entrants.

1.4.1 DEMAND UNDERPINNED BY AN AGEING POPULATION AND THE INCREASE IN NEURODEGENERATIVE ILLNESSES

Medical advances and higher living standards have pushed up life expectancy in most of the world.

Between 2002 and 2020, life expectancy at birth continued to rise by 3.3 years on average in the European Union, representing an increase of around three months every year. According to the latest European Union surveys (Eurostat, May 2021), EU residents who reach the age of 65 now have a life expectancy of 83.2 (men) or 86.5 (women), which represents an increase of nearly one year since 2010: the population of over 80s is set to more than double by 2050, from 24 million in 2015 to 53.5 million by 2050. In Germany, as an example, the number of people aged 80 and over is expected to increase by almost 75% to more than 10 million by 2050 (source: World Bank).

At the same time, with the evolution of pathologies, characterised by the increase in the number of people affected by neurodegenerative diseases or chronic illnesses, the need for temporary or permanent accommodation solutions is unavoidable. In France, for example, the Jeandel-Guérin report (2021) highlighted a significant increase in the degree of dependence of people in EHPAD nursing homes.

As stated in the table below, all the countries in which ORPEA has established a presence are experiencing identical trends.

Source: World Bank database.

At the same time, according to World Health Organisation estimates, the number of people afflicted with neurodegenerative diseases is expected to increase from 47.5 million to 135 million by 2050. In the many countries facing this issue, a customised and specialised care offering is needed but is currently lacking in most countries where ORPEA is present.

1.4.2 OVERVIEW OF THE SECTOR

The long-term care sector has similar characteristics in all the European countries in which the Group operates:

ORPEAs market share remains below 5% in each country, and so it has ample scope for further expansion incoming years. The private commercial sector is still heavily fragmented across the board, and so a round of consolidation is likely, causing the share of independent operators to decline over the next few years.

In France, for example, the top five operators (Korian, ORPEA, Domus Vi, LNA Santé and Colisée Patrimoine) account for 55% of the private sector, which has 132,000 beds.

In Belgium, the four major national players (Senior Living Group and Senior Assist held by Korian, ORPEA, Armonea held by Colisée Patrimoine) account for only 35% of the private commercial sector.

In Germany, the ten groups with over 4,000 beds have a combined share of just 21% of the private commercial sector. As a result, around 275,000 beds, or over 30% of the sector's total capacity, are owned by small regional groups or independent operators.

In Spain, the top ten private-sector groups account for just 10% of the total number of nursing home beds.

In Switzerland, Poland and the Czech Republic, independents and small family groups with a few hundred beds still account for the vast majority of the private sector's capacity.

In the Netherlands, the private sector remains very small at just 4%, the top eight representing around 50% of the private sector.

1.4.3 GROWING NEED FOR MEDICAL SERVICES AND FACILITY SPECIALISATION, FOR BOTH NURSING HOMES AND HOSPITALS

1.4.3.1 GREATER MEDICAL NEEDS IN NURSING HOMES

Nursing home residents are increasingly vulnerable and dependent, an underlying trend evident across most European countries. For example, according to a December 2014 DREES study, the average age of residents entering an institution was 89, up from 82 in 1994. For this reason, the average stay is 18 to 24 months, compared with around 3 to 3.5 years 25 years ago, but these stays, whether temporary (in order to help caregivers) or permanent, require the capacity to accompany residents who are more dependent due to sensory, cognitive or psychological disabilities.

Nursing homes consequently require more extensive medical services, an on-site multidisciplinary nursing team, specialised units caring for residents with neurogenerative diseases such as Alzheimer's and also higher levels of safety and security.

1.4.3.2 INCREASED SPECIALISATION OF POST-ACUTE AND MENTAL HEALTH HOSPITALS

The reduced length of stays in medical, surgical and obstetrical facilities associated with the shift to outpatient care, means that post-acute hospitals are of paramount importance within health systems. Indeed, post-acute and rehabilitation hospitals offer complex rehabilitation treatments, provided by multidisciplinary medical, paramedical and social services teams, after patients undergo major operations. Post-acute facilities are becoming increasingly specialised (for example, in the musculoskeletal system, nervous system, respiratory system, cardiology or oncology) according to the pathologies treated.

At the same time, in many countries where ORPEA operates, changes in lifestyles are leading to increasingly prevalent psychological disorders, including both more well-known disorders [depression, bipolar disorder, schizophrenia, addictions, etc.] as well as more recently identified pathologies [sleep disorders, burnout, etc.]. Faced with the increase in these pathologies, private operators are providing a specialised care offering as a complement to public action.

1.4.4 A REGULATED AND CONTROLLED SECTOR OF ACTIVITY

Owing to the nature of its business activities, which involves running facilities for the elderly requiring long-term care, post-acute and rehabilitation hospitals and mental health facilities, the ORPEA Group operates in a closely supervised and highly regulated environment.

Over the past 30 years, the ORPEA Group has developed a keen understanding of this complex regulatory environment and acquired the expertise and put in place the requisite procedures to operate in it successfully, working closely with supervisory authorities on an ongoing basis. The Group regards this environment as an opportunity and as a strength since it favours experienced operators such as ORPEA and represents a major barrier to entry preventing newcomers from moving into its markets.

In France, Spain, Belgium. Italy, Switzerland, Austria and Poland, an administrative permit from regional or national supervisory authorities is required before any new healthcare facility or nursing home can be set up. converted or extended. The number of new permits issued in these countries is tightly controlled and restricted by the public authorities in an effort to ensure a decent standard of care and services and to keep spending under control.

The process of gaining a permit and the regulatory framework vary from country to country, or even from region to region within certain countries. As a result, it is crucial to have well-respected and experienced local teams on the ground with the requisite knowledge.

ORPEA has also expanded into other countries, including Germany, where no administrative permit is required in the strict sense of the term. Instead, the supervision of activities by the public authorities gives rise more indirectly to the definition of standards and checks by the authorities to ensure they are upheld.

In addition to administrative permits, strict operational, technical, construction, safety and environmental standards apply in the sector. Minimum nursing and non-nursing staff to residents and patients ratios must also be maintained. Compliance with all these standards is closely monitored in all European countries by various national or local supervisory authorities.

1.4.5 A CONTROLLED PRICING SYSTEM

Long-term care facilities' pricing is controlled across all European countries in a bid to keep public healthcare spending in check. Per diem rates have two main components:

Owing to its complexity, this pricing system, which varies from country to country and even from one region to another, represents another barrier to entry for newcomers.

France

The pricing system for nursing home facilities has three components:

The charges for post-acute and rehabilitation and psychiatric hospitals are set by the French national health insurance system, which pays a per diem rate for each patient cared for that covers the cost of all medical care, personal care, medicines and accommodation based on a two-bed room. Changes to this flat-rate charge covering all the related costs are regulated and controlled. In addition to the per diem rate paid by the French national health system, facilities may levy additional charges for residential services such as private rooms, television, telephone. Wifi, or other services. These additional charges are paid directly by patients, who may apply for reimbursement of all or part of the cost from their mutual health insurer. These charges may be changed freely.

Belgium

Nursing home charges have two components:

Italy

The pricing system is regional, with each region having complete autonomy. For example, the Marches region calculates the extent of each resident's care requirements and awards the facility a care services allowance. In other regions, the local health authority (ASL - Azienda Sanitaria Locale) gives the future resident a voucher granting access to an accredited facility depending on the availability of beds under the scheme.

Spain

Accommodation and care charges may be freely negotiated in Spain and are payable in full by residents.

In certain cases, nursing homes and the regional supervisory authorities enter into agreements primarily to reserve a certain number of beds for people with long-term care needs who have applied for assistance or full or partial coverage of the care. Under these agreements, charges are set in advance, and any changes have to be approved.

Switzerland

The medical care allowance covers around 30% of the per diem rate, which is based on the care requirement, and is covered by the national health insurance system or by private insurance. The remaining balance, which covers accommodation, services and care requirements, is paid for by the resident or their family, or in part by the canton if the resident cannot afford the full amount. This part of the fee may be changed freely.

Germany

Nursing home charges have three main components:

The charges for post-acute and rehabilitation hospitals and for psychiatric hospitals are based on per diem rates. They are agreed with the various health insurance and/or pension funds and they vary within a single facility based on a resident's conditions and insurance. Likewise, special charges apply for private-sector patients. Broadly speaking, the per diem charges covered by pension funds are higher than those paid for by the national health insurance system owing to the importance of getting people back to work.

Austria

Nursing home charges have three components:

Similarly to Germany, long-term care insurance covers a portion of the care costs based on a single national sliding scale linked to the resident's care requirements. In addition, if a resident does not have sufficient income, the payment may be covered by welfare benefits. Where this applies, the full per diem rate is charged to the state [Lander] authorities, which then recover the outstanding amount from the resident.

Every year, the state authorities set the amount by which charges may increase, usually indexed to consumer price inflation. Larger increases may be agreed, but this requires detailed justification.

Czech Republic

Nursing home charges have four main components:

Poland

There are two types of beds in Poland:

The cost of private so-called "commercial" beds is paid for in full by residents' families, while the cost of NFZ beds is partially covered by the public sector. The NFZ agreement provides for full or partial reimbursement of medical care costs.

Accommodation costs are borne by the patients or their families. The average per diem rate is thus covered by a combination of reimbursements from the NFZ, the local authorities and the private contribution by families.

Netherlands

In the Netherlands, 65% of the per diem rate is paid for by the government (the daily medical care costs are covered by health insurance), with the remaining 35% covering the accommodation payable by the residents.

For new residents, the outstanding amount can be set freely.

Luxembourg

In Luxembourg, 52% of the per diem rate is paid for by the government long-term care insurance (covering care and assistance costs), with the remaining 48% covering the accommodation and services payable by the resident.

There are no pricing controls concerning the accommodation.

Ireland

In Ireland under the general Fair Deal system, 73% of the per diem rate is paid for by the Health Service Executive. The balance is paid for both by the patient and a voluntary dependency insurance system.

2. 2021 management report

2.1 2021 overview

2.1.1 Managing the Covid-19 pandemic: vaccination campaign roll-out and continued close monitoring of variants

2.1.2 Continued development through acquisitions and new facility openings

2.1.3 Financing operations

2.1.4 Management of the real estate portfolio

2.2 Review of the consolidated financial statements for the year ended 31 December 2021

2.2.1 Consolidated income statement

2.2.2 Consolidated balance sheet

2.2.3 Cash flows

2.3 Review of the individual financial statements for the year ended 31 December 2021

2.3.1 ORPEA SA income statement

2.3.2 ORPEA SA balance sheet

2.3.3 Subsidiaries and other equity interests

2.3.4 Information on supplier and customer payment terms

2.4 Other financial information

2.4.1 Dividend payments in the past three years

2.4.2 allocation of net profit/(loss)

2.4.3 Sumptuary expenses

2.4.4 Legal and arbitration proceedings

2.5 Outlook and events after the reporting date

2.5.1 Publication of a book containing allegations of wrongdoing

2.5.2 Findings of administrative investigations and independent reviews

2.5.3 Measures to support a way out of the crisis

2.5.4 New funding and conciliation procedure

2.5.5 2022 Outlook

2.6 Five-year financial summary

2.1 2021 overview

The Covid-19 vaccination campaign launched at the beginning of the year led to an increase in admissions to nursing homes and a sustained level of activity in clinics. Despite this, in the face of emerging new variants of the virus (Delta in the summer of 2021, then Omicron in the autumn), governments were obliged to reintroduce precautionary measures, and this affected business, particularly at the end of the year.

At the same time, ORPEA's development continued apace, with facility openings and expansions representing more than 2,250 additional beds, as well as external growth transactions involving the acquisition of groups, notably in Ireland and Switzerland.

In 2021, the Company also incorporated non-financial targets into its operations. Accordingly, the Board of Directors created a CSR and Innovation Committee in January 2021 and defined a CSR roadmap through to 2023, featuring 17 objectives (see Chapter 4 of this Universal Registration Document for more details).

In order to meet needs in terms of care staff, ORPEA continued to invest in training through the acquisition of Austria's EMG Akademie in February 2021.

2.1.1 MANAGING THE COVID-19 PANDEMIC: VACCINATION CAMPAIGN ROLL-OUT AND CONTINUED CLOSE MONITORING OF VARIANTS

At the end of December 2020, following the approval of the main vaccines by health authorities, ORPEA launched the vaccination campaign for its patients, residents and employees in all geographical areas. This led to a clear improvement in the health situation, with a sharp and rapid decline in positive cases among patients, residents and employees from February onwards. In the second half of the year, with the arrival of the Delta variant, ORPEA implemented government recommendations in September 2021 calling for a booster jab, and maintained strict rules to protect the health security that had been achieved in the first half of 2021.

Thanks to these efforts, the health situation in nursing homes was broadly able to be brought under control, allowing occupancy rates to rise again from March 2021. Occupancy rates saw strong momentum in the spring of 2021 which continued into the summer with temporary stays. Rates continued to increase at a more moderate pace between September and December 2021.

At the same time, activity in clinics (for post-acute care and rehabilitation as well as psychiatric care) increased compared to 2020, despite the impact of the Omicron variant in the last two months of the year.

2.1.2 CONTINUED DEVELOPMENT THROUGH ACQUISITIONS AND NEW FACILITY OPENINGS

ORPEA completed several acquisitions in 2021, mainly in France, Ireland and Switzerland.

ACQUISITION OF A CONTROLLING INTEREST IN THE FRANCE SENIORS GROUP

In January 2021, ORPEA acquired from a group of individual investors a 52.59% stake in France Seniors, a company specialising directly and indirectly in the operation of senior assisted-living facilities. Following this transaction, ORPEA holds 100% of the company's share capital and voting rights.

ORPEA IS THE MARKET LEADER IN IRELAND FOLLOWING THREE ACQUISITIONS IN THE IRISH NURSING HOME SECTOR: THE REMAINING 50% OF BRINDLEY HEALTHCARE, FIRSTCARE AND BELMONT HOUSE

After acquiring a 50% stake in Brindley Healthcare in July 2020, ORPEA acquired the remaining 50% of its capital in August 2021. Founded in 2000, Brindley Healthcare operates ten facilities (574 beds) across six counties adjacent to Dublin, and generated revenue of €25 million in 2020.

ORPEA also continued to develop in Ireland with the acquisitions of the FirstCare group (July 2021) and Belmont House (August 2021). Founded in 1994 and owned up to that date by its founder, FirstCare is the fourth largest operator of nursing homes in Ireland, with eight facilities representing 857 beds, including two sites (306 beds) under construction. FirstCare's modern facilities are located mainly in Dublin and primarily feature single rooms (over 90% of the offer). FirstCare posted revenue of €30.9 million in 2020. Belmont House is a well-known facility in Dublin with a capacity of 157 beds.

These transactions, following the acquisition of TLC in January 2020, have made ORPEA the leader in Ireland's private care facilities market.

SWITZERLAND: ACQUISITION OF SENSATO AG

Founded in 2008, Sensato AG is one of the leading private Swiss groups, with a network of seven facilities (443 beds) in the north and north west of the country (Aargau. Bern and Thurgau cantons) and a dual offering of nursing homes and senior assisted-living facilities, providing strong geographical complementarity as well as the potential for synergies with the existing ORPEA care network (through its subsidiary Senevita) in Switzerland.

In 2020, Sensato AG posted revenue of €20 million. Thanks to this May 2021 acquisition, ORPEA has strengthened its position as the second largest player in Switzerland with a total network at maturity of 47 facilities and 4,367 beds.

SPAIN: ACQUISITION OF SEVEN FACILITIES FROM SANITAS

In July 2021, ORPEA acquired seven facilities (838 beds) from Sanitas, a subsidiary of Bupa, a UK health insurance and care group. Two of these facilities are open (188 beds) and five are under redevelopment and construction in Madrid, Barcelona, Logrono and San Sebastian, representing total potential revenue of €25 million at maturity.

CONTINUED ORGANIC GROWTH WITH OVER 2,250 NEW BEDS ADDED

ORPEA added around 2,250 new beds in 2021 following the creation of new facilities and expansion of existing facilities.

2.1.3 FINANCING OPERATIONS

In 2021, ORPEA SA carried out its first public offering of sustainable bonds for €500 million in the form of a convertible bond with a maturity of seven years. The Group also completed new Schuldscheindarlehen issues in the year for a total amount of €462 million.

2.1.4 MANAGEMENT OF THE REAL ESTATE PORTFOLIO

At 31 December 2021, ORPEA owned 46% of the properties operated as part of its activities and its real estate portfolio was valued at €8.069 billion ⁽¹⁾ , a year-on-year increase of €1.1 billion.

The increase in the value of the portfolio is the result of a revaluation of the entire portfolio by independent experts, and of new developments and property disposals in connection with the arbitrage strategy. In 2021, the Group sold real estate assets in Germany and France to property companies for a total of €284 million.

⁽¹⁾ Excluding the €347 million in real estate assets herld for sale.

2.2 Review of the consolidated financial statements for the year ended 31 December 2021

2.2.1 CONSOLIDATED INCOME STATEMENT

ORPEA GROUP'S 2021 CONSOLIDATED REVENUE

The ORPEA Group generated consolidated revenue of €4,298.6 million in 2021, up 9.6% on 2020. Revenue growth reflects the gradual increase in occupancy rates, mainly resulting from the Covid-19 vaccination campaign, as well as the contribution of external growth transactions in 2020 and 2021.

Consolidation dates:

Sensato - 1 May 2022, FirstCare - 1 July 2022, Brindley and Belmont - 1 August 2022.

Composition of geographical areas:

France-Benelux-UK-Ireland: France. Belgium, the Netherlands, the United Kingdom, Luxembourg and Ireland. Central Europe: Germany, Italy and Switzerland.

Eastern Europe: Austria, Poland, the Czech Republic, Croatia, Slovenia and Latvia.

Iberian Peninsula and Latin America: Spain, Portugal, Brazil, Uruguay, Mexico, Chile and Colombia.

Rest of the World: China.

Revenue in the France-Benelux-UK-Ireland area advanced 11.8% over the year to €2,643 million, accounting for 61.5% of the Group's total revenue. This increase results from the recovery in occupancy rates in nursing homes in France, the contribution of acquisitions in Ireland (FirstCare, Brindley and Belmont House), as well as a good level of activity in the clinics.

Central Europe revenue rose by 75% to €1,086 million, representing 25.3% of the Group's total revenue, driven by the acquisition of Sensato in Switzerland and a good level of activity in clinics.

Eastern Europe revenue grew by 8.1% to € 395 million, reflecting the level of activity in the Group's Austrian post-acute care clinics, which had been closed for three months in 2020. This geographical area represents 9.2% of the Group's total revenue.

Iberian Peninsula and Latin America revenue was down by 4.5% to €171 million, or 3.9% of the Group's total revenue, as the Covid-19 pandemic and resulting health restrictions continued to impact business in Spain, along with work undertaken in certain facilities, leading to temporary closures.

Operations in China make up the Rest of the World, with the €3.1 million in revenue deriving from the facility in Nanjing.

PROFITABILITY AND NET PROFIT

⁽¹⁾ EBITDAR = Recurring EBITDA before rental expenses, including provisions related to the "external costs" and "personnel expenses" line items.
⁽²⁾ EBITDA = Recurring operating profit before depreciation and amortisation, including provisions relating to the "external costs" and "personnel expenses" line items.

EBITDAR (EBITDA before rental expenses) was up by 11.1% over the year to €1,070.2 million, representing 24.9% of revenue, compared to 24.6% in 2020. This increase reflects the rise in occupancy rates and includes a negative dilutive impact of 60 bps at Group level linked to the Ségur healthcare review in France.

EBITDA rose 12.3% to €1,040.7 million, or 24.4% of revenue.

Recurring operating profit was €395.7 million (down 6.4%) after €645 million in depreciation, amortisation and charges to provisions for which the expense was 28.1% higher than in 2020 due to an €83 million provision accrual following an administrative investigation in France that led to a report from the French government and the opening of legal proceedings (see section 2 5 "Outlook and events after the reporting date" for more details).

Non-recurring items represented a net expense of €41.1 million compared to a net gain of €44.1 million in 2020. This change is mainly due to impairment recognised against operating assets in an amount of €38.5 million.

Net interest expense was down 3.1% year on year to €248.9 million, and included a €20.7 million provision recognised in connection with Brazil Senior Living shares.

After €37.5 million in income tax expense, net profit attributable to ORPEA's shareholders came out 59.3% lower year on year at €65.2 million.

2.2.2 CONSOLIDATED BALANCE SHEET

ASSETS

EQUITY AND LIABILITIES

Operating intangible assets

At 31 December 2021, goodwill totalled €1,669 million compared to €1,494 million at end-2020. Intangible assets, comprising mainly operating licences, amounted to €3,076 million versus €2,881 million at 31 December 2020.

Real estate portfolio

The portfolio had a total value of €8,069 million, including €832 million in land and assets in progress or redevelopment.

This sharp €1,100 million (16%) increase compared to 2020 reflects:

All operating real estate assets are carried at fair value with the exception of buildings under construction and facilities under redevelopment.

Capital structure and debt

At 31 December 2021, equity attributable to ORPEAs shareholders stood at €3,799 million, up from €3,495 million at 31 December 2020.

At end-2021, the Group had cash and cash equivalents of €952 million, compared with €889 million at end-2020.

Net debt stood at €7,910 million, compared with €6,654 million at 31 December 2020. The increase is the result of significant real estate and operating investments in 2021. Net debt at 31 December 2021 comprised:

Current gross debt amounting to €1,856 million at 31 December 2021 comprised bridging loans to finance properties recently acquired or under construction or redevelopment, lease financing, and other miscellaneous borrowings and debt due in less than one year.

Debt ratios (covenants) excluding lease items (IFRS 16) at 31 December 2021 are as follows:

The application of IFRS 16 led to the recognition on the balance sheet of right-of-use assets relating to lease agreements in force for €3,073 million (31 December 2020: €2,817 million), while the present value of future lease payments recognised in liabilities totalled €3,265 million, €2,968 million of which is due in more than one year and €297 million within one year.

Other assets and liabilities

Changes in other receivables and payables reflect construction projects, disposals of real estate assets and acquisitions in connection with the Group's expansion drive.

2.2.3 CASH FLOWS

Net cash generated by investing activities represented an outflow of €1,409 million, of which 90% related to ongoing construction projects and acquisitions of properties operated by the Group.

Net cash generated by financing activities represented an inflow of €718 million and includes proceeds from the €500 million public bond issue in March 2021 and Schuldschein issues for a total of €462 million.

2.3 Review of the individual financial statements for the year ended 31 December 2021

2.3.1 ORPEA SA INCOME STATEMENT

REVENUE

Revenue for 2021 amounted to €1,027 million, up 6.3% year on year as a result of an upturn in occupancy rates in nursing homes. The comparative 2020 period was affected by health restrictions triggered by the first wave of the Covid-19 pandemic.

OPERATING PROFIT/(LOSS)

Operating costs increased significantly, with "Purchases and external costs" rising 16.6% to €458.8 million and personnel expenses up 8% to €542 million.

The main change affecting operating items relates to the €83.2 million accrual to the provision for liabilities and charges following the IGAS-IGF report and the government's announcement on 28 April 2022 that it would be referring the case to the public prosecutor (see section 2.5). This relates to facts and circumstances that arose prior to the reporting date (2017-2021).

NET FINANCIAL INCOME/(EXPENSE)

Financial items represented net financial income of €38.1 million, due mainly to income on intra-group current accounts, including dividends received from the subsidiary CLINEA.

NON-RECURRING ITEMS

Non-recurring items represented a net expense of €20.6 million, compared with a net expense of €3.2 million in 2020.

NET PROFIT/(LOSS)

The Company posted a loss of €51.6 million for 2021, compared to a profit of €30.5 million for 2020.

2.3.2 ORPEA SA BALANCE SHEET

ASSETS

EQUITY AND LIABILITIES

ORPEA SA's net non-current assets totalled €2,9375 million at 31 December 2021, versus €2,583.4 million at 31 December 2020. This increase was mainly due to the rise in equity investments, mainly as a result of capital increases in subsidiaries (€ 284 million) and acquisitions (€ 37 million).

Net current assets came to €4,682.5 million at 31 December 2021 versus €4,298.9 million at 31 December 2020. The increase in Group and associate company receivables corresponds to the increase in receivables due from Group entities in relation to inter-company loans granted for the entities' development, acquisitions and construction projects.

On the liabilities side, the Company's equity totalled €735.3 million at 31 December 2021, compared with €845.1 million at end-2020.

Borrowings and debt - the Company's main liability item - rose to €5,729 million at 31 December 2021 from €4,889.4 million at 31 December 2020.

Total equity and liabilities amounted to €7,631.8 million at 31 December 2021, compared with €6,886.9 million at 31 December 2020.

2.3.3 SUBSIDIARIES AND OTHER EQUITY INTERESTS

In the France-Benelux-UK-Ireland area (France, Belgium, the Netherlands, the United Kingdom and Ireland), revenue continued to grow in 2021, up 11.8% to €2,643.2 million. EBITDAR moved up 9.8% to €694.5 million, while the EBITDAR margin for this geographical area fell slightly to 26.3% (from 26.8% in 2020).

Central Europe (Germany, Switzerland and Italy) saw further revenue growth, up 7.5% to €1,086.0 million. EBITDAR advanced 5.5% to come out at €283.9 million, while the EBITDAR margin for this geographical area fell slightly to 26.1% (from 26.6% in 2020).

In the Eastern Europe area (Austria, the Czech Republic, Poland, Croatia. Slovenia and Latvia), revenue for the year climbed 8.1% to €395.2 million. EBITDAR was up 15.9% to €69.9 million, while the EBITDAR margin for this geographical area increased to 15.4% (from 14.4% in 2020).

In the Iberian Peninsula and Latin America area (Spain, Portugal, Brazil, Uruguay and Mexico), revenue fell 4.5% to €171.1 million in 2021. EBITDAR jumped 234.4% to €31.9 million, while the EBITDAR margin for this geographical area widened to 18.7% (from 5.3% in 2020).

In the Rest of the World (China) area, revenue for 2021 fell 5.3% to €3.1 million. EBITDAR was down 42.3% at a negative €0.9 million.

Details of the main shareholdings are shown in Chapter 6 (individual financial statements for the year ended 31 December 2021).

2.3.4 INFORMATION ON SUPPLIER AND CUSTOMER PAYMENT TERMS

Pursuant to Articles L. 441-14, D. 441-2 and D. 441-6 of the French Commercial Code [Code de commerce], the following table shows information about the payment terms applicable to ORPEAs suppliers and customers at 31 December 2021.

Note:

The number of (A) invoices relating to suppliers is taken from our digitalisation software, which handles most of our payables.

The number of (A) invoices relating to customers is taken from our billing software, which handles most of our receivables.

Invoices issued to customers are due immediately. A 30-day payment term was taken into account in 2020.

2.4 Other financial information

2.4.1 DIVIDEND PAYMENTS IN THE PAST THREE YEARS

The table below shows the dividend per share paid in the past three years, as well as the applicable tax regime.

Pursuant to Article 2224 of the French Civil Code (Code civil) and Article L. 1126-1 of the French Public Property Code (Code générale de la propriété des personnes publiques). dividends that are not claimed within five years of their payment date will lapse and become the property of the State.

2.4.2 ALLOCATION OF NET PROFIT/(LOSS)

At the Annual General Meeting scheduled for 28 July 2022, shareholders will be asked to appropriate the loss for the year ended 31 December 2021, amounting to €51,626,332.22, as follows:

2.4.3 SUMPTUARY EXPENSES

Sumptuary expenses referred to in Article 39-4 of the French General Tax Code (Code général des impôts) amounted to €862,994 for the Company. These included excess depreciation of passenger vehicles not deductible for tax purposes.

2.4.4 LEGAL AND ARBITRATION PROCEEDINGS

In the normal course of its French and international business, the Group is involved in litigation or disputes, mainly in the labour and tax fields. The provisions accrued in respect of any such disputes are described in the notes to the consolidated and individual financial statements on pages 268, 269, 306 and 307 of this Universal Registration Document.

Following the claims made against the Group in a book containing allegations of wrongdoing, the French government ordered two investigations of ORPEA, one by the General Inspectorate of Social Affairs (Inspection Générale des Affaires Sociales - IGAS) and the other by the General Inspectorate of Finance (Inspection Générale des Finances - IGF). On 26 March 2022, the Minister Delegate to the Minister of Solidarity and Health in charge of Autonomy submitted the final report of the joint IGAS-IGF investigation to the public prosecutor. In this regard, the Company booked a provision for €83.2 million in its individual and consolidated financial statements at 31 December 2021, which breaks down as follows:

Furthermore, on 2 May 2022 ORPEA announced that it had filed a complaint against unnamed persons with the public prosecutor for past transactions and events - wholly unrelated to the accommodation and care conditions for residents - that could raise questions with regard to ORPEAs best interests and which were discovered following internal investigations that revealed a certain number of fraudulent activities of which the Company or its subsidiaries may have been victims.

At present, the Group is not aware of any exceptional event or litigation, including in the recent past, that could have a material adverse effect on its assets and liabilities, financial position, business activities or the results of its operations.

To the best of the Group's knowledge, there are no other governmental, legal or arbitration proceedings that may have, or have had in the recent past, a material adverse impact on the financial position or profitability of the Company and/or the Group.

2.5 Outlook and events after the reporting date

2.5.1 PUBLICATION OF A BOOK CONTAINING ALLEGATIONS OF WRONGDOING

Following the publication on 26 January 2022 of a book containing allegations of wrongdoing, ORPEA's Board of Directors mandated Grant Thornton and Alvarez & Marsal to conduct an independent review of the allegations in question. At the same time, the Ministry of Solidarity and Health ordered each of the General Inspectorate of Finance (IGF) and the General Inspectorate of Social Affairs (IGAS) to investigate the claims.

On 30 January 2022, the Group's Board of Directors decided to terminate Yves Le Masne's duties' as Chief Executive Officer, and to appoint Philippe Charrier as Chairman and Chief Executive Officer. Mr Charrier's mission is to ensure, under the Board's control, that best practices are applied throughout the Company and to shed full light on the allegations made, based in particular on the aforementioned reviews.

2.5.2 FINDINGS OF ADMINISTRATIVE INVESTIGATIONS AND INDEPENDENT REVIEWS

On 26 March 2022, ORPEA issued a press release disclosing the findings of the final reports of the IGAS-IGF joint investigation and took note of the announcement by Brigitte Bourguignon, Minister Delegate to the Minister of Solidarity and Health in charge of Autonomy, of her decision to transmit to the public prosecutor the report of the administrative investigation carried out by the IGAS and IGF. The provision for liabilities and charges booked by the Company following the publication of this report is detailed in section 2.4.4 above.

The administrative investigation enabled the Company to identify areas for improvement and ORPEA has already committed to taking the corrective actions outlined below.

On 26 April 2022, the Company published the progress report by Grant Thornton and Alvarez & Marsal, submitted to the Company's Board of Directors a few days earlier, which confirmed the findings of the IGAS-IGF investigation. Based on the preliminary findings of these independent reviews, we are as yet unable to confirm the existence of a systemic issue in relation to supply shortages for incontinence products or food rationing. The final report on the use of public funds and business relations with third parties, including some public officials (series of allegations 2 and 3), was submitted to the Board of Directors on 27 May 2022; the final report on the care of nursing home residents and on employment law (series of allegations 1 and 4) will be submitted by 30 June 2022.

2.5.3 MEASURES TO SUPPORT A WAY OUT OF THE CRISIS

On 2 May 2022, ORPEA's Board of Directors appointed Laurent Guillot as Chief Executive Officer with effect from 1 July 2022. Aged 52 and boasting extensive management experience, Laurent Guillot will be responsible for developing and implementing the improvement and transformation plan to build the New ORPEA His appointment to the Board of Directors will be proposed to the Annual General Meeting scheduled for 28 July 2022. Laurent Guillot will act as advisor to the Chairman and Chief Executive Officer until he takes office.

On the same day, ORPEA also announced that it had filed a complaint against unnamed persons with the public prosecutor for past transactions and events - wholly unrelated to the accommodation and care conditions for residents - that could raise questions with regard to ORPEA's best interests and which were discovered following internal investigations that revealed a number of fraudulent activities of which the Company or its subsidiaries may have been victims.

The Company has not currently identified any material adverse impacton its cash flow or real estate assets resulting from the reported fraudulent activities.

The Company intends to use all means at its disposal to recover the sums of money that it may have been deprived of as a result of these fraudulent activities.

Internal measures were immediately taken to remove the persons likely to be involved in these fraudulent activities and to strengthen the Group's internal control procedures; its investigations are ongoing and could lead to further dismissals.

The Board of Directors has also unanimously approved various structural changes, including:

Accordingly, the implementation of these structural changes will include the following actions:

FIRST-QUARTER 2022 REVENUE UP 9.0% AT €1,119.7 MILLION

⁽¹⁾ Organic growth in consolidated revenue reflects the following factors: 1. The year-on-year change in revenue of existing facilities as a result of changes in their occupancy and per diem rates; 2. The year-on-year change in revenue of redeveloped facilities or facilities where capacity was increased in the current or previous year; 3. Revenue generated in the current period by facilities created during the current or previous period, and the change in revenue of recently acquired facilities in comparison with the previous equivalent period.
Consolidation dates: Brazil Senior Living group - January 2022: Sensato AG - May 2021; FirstCare - July 2021; Brindley, Belmont - August 2021.
Composition of geographical areas: France-Benelux-UK-lreland (France, Belgium, the Netherlands, the United Kingdom and Ireland); Central Europe (Germany, Italy and Switzerland); Eastern Europe [Austria, Poland, the Czech Republic, Slovenia, Latvia, Croatia and Russia]; the Iberian Peninsula and Latin America (Spain, Portugal Brazil, Uruguay, Mexico, Colombia and Chile); Rest of the World (China).

ORPEA reported robust growth in the first quarter of 2022, with revenue up 9.0% year on year to €1,027.3 million. While revenue in France declined following the publication of the book mentioned in section 2.5.1, the Group's occupancy rate in first-quarter 2022 is significantly higher than that observed in the same period of 2021. ORPEA recorded solid overall growth momentum in the first quarter of 2022, with revenue up 9.0%, including 5.0% organic growth.

In France, against a difficult backdrop, the nursing homes business recorded a decline in occupancy rates in the first quarter.

The rest of the Group's business enjoyed good momentum, with occupancy rates on an upward trend.

The Iberian Peninsula and Latin America area benefited from the inclusion of the Brazil Senior Living group within the scope of consolidation in January 2022, which added €7 million to revenue for the quarter.

2.5.4 NEW FUNDING AND CONCILIATION PROCEDURE

On 13 May 2022, ORPEA entered into an agreement in principle with its core banking partners BNP Paribas, Crédit Agricole, Crédit Mutuel Alliance Fédérale, BPCE group, La Banque Postale and Soctété Générale ("the Banks').

This agreement in principle with the Banks is a response to the current period of uncertainty affecting ORPEA, as well as to closed-off access to financial markets and the slowdown in the initially planned real estate asset disposal programme, and will notably enable it to meet significant debt servicing obligations in 2022 (approximately €813 million due in the second half of the year) and in 2023 (approximately €1,004 million due).

The agreement in principle is part of an amicable conciliation procedure, opened by order of the President of the Nanterre Commercial Court on 20 April 2022.

The agreement in principle, unanimously approved by ORPEAs Board of Directors, includes the following key principles:

• Provision of a new financing plan by the Banks via a secured syndicated facility of €1.733 billion:

The key terms of this facility granted by the Banks to ORPEA include:

The new financing includes:

The new financing will benefit from a pledge over the shares of the subsidiaries CLINEA and CEECSH (representing 25% and 32% of Group revenue, respectively). Following certain reorganisations to be carried out within the Group, the pledges will be over shares in CLINEA France and the Group's business in Germany, representing 25% and 16% of consolidated revenue, respectively.

It is further noted that the average interest rate of all new lines granted under the agreement in principle in respect of the €1.733 billion tranche will be Euribor + 3.9% (except for the optional refinancing facility bearing interest at Euribor + 5%), compared to the Group's current average estimated borrowing cost of 2.2%.

Part of the proceeds from the disposals will be immediately allocated to the repayment of the short-term tranches of the facility.

This agreement in principle was the subject of a loan agreement signed with the Banks on 13 June 2022 and a conciliation protocol approved by the Nanterre Commercial Court on 10 June 2022.

2.5.5 2022 OUTLOOK

Following the IGF-IGAS report, the independent review conducted at the request of the Board of Directors is continuing its investigations into the care of nursing home residents and employment law (series of allegations 1 and 4) and its findings are expected to be delivered no later than 30 June. The review's findings in relation to the use of public funds and business relations with third parties, particularly some public officials (series of allegations 2 and 3) were delivered on 27 May 2022. The Group has already implemented corrective actions and will continue to take necessary measures as and when the findings of the ongoing reviews become available.

The Group remains confident about its revenue growth momentum in 2022, which should continue to benefit from numerous new site openings (with a target of more than 3,000 new beds over the period) and from favourable business trends in international markets and in clinics in France.

The Group's operating profitability will be affected by the unfavourable inflationary environment linked to the Russia-Ukraine conflict, specifically impacting energy costs and salaries in certain countries. The Group's assets and investments in Russia are not material.

The Group will also have to face one-off expenses related to the management of the aforementioned crisis and its consequences.

2.6 Five-year financial summary

3. Risk factors and internal control

3.1 Risk factors and risk management

3.1.1 Identification of risks

3.1.2 Main risks

3.1.3 Legal and compliance risks

3.1.4 Operational risks

3.1.5 Financial risks

3.1.6 Risks related to the construction and maintenance of real estate assets

3.2 Internal control

3.2.1 Scope and objectives of internal control

3.2.2 Continuous improvement of internal control

3.2.3 Main internal control participants

3.2.4 Cross-functional internal control system applicable to the Group

3.2.5 Specific internal control framework for preparing and processing financial and accounting information

3.1 Risk factors and risk management

3.1.1 IDENTIFICATION OF RISKS

The Group has a risk management and prevention policy that is adapted to the risks inherent to its business. This policy is based on a structured approach to identifying, assessing, prioritising and then controlling the risks that could compromise the Group's objectives.

In 2019, the Company completely overhauled the Group's risk map, covering all of its countries and businesses. The risk map was shared in full with the members of the Group's Executive Management, the Audit Committee and the Board of Directors.

The Group's risk mapping process is based on the following steps:

In 2022, the Group carried out a new assessment of its main risks and updated its risk map accordingly, notably taking into account the consequences of the crisis faced by the Group and its stakeholders since the publication on 26 January 2022 of a book containing allegations of wrongdoing, particularly in facilities operated by the Group in France.

3.1.2 MAIN RISKS

This section includes the information required pursuant to Article 16 of Regulation (EU) 2017/1129 of the European Parliament and of the Council. It therefore sets out the main risks that could impact the Group's business, financial position, reputation, results and outlook.

The risk factors described in this section are limited to the risks which are material for making an informed investment decision.

The risks identified by the Group in the risk mapping process are ranked in order of severity: low, moderate, significant and major. This ranking - which corresponds to a qualitative assessment - is based on a combination of each risk's likelihood of occurrence and its potential impact. The effect of the Group's internal control systems is then taken into account in order to obtain the net risks presented in the table below.

The methods used for identifying and assessing the risks are the same as those applied for the risks set out in the Non-Financial Statement and in the Duty of Care Plan.

^* Non-Financial Statement
^** Duty of Care Plan

3.1.3 LEGAL AND COMPLIANCE RISKS

3.1.3.1 DISPUTE, CLAIMS AND LITIGATION RISK

Risk identification

The Group's activities, which entail the care of vulnerable people, are of a highly sensitive nature and are therefore particularly exposed to the risk of disputes, claims and litigation. This risk has particularly materialised in the context of the crisis faced by the Group and its stakeholders since the publication of a book containing allegations of wrongdoing, notably in the facilities operated by the Group in France.

The Group responded to questions put to it by the joint investigation team set up by the French government, comprising members of the General Inspectorate for Social Affairs (Inspection Générale des Affaires Sociales - IGAS) and the General Inspectorate for Finance (Inspection Générale des Finances - IGF). On 26 March 2022, Brigitte Bourguignon - then Minister Delegate to the Minister of Solidarity and Health, in charge of Autonomy - announced that she would be forwarding the investigation team's report to the French public prosecutor.

Since April 2022, lawyers claiming to represent the families of residents and patients in the Group's facilities have announced that they have filed several criminal complaints alleging various personal injury offences. The Group is not aware of the exact content or number of these complaints.

Based on publicly available information, it is apparent that the Nanterre public prosecutor is in charge of (i) the legal investigations based on the report provided by the authorities and (ii) some of the complaints filed. Other civil or criminal proceedings, either related or unrelated to the allegations of wrongdoing, could result in civil or criminal liability of the Group, its managers and/or current or former employees.

Lastly, on 2 May 2022, the Group announced that it had filed a complaint with the public prosecutor against unnamed persons for past events and operations - totally unrelated to the living and care conditions of residents - that could adversely affect ORPEA's best interests and which were discovered following internal investigations.

If the above procedures were to result in lawsuits or criminal proceedings being brought against the Group, its managers and/or its current or former employees, and in civil rulings or criminal convictions being handed down against them, this could impact the Group's cash flow and damage its image and reputation, which would negatively affect its business, financial position, results and business development prospects.

Risk management

In early February 2022, the Board of Directors commissioned Grant Thornton France and Alvarez & Marsal to conduct an independent review of the allegations made in the book published a few days earlier. After a status update in mid-April 2022, the final report on sections 2 and 3 relating to the use of public funds and business relations with third parties, and in particular certain public officials, was submitted to the Board of Directors on 27 May 2022. The final report on sections 1 and 4 relating to the quality of care of nursing home residents and employment law will be submitted to the Board by 30 June 2022.

The Company also cooperated with the IGAS and IGF joint investigation team, which submitted its final report on 26 March, highlighting certain wrongdoing for which remedial action has already been taken.

The Company recorded an €83.2 million provision for the above risks in its individual and consolidated financial statements at 31 December 2021, which breaks down as follows:

In parallel with these external and internal investigations, the Group has already implemented the corrective actions described below (in the section on "Risk of fraud and internal control failure") and will continue to take appropriate measures as the findings of the audits become available.

The Board of Directors has also unanimously approved various structural changes, including:

The above changes will notably be achieved through the following measures, some of which have already been implemented:

3.1.3.2 RISK OF NON-COMPLIANCE WITH THE GROUP'S PRINCIPLES IN TERMS OF ETHICS AND THE PREVENTION OF CORRUPTION AND INFLUENCE PEDDLING

Risk identification

Ethical conduct and integrity are crucially important to ORPEA. Like any decentralised international business, the Group may be exposed to breaches of its Code of Conduct by one of its employees or stakeholders. Aside from any penalties that may be incurred for such breaches, they could damage the Group's reputation and have a detrimental impact on its business, financial position, results and outlook.

Moreover, ORPEA is expanding in countries, such as Brazil, where the risk of corruption is considered higher than in its core markets. This could therefore expose employees to new sources of risk that the Group needs to identify in order to protect itself.

In addition, the Group's activities entail building relationships with public authorities and civil servants, as well as with health professionals (doctors, pharmacists, etc.) in all of the countries where it operates. Consequently, the Group may incur sanctions if it does not fully comply with the requirements of France's Sapin II law, in particular with regards to its anti-corruption provisions, and the applicable local laws and regulations.

Lastly, on 2 May 2022, the Group announced that it had filed a complaint with the public prosecutor against unnamed persons for past events and operations - totally unrelated to the living and care conditions of residents - that could adversely affect ORPEA's best interests and which were discovered following internal investigations.

Risk management

As part of the Group's implementation of France's Sapin II law (law no. 2016-1691) of 9 December 2016 on transparency, anti-corruption and the modernisation of business practices, and in accordance with similar laws and regulations in other countries, the Group has integrated into its internal control system a compliance programme including measures on the prevention of corruption and influence peddling. The Group's Executive Management is responsible for deploying and overseeing this programme. An international network of compliance correspondents ensures that the programme's rules - especially those related to business integrity - are relayed across the Group and respected at local level. To that end they carry out awareness-raising initiatives and provide training.

To remain aligned with evolving market practices and regulatory requirements, a new risk mapping process was undertaken in 2021 to specifically address corruption and influence peddling risks, with the results of the process summarised in a Group risk map.

As part of its ethics approach, the Group also has (i) a gifts and hospitality policy, which was harmonised and adapted in line with local specifications in 2019, and (ii) a specific system for managing conflicts of interest, which was last revised in March 2022 (educational guide on the concept of conflict of interest, mandatory annual declaration for the people most exposed to this risk situation, analysis of potential and actual conflicts of interest and implementation of corrective measures where required).

The Group also pays particular attention to the integrity of the third parties with which it works and has put in place third-party internal control and approval procedures. Due diligence processes are carried out where appropriate, with the support of local compliance correspondents. These processes entail verifying the integrity of certain strategic third parties [such as first-tier suppliers and general contractors] and substantially all third parties involved in acquisitions (including the vendors). For example, the acquisition projects presented to the Development Committee include a Compliance section in which the Development Officer concerned is required to certify that they have verified the integrity of the vendor and, where applicable, the intermediary involved in the project. This verification process includes consulting Dow Jones and LexisNexis databases. Similarly, before any payments are made, treasurers are required to verify the identity of the beneficiaries through a call-back procedure.

3.1.3.3 RISK RELATED TO MANAGING PERSONAL DATA AND MEDICAL INFORMATION

Risk identification

Risks related to data collection, hosting and access are clear priorities given the Group's shift towards digitalising the data held in its systems. All personal data must be handled in accordance with the EU General Data Protection Regulation (GDPR) and/or local regulations. The Group has a department responsible for ensuring that its data protection policy is properly implemented, and, in particular that only necessary data is collected, that data subjects are given the required information, and that any requests submitted by data subjects are answered.

The data held by the Group - particularly personal data and medical information - could be subject to fraud or other internal or external wrongdoing. In particular, the Group or its service providers could be victims of cyberattacks (viruses, denial of service, etc.), sabotage or intrusion (physical or virtual), which could affect the availability, integrity and/or confidentiality of such data. If such an event were to occur it could adversely impact the owners of the stolen or disclosed data, which in turn could affect the Group's reputation and the trust placed in it. The Group could be held liable if the necessary data protection measures are not effectively implemented, which could have a significant financial impact (fines imposed by data protection authorities (CNIL in France), damages payable to customers or other parties) and could expose ORPEA to non-compliance risk.

In addition, a lack of appropriate governance and a failure to standardise practices would constitute aggravating factors if a data protection breach were to occur.

Risk management

The Group's data protection policy (integrity, availability, traceability and confidentiality) was reinforced when the GDPR came into force in May 2018. A Data Protection Officer (DPO) responsible for managing all GDPR obligations Group-wide was appointed, who works with an international network of local DPOs.

In addition, a GDPR Steering Committee comprising members from several support departments monitors the deployment of the Group's roadmap and makes any necessary decisions.

The Information Systems Security department is responsible for ensuring the security of the infrastructures, systems and applications required for the Group's business. One of its main roles is to prevent intrusions, viruses and attacks by administering a suite of hardware and software dedicated to IT security and by regularly carrying out penetration tests.

As explained in more detail in the Non-Financial Statement [in Chapter 4], the Group's Data Protection and IT teams work closely together, particularly on the following:

The DPO also coordinates answers to requests relating to the exercise of data subjects' rights as well as responses to security incidents and personal data breaches.

3.1.3.4 RISK RELATED TO THE AWARD AND RENEWAL OF OPERATING LICENCES

Risk identification

A licence is required to operate a nursing home or medical facility in France and in most of the other countries where the Group operates. These licences are issued by the competent authorities in each country. The ease with which such licences can be obtained varies depending on the applicable national and regional regulations.

In some countries, such as France, Belgium and Austria, obtaining such licences is directly dependent on a quota of planned beds, whereas in other countries it is contingent on complying with architectural, safety, quality, staffing and other standards.

The crisis facing the Group and its stakeholders following the publication of a book containing allegations of wrongdoing could make it more difficult to obtain new licences.

Failure to obtain new licences could slow down the Group's business development, which would impact its financial position, results and outlook.

To maintain or renew their licences - which are granted either for a fixed or unlimited period - the entities concerned usually have to undergo service quality assessments and controls. Depending on the country, these procedures are carried out by either the national or regional supervisory authorities.

In countries where licences are highly regulated and limited by governments, the Group recognises the licenses as intangible assets and they are tested for impairment. The withdrawal or non-renewal of a licence could therefore result in the Group having to write down some of its assets.

At 31 December 2021, the Group's intangible assets - which mostly correspond to these licences - represented a total net value of €3,076 million. Any failure to comply with the applicable regulations could result in administrative closures and/or the withdrawal of operating licences.

The withdrawal or non-renewal of an operating licence is extremely rare and has never happened to the ORPEA Group in any of the countries where it conducts business. If an operating licence were to be withdrawn or not renewed, this could have adverse reputational, operational and financial impacts for the Group.

Risk management

The operating licences granted to the Group's facilities have never been jeopardised given the meticulous monitoring processes implemented by its various departments and support units (Quality department. Medical department, Operations departments, and Works, Procurement and Catering units etc.).

The quality procedures, which cover all subsidiaries and all stages of resident and patient care, as well as the care provision traceability approach implemented by the Medical department and the audits performed by the support units, help the Group to protect itself against the potential risk of operating licences not being granted or renewed.

Following the publication of a book containing allegations of wrongdoing, the supervisory authorities performed a large number of controls on the Group's French nursing homes, with some 180 inspections carried out in the space of two months. To date, no breaches serious enough to lead to the closure of a facility and/or the withdrawal of a licence have been identified during these inspections. The Group is now working hard to ensure that the injunctions imposed by the authorities are lifted and their recommendations are implemented as soon as possible.

Following the findings of the external and internal investigations, the Group also plans to revise and streamline its quality processes with a view to increasing ownership by its employees in the field.

3.1.3.5 RISK RELATED TO PRICING POLICIES

Risk identification

In some of the countries where the Group operates, the pricing applied by facilities has two components:

The portion paid for by the public authorities varies from country to country, and even from one region to another within the same country, but makes up less than 50% of total funding in most cases.

The portion paid for by patients and residents is deregulated in most countries, but increases - generally on a yearly basis - may be regulated and subject to an inflation-linked cap, at least for existing residents and patients. For new residents and patients, however, the pricing of this portion is generally not regulated.

Depending on the country, the portion of the Group's services that patients and residents pay for may increase if the public authorities reduce their reimbursement or funding levels or if private healthcare insurers reduce coverage or increase premiums. As a result, individual decisions to reduce personal spending or the risk of patients or residents having to pay higher private supplemental health insurance premiums could lead to reduced demand for comfort spending. A general decrease in prices could have an adverse effect on the Group's business, financial position, results and outlook.

Risk management

The Group is now present in 23 countries, so it has diversified its exposure to several healthcare systems by expanding its operations in countries such as Germany, Austria, Ireland and Switzerland where public funding is secure over the long term.

In addition, the Group has always focused on countries where a significant portion of its revenue is generated from private funding. In the event of a cut in public funding, the Group has a degree of flexibility because of the proportion of its funding that comes from private sources.

In some countries - such as Spain, Poland, Portugal, Brazil and China - the Group has developed a completely private offering and does not receive any public funding.

3.1.4 OPERATIONAL RISKS

3.1.4.1 RISK OF DAMAGE TO THE GROUP'S IMAGE

Risk identification

In view of the Group's activities, it has particularly significant exposure to the risk of its reputation being damaged by events for which it may or may not be responsible. This is all the more the case since the Covid-19 pandemic and the publication of a book containing allegations of wrongdoing that exposed the medical and social care sector as well as the Group to reputational risk.

The crisis faced by the Group and its stakeholders since the publication of this book has significantly impacted its image and activity levels in its nursing homes in France. It has also meant that the Group's access to the financial markets has been cut off and has slowed down its real estate asset disposal programme, therefore compromising its access to sufficient liquidity to finance its business and refinance its debt (see "Liquidity risk and risk related to raising additional funding"). At the date of this Universal Registration Document, the Group is not in a position to assess the potential medium or long-term impact of this crisis on its business, finances and employer brand.

Furthermore, the Group's image could be affected by public information relating to the existence, content or outcome of the investigations - particularly criminal investigations - launched as a result of (i) reports made or complaints filed by third parties, on the one hand, and/or (ii) the outcome of the complaint filed by the Group itself against unnamed persons, on the other hand, which could implicate the Group, its managers and its current or former employees.

Whether founded or not, the criticisms and allegations levelled against the Group could be amplified by the spread of information on social media.

Risk management

Following the publication of the above-mentioned book containing allegations of wrongdoing, the Group chose to respond in a totally transparent way with a view to staying true to its underlying values.

Aware of the highly sensitive nature of its activities, the Group pays particular attention to the quality of the services it provides. Its quality management system, described in more detail below, is based on a set of procedures, training measures and controls, as well as a clearly stated continuous improvement approach. The Group regularly puts in place action plans to ensure that its staff always act with compassion and to prevent all forms of mistreatment. Surveys to measure the satisfaction of residents/patients/families and staff are conducted and corrective action plans are implemented where required.

The Group has also launched training and awareness-raising initiatives related to its Code of Conduct which are applicable to all of its teams, as well as a whistleblowing system for employees and external stakeholders so they can report any suspected mistreatment or, more generally, any breach of the Group's ethical principles. The procedure for managing conflicts of interest was strengthened in March 2022 and, in April 2022, a freephone number was set up in France, as well as an Ethics Committee and a special surveillance body dedicated to monitoring situations of mistreatment.

A reputation watch system is in place that continuously monitors all types of media.

Lastly, depending on the content of information published in the media, the Group consults with its teams and legal counsel on whether to respond or take appropriate legal action.

3.1.4.2 RISK OF FRAUD AND INTERNAL CONTROL FAILURE

Risk identification

Fraud is defined as an intentional failure to respect the applicable laws and regulations or procedures which causes loss or damage for the Group.

It can include, for example, failure to comply with the Group's principles on ethics and the prevention of corruption and influence peddling (see "Risk of non-compliance with the Group's principles in terms of ethics and the prevention of corruption and influence peddling") or staff members misappropriating funds or assets for their personal use, with or without external collusion.

Fraud risk may be exacerbated if the Group's internal control system fails to detect certain types of fraud or is unable to cover certain staff members.

A failure in the Group's internal control processes could lead to serious consequences for patients and residents and also for the Group and its shareholders.

Potential failures in the Group's internal control system were highlighted by (i) the crisis faced by the Group and its stakeholders following the publication of a book containing allegations of wrongdoing, and (ii) the complaint filed with the public prosecutor by the Group against unnamed persons for past events and operations that could adversely affect ORPEA's best interests and which were discovered following internal investigations (see "Dispute, claims and litigation risk" above).

These potential failures have caused, are still causing, and could continue to cause, serious damage to the Group's image (see "Risk of damage to the Group's image") and consequently to its financial position (see "Liquidity risk and risk related to raising additional funding").

Risk management

The Group's internal control system has been integrated into the Group Standards which, for each key function, provide a common set of rules applicable to all of the Group's entities with a view to safeguarding its operations, facilitating the integration of its various entities, encouraging international collaboration and ensuring that best practices are harmonised within the Group. The Group Standards are updated regularly, most recently in 2021.

In view of the potential failures in the Group's internal control system, it is currently working on significantly strengthening its internal control and internal audit processes. Initial measures have already been implemented in recent weeks, including:

3.1.4.3 HUMAN RESOURCES RISK: DIFFICULTIES IN ATTRACTING, HIRING AND RETAINING EMPLOYEES, ESPECIALLY FOR IN-DEMAND JOBS (MEDICAL AND PARAMEDICAL)

Risk identification

This is the most significant human resources risk identified in the risk mapping process. Human resources issues are described in further detail in the Non-Financial Statement.

The quality, availability and commitment of employees play a key role in the Group's success. However, ORPEA operates in a sector that is marked, in many countries, by a shortage of qualified personnel, attributable especially to growing needs related to population ageing and the fact that working with the elderly can be perceived as an unattractive career choice.

At 31 December 2021, the Group had 71,676 employees, with 80% on permanent contracts. During the year, 14,219 people left the Group and 15,673 were hired. Staff ratios vary greatly from country to country and even from facility to facility, depending on the applicable regulations and the average dependency level of residents and patients. For example, in France, the ratio is around 70 full-time equivalents (FTE) per 100 residents in a nursing home and 95 FTE per 100 patients in a hospital facility as more medical personnel (doctors, nurses, physiotherapists, etc.) are required in hospital facilities.

If, despite its hiring campaigns and employer brand strategy, ORPEA is unable to identify, attract, train and retain skilled and responsible employees, this could significantly affect the care it provides, its business development and its results.

Similarly, the continuity of resident and patient care could be compromised if the Group has an insufficient number of qualified care staff. If a shortage of qualified care staff at a facility proves to be long-lasting and the operator fails to react to the situation, this could lead to a suspension of admissions at the facility and jeopardise the number of authorised beds, or even the facility's operating licence.

The risk related to hiring difficulties has been exacerbated by the crisis faced by the Group and its stakeholders since the publication of a book containing allegations of wrongdoing.

Risk management

To address these risks, the Group has strengthened its human resources management teams, both at corporate level and within each geographical area. It has also put in place action plans in order to:

3.1.4.4 INFORMATION SYSTEMS AND CYBERSECURITY RISK

Risk identification

Information systems play an important role in ORPEA's operations. If these systems become unavailable or malfunction, whether due to a failure of hardware or software solutions or because of a third party, human error or a malicious act, the Group's facilities and administrative offices could be prevented from operating effectively.

The Group, its suppliers and subcontractors are exposed to cybersecurity risks. Despite the security measures implemented by the Group, cybersecurity risk remains high because cyberattacks are becoming more diverse and complex and are happening with increasing frequency and more severe consequences. This risk is all the greater in view of the sensitive data (particularly personal data and medical information) that the Group handles due to the nature of its activities and which is essential for providing proper care to patients and residents.

Depending on the type of attack or information systems failure that it might suffer, the Group could face various consequences [such as personal data and/or medical and/or confidential information being lost or stolen, or resident and patient care being compromised] as well as the ensuing repercussions [failure of the main operational systems, inability to carry out daily tasks, etc.]. Any system malfunction or shutdown or loss of data could have a major negative impact on the Group's business, financial position, results and outlook.

Risk management

The Group allocates a substantial investment budget to the Information Systems department and is committed to continuously improving its systems and infrastructure to effectively meet the needs of users and the Group as a whole. It has embarked on a process of upgrading its information tools and systems, notably by deploying shared international solutions.

On several occasions the Group has detected attempted malware intrusions into its IT system, although these did not have any significant impact on the continuity of its services.

To mitigate cybersecurity risks, the Group continuously adapts its detection and prevention measures. For example, it recently had to factor in the risks associated with remote working. Some of the main actions it takes to reduce cybersecurity risks are as follows:

The security of information systems is governed by the ISO 27001 standard and the Health Data Hosting (HDS) regulations, the Group's Data Center being both ISO 27001 and HDS certified.

3.1.4.5 RISK RELATED TO A FAILURE TO RESPECT THE RIGHTS AND DIGNITY OF VULNERABLE PEOPLE

Risk identification

The Group offers comprehensive care for people with all types of physical and intellectual dependency issues, on either a permanent or temporary basis. Patients and residents may have mental health problems, addictions or severe depression. In the context of these socio-demographics and due to the vulnerability of the people in its care, one of the Group's central ethical principles is to ensure that their dignity and rights are respected.

The different ways in which a failure in care or treatment could arise include:

Although the Covid-19 pandemic has eased since the second half of 2021, a future resurgence in cases cannot be ruled out. If infection levels were to rise, there could once again be an increase in patient or resident mortality and difficulties in recruiting staff, which would negatively impact the Group's financial position, slow down its business activity and lead to additional costs.

Furthermore, the Group's patients or residents may be victims of mistreatment or may feel that they have been mistreated. Mistreatment can result from intended or unintended negligence that is detrimental to the dignity, privacy and/or health of an individual.

Any actual or alleged mistreatment could damage the Group's reputation, incur civil and/or criminal liability and generate supplementary direct and/ or indirect costs (compensation, legal advice, higher insurance premiums, etc.). If such an event were to occur on a significant scale, this could negatively impact the Group's image, business, financial position, results and development prospects.

Since the publication of a book containing allegations of wrongdoing, the Group's ability to respect its ethical commitments and guarantee the best possible care for its residents and patients has been called into question, which confirms the importance of this risk (see "Dispute, claims and litigation risk" above).

Risk management

The risks associated with medical care are vigilantly monitored within the Group's facilities. The management of these risks is notably based on:

Self-assessments, audits, controls, incidents and indicators are analysed and corrective action plans are put in place where required.

Liability insurance has also been taken out at Group level.

Throughout 2021, the Group continued to deploy protocols and procedures in line with the development of the Covid-19 pandemic and the health authorities' recommendations. It also focused on informing and training staff and visitors about Covid-19-safe measures (providing reminders of good hygiene practices and implementing isolation protocols for infected patients and residents, etc.). In agreement with the local authorities, visits were limited in order to stop the spread of the virus, although steps were taken to ensure that social interaction was maintained, mainly through the deployment and use of new means of communication.

Also during the year, the Group continued to place orders for personal protective equipment, such as masks and hand sanitisers, to limit the spread of the virus as much as possible and to protect residents, patients and employees. At the same time, it set up psychological support units to help not only patients and residents but also its employees.

The dignity of vulnerable people is a core ethical principle for ORPEA and it has put in place a Group-wide framework of best practices related to this issue. It also provides training to its front-line teams to effectively prevent and manage the related risks.

The values essential to respecting the dignity of residents and patients are set out in the Group Code of Conduct and the ORPEA quality charters.

The Group has also deployed a preventive and corrective protocol for mistreatment in all of its facilities.

A whistleblowing platform is available for reporting any breaches of the principles set out in the Code of Conduct.

As part of its CSR objectives for 2023, the Group has undertaken to select, appoint and train a positive treatment and/or ethics correspondent in each facility to ensure that best practices are implemented in all of its facilities (compared with the 44% at end-2021). This correspondent will work closely with residents, patients and their relatives as well as with the facilities' staff.

One of the roles of the International Scientific and Ethics Council is to support and promote a dynamic culture of clinical ethics within the Group. Each facility can refer matters to the Council or raise questions about a resident's or patient's care, particularly if the situation concerns positive treatment or clinical ethics. For 2022, the Group has set the following objectives: (i) help create and coordinate national Ethics Committees, (ii) continue to appoint, train and support ethics correspondents within the Group's facilities, and (iii) set up a hotline or mobile unit to provide real-time assistance for teams faced with an ethics-related situation and support families seeking advice about ethics issues.

Since the publication of the above-mentioned book, the Board of Directors has unanimously approved a number of structural changes within the Group, in particular:

3.1.4.6 RISK RELATED TO FACILITY SAFETY CONDITIONS

Risk identification

Keeping the people in its care physically safe is a pre-requisite for any medical facility or nursing home. Each country, or sometimes even region, has different, strict building standards and obligations, and has put in place compulsory external controls concerning the safety of premises that host the public, particularly vulnerable people.

At 31 December 2021, there were no serious safety-related incidents in any of the Group's facilities.

Risks relating to the safety of premises may arise in different ways:

Despite the measures put in place, which are described in more detail in the Non-Financial Statement, these risks could have an adverse effect on people's health and on the reputation and continuing operation of the facility concerned, and on the Group's image, financial position, results and outlook.

Risk management

The Group takes great care to ensure that its facilities comply with safety standards, that regulatory changes are closely monitored and that its facilities and their equipment are properly maintained.

Each country has a Maintenance department or team responsible for putting in place and monitoring all building safety and maintenance operations. This is underpinned by:

Specific risks such as Legionnaires' disease, non-potable water and fire are managed in accordance with applicable local regulations and Group best practices (protocols, maintenance, training, etc.).

3.1.5 FINANCIAL RISKS

3.1.5.1 LIQUIDITY RISK AND RISK RELATED TO RAISING ADDITIONAL FUNDING

Risk identification

At 31 December 2021, the Group's gross debt was €8.862 billion and it had €952 million in cash and cash equivalents. Its debt ratios, restated for the impact of IFRS 16, were (i) financial leverage restated for real estate assets: 3.7x (5.5x authorised), and (ii) restated gearing: 1.7x (2.0x authorised). The contractual repayment schedule for this debt was €1,856 million for 2022 and €983 million for 2023.

The Group's debt at 31 December 2021 breaks down as follows:

The crisis faced by the Group since the publication of a book containing various allegations of wrongdoing on 26 January 2022 has had a major impact on its refinancing capacity.

This crisis has had the effect of closing off the Group's access to the financial markets and slowing down its real estate disposal programme, thereby compromising its access to sufficient liquidity to finance its operations and refinance its debt. It has therefore reviewed its current and future development projects and decided to stop, postpone or suspend them as appropriate.

On 13 May 2022, the Group announced that it had signed an agreement in principle with its core banking pool securing the financing of the Group as part of a conciliation procedure. The terms of this agreement were included in the conciliation protocol approved by the Nanterre Commercial Court on 10 June 2022 and in the loan agreement signed with the banks on 13 June 2022.

The €1.733 billion overall syndicated loan granted to the Group includes:

As part of the agreed financing plan, the Group has undertaken to:

As security for the financing provided, the Group has pledged the shares of its subsidiaries CLINEA and CEECSH (representing 25% and 32% of the Group's revenue, respectively). Following certain reorganisations to be carried out within the Group, the pledges will be over shares in CLINEA France and the Group's business in Germany, representing 25% and 16% of consolidated revenue, respectively.

There is a risk that the Group may not be able to comply with its undertakings to keep a minimum level of cash and carry out asset disposals. Any failure to meet those commitments would constitute an event of default.

In such a case, the lenders could enforce the security interests granted to them, which would affect assets that are substantial for the Group and could have significant consequences on its financial position, business and development.

In addition, the Group's commitment to carry out asset disposals (mainly real estate disposals) within a limited time period could mean that it may have to sell the assets at a lower-than-expected price, which could require the Group to recognise impairment losses on the assets concerned.

The cost of this new financing is also higher than the average cost of the debt usually taken out by the Group, which will increase the Group's financial expenses and could have an impact on its profitability and results.

At the same time, the Group's existing debt at 31 December 2021 is subject to covenants, including requirements to:

Although the Group has never defaulted on any of its covenants and continues to scrupulously comply with all of its obligations under its existing financing arrangements, these various covenants would restrict its capacity to take on debt if new difficulties were to arise, and any failure to comply with them could constitute an event of default which could affect the Group's financial position, results and outlook.

The Group has also negotiated an optional syndicated term loan for up to €1.5 billion, open in priority to the lenders participating in the short- and medium-term financing described above. This optional syndicated loan would be used to refinance the unsecured bank facilities.

If the Group fails to restore its image and financial position, it could continue to experience difficulties in obtaining financing, which could jeopardise its results and its ability to pursue its business.

Risk management

The above-described new financing obtained and asset disposal plan will provide the Group with liquidity until 2025 and should enable it to make the scheduled repayments on its existing debt in 2022 and 2023.

In connection with its obligations under the €1.733 billion syndicated loan, the Group has decided to revise:

3.1.5.2 INFLATION RISK

Risk identification

Since mid-2021, the global economy has seen a return of inflationary trends, which firmly took hold and intensified in early 2022 with the outbreak of the conflict in Ukraine and another lockdown ordered in China.

The Group's operating profitability will be significantly affected by this inflationary environment, particularly due to the pressure on energy and food prices and on wages.

Additionally, the cost of investments in and renovation of the real estate owned or leased by the Group could be affected by a sharp increase in the price of raw materials in the global market or by interruptions in the supply chain, which could drive up costs of some construction projects prior to their delivery, as well as maintenance and upkeep costs.

Lease payments will also be affected by this inflationary environment as a result of indexation clauses and when leases are renewed. In 2021, lease payments on the Group's non-owned real estate represented approximately 9% of its revenue. This proportion will increase in the coming years in view of the commitments made by the Group to dispose of real estate assets as part of its deleveraging strategy (see "Liquidity risk and risk related to raising additional funding").

Risk management

The Group's procurement policy is designed to anticipate price increases through forward-looking purchase management and controlled monitoring of consumption of both consumables and raw materials.

The Group has strengthened its construction teams, giving it new negotiating levers in the choice of its suppliers of raw materials and construction works, while enabling it to tighten control over costs and construction lead times.

Lease payments on non-owned properties are controlled through a proactive policy for managing existing leases and forward planning lease expiry dates.

The shift towards holding fewer real estate assets will take place primarily through sales to major investors who are already partners of the Group, so that the Group can have preferential conditions.

In relation to the prices paid to the Group's facilities, as described above, the portion paid for by patients and residents is deregulated in most countries, but price increases - which are generally annual - may be regulated, subject to an inflation-linked cap, at least for existing residents. For new residents and patients, however, the pricing of this portion is generally not regulated (see "Risk related to pricing policies").

3.1.5.3 INTEREST RATE RISK

Risk identification

At 31 December 2021, the Group's debt net of cash broke down as follows by maturity and by fixed and floating rate:

The Group's debt structure is mainly composed of domestic floating-rate debt. The €1.733 billion secured syndicated loan to be granted to the Group will bear interest at Euribor plus a margin.

The Group is therefore exposed to the risk of interest rises in the euro zone. Although after hedging, the majority of its debt is at fixed rates, the cost of hedging could increase, which could impact the Group's financial position and results.

Lastly, the value of the Group's existing assets could be negatively affected by a rise in interest rates which would in turn adversely impact the yields expected by investors. This could have a negative effect on the valuation of real estate assets in the Group's consolidated financial statements.

Risk management

The Group's strategy is to hedge a major portion of its consolidated net debt against interest rate risk. To that end, it uses a portfolio of financial instruments in the form of (i) interest rate swaps, under which it generally receives interest at the three-month Euribor and pays a fixed rate specific to each contract, and (ii) interest rate caps.

At 31 December 2021, the notional amount of interest rate hedges used by the Group was € 3,523 million.

Analysis of sensitivity to fluctuations in interest rates

The impact of a +/-1% shift in the yield curve on the Group's earnings would affect:

The fair value of derivatives is sensitive to changes in the yield curve and volatility trends. Volatility is assumed to remain unchanged for the purposes of this analysis.

At 31 December 2021, net debt amounted to €7,910 million, with approximately 45% at contractually fixed rates and the remainder at floating rates.

Including the impact of hedges:

3.1.6 RISKS RELATED TO THE CONSTRUCTION AND MAINTENANCE OF REAL ESTATE ASSETS

Risk identification

Building future facilities and ensuring the maintenance of existing real estate assets are strategic priorities for the Group.

The risks in this domain that ORPEA could be exposed to include:

Any inability by the Group to meet the construction and maintenance objectives for its real estate assets could have a significant negative impact on its business, financial position, results and outlook and on the value of its real estate.

Risk management

The Group has strengthened its dedicated and specialised development, construction and maintenance teams.

Audits are carried out prior to real estate acquisitions and projects are validated by the Development Committee.

In order to limit construction risks and ensure that real estate meets the Group's operational requirements, building permit projects are prepared by the construction teams with the help of external architects and in close collaboration with the Group's operations staff and the local authorities' administrative departments.

The Group regularly monitors the progress of each construction project to ensure that lead times, costs and quality are effectively managed. Weekly meetings are held and "milestone" visits carried out with the management team in order to deal with any technical concerns. Shared monitoring tools have also been put in place to track the progress of these projects and deploy the necessary measures in the event of any problems.

In addition, specific insurance policies (comprehensive jobsite insurance, builder's liability insurance etc.) are taken out for all construction works.

Maintenance risk is managed by the local Maintenance departments in each of the Group's host countries and by the on-site teams (see "Risk related to facility safety conditions").

3.2 Internal control

3.2.1 SCOPE AND OBJECTIVES OF INTERNAL CONTROL

Internal control is a system designed to provide reasonable assurance that:

The internal control system - rolled out in all countries - therefore contributes to the effective management of the Group's activities, the safety and effectiveness of its operations and the efficient use of its resources, by establishing a control environment that is adapted to its businesses. This control environment - which is based on rules, procedures and charters drawn up at both Group and local level - provides a framework for a structured organisation aimed at safeguarding operations and reacting swiftly and effectively if material adverse events occur.

3.2.2 CONTINUOUS IMPROVEMENT OF INTERNAL CONTROL

The internal control system needs to be adapted and enhanced over time in light of the lessons learned from internal and external audits, attempted and actual fraud and any wrongdoing in its operations, as well as in line with changes in the legal and regulatory environment.

The internal control system is underpinned by a risk analysis performed yearly in order to draw up an internal control plan which enables the Group to take action to mitigate any major new identified risks. For example, in 2021, the Group:

Following the publication on 26 January 2022 of a book containing allegations of wrongdoing, the Group was subject to a joint investigation in France carried out by the General Inspectorate for Finance and the General Inspectorate for Social Affairs. The Board of Directors subsequently commissioned Grant Thornton and Alvarez & Marsal to conduct an independent review of the allegations. The Group will use the findings of these external and internal investigations to strengthen its internal control system. Initial steps have already been taken in this respect, such as strengthening the prevention and management of conflicts of interest and actively promoting the whistleblowing platform for employees and the new Code of Conduct - Ethics and Corporate Social Responsibility.

3.2.3 MAIN INTERNAL CONTROL PARTICIPANTS

3.2.3.1 EXECUTIVE MANAGEMENT

Executive Management designs and implements the internal control and risk management systems and is responsible for the quality of those systems. It assesses those systems on a continuous basis and ensures that any necessary corrective measures are effectively taken.

Executive Management is required to communicate all relevant information to the Board of Directors and the Audit Committee in a timely fashion so that they can properly perform their internal control work.

3.2.3.2 THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE

The Audit Committee is responsible for monitoring the effectiveness of the internal control, internal audit and risk management systems, as well as for reviewing the individual and consolidated financial statements and their verification by the Statutory Auditors. It monitors issues relating to the production and audit of accounting and financial information, in order to prepare the decisions of the Board of Directors on financial and accounting matters and to enable the Board to meet its legal and regulatory obligations.

The Committee reports to the Board on its internal control and risk management work, which the Board then reviews. The Board of Directors approves the individual financial statements and the annual and half-yearly consolidated financial statements based on recommendations issued by the Audit Committee.

The Audit Committee's role and responsibilities are described in Chapter 5 of this Universal Registration Document.

3.2.3.3 AUDIT, RISK AND COMPLIANCE DEPARTMENT

This department - which reports directly to the Secretary General and on a dotted-line basis to the Audit Committee - is structured around two units: permanent control and periodic control.

The permanent control unit works on identifying and preventing risks as well as on the design of the internal control system. It has four main sub-units:

The permanent control unit is supported by centralised teams at the Group's headquarters and also has a network of local correspondents in the Group's various geographical areas. These correspondents are responsible for adapting the Group's principles to specific local requirements and for monitoring the implementation of the internal control system.

The periodic control unit corresponds exclusively to internal audit and is responsible for ensuring that the internal control system is effective and that risks are mitigated within all Group entities. It may also recommend improvements to limit risk exposure.

The Company has filed a complaint with the French public prosecutor against unnamed persons for past events and operations - totally unrelated to the living and care conditions of residents - that could constitute fraud. This situation was discovered following internal investigations and could call into question ORPEA's best interests.

Internal measures were immediately taken to remove the persons allegedly involved in these events and operations and to strengthen the Group's internal control procedures.

3.2.3.4 FINANCE DEPARTMENT

The Group Finance department is responsible for producing the financial statements, ensuring compliance with tax legislation, assisting operations staff with establishing and monitoring key performance indicators, and managing the Group's liquidity, cash and financing.

Its role and responsibilities are described in more detail in section 3.2.5 below.

3.2.3.5 QUALITY DEPARTMENT

The Group Quality department defines the Group's quality policy and ensures that it is implemented and monitored within all of its facilities. It works closely with the local Quality departments in the Group's various geographical areas, which are responsible for adapting quality and operational risk management procedures to the specific requirements of local business lines and regulations.

These local teams provide support to the Operations departments and facilities with the methodology for putting in place and monitoring quality procedures. They also help the facilities to obtain certification and with internal and external quality assessments. To that end, they adapt and develop assessment and monitoring tools and provide training, and they also conduct on-site audits.

3.2.3.6 LEGAL DEPARTMENT

The Group Legal department advises and assists Executive Management and all the Operations and Support departments with safeguarding the Group's interests and assets from a legal perspective. More specifically, it is tasked with identifying legal risks and optimising the management of those risks. It is also responsible for ensuring compliance with the legal and regulatory obligations applicable to each of the Group's businesses and in each of its geographical areas, assisted by local legal counsel when required. The department is divided into three units:

3.2.3.7 OTHER CORPORATE SERVICES

In addition to the above-mentioned departments, the Group has other corporate services which help draw up guidelines applicable to all Group entities, assist the local teams in the various geographical areas with implementing those guidelines, and monitor, validate and/or control certain aspects of those teams' work. These corporate services mainly correspond to:

3.2.3.8 THE MAIN DEPARTMENTS IN THE GROUP'S GEOGRAPHICAL AREAS/BUSINESS UNITS

Local managers are responsible for safeguarding the activities within their remit and must therefore ensure that the appropriate control system is in place. The headquarters of the geographical areas/Business Units also have their own support services such as finance, quality, catering, human resources and IT, whose role includes supporting, safeguarding and controlling operations.

3.2.4 CROSS-FUNCTIONAL INTERNAL CONTROL SYSTEM APPLICABLE TO THE GROUP

The system described below corresponds to the system in place as at 31 December 2021.

As a result of the publication on 26 January 2022 of a book containing allegations of wrongdoing and the internal and external investigations following this publication, as mentioned several times above, the Group launched a process to strengthen its internal control system. Initial measures have already been implemented in recent weeks, including:

3.2.4.1 CONTROL ACTIVITIES

Control activities, which are carried out at every tier of the organisation, aim to safeguard operations and to enable the Group to achieve its objectives while accepting a tolerable level of risk. They are conducted on the basis of the procedures and operating methods in place.

3.2.4.2 INTERNAL RULES AND STANDARDS

The Group Standards

In 2020, ORPEA drew up a set of Group Standards, which, for each of the Group's key functions (operations, medical, quality, catering, human resources, finance, procurement, IT, legal, compliance, risks, etc.), define a common set of rules applicable to all entities in order to safeguard its activities, facilitate the integration of its various entities, encourage international collaboration, and harmonise best practices within the Group.

The Group Standards were developed jointly by the business lines, the Internal Control department and the Corporate Secretary's office.

Quality procedures

In accordance with the quality requirements in the Group Standards, each country has a set of quality procedures. Wherever possible, the same quality procedures and tools apply to all facilities in each country.

The procedures cover a range of events that could affect the safety of residents, patients and employees, as well as the Group's proper functioning, performance and/or reputation. They contain preventive and remedial measures together with actions for managing such events.

They are reviewed whenever deemed necessary (e.g., in the event of a regulatory change) and at least once a year, by the local Quality department in conjunction with the Operations department and the support departments concerned, in order to incorporate any required amendments as part of a continuous improvement policy. Facility directors are systematically informed of any updates, with training provided where required, and must confirm that the procedures are being applied in the facility for which they are responsible.

When a new facility or group of facilities is acquired, the quality teams of the geographical area concerned and/or the Group work closely with the local country-level quality teams in order to implement and deploy the Group's rules and best practices in the new facility or facilities concerned.

3.2.4.3 MAIN CONTROL BODIES

In addition to the Board of Directors and its various Committees (described in Chapter 5 of this Universal Registration Document), the Group has set up several bodies whose roles are (i) to ensure that the business is properly and smoothly run, and to monitor that the Group's rules - both its operational rules and those for safeguarding its activities - are being effectively applied, and (ii) draw up any necessary remedial action plans. The main committees responsible for these roles are:

• The Quality Committee, whose meetings are held at geographical area or Business Unit level and which relays best practices within the facilities and verifies that they are being effectively applied. This committee also addresses any implementation difficulties encountered by operations teams and proposes solutions to ensure that targets are met. It analyses the main quality indicators (complaints, material adverse events, satisfaction surveys, etc.) and also studies ways of developing and improving internal control tools.

• The Operations Committee, whose meetings are held at geographical area or Business Unit level, and which reviews all matters relating to the running of that geographical area or Business Unit. In particular, it carries out progress reviews on current and future action plans, training programmes, quality and budgets.

• The Business Review Committee, whose meetings are held at Group level and cover each geographical area. This committee reviews the current situation of the Business Units in the geographical area that fall within the scope of the meeting, as well as their key figures and the main difficulties encountered. It also takes decisions on matters that require Group-level authorisation, in accordance with the rules set out in the Group Standards.

• The Development Committee, whose role is to validate development projects (building new facilities, acquisitions or restructurings). This committee's meetings are attended by Executive Management and representatives from the Group Finance, Construction, and Transactions and M&A departments, as well as representatives (generally the CEO, CFO and Head of Development) of the geographical area or Business Unit concerned. Where required, the Development Committee may invite representatives from other departments to attend its meetings, such as the Operations, Legal, Medical and Compliance departments.

3.2.4.4 CRISIS MANAGEMENT AND BUSINESS CONTINUITY PLANS

A crisis management plan is in place that outlines the instructions for activating crisis units both at the Group and local levels. Each facility also has a business continuity plan (BCP) detailing all the incidents, accidents or disasters that could affect that facility and the actions that should be taken if such events occur.

The crisis management plan rounds out the BCP by cataloguing all the human resources, equipment and logistics that would be necessary in the event of a health crisis and explains how to set up a crisis unit. These plans are submitted to the relevant authorities, where required, and are verified and controlled by the Operations departments and the Quality department.

3.2.4.5 PROCESS FOR HANDLING MATERIAL ADVERSE EVENTS

The Group has a procedure for handling material adverse events which states that all facility directors must systematically inform the regional director immediately if a material adverse event occurs. The regional director must then inform the head of the geographical area/Business Unit and the information is then passed on to the Group (Operations, Quality, Communications department, etc.). This procedure will be reviewed as part of the measures to revise and streamline the quality processes as mentioned above, and in response to the observations contained in the report of the IGAS and IGF joint investigation.

3.2.4.6 ASSESSMENTS AND AUDITS

Internal audit assignments

The internal audit division of the Group Audit, Risk and Compliance department is responsible for ensuring that internal control procedures are effectively applied such that they cover the risks to which the Group is exposed. Internal audit assignments are therefore conducted by the Group's internal audit teams in all of its geographical areas and Business Units. The auditors use a methodology that complies with the standards of the profession and they act within the framework of the Internal Audit Charter approved by the Audit Committee.

The audit plan is drawn up based on the risk map and dialogue with the members of the Group Executive Committee. This plan is presented to the Audit Committee, which approves it annually, prior to its implementation. It usually includes different types of engagements: general audits, specific audits, thematic reviews or special engagements.

Facility assessments

Throughout the year, each facility carries out self-assessments based on pre-defined criteria set by the Quality and Operations departments. The results of these self-assessments provide input for the half-yearly audits of facilities carried out by the Regional directors aimed at ensuring that residents and patients are cared for properly at all times and that the care provided is in line with the Group's quality policy.

The results of these self-assessments and audits are then compiled into a report once every six months, which enables the geographical areas, Business Units and the Quality department to check that the control processes are being systematically applied and to identify any failure to comply with best practices. If any such failures are identified, a remedial action plan is drawn up and implemented.

The support departments (Quality, Care/Medical, Catering and Maintenance departments) also carry out random assessments within the facilities.

The information obtained and conclusions drawn on the basis of these assessments help shape changes in the Group's quality policy.

Lastly, the buildings used by the Group's facilities are regularly audited to ensure compliance with health and safety procedures for residents, patients and employees and the proper maintenance of buildings and equipment.

External assessments and certifications

In France, nursing homes and hospital facilities are subject to external assessments (certification), conducted under the authority of the Haute Autorité de santé (HAS), an independent public scientific authority. These assessments are carried out once every five years for nursing homes and once every four years for hospital facilities. Outside France, the Group is subject to other types of certification depending on the applicable local regulations. The assessments required for these certifications are either based on recognised international reference frameworks such as ISO or on industry standards imposed by the authorities of the country in question.

The Group regards these assessments as an additional opportunity to analyse how well its operations are performing based on an objective, rigorous and impartial approach and thanks to the external views provided by the assessors.

Satisfaction surveys

Satisfaction surveys are carried out annually at nursing homes to gauge how the residents and their families feel about the quality of care provided and about the way the facilities are being run. These surveys - which are given to all of the residents in residence at the time of the campaign, as well as to their families - add to the information provided by the facility assessments and help the Group put in place the necessary measures for continuous quality improvement. The survey results are presented to the families and the nursing home employees at information meetings.

Similarly, in the case of hospitals, patients are asked to complete a satisfaction survey during and/or at the end of their stay.

3.2.5 SPECIFIC INTERNAL CONTROL FRAMEWORK FOR PREPARING AND PROCESSING FINANCIAL AND ACCOUNTING INFORMATION

3.2.5.1 PARTICIPANTS IN THE FINANCIAL REPORTING PROCESS

Group Finance department

The Group Finance department has two main tasks:

It is therefore responsible for:

It is also in charge of selecting and deploying the systems underlying the key processes (consolidation, treasury, etc.).

Lastly, it is responsible for managing the budget process and monitoring operational performance.

The Group Finance department comprises the following units: financial control, consolidation, management control, treasury and tax.

The Finance departments of the geographical areas and/or Business Units

The local Finance departments are organised by geographical area and/ or Business Unit. They are responsible for preparing the local accounts and financial statements, cash management and monitoring operational performance in accordance with the principles set by the Group.

The local Finance departments report directly to the local Executive Management teams and on a dotted-line basis to the Group Finance department.

3.2.5.2 PROCESS OF PREPARING ACCOUNTING AND FINANCIAL INFORMATION

Year-end reporting

The Group Finance department is responsible for preparing the consolidated financial statements based on the financial statements for each of the legal entities and the consolidation packages prepared by the geographical areas and/or Business Units. The Navision system is used in many of the Group's geographical areas and/or Business Units.

Quarterly consolidated financial statements are prepared in the HFM software, with the process supervised by the Group consolidation unit. Only the interim and annual consolidated financial statements undergo a limited review and audit, respectively, by the Statutory Auditors.

The financial reporting process also involves all the accounting teams both in France and outside France. The work conducted consists of verifying compliance with the statutory and regulatory requirements and confirming that the accounting principles and standards are applied properly. The process is split into three main stages:

The Group Finance department constantly monitors the application of changes in accounting standards, tax law and new statutory and regulatory requirements. To help with its decision-making on technical issues, it may also obtain assistance from other corporate departments or external advisors. ORPEA stays in regular contact throughout the year with its Statutory Auditors, and it may consult them on certain specific technical issues, if the need arises.

3.2.5.3 BUSINESS AND FINANCIAL PERFORMANCE MONITORING SYSTEMS

Operational management control

The reporting system for the various business indicators is used to continuously and consistently track performance trends at each of the Group's facilities.

The budget is put together based on dialogue between the Operations department and management control. After validation, it serves as a roadmap for each facility.

A budget tracking document is prepared on a monthly basis in order to monitor trends in revenue and operating expenses. It also provides a basis for carrying out a monthly analysis of the financial information related to operations. This document is given to the management of the geographical areas and/or Business Unit prior to Operations Committee meetings, during which any requisite action plans are drawn up, with input from technical managers at local headquarters (medical, employee relations, procurement, catering and construction).

The occupancy rate of all facilities is tracked in real time via an intranet, which compiles all the data once a day.

Real estate management control

The real estate management control team is responsible for valuing the real estate portfolio and monitoring the related indicators, in conjunction with renowned international external firms which carry out their own valuation once a year.

3.2.5.4 THE STATUTORY AUDITORS

The Statutory Auditors review and audit the accounting information and financial statements of ORPEA SA and its consolidated subsidiaries. This takes the form of:

A letter of representation, signed jointly by the Chief Executive Officer and the Group's Chief Financial Officer, giving undertakings concerning the quality, reliability and completeness of the financial information, is given to the Statutory Auditors at the end of each reporting period.

The Statutory Auditors certify the financial statements after examining them and the methods used to prepare them.

3.2.5.5 FINANCIAL COMMUNICATION

Executive Management has direct responsibility for financial communication.

The published annual and half-yearly financial information is approved for issue by the Board of Directors. The Chief Executive Officer is responsible for quarterly revenue releases.

A calendar for the publication of financial information is drawn up by the Group each year and is made available to the public and updated where required during the course of the year.

The investor relations and financial reporting website (www.orpea-corp.com) contains all the information available for investors, including presentations given to the financial community, press releases and regulated information.

Twice a year, Executive Management gives a presentation of the Group's results to the financial community.

The Non-Financial Statement presents the ORPEA Group's corporate social responsibility (CSR) strategy in accordance with the regulatory requirements (Article L. 225-102-1 of the French Commercial Code) on the publication of non-financial information.

This Statement outlines the Group's pricipal non-financial risks and the policies it has implemented to adress them including the results obtained for each of this policies. This Chapter also presents the Group's ambitious policies and initiatives, in addition to the main risks identified.

4. Non-Financial Statement

4.1 CSR at the heart of ORPEA's strategy

4.1.1 Strategic positioning

4.1.2 Full integration of CSR into corporate governance

4.1.3 Contributing to the United Nations Sustainable Development Goals

4.2 Acting within an ethical framework

4.2.1 Strengthening compliance processes

4.2.2 The Group's ethical principles and Code of Conduct

4.3 Ensuring the well-being, care and safety of patients, residents and beneficiaries

4.3.1 Respecting the rights and dignity of residents and patients

4.3.2 Ensuring the health and safety of residents and patients

4.3.3 Promoting the well-being of residents, patients and beneficiaries

4.3.4 Maintaining regular, transparent dialogue with residents, patients and families to meet their expectations

4.4 Providing an attractive environment that promotes employee engagement and development

4.4.1 Group profile

4.4.2 Monitoring the health, safety and well-being of employees

4.4.3 Retaining and engaging employees through a dynamic human capital development policy

4.4.4 Promoting diversity and inclusion within the organisation

4.5 Limiting the Group's environmental footprint

4.5.1 A comprehensive review of our environmental policy

4.5.2 Reducing CO ₂ emissions to help mitigate climate change

4.5.3 Working to preserve biodiversity and integrate nature into facilities

4.5.4 Preserving resources and developing the circular economy

4.5.5 Sharing the Group's environmental approach and involving all stakeholders in its implementation

4.6 Building sustainable and responsible partnerships

4.6.1 Consolidation of the responsible procurement policy

46.2 Anchoring the Innovation policy

4.7 Being actively engaged in its communities

4.7.1 Being part of a regional project

4.7.2 Cooperating with local health care providers to share best practices and raise awareness on health issues

4.7.3 Enriching and transmitting knowledge

4.7.4 Showing solidarity in its geographical areas

4.8 Duty of Care Plan

4.8.1 Group risk mapping

4.8.2 Special mapping

4.8.3 Procedures for assessing and monitoring implementation

4.8.4 Risk prevention and mitigation actions against severe breaches of human rights or environmental damage

4.8.5 Introduction of a whistleblowing platform

4.9 Non-financial performance assessment

4.10 GRI, SASB cross-reference tables

4.10.1 Global Reporting Initiative (GRI)

4.10.2 Sustainability Accounting Standards Board (SASB)

4.11 Methodological note

4.12 Report of one of the Statutory Auditors appointed as an independent third party on the consolidated non-financial statement

2021 ESG ACHIEVEMENTS

Launch of IMPROVING TOMORROW BY ORPEA

This corporate project is structured around five programmes in line with the Group's CSR roadmap. It is based on quantified objectives focused on the Group's main challenges, namely:

E for Environment

S for Social

G for Governance

4.1 CSR at the heart of ORPEA's strategy

4.1.1 STRATEGIC POSITIONING

The Group's mission is to provide care and life pathways to people in vulnerable situations. The increase in life expectancy and the rise in the number of neurodegenerative diseases make ORPEA a key player in the management of these vulnerabilities.

To meet the demographic and health-related challenges of an ageing population and shifting trends in pathologies, ORPEA aims to provide a full spectrum of suitable and diverse care solutions tailored to meet the needs of populations in the areas in which ORPEA operates.

By leveraging the resources and stakeholders that make up the Group's business model (see Introduction: Business Model), ORPEA has always endeavoured to create value over the long term - for residents, patients and employees, as well as for society as a whole and for the environment.

By virtue of its mission, ORPEA is naturally at the centre of a dynamic ecosystem that serves people by:

ORPEA wants this ecosystem to be accessible, open, flexible, communicative and transparent to facilitate and strengthen interactions with all stakeholders both at the local and global levels.

Following the publication of a book containing allegations of wrongdoing in January 2022, ORPEA wishes to reaffirm its commitments to all its stakeholders through policies, action plans and performance indicators both at Group level and locally. These indicators are based on recognised international non-financial reporting standards. Tables of concordance with the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) can be found in section 4.10. As part of an improvement and transformation plan to be established in 2022, the company may need to adjust some of the above-mentioned indicators.

Corporate social responsibility is an integral part of the Group's business and is therefore at the heart of its strategy. The CSR and Innovation Committee of the Board of Directors ensures compliance with the chosen guidelines and the deployment of the 2023 roadmap. The 2021 results are presented in section 4.1.1.2. ORPEA renewed its commitment to the United Nations Global Compact in 2021 and details on the Group's contribution to the Sustainable Development Goals are included in section 4.1.3.

• The ORPEA Group's nine CSR indicators

4.1.1.1 STRUCTURING THE CSR APPROACH AND LAUNCHING IMPROVING TOMORROW

In 2020, the Group structured its CSR approach around dialogue with its stakeholders, and was able to identify its priority issues and develop a 2023 roadmap in direct response to the issues of concern.

In 2021, ORPEA took its CSR strategy a step further by developing it into a corporate project entitled Improving Tomorrow. This project aims to bring people together to build a more inclusive and sustainable world in line with the planet's limits and promotes the idea of using each day to make things better.

In 2022, ORPEA will conduct a materiality analysis to better factor in the expectations of its stakeholders and thus prioritise the most relevant issues. This work will become even more important due to the events that affected the Group in 2022. The improvement and transformation plan to be drawn up should also help the Group improve its CSR strategy and its business plan.

For this strategy to be applied to daily life at all facilities, Improving Tomorrow is divided into five programmes which group all the actions and steps necessary to address the Group's non-financial challenges and achieve the CSR roadmap objectives.

The five Improving Tomorrow programmes

This strategy will be implemented on a daily basis so that the entire Group and its stakeholders can make it their own.

1 - Well-being

Ensuring the well-being of residents, patients and employees in adapted living and working environments by ensuring quality of care, quality of catering, quality of life in the workplace and health and safety awareness.

BE WEll IMPROVING TOMORROW BY ORPEA

2 - Career development

Providing access to training and encouraging internal promotions and career development for all employees.

BOOST! IMPROVING TOMORROW BY ORPEA

3 - Inclusion and diversity

Hiring and developing people from all walks of life. Helping to change society's view on ageing, disability and mental illness. Strengthening social bonds by involving families, loved ones and patient associations in day-to-day life at the facilities.

ALL IN IMPROVING TOMORROW By ORPEA

4 - Environmental impact

Managing the Group's environmental impact by reducing its carbon emissions and its energy consumption, by minimising and treating waste more efficiently using the circular economy, and by building greener facilities which promote biodiversity. These values are also shared with all ORPEA partners through its responsible procurement policy.

GO GREEN IMPROVING TOMORROW BY ORPEA

5 - Building a better world

Contributing to social and environmental projects through charitable and community outreach initiatives, supporting vulnerable populations through health prevention programmes, working with local authorities, investing in research, designing tomorrow's innovative solutions... these are all ways to build a more just and sustainable world.

ACT BEYOND IMPROVING TOMORROW By ORPEA

4.1.1.2 IMPROVING TOMORROW ROADMAP

Our roadmap

In response to certain challenges and in order to pursue its CSR ambitions, the Group has already begun to reflect on its future roadmaps, in particular by adding commitments relating to catering or the reduction of carbon emissions in line with the Paris Climate Agreement. These roadmaps will be rounded out in light of the Group's materiality analysis and the development of the improvement and transformation plan in 2022.

- Well-being BE WEll IMPROVING TOMORROW BY ORPEA

- Career development BOOST! IMPROVING TOMORROW BY ORPEA

Inclusion and diversity ALL IN IMPROVING TOMORROW BY ORPEA

- Environmental impact GO GREEN IMPROVING TOMORROW BY ORPEA

- Building a better world ACT BEYOND IMPROVING TOMORROW BY ORPEA

⁽¹⁾ LEED: Leadership in Energy and Environmental Design, a North American standardisation system for buildings with high environmental quality.
⁽²⁾ BREEAM: Building Research Establishment Environmental Assessment Method, a British certification standard for analysing a building's environmental impact.
⁽³⁾ Global, multinational, national and regional suppliers.

The issues of concern to each stakeholder, identified in conjunction with ORPEA's business lines, represent both risks and opportunities that must be analysed and monitored. Indeed, these issues are naturally evolving and will be subject to regular review. Actions taken to address these issues must then be measured and monitored through performance indicators. The key performance indicators are included in the Group's Improving Tomorrow CSR roadmap.

Non-financial risks are the result of mapping conducted as part of an active policy of prevention and management of the risks inherent in the Group's activity. The risk prevention and management framework is based on a structured approach, which aims to identify, assess and control risk factors liable to adversely affect the smooth operation of the Group.

In 2019, ORPEA carried out a complete overhaul of its risk mapping to identify the main risks throughout the Group. All subsidiaries and activities were included in the exercise to take into account changes within the organisation and its operating environment. The risk mapping was presented and shared in full with the members of the Group's Executive Management, the Audit Committee and the Board of Directors. The Group's risk mapping programme is built on the following pillars:

Initially scheduled for 2021, the update of the Group's risk mapping had to be postponed due to the health situation.

At the beginning of 2022, the Group carried out a new assessment of its main risks and updated its risk mapping, particularly in light of the consequences of the crisis faced by the Group and its stakeholders since the publication on 26 January 2022 of a book containing allegations of wrongdoing, particularly in facilities operated by the Group.

The various internal control participants and bodies (quality, medical, human resources, audit, risk and compliance, etc.), and the CSR department, have drawn up definitions and rolled out policies to manage the risks identified.

The CSR roadmap with its quantified commitments illustrates the Group's main non-financial challenges. In order to promote the achievement of these objectives, up to 40% of the bonus of ORPEA's CEO is conditional on the establishment and implementation of the Group's CSR strategy. The same applies to the senior managers of each geographical area, including the CEOs and COOs, whose bonus is conditional, up to 20%, on the implementation of the CSR strategy in their scope, of which 15% is based on the achievement of the roadmap objectives and 5% on a priority CSR criterion depending on the local characteristics of each geographical area. Up to 15% of the bonus for CFOs at geographical-area level is correlated with achieving CSR roadmap objectives.

RESIDENTS, PATIENTS, OTHER BENEFICIARIES AND THEIR FAMILIES

EMPLOYEES

ENVIRONMENT

PARTNERS

LOCAL COMMUNITIES

ALL STAKEHOLDERS

4.1.2 FULL INTEGRATION OF CSR INTO CORPORATE GOVERNANCE

To ensure that its environmental and social impacts are fully taken into account, the Group has integrated CSR into all of the company's existing decision-making bodies.

• The CSR and Innovation Committee of the Board of Directors meets at least three times a year and is responsible for:

The complete Internal Rules of the Board of Directors, including the CSR and Innovation Committee, can be found in Chapter 5, "Corporate governance", or on the Company's website;

ORPEA has chosen to decentralise its corporate social responsibility strategy to its business lines (HR, Procurement, Quality. Medical, Construction, IT, etc.). This means the Group departments drive the strategy, cascading the CSR objectives and action plans specific to their areas of expertise at "community meetings" attended by their counterparts from the Group's various geographical areas. Similarly, the geographical areas are gradually appointing local CSR managers or correspondents to lead the CSR strategy as close to the field as possible and to respond adequately to the specific issues and requirements in each country.

The Group CSR department is responsible for coordinating and promoting the strategy throughout the Group, for all countries and corporate functions. It forms part of the Well-Being unit, which incorporates the Quality, Medical and CSR teams. This setup further embeds CSR in the entire organisation and in the field through the synergies created with these departments, which are specific to ORPEA's core business. The CSR department participates in the CSR Committee of the Board of Directors in order to present the progress made over the period.

CSR is driven by the corporate departments, which cascade the CSR objectives and action plans specific to their areas of expertise at community meetings attended by their counterparts from the Group's various geographical areas.

4.1.3 CONTRIBUTING TO THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS

ORPEA has made the Sustainable Development Goals (SDGs) a priority, as attested by its joining the Global Compact in 2020, its IMPROVING TOMORROW strategy and. more generally, its business as a whole.

While the Group contributes, to varying degrees, to 11 of the 17 SDGs on the 2030 Agenda through all of its business lines, six are particularly material for the organisation and its key stakeholders:

The table below details ORPEAs contributions to the six "priority" and five "secondary" SDGs:

The contribution to the SDGs has been formalised in ORPEA's CSR strategy. Improving Tomorrow. Each of its programmes is subject to quantified targets in line with the following SDGs:

To accelerate its contribution to the SDGs and act in line with its ambitions, ORPEA has joined the Global Compact's "SDG Ambition Accelerator" programme, put in place to help companies "set ambitious goals and targets in the areas that will have the greatest business impact on the SDGs, and integrate sustainable development into enterprise management processes and systems." (United Nations Global Compact - Ambition Guide - Setting the Goals for the Decade of Action, 2020).

4.2 Acting within an ethical framework

- Main issues identified

ORPEA is a leading provider of long-term care for vulnerable people. The Group has achieved this position through active, sustainable and responsible development founded on values and business ethics in the exercise of its business with respect to its residents, patients and beneficiaries and to compliance with laws and regulations.

Even so, like other industry operators, the ORPEA Group may be exposed to the risk of fraud, corruption and influence peddling arising from its interactions with third parties (including public authorities). If this risk were to materialise, ORPEA, its employees and/or senior executives could face sanctions, damaging the Group's reputation.

4.2.1 STRENGTHENING COMPLIANCE PROCESSES

The basis of compliance rules applicable to the entire Group was integrated into an internal body of rules of procedure distributed in 2020 called the "Group Standards [GS]". The GS incorporate the principles of compliance at two levels:

In order to monitor and coordinate the GS, the Group has implemented a twice-yearly self-assessment system. In 2021, the first self-assessment campaign regarding major GS rules was conducted at Group level. Action plans were defined to achieve the risk management objectives.

This work has also led to the strengthening of compliance teams, both at the corporate level and through the creation of a network of compliance correspondents within different geographical areas who support the Group's international development. These local correspondents, assigned to oversight duties, ensure the dissemination and application of the Group's best practices. They are also in charge of adapting the GS to fit the local environment. Coordination between the Group teams and the teams in the geographical areas is achieved through communication and regular interactions to foster transparency on issues that occur at both the Group and local levels.

The new corruption and influence peddling risk mapping exercise conducted in 2021 took place in 19 countries and involved interviews with some 100 people. The identified risks were shared with the management of the geographical areas and with the Group Executive Committee. Action plans have been identified and will be monitored regularly.

Lastly, following publication at the end of January 2022 of a book containing allegations of wrongdoing and the ensuing external and internal investigations, the Group plans to significantly strengthen its compliance process and associated key controls.

4.2.2 THE GROUP'S ETHICAL PRINCIPLES AND CODE OF CONDUCT

In the past, ORPEA has drawn up ethical and quality charters within its facilities setting out its values and best practices. ORPEA has since expanded the process by setting up an International Scientific and Ethics Council and implementing its Code of Conduct (see section 4.3.1.1).

ORPEA relies on two key Group-wide documents:

These documents go hand in hand with a gifts and entertainment policy that has been harmonised and adapted in line with applicable local regulations, as well as a guide to preventing and managing conflicts of interest.

These ethical principles and the Code of Conduct are put into action through a training policy supporting employees in the implementation of best practices contained in these documents.

4.2.2.1 CODE OF CONDUCT

The Code of Conduct, rolled out in all countries, sets out ORPEAs business ethics commitmentsto all its stakeholders: employees, patients, residents and other beneficiaries, public authorities and partners, investors and lenders.

The ORPEA Group's Code of Conduct is based on the principles of the following international and national conventions:

Starting in 2018, the Group has initiated a training policy that uses various approaches to disseminate the principles of the Code of Conduct (in-person training, e-learning, posters). As a result, the Code of Conduct is accessible in French and English on the Group's corporate website (https://www.orpea-group.com/le-groupe/qui-sommes-nous-en/our-ethics) to facilitate its distribution in a fully transparent manner. It has also been adopted by the management of all geographical areas after being adapted to local regulations and translated into all languages of the countries in which the Group operates. Training modules have been developed and shared with local compliance correspondents to facilitate the training of employees throughout their career within the Group.

The Code of Conduct is rolled out to all Group employees, starting with the manager of each geographical area and the Group functions. Regional directors and facility directors are particularly involved, as the latter are responsible for promoting it within their facilities. To that end, several communication tools have been designed and adapted to each audience. E-learning modules have been rolled out within the Group, including in France, Spain, Portugal and Austria.

E-learning is also offered to new recruits. In addition to making the Code of Conduct available via the website, information sheets and e-learning, Code of Conduct training courses, in the presence of a compliance correspondent, are regularly organised.

At end-2021, nearly 25,000 employees in all countries had participated in these training courses.

The presentation of the Code of Conduct is also part of the induction process for new employees (HQ and facilities). In addition, the Code of Conduct is displayed in staff rooms at the facilities so all employees are aware of its existence and the importance of being familiar with it.

In 2021, the Group worked on a complete revision of the 2018 Code of Conduct, leading to the publication of its Code of Conduct - Ethics and CSR in 2022. This comprehensive review has allowed the Group to refocus on its core business of accommodating and caring for patients and residents. It is now structured around four key areas:

Seven of these 16 principles are dedicated exclusively to the human aspect of ORPEA's business. The human factor is therefore particularly highlighted in this new version of the Code, which demonstrates the Group's desire to reiterate its essential principles of respect for patients, residents and their families, as well as the Group's respect for its employees.

The new version of the Code of Conduct - Ethics and CSR is a real working tool for all Group employees and partners. Lastly, this Code of Conduct, thanks to the nine quantifiable and verifiable CSR objectives that it sets, now constitutes a tool for transparency and monitoring of compliance with the commitments made by the Group to all its stakeholders.

2023 CSR objective

Revision of the Code of Conduct that will become the ORPEA Group's Code of Conduct - Ethics and CSR and roll-out to all employees by 2023.

2021 progress report

In 2021, the Group substantially revised its Code of Conduct, now entitled Code of Conduct - Ethics and CSR.

Training for all Group employees on this new Code of Conduct will be rolled out over 2022 and 2023.

4.2.2.2 ORPEA'S CHARTER OF COMMITMENTS TO ITS RESIDENTS, PATIENTS AND THEIR FAMILIES

Each of the Group's geographical areas has introduced a quality system in the form of a charter. These quality charters set out the common basis of the ORPEA Group's commitments based on both the Group's ethical values and the areas of attention that each facility must monitor throughout the management of its activities. To be as aware as possible of the expectations of residents, patients and their families, these charters include the specific local environment of each core business and geographical area. The ORPEA residents and family commitment charter is common to all nursing homes in the same country.

Like all the Group's other quality charters, the quality charter for nursing homes in France outlines ORPEA's commitments to its residents and their families. The best practices it presents cover accommodation, care, meals, bedrooms, accessibility, information, suggested activities and employee training. The charter is displayed in each facility and provided upon admission to new residents and their family. Employees are regularly reminded of the importance of honouring the commitments laid down in the charter.

National charters are also adopted in each geographical area. In France, for example, the hospitalised persons charter is in force in all the Group's hospitals, and the charter for the respect of the rights of the elderly requiring long-term care is in place in all its nursing homes.

Lastly, dedicated quality charters for home care services have also been introduced and published on the corporate websites.

4.2.2.3 INTERNATIONAL SCIENTIFIC AND ETHICS COUNCIL

The Group set up an International Scientific and Ethics Council [ISEC] with a dual mission: firstly, to build and instil a clinical ethics culture and provide support to staff faced with ethically challenging situations; and secondly, to analyse, evaluate and promote clinical research and Innovation in Care programmes within the Group.

In order to strengthen its wider reflections on the ethical dimension of care practices, respect for the individuality of each person and to encourage all legitimate questions on the subject, each Group facility can refer to the ISEC. Any matter or question concerning a resident's or patient's care can be referred to the Committee, including matters of positive treatment. As part of this commitment, every year the ISEC organises the ORPEA Excellence Awards (see section 4.3.3.4) to showcase the efforts made by teams regarding ethical considerations and Innovation in Care.

4.2.2.4 GIFTS AND ENTERTAINMENT POLICY

The Group's revised gifts and entertainment policy was circulated to all geographical areas at the end of 2018. It was harmonised and adapted for rules and local regulatory contexts in each geographical area in 2019. Another update of this policy took place in France 2021 to take into account the new anti-gift law applicable to health professionals.

In concrete terms, the policy aims to provide a framework for relationships between the Group's employees and third parties, such as business partners, authorities (civil servants, public officials, elected officials, government representatives, etc.) and healthcare professionals. The policy also sets the thresholds for gifts and entertainment, which are adapted to each geographical area according to applicable practices and regulations.

Employees in each geographical area are regularly made aware of the policy. A communication is sent to them in various forms that contains an overview of the applicable rules. This gifts policy is included in the Group's Code of Conduct - Ethics and CSR.

4.2.2.5 GUIDE TO PREVENTING AND MANAGING CONFLICTS OF INTEREST

The guide to preventing and managing conflicts of interest is embedded in the Group's approach to ethics. It presents the concept of conflicts of interest in an educational way and provides practical examples. The guide comes with a conflict of interest declaration form. This declaration is annual and mandatory for the functions listed below (even if there is no conflict of interest) and optional for other functions considered less exposed.

The initial roll-out was as follows:

Where a conflict of interest is declared, Compliance verifies whether or not it is material and implements the necessary corrective measures.

As of March 2022, a new campaign to identify conflicts of interest has been launched for the above-mentioned persons and on the basis of a more thorough questionnaire.

4.2.2.6 NON-COMPLIANCE RISK MAPPING

Since 2018, the Group has endeavoured to roll out a new set of processes in line with the Sapin II law. To remain aligned with evolving market practices and regulatory requirements, a new risk mapping process was undertaken in 2021 to specifically address corruption and influence peddling risks. The Group has enlisted the support of an internationally renowned firm in order to benefit from best practices and to guarantee the impartiality of the process (other risks being dealt with in the Group's risk mapping). The mapping exercise covered 19 countries with specific maps that were then summarised into a single Group map. The results were shared with the management of the different geographical areas and the Executive Board between the end of 2021 and the beginning of 2022, for implementation of the required action plans.

4.2.2.7 A RESPONSIBLE AND CLOSELY CONTROLLED PROCUREMENT POLICY

The Group has a Procurement department backed up by procurement services in the various geographical areas in which it operates. Under its procurement policy, the Group takes into account the societal, environmental and business ethics aspects of its supplier relationships. A description of the Group's Responsible Procurement Charter can be found in section 4.6.1.2 of this Universal Registration Document.

Oversight of third parties

The Compliance department has implemented a process to identify and evaluate existing significant third parties. The Development, Construction, Procurement and IT departments have already undergone more in-depth analysis.

Suppliers were pre-classified on the basis of their business volumes with the Group or their strategic importance. Depending on the results of the evaluation, the Compliance department then conducted Know Your Third-Party procedures based on in-depth duty of care compliance questionnaires. Action plans were then implemented based on the responses provided.

In parallel, suppliers were asked to:

New partnerships are subject to internal control processes and a strict approval procedure before any geographical area can enter into a relationship with the new partner. Accordingly, an integrity verification process of the new partner is conducted using dedicated tools such as LexisNexis and Dow Jones to avoid any risk of corruption and/or influence peddling. This is supplemented, if necessary, by in-depth investigations (depending on the nature of the third party, the nature of the services provided, potential interactions with public officials and the risks identified).

Duty of care processes are carried out with the support of local compliance correspondents and cover the verification of the integrity of strategic third parties (such as first-tier suppliers and general contractors) and of almost all third parties related to acquisitions (intermediaries, vendors).

In line with the findings of external and internal investigations following the publication of a book containing allegations of wrongdoing, the third party compliance process will be strengthened.

4.2.2.8 WHISTLEBLOWING PLATFORM

In accordance with the Sapin II law, a global whistleblowing framework for all stakeholders was introduced, providing them with a warning mechanism for Code of Conduct breaches, especially those regarding:

Confidentiality of the information disclosed is guaranteed at every stage of the whistleblowing process, which extends to the identity of the whistleblower. No action may be taken against an employee who reports in good faith a breach of the principles laid down in the Group's Code of Conduct via the whistleblowing platform, which is available at www.orpea.signalement.net.

The table below outlines the incidents reported over the last three years.

The Group has also established a procedure for compiling reports accessible on the whistleblowing site. The procedure sets out the rights and obligations of whistleblowers and those referred to in a whistleblowing report. It also stipulates the scope of the protection provided to the whistleblower making a report in good faith.

An Audit Investigation Charter has also been drafted to guide the audit missions and is regularly applied to the course of investigations launched following a whistleblower's report. This charter will be updated in 2022 to incorporate regulatory changes related to the strengthening of whistleblower protections.

In order to raise the level of awareness on this tool, reporting procedures via the dedicated platform are presented in greater detail as part of the training courses on the new Code of Conduct - Ethics and CSR to be rolled out in 2022.

The low number of cases reported through the whistleblowing site can be explained in part by the coexistence of other channels for reporting employee concerns but also by insufficient awareness of this platform among employees. For this reason, an e-learning module dedicated to the whistleblowing platform was rolled out in 2021 in France and at Group level in order to raise awareness of this platform among employees. Other awareness-raising actions are planned for 2022 throughout the Group, in particular via posters displayed in staff rooms and the roll-out of a QR code facilitating access to the whistleblowing platform.

4.3 Ensuring the well-being, care and safety of patients, residents and beneficiaries

The primary mission of the ORPEA Group in all its activities is to care for and support vulnerable people experiencing a loss of independent living skills, whether they are "residents" in nursing homes, "patients" at rehabilitation or mental health hospitals or "beneficiaries" of home care services.

- Main issues identified and summary of the ORPEA Group's values

The average age of nursing home residents is over 85 and the average age upon admission is 84. Dependence levels are assessed according to country-specific scales and determine the physical and psychological vulnerability of those requiring care (75% suffer from degenerative or neurodegenerative diseases and 45% are undernourished when they arrive at the nursing home).

Given these socio-demographics, ORPEA's key challenges are:

4.3.1 RESPECTING THE RIGHTS AND DIGNITY OF RESIDENTS AND PATIENTS

The dignity and rights of residents and patients are central to the ORPEA Group's activities, a value that is reflected in the IMPROVING TOMORROW programme BE WELL. Every resident or patient should be empowered to remain in control of their health and life, despite their disability or frailty, based in particular on clear information adapted to every step of their care and a personalised care and life plan.

4.3.1.1 A CULTURE OF ETHICS SUBJECT TO ONGOING REVIEW

The culture of ethics and positive treatment is an intrinsic component of the ORPEA model. The Group aims to ensure that these fundamental principles of respect for the rights and dignity of residents and patients are implemented. This culture is reflected on a daily basis in every facility's commitment to preventing mistreatment and promoting positive treatment, founded on respect for the individual, for their dignity and for their uniqueness. This positive treatment also requires continuous analysis of working practices with professionals regularly reflecting on what they do. and rigorously applying the measures decided on to improve practices. This culture is a cornerstone of quality care and permeates in a number of ways:

Code of Conduct and charters

The ORPEA Group's values are set out in the Group's Code of Conduct - Ethics and CSR and in the charters that are deployed at facility level.

This Code of Conduct and the charters are essential in terms of both social responsibility and ethics (see section 4.2.2). Everyone is expected to comply with these principles and set an example in the way they act every day.

LES ENGAGEMENTS D ́ORPEA

Charte Qualité Families / Résidents

All nursing homes have a copy of the Group's Commitments Charter, which is displayed in the reception halls and given to each new arrival. A specific check is carried out on this point during the half-yearly internal audits. It includes everything that residents can expect from the teams, the facility and the Group during their stay on many topics, including care, meals, bedrooms, activities, etc. The Charter, which is shared by all nursing homes in the same country, represents the Group's strong commitment to its residents and their families with regard to the quality of the services offered.

An Ethics Council, the ISEC, with a Chairman from outside the ORPEA Group to support ethical reviews by teams in the field

In order to strengthen its wider reflections on the ethical dimension of care practices and respect for the individuality of each person and to encourage all legitimate questions on the subject, each Group facility can refer to the ISEC (International Scientific and Ethics Council, see section 4.2.2.3). Any matter or question concerning a resident's or patient's care can be referred to the Committee, including matters of positive treatment. As part of this commitment, every year the ISEC organises the ORPEA Excellence Awards (see section 4.3.3.4) to shed light on the efforts made by teams regarding ethical considerations and Innovation in Care.

In its 2020 activity report, the ISEC identified five areas of work for 2021:

The various phases of the Covid-19 epidemic throughout 2021 have made it difficult to apply this roadmap, and have delayed some of the objectives, which will be picked up again in 2022. Furthermore, on the basis of the in-depth survey (COVISEO ⁽¹⁾ ) conducted during the first wave of Covid-19, the ISEC has set itself the following objectives for 2022:

⁽¹⁾ COVISEO (Covid International Survey on Ethics-ORPEA): this exploratory qualitative study had a dual purpose: to identify the key clinical ethical principles highlighted by the Covid-19 pandemic in the Group's nursing homes, and to map the situations considered ethically problematic which arose during the epidemic. It drew on voluntary participation from the nursing homes and their teams. The survey was conducted among caregivers in 36 nursing homes in seven European countries, based on 180 questions.

4.3.1.2 PREVENTING MISTREATMENT AND PROMOTING POSITIVE TREATMENT

Preventing mistreatment, providing team training, and handling cases of mistreatment

To prevent the risk of mistreatment, the ORPEA Group has put in place a preventive and corrective protocol in the event of mistreatment in all its facilities.

This protocol helps to prevent mistreatment by addressing:

Cases of mistreatment or suspected mistreatment are considered a serious adverse event and are reported to the competent authorities in accordance with applicable rules in the corresponding country. Events may be reported by an employee and/or a resident or patient, a family member or any other person involved in the facility. Each event is subject to an internal investigation, an analysis of the causes and the implementation of immediate corrective actions.

ORPEA is particularly vigilant against acts of mistreatment. In 2021, 83 cases of suspected mistreatment or neglect were identified in all countries where the Group operates and were reported to the relevant authorities. Some 45% of these cases were corroborated, leading to disciplinary measures such as dismissal of the involved employees.

To strengthen its policy against mistreatment, the ORPEA Group will set up an Observatory for Mistreatment and Neglect in France from 2022 onwards, based on the model of the Suicide Observatory which has been in operation for several years. The aim is to analyse each proven act of mistreatment to look for correlations and recurring factors in order to better target the prevention and training measures that need to be rolled out.

Promoting positive treatment

Weekly summary meetings are held in each of the Group's facilities to discuss the difficulties encountered by the team. During these meetings, the care of residents and patients is discussed in order to identify, as a team, the most appropriate solutions to be implemented with the aim of respecting the rights, freedoms, individuality and dignity of residents and patients. To strengthen this culture and promotion of positive treatment in all its facilities, the ORPEA Group has committed to systematically training an ethics and positive treatment correspondent for each site.

- Role of the facility ethics/positive treatment correspondents

• For residents, patients, families and relatives:

• For professionals:

2023 CSR objective

The ORPEA Group is committed to identifying, appointing and training an ethics/positive treatment correspondent at each of its facilities who will be responsible for ensuring that best practices are implemented.

2021 progress report

As of 31 December 2021, 44% of the Group's facilities had an appointed and trained ethics/positive treatment correspondent.

• Facilities with a trained ethics/positive treatment correspondent in 2021 ^*

^* The scope of the facilities is as follows: all facilities with a care activity, i.e., hospitals and nursing homes that have been in the Group for more than one year.

The training programmes for ethics/positive treatment correspondents are developed by a multidisciplinary team and in some cases certified by an external organisation. For example, in Spain, ethics/positive treatment correspondents receive training from an external organisation. In France, the in-house training of ethics/positive treatment correspondents has been certified by an external organisation. Appointment of these correspondents will accelerate in 2022 in order to respond as quickly as possible to the challenges of promoting positive treatment in the facilities.

4.3.2 ENSURING THE HEALTH AND SAFETY OF RESIDENTS AND PATIENTS

The ORPEA Group has implemented appropriate preventive measures and corrective action plans to address the various health and safety risk factors that facilities may encounter (pandemic risk, infection risk, food safety risk, etc.), while taking into account the regulations in force in the various host countries. Analysis of these risks and malfunctions is essential to guarantee the health and safety of residents, patients and beneficiaries.

For example, a major vaccination plan against Covid-19 was carried out by the Group for residents of nursing homes, resulting in the vaccination of approximately 90% of the residents.

4.3.2.1 A CULTURE OF QUALITY IN ALL COUNTRIES

Each geographical area has a Quality department responsible for drafting and coordinating with the different business lines the procedures setting out best practices for the care and quality of life of residents, patients and other beneficiaries in all facilities, both for initial implementation and for any necessary updates.

The procedures provide a framework for staff practices in the areas of healthcare, food services, management, activities, maintenance and safety, and more. They are then broken down into application protocols and traceability and training tools.

Almost 500 procedures and tools are in place at each facility to manage practices and ensure they are correctly applied on a daily basis or in urgent situations. In 2022, the Group will review all of its procedures and tools in order to ensure greater ease of implementation for facility teams.

This policy is actively supported by the countries' Quality teams, who head up and monitor the Group's Quality policy in each country where ORPEA operates. In total, in all geographical areas, nearly 110 people work in the Quality departments to implement the quality policy in all facilities, overseen by the corporate Quality department during quarterly Quality Committee meetings and visits to facilities.

4.3.2.2 PROGRAMME FOR PREVENTING AND MANAGING OPERATIONAL RISKS

Maintenance of facilities

ORPEA has identified the safety risks that may arise at its facilities and has introduced appropriate tools including procedures, training, checklists and control assessments to prevent and manage these risks. The main risks associated with buildings relate to:

ORPEA invests each year to ensure that its facilities in every host country provide high-quality, safe and comfortable accommodation and comply with the applicable health, safety and fire regulations. This investment also helps maintain the appeal of the Group's facilities and meet the comfort and safety expectations of residents and patients.

Maintenance teams set up in each country are responsible for building safety and maintenance, based on a dedicated yearly works budget. This is underpinned by:

Hygiene and food safety

ORPEA's food safety control plan helps prevent the chemical, physical and biological risks inherent in collective catering. It covers the requisite points for ORPEA's facilities to fully honour their responsibilities: best practices in food hygiene, compliance with the Hasard Analysis Critical Control Points (HACCP) method, management of remedial actions and warnings, and introduction of a traceability system.

Assessments are conducted on a regular basis, both internally and by independent organisations, monitoring more than 250 food-related criteria per year. For example, the Group conducts quarterly bacteriological analyses above and beyond the regulatory requirements of many countries to ensure the best possible food safety.

The Group Catering department works with its suppliers to offer high-quality products and to safeguard the traceability of products and their origins. To ensure all countries adhere to the same principles, the Group has developed a catering standard that lays down the major rules when it comes to hygiene and food safety in particular.

Crisis management

Every facility has both a crisis management plan and a business continuity plan to deal with any situation, with different levels of response. These plans also include the equipment needed to protect residents, patients and employees, such as masks, goggles and hand sanitiser to deal with an epidemic, and air conditioners and fans in the event of a heat wave. In the event of a crisis, these plans provide for the setting up of a crisis unit within the facilities. The facility crisis unit communicates with the national crisis unit, which consists of the Operations department, the Medical department and the Quality department, among others. The national unit coordinates actions throughout the Group and centralises the information reported by the local crisis units. The Group procedure will be reviewed in 2022 to strengthen crisis management tools at Group level.

4.3.2.3 MONITORING OPERATIONAL ACTIVITIES

To ensure the smooth operation of the arrangements put in place to protect the health and safety of residents, assessments and controls are conducted on a regular basis in all countries to make sure the procedures and regulations are followed properly and that training has been taken on board by employees.

Internal audits

100% of facilities internally audited every six months

at least 200 criteria monitored on an ongoing basis

ORPEA has developed a quality control process that applies to all its facilities in every country. Nearly 200 criteria are continually monitored and controlled by facility directors, regional directors and the different support business lines (quality, medical/care, construction and catering). These control points cover the following topics:

This operational internal assessment plan takes the form of:

These internal assessments allow each facility to identify areas of non-compliance and implement appropriate corrective action plans as a team. The action plans are monitored on a weekly basis by facility management during team meetings and by the support teams during their regular visits. The Group promotes a positive error culture that includes systematically taking stock of and continually improving practices.

External audits

In addition to this internal assessment plan carried out by ORPEA teams, external audits by authorised companies are carried out in all countries and lead to corrective measures if necessary.

Checks are also carried out by the competent state authorities in each country. The ORPEA Group ensures that it takes into account all the recommendations issued by these bodies to correct any discrepancies flagged and to improve its practices in a more general sense.

Between January and April 2022, following the publication of a book containing allegations of wrongdoing, nearly 70% of French nursing homes were audited. No major sanctions, i.e., facility closure, were applied against Group facilities. ORPEA will ensure that all corrective measures are implemented within the required timeframe.

Certification of facilities

ORPEA seeks to have its facilities certified so as to obtain an independent assessment of the quality and safety of the people being cared for and of the services provided. The minimum standard chosen by ORPEA is ISO 9000:2015 However, some countries provide for other standards that are more appropriate to the health activities or culture of the country concerned. On this basis, the ORPEA Group has decided to certify all of its facilities by independent bodies to guarantee the quality system, with a focus on the quality of care and management of the facilities. The Quality department of each country is responsible for selecting the benchmark that corresponds to the best quality level in conjunction with the Group Quality department. Where there are no demanding business standards, countries choose to implement the internationally recognised ISO 9000:2015 standard. This is the case for the following countries/activities: Belgium, Ireland, Germany, Netherlands, Spain, Portugal (nursing homes), Poland and French-speaking Switzerland (hospitals).

2023 CSR objective

All facilities are certified based on local reporting criteria. The ORPEA Group is committed to every facility having an external certification. To comply with local regulations and take better account of the expectations of residents and patients, the Group has undertaken to obtain this certification based on the most relevant standards in the country concerned, thus considering the needs of all stakeholders.

2021 progress report

By 31 December 2021, 61% of the Group's facilities were certified by an external body based on an ISO 9001 standard equivalent or higher.

• % of certified facilities in 2021 ^*

^* The scope of the facilities is as follows: all facilities with a care activity, i.e., hospitals and nursing homes that have been in the Group for more than two years.

4.3.2.4 HANDLING ADVERSE EVENTS

Adverse events represent a risk of which the Group is well aware and for which staff endeavour to implement all preventive measures necessary. Teams assess the potential risks when residents and patients are first admitted. For individuals at risk, in addition to the requisite close monitoring, the care team introduces protective measures, develops an appropriate care pathway and makes sure the resident's or patient's environment is secure at the time of admission. These measures are always discussed with the doctor, staff and the resident's legal guardian, safeguarding the well-being, rights and freedoms of residents and patients. In order to increase prevention within facilities, the Group organises training and awareness raising campaigns for teams. Among other things, they provide the teams with the knowledge they need to identify behaviour that could lead to a risk of running away or suicide and to understand the procedures to follow if an exceptional event occurs.

In order to guarantee this programme, a procedure for reporting and processing adverse events is established in all countries where the Group operates. All serious adverse events are handled with special procedures (internal and external reporting to the competent authorities, analysis of causes and corrective actions to be taken, both locally and at country and Group level). As well as these procedures being set up in all facilities, an action plan has been launched to strengthen the culture of reporting all adverse events, regardless of their level of seriousness.

In 2021, the adverse event rate was 0.2% (number of serious adverse events relative to the number of residents and patients admitted in 2021), Each serious adverse event was the subject of detailed analysis and specific monitoring. Corrective actions were systematically carried out with staff, always with the aim of reducing this type of adverse event as much as possible and preventing it from occurring at other facilities.

The ORPEA Group also pays particular attention to caring for residents and their families following a serious adverse event by systematically offering psychological support. At the same time, the teams are also monitored and they can also receive psychological support (see section 4.4.2.1).

In 2021, 87% of the serious adverse events that occurred were care-related, which is consistent with the Group's activity. For a more in-depth analysis, the Group will work in 2022 on the reporting of new indicators to assess, among other things, the exhaustivity of reports of such events and how they were handled.

Serious adverse events always represent a failure in the care of a resident or patient. This is why, in addition to the corrective measures taken locally by the teams, a macro-analysis of these events helps identify more general measures to be taken, particularly in terms of team training. For example, in France, the following training courses were implemented for teams:

^* Adverse events are considered to be:
- related to care: running away, suicide or attempted suicide, abuse, aggression, inappropriate family behaviour (excluding Covid-19);
- related to logistics/technical issues: heating, water, electricity, etc.;
- related to an external factor: theft, intrusion, climate event, etc.

In 2022, in light of the conclusions of the external and internal investigations carried out following the publication in January 2022 of a book containing allegations of wrongdoing, the Group will strengthen its culture of systematic reporting of adverse events and the timeframe for reporting serious adverse events to the competent authorities.

4.3.3 PROMOTING THE WELL-BEING OF RESIDENTS, PATIENTS AND BENEFICIARIES

4.3.3.1 FACILITIES DESIGNED AND OUTFITTED FOR PEOPLE'S WELL-BEING

The ORPEA Group designs the architecture and amenities of its facilities around people. This philosophy is essential for creating a pleasant care and living environment and goes beyond the quality of nursing care to focus on the well-being of those being cared for. The Group takes several factors into account:

These criteria, which are absolutely essential for pleasant living conditions and individual well-being, not just for residents and patients and their families but also for facility staff, are on the Group's checklist for new building construction.

4.3.3.2 DEFINING A FOOD PLAN THAT ENSURES NUTRITIONAL INTAKE AND GUEST SATISFACTION

47 million meals served in 2021

Meals are a special time of day, fostering a social atmosphere, sharing and pleasure, and contribute to maintaining good physical and mental health. This is a fundamental issue for elderly or frail people who are at high risk of undernutrition, and is the subject of particular attention within the Group. ORPEA's catering policy is based on three pillars:

In 2021, based on its conviction that catering that incorporates "health and pleasure" is key to the well-being of patients, residents and users, ORPEA, together with all the Catering departments in the various countries, drew up a Catering Charter containing nine clear, concrete commitments that will gradually be rolled out systematically in all the Group's facilities.

9 Catering Charter commitments

1. Detecting and managing the risk of undernutrition as early and as effectively as possible

2. Guaranteeing food safety

3. Respecting the seasons and promoting local culinary heritage

4. Sourcing local, quality and environmentally friendly products

5. Making meals truly enjoyable by stimulating the senses

6. Personalising the catering offer by adapting to each individual's needs and expectations

7. Promoting dialogue and participation of residents, patients and users

8. Promoting the work of the catering teams on a daily basis

9. Reducing the Group's environmental footprint, by fighting food waste and limiting energy consumption and water use

New 2023 CSR objective

100% of facilities have implemented the Group's Catering Charter and have met the commitments relating to nutrition, food safety and environmental footprint.

New 2025 CSR objective

100% of facilities have implemented 100% of the commitments of the Catering Charter.

• "Meal quality" satisfaction index

Although the satisfaction rate for catering is still lower than for the other questions, the quality of the meals remains stable and is appreciated by more than 87% of the residents at the Group's nursing homes ("very satisfied" or "satisfied"). In hospitals, the satisfaction rate for the quality of meals has only been consolidated since 2021. As catering plays an important role in personal care, the Group intends to continue its efforts in terms of nutritional quality (choice of products, team training, etc.).

4.3.3.3 IMPLEMENTING EDUCATION AND PREVENTION PROGRAMMES TO MAINTAIN THE AUTONOMY OF RESIDENTS AND PATIENTS

Health education or psychological education programmes have been developed for patients or their loved ones and family by the Group's hospitals in France, both in psychiatry and in post-acute care and rehabilitation, with all specialities covered.

These programmes allow patients to improve their knowledge of their pathology and help them prevent health risk factors to live better, better control their treatment and consolidate their recovery, thus prolonging the benefits of hospitalisation once they return home.

To promote patients' well-being and give them the keys to taking care of themselves, partnerships can also be set up to offer alternative, non-drug, supplemental treatments, such as yoga therapy in post-acute care and rehabilitation for patients suffering from chronic pain or cancer. There are also comprehensive programmes that involve early intervention with elderly people before they lose their independent living skills to provide them with tools to take charge of their health, preserve their remaining abilities and maintain or improve their quality of life.

In Germany, an innovative programme called "Salvea Inside" has been implemented to integrate physiotherapy more intensively into the daily care and activity plan of nursing homes. The many advantages of this programme include preventing falls and increasing the motivation of residents and care givers.

4.3.3.4 INNOVATING CARE PRACTICES AND SHARING BEST PRACTICES FOR GREATER WELL-BEING OF RESIDENTS AND PATIENTS

As part of its innovation policy, ORPEA is committed to identifying new projects and solutions every year to improve the well-being of the people in its facilities. And as part of its CSR roadmap, the Group has also formally committed to implementing well-being programmes (see section 4.6.2).

ORPEA Excellence Awards

Since the culture of well-being is the key focus of on-site teams, every year the ISEC organises the ORPEA Excellence Awards to pay tribute to Group teams that have developed programmes bringing fresh thought and innovation to their healthcare practices. The event is a way to support and nurture the teams' efforts in these areas.

For the seventh edition of the ORPEA Excellence Awards, teams from 12 countries submitted 44 projects for consideration. Despite the public health crisis still ongoing in 2021, the growing number of projects submitted during the year attests to the genuine interest of the ORPEA Group's teams in ethical considerations as well as the importance they place on constantly reviewing their practices. The teams' goal is to offer residents and patients ground-breaking care to improve their quality of life and well-being.

The award ceremony honoured the following winners:

- ORPEA Excellence Awards 2021:44 entries from 12 countries

Clinical Ethics category

Research category

Innovation in Care category

Sharing innovative care practices

ORPEA endeavours to promote the sharing of best practices Group-wide. Its aim is for its entire network to reap the benefits of innovative care and treatment approaches, and also of initiatives successfully implemented at a facility that promote the well-being of residents and patients or improve the quality of life in a facility.

As part of this approach, every country publishes an internal local paper or online magazine for its teams to get the message across and share these insights.

The Quality programme and the tools rolled out Group-wide also contribute to these efforts. The regional Quality correspondents also help to pass on best practices and interesting initiatives and to adapt them to a greater extent.

Lastly, a number of years ago ORPEA established scientific associations to review best professional practices in its countries of operation. It also set up inter-country committees to share these best practices across borders (Quality Committee, Medical Committee, etc.). These associations and committees allow professionals to meet, exchange ideas, compare practices, draw inspiration from one another, support clinical reflection, discover new therapeutic approaches and sometimes pool their resources. The ultimate aim of these associations is to improve the care given to residents and patients at facilities within the Group. They also help to create a sense of belonging among professionals.

1,000 Smiles initiative

Created in 2020, the "1,000 Smiles" awards recognised the efforts made by teams in the Group's facilities who, during the many weeks of Covid-19 lockdowns, developed a multitude of original initiatives to mobilise, unite, strengthen ties and inspire smiles, energy and optimism among residents, patients and employees.

A second edition of the awards was held in 2021 and 51 entries were submitted by teams from 14 countries. Based on the criteria of originality, impact, replicability and team commitment, the jury of Group employees awarded three prizes for the year 2021:

4.3.4 MAINTAINING REGULAR, TRANSPARENT DIALOGUE WITH RESIDENTS, PATIENTS AND FAMILIES TO MEET THEIR EXPECTATIONS

255,000 patients and residents cared for in 2021

One of the main concerns of facility directors is to maintain an ongoing dialogue with residents and patients and their families so as to meet their expectations, answer their questions and provide the best possible care plan for people who place their trust in the Group.

ORPEA is aware that certain situations, and in particular admission to a nursing home or the progression of an illness, can cause feelings of stress, guilt or even failure and lead to misunderstandings and concerns. It is the primary mission of facility directors and their teams to maintain ongoing dialogue with residents and their families.

This dialogue and transparency begin upon admission, giving residents and patients a say in shaping their care plan and arrangements so that they take the lead in decisions related to their health and maintain their independence and well-being as far as possible. This is a crucial part of giving prevention and care pride of place over the long term, and of respecting the choices made by residents and patients. As part of this approach, ORPEA's teams always take the time to explain the care and treatment they are giving to residents and patients so that they can freely make their own decisions. Their consent is systematically requested for all courses of treatment.

At the same time, different measures are developed within the Group to encourage teams to listen attentively and kindly and to put the resident's or patient's concerns first, as set out in the chapters below.

4.3.4.1 CONSTANT DAILY DIALOGUE

The teams are made aware of the importance of paying special attention to the needs and expectations of residents, patients and their loved ones in all circumstances. Every effort is made within each facility to conduct a constructive dialogue based on the following bodies:

In 2021 and in view of the ongoing Covid-19 epidemic, facilities continued to encourage the proactive communication practices with families and loved ones that had been put in place in 2020 to stave off isolation as much as possible during lockdowns through:

Attentive and committed to strengthening this dialogue and transparency with families, the ORPEA Group will strengthen the mechanisms for maintaining social bonds by 2023, in the form of:

Public messages from the facility, private messages and photos for families

Private messages and photos for the resident and his/her family

Facilities and residents

Tablets available at the facility allow your loved one to view messages and photos that you have sent, look back at special moments enjoyed at the facility and receive a personalised newspaper.

Families and loved ones

You can communicate with your loved one, and post photos or messages on the news feed.

You can also view updates about the facility and memorable moments

• ORPEA Family app: as part of its initiatives to enhance communication with families, the Group has developed an app currently used in France and being trialled in Belgium, Ireland, Spain and Austria. The app accompanies families in their journey with ORPEA and involves them in key moments such as admission, changes in health, daily life and end of life. It is aimed at maintaining and strengthening links between residents and their families, to proactively include family members in life at the facility and to train and support them in understanding this new stage;

• meetings with families, or family councils mirroring residents' councils in France: periodic meetings that foster important dialogue between the facility team, the residents and their families. These are in place in Spain, Latvia, Italy and Poland.

In hospitals, it is more difficult to establish relationships with families because some patients do not want to or are only staying for a few weeks. For this reason, other solutions are being considered, for example in France, where a project to partner with user associations, representing patients, has been launched and will be rolled out over 2022.

2023 CSR objective

The ORPEA Group will be introducing a system in all countries aimed at involving families more closely in life within a facility, improving the quality and transparency of the information provided, and maintaining the social bonds that are such a vital part of caring for residents and patients.

2021 progress report

At 31 December 2021, 58% ⁽¹⁾ of the Group's countries had set up a system to enhance dialogue with families through apps, committees, mediation and partnering with patient associations.

⁽¹⁾ The scope of the facilities is as follows: all countries with facilities caring for frail residents or patients (excluding assisted living facilities and rehabilitation centres where the beneficiaries are autonomous, excluding home care services). Excluded: clinical activities where the patient is autonomous, assisted living, home care and outpatient units.

4.3.4.2 ACTIVE LISTENING THROUGH REGULAR SATISFACTION SURVEYS

For more than 20 years, the ORPEA Group has been tracking the satisfaction of its residents and patients through regular surveys. The Group believes that it is essential to understand their expectations so it can identify the corrective measures needed and the priority areas to work on with the teams in the facilities.

To this end, the Group has adapted the satisfaction survey for each of its businesses (nursing homes, hospitals and home care services) and rolled it out it in all Group facilities.

Hospitals

In hospitals, these surveys are carried out during the patient's stay or when they are discharged. In Austria, for example, hospitals chose to use a survey company to call patients a few days after discharge. All patient satisfaction questionnaires have the same overall structure and measure five key indicators, with each country given the option to adapt some questions to best take into account patient expectations and the type of healthcare facility. The completed questionnaires are analysed at meetings by the management team and the heads of the hospital departments, and lead to action plans where necessary. The following subjects are covered:

^* Hospitals measure satisfaction on tour levels: "very satisfied", "satisfied"; "unsatisfied" and "very unsatisfied" - except in Germany, where they use five. This result includes the response rate of the first two levels of satisfaction out of all the responses given. The satisfaction rate regarding care, care teams and catering have only been consolidated since 2021.
^** The recommendation rate is measured on three levels: "Yes, definitely", "Yes, maybe", and "No". This result includes answers for "Yes, definitely" and "Yes, maybe".

Nursing homes

In nursing homes, a satisfaction barometer is carried out annually by an independent external company specialising in surveys. In 2021, more than 61,000 Group residents and family members were surveyed. Two channels of collection were used to make sure each resident or legal representative could respond to this satisfaction survey:

To ensure total objectivity, strict instructions are given to the facilities so that no help from the team is given to the residents in filling in the questionnaires. And, to provide an even higher degree of reliability, the external firm is responsible for checking that similar entries are not found on several questionnaires from the same facility. If doubts arise, a report is made to the Group's Quality department, which investigates and decides whether or not to withdraw these questionnaires.

In nursing homes, the annual satisfaction barometer measures the quality of the services provided according to nine criteria, in addition to measuring the consideration given to the resident and the confidence in the care provided:

The survey also measures overall satisfaction and asks residents and family members how likely they would be to recommend the nursing home to an external person. In 2021, 50.4% of residents and families responded to the survey. More than 90% of them said they were satisfied or very satisfied and more than 93% said they would be likely to recommend ORPEA facilities to friends or family.

Processing the results is a key part of the satisfaction survey. The management teams at each facility receive a detailed report of the ratings. An action plan is then worked out with all facility staff. All the residents and their families are then invited to a feedback meeting where the results of the survey and the areas for improvement worked on by the team are presented. This is an important opportunity for discussion at the facility and helps set the tone for the year to come.

^* In 2021, the satisfaction survey could be filled in digitally in 11 of the 15 countries involved in the nursing home business. However, the participation rate was lower than for the paper version (42%). As a result, the participation rate decreased in 2021 In 2020, only a pilot version of the digital satisfaction survey was rolled out in France. In 2021, it was rolled out across the ORPEA network with the exception of Latvia, Mexico, Brazil and Uruguay.
⁽¹⁾ Satisfaction is measured on four levels: "very satisfied", "satisfied", "unsatisfied" and "very unsatisfied". This result corresponds to the sum of "very satisfied" and "satisfied" responses.
⁽²⁾ The recommendation rate is measured on three levels: "Yes, definitely", "Yes, maybe", and "No". This result includes answers for "Yes, definitely" and "Yes, maybe".

• Satisfaction criteria - Satisfaction rate

Home care services

For home care services, each country or subsidiary organises its own satisfaction survey, either as a questionnaire or a digital survey. They were rolled out for the first time in 2021. As for the other businesses, the survey assesses the recommendation rate and general satisfaction with the service, but also looks at specific areas such as relationship with the home care services agency and quality of the provider. The response rates were 33% and the overall satisfaction rate was 93%.

4.3.4.3 HANDLING COMPLAINTS

In each country, a procedure has been established for handling and following up on complaints, whether they come directly from the patient, resident or their family. There are several channels for complaints: they may be made directly to the facility concerned, to regional management, to administrative headquarters or to Group headquarters. Regardless of the channel, complaints are handled as follows:

In 2021, the complaints rate was 0.3% (number of complaints in relation to the number of residents and patients in 2021), For the Group as a whole, the complaints rate for 2021 was lower than in 2020. This is partially explained by the looser restrictions linked to Covid-19 than in 2020, leading to fewer complaints from families. Particular attention should be paid to verbal complaints, which are not yet always systematically tracked, even if corrective measures are taken by the facilities.

Since the publication of a book, at the end of January 2022, containing allegations of wrongdoing, particularly in facilities operated by the Group, the number of complaints received has increased significantly.

⁽¹⁾ The rate is calculated on the basis of complaints received outside facilities.

Caring for frail and vulnerable people in facilities can lead to relational difficulties and even conflicts that the company may find difficult to manage, despite the many discussions held. Following the crisis in 2022, the Group decided to set up a listening platform and an external mediation system so that residents, patients and families can contact a neutral external third party to settle a dispute or conflict.

A mediation system external to the Group

In 2019, the ORPEA Group implemented a mediation process in Austria. Assisted by University Professor Gregor Wollenek, the programme, which is available to facility directors, residents and families, helps each party to re-establish calm dialogue and find a satisfactory response to points deemed to be conflictual. In 2021, 80 mediations were conducted in Austria. Following the success of the system and the publication in January 2022 of a book containing allegations of wrongdoing, the Group decided to extend the programme to other countries, in particular in line with its CSR strategy. Accordingly, in 2022, the Group will set up a mediation programme in France, in line with the required guarantees of independence.

SeneCura Ombudsmann

4.4 Providing an attractive environment that promotes employee engagement and development

Employees are at the heart of the Group's operations. ORPEA's responsibility is to support them in the face of common challenges such as health and safety, training and career development and, overall, to continuously improve the quality of working life. In a care and service profession, taking care of staff is a fundamental requirement for providing quality service and care.

- Overview of challenges

In order to offer quality care solutions and meet the new expectations of employees in terms of management and working conditions, the Group implements its human resources policy at all levels, collaborating with each country in order to respond to local needs. The policy addresses the following issues:

4.4.1 GROUP PROFILE

4.4.1.1 VALUES

The ORPEA Spirit

Reaffirmed in the Code of Conduct, the Group's values and principles guide each employee in their relations with all stakeholders and become a shared language that is used daily. These values help spread the "ORPEA Spirit" in all the Group's host countries.

- Professionalism

Solid professional skills are combined with a strong sense of responsibility and a consistent focus on the quality of services provided, both individually, through the diligence and commitment of each individual, and collectively, through the implementation of effective procedures, quality policies and training.

- Compassion

Forging a trust-based relationship with vulnerable people and their families is founded on a daily commitment to positive treatment that is respectful, empathetic and always compassionate.

- Loyalty

Demonstrate integrity and exemplary behaviour, respecting commitments to all stakeholders for trustworthy, healthy and sustainable relationships.

- Humility

"Humans are imperfect, and dependent beings, who unceasingly aspire after something better and greater."

- René Descartes. Since people are at the heart of the Group's work, it is essential to accept imperfections and commit to a process of continuous improvement.

Compliance with international human rights and labour standards

In its Code of Conduct, the Group reaffirms its commitment to respect universal human rights and labour standards. In accordance with its international commitments under the United Nations Global Compact, ORPEA is committed to:

Because of its global presence, ORPEA pays particular attention to:

4.4.1.2 SKILLS MODEL

Since 2019, in addition to professional skills, the Group has been placing emphasis on behavioural skills which are in line with its values. The ORPEA model of six key skills is the common reference for all the Group's functions and countries, and brings together the essential skills needed in the care and service professions to support residents and patients.

Jointly designed by the Group Human Resources and Operations departments, the model serves to underpin all HR processes. It reflects the Group's values at all levels and in all standards of its activities with regard to:

• ORPEA Skills Model

4.4.1.3 KEY FIGURES

Workforce and working hours

The total number of employees was 71,676 at end-2021,which is 2,785 more than at end-2020, representing a 4.04% increase. This increase is partly attributable to the opening of new facilities and partly to the acquisitions made by the Group in 2021. 58% of the Group workforce are care staff.

71,676 employees, i.e., a 4% increase in 2021

• Changes in the workforce structure

^* Individuals employed at 31 December with all types of contracts.

ORPEA pursues a policy that aims to give all its staff job stability and security in all the countries in which it operates. This employment policy favours permanent employment contracts. For example, the percentage of employees working full time and those working on a permanent contract was 59% and 80% respectively.

In 2022, the Group will continue its efforts to increase the number of employees with permanent contracts.

80% of contracts are permanent

Turnover rate

^* Individuals employed at 31 December with all types of contracts.

The turnover rate includes both the number of employee departures and the number of new hires. In light of the Group's strong growth, this rate is impacted by expansion in the various geographical area, both through the opening of new facilities for which a large number of employees need to be recruited and acquisitions of existing facilities leading to the integration of existing staff.

In 2020, due to the postponement of facility openings and acquisitions, and the decrease in the "natural" movement of employees as a result of the Covid-19 waves, the Group turnover rate fell sharply compared to 2019. In 2021, thanks to the resumption of development activities and the more stable pandemic situation, the turnover rate increased slightly from 20.4% in 2020 to 22.1% in 2021, while remaining lower than in 2019 (pre-pandemic reference: 22.8%).

The Group is committed to sustainable and long-term employment. Therefore, regardless of whether a facility is being opened after construction, transfer or acquisition, the Group does its utmost to maintain or even develop local jobs and to respect or even improve working conditions.

Several factors may influence turnover. The Group uses the following levers:

Absenteeism rate

The Group's absenteeism rate increased in 2020 due to the health crisis as well as compliance with country legislation and health protocols, but decreased again in 2021 to 8.7%.

Remuneration

The increase in payroll costs mainly reflects facility acquisitions and openings. In 2021, for example, Ireland and the United Kingdom were added to the France-Benelux area.

Recruitment

Professional bodies and training schools

Partnerships with schools are key in implementing the Group's recruitment strategy. The partnership policy is applied at all levels: locally, nationally and internationally. In France, for example, national partnerships have been signed to enable interns and students on work-study programmes to find nursing and care assistant placements close to where they live. In Germany, local and regional partnerships have been set up with 160 schools.

Regarding management, the Group focuses its recruitment policy on identifying particularly promising or specific profiles by forging partnerships with renowned training schools and universities. These partnerships also enable ORPEA to present and promote its business and career prospects to final-year undergraduates or postgraduates at conferences, business forums and recruitment fairs, or offer them jobs or internships. Such events are organised by the Human Resources department of all of the Group's various geographical areas in response to local needs and realities.

Social commitment through cooperation with local players

The Group also collaborates with local employment players in all countries. The health crisis has made these collaborations more important because of the shortage of care staff and the increase in unemployment in certain accommodation-related professions. In Belgium, for example, local and national initiatives have been implemented to train or redirect employees from other sectors to the healthcare sector. In Austria, ORPEA organises and finances "care as a chance" training courses for the care profession in cooperation with the national employment agency. This training takes place at Group facilities. Over 800 applications have been received since the campaign was launched in May 2020. In France, similar initiatives are being pursued with the Pôle emploi (the government job centre), Forces femmes (a non-profit that helps women over 45 to return to work) and Nos quartiers ont du talent (a non-profit that helps young people find their first job or create a career plan).

New tools for recruitment teams

The Group is continuing the gradual roll-out of a digital recruitment solution to improve the applicant experience and optimise the management of applications in all its countries of operation. After its launch in France in 2019, the solution was deployed in Austria in 2020 and the project was launched in Germany, Portugal, Poland and in Latin America in 2021.

firstbird

The health crisis has strongly impacted the Group's participation in schools and job fairs and has prompted it to adopt new approaches such as job-dating platforms. For example, in Austria, First Bird was implemented to allow employees to answer applicants' questions directly, thus creating a peer support system.

15,673 employees were hired on permanent contracts in 2021, representing a 14.6% increase

• Permanent contract recruitment by geographical area between 2020 and 2021

4.4.2 MONITORING THE HEALTH, SAFETY AND WELL-BEING OF EMPLOYEES

ORPEA is committed to upholding international standards of employee health, safety and well-being and has reaffirmed this in its Be Well programme and in its Code of Conduct. As part of the Improving Tomorrow roadmap, a target of a 15% reduction in work-related accidents was set.

4.4.2.1 PROMOTING SAFETY AT WORK AND PREVENTING WORK-RELATED RISKS

The methodological approach implemented by the Group follows the proven pattern of identifying at-risk work situations, analysing their causes, developing corrective actions and having operational or cross-functional management teams monitor them.

Monitoring work-related accidents

The work-related accident frequency rate is one of the main ways to measure the effectiveness of action plans implemented for employee health and safety.

In 2021, the work-related accident frequency rate was 31.77, which is lower than in both 2020 (37.91) and 2019 (33.9), Frequency rates were particularly high in 2020 due to the health crisis. Authorities in several countries such as Spain, Italy, Germany, Switzerland and Austria decided that sick leave days due to Covid-19 should be considered work-related accidents. In France, in line with national practices, sick leave days due to Covid-19 have not been classified as work-related accidents. Consistent with the sector as a whole, the Group saw a sharp downturn in the number of sick leave days in 2020, due in particular to the isolation of residents and patients in their rooms or on floors, which significantly limited staff movements and resident transfers, thereby reducing the number of work-related accidents. In 2021, the frequency rate in France increased but remained lower than in 2019. The Group's severity rate remained stable between 2020 and 2021.

As part of the Improving Tomorrow roadmap, Human Resources departments in the Group's countries analysed their initiatives regarding workplace health and safety and drew up specific action plans in coordination with the relevant business lines. All of the Group's countries are mobilised on this key issue while strictly complying with national regulations. In 2022, the Group will adopt an even more ambitious policy to reduce work-related accidents, which will be driven and embodied by its Executive Management.

2023 CSR objective

ORPEA is stepping up its commitment by targeting a 15% reduction in work-related accidents compared to 2020.

2021 progress report

At 31 December 2021, the work-related accident frequency rate was 31.8, representing a 16% decrease compared to 2020.

• Work-related accidents (frequency and severity) between 2020 and 2021

Identifying and preventing workplace risks

A comprehensive risk mapping and analysis is carried out in each country to identify the risks an employee may face at work. Workplace risk categories are assessed based on work units and characterised in terms of the hazards identified, the situations that can lead to them and the control measures in place. The major risks identified are musculoskeletal disorders, falls, and psychosocial risks, which are cross-cutting and common to all work environments.

In order to prevent and mitigate these risks, each country deploys different measures and actions based on several priorities:

By 2021, more than 63,557 hours of training on health and safety within the Group

Preventing psychosocial risks

The psychosocial risks to which the Group's employees are exposed are identified within the framework for preventing occupational hazards and include everything related to stress as well as external and internal conflicts. The following risks are common to the work situations faced by employees:

Managers and team leaders are trained on how to prevent these specific risks (in particular as part of their onboarding), how to deal with workplace events that may lead to them, and how to raise teams' awareness. In France, for example, the Psychology department conducts training on this topic with more than 20 courses available. A special training course on psychosocial risks during the Covid-19 crisis was also provided in 2021.

Specially adapted external or internal training may be offered for individual or collective situations that may trigger intense emotions (death, violent situations, etc.). Many of the Group's countries have emergency intervention units in several formats. During the Covid-19 crisis, a specific system was implemented to enable the Psychology department to provide sessions to small groups, psychological support interviews, on-site support groups, and an on-site psychologist assigned to the facility to support employees over several weeks. These sessions were voluntary and were maintained to varying degrees in 2021. For head office staff working remotely in the Group's different countries, specific programmes to facilitate their return to the office were implemented. Trade union agreements have been signed in some countries (see section 4.4.2.3). A medical hotline was also set up in France for confined or isolated employees.

4.4.2.2 NURTURING QUALITY OF LIFE IN THE WORKPLACE

Since its inception, ORPEA has always endeavoured to provide safe environments conducive to a high quality of life in the workplace.

This policy is applied at Group level, but in particular locally according to local needs and cultures. These efforts meet two objectives:

The Group also pays particular attention to the work environment: spacious, comfortable and well-equipped break rooms, building design that maximises natural light, and adapted workstations and workrooms.

In 2021, 68% of employees said they were satisfied with their work-life balance ^*

^* Results of the 2021 employee engagement survey.

4.4.2.3 STRENGTHENING EMPLOYEE DIALOGUE

Depending on the legislation, employee dialogue can take place at different levels, both nationally or at each facility. In this respect, the choice of themes is made independently in compliance with local regulations. Trade and employee representatives meet at the initiative of the company at a frequency determined by local law.

The Group involves local employee representative bodies (works councils or committees, trade union representatives) in its development. This local approach is intended to best respond to the specific needs of its employees and its different activities.

Upon publication in January 2022 of a book containing allegations of wrongdoing, external and internal investigations ensued which led the Group to set objectives to improve the quality of employee dialogue, particularly with employee representatives, and to strengthen employee dialogue at the local level. In France, for example, the French employee representative bodies (Instances Representatives du Personnel) would need to be restructured.

At the same time, a first international agreement was signed with UNI Global Union in April 2022 on ethical employment, employee dialogue, collective bargaining and trade union rights.

In addition to the above, the following three paragraphs provide an overview of employee dialogue within the Group.

Collective bargaining agreements

Collective agreements are signed regularly (every three years), with varying scopes, in line with employee consultation and the local regulations in force, particularly in the following areas:

The various themes of these agreements are adapted across the European operations in line with each country's own legislative framework. In Spain, for example, a major three-year agreement was signed in May 2021 that applies to all employees and covers diversity and inclusion, recruitment, career development and training, work-life balance, prevention of all forms of harassment and discrimination, as well as ensuring health and safety at work.

Around 85% of employees covered by a collective scheme at country, Group or local level

In France, a major collective agreement was also signed in June 2021 to renew and improve commitments to quality of life in the workplace as well as professional equality. To effectively promote well-being at work, various measures such as more flexible work hours (including remote working) have been put in place to ensure better work-life balance, including measures related to parenthood. Strict and close monitoring of workplace risk prevention and related action plans are also emphasised to better control daily risks and improve employees' working conditions.

The Group operates in 23 countries and aims to ensure that all employees are covered by collective bargaining agreements, particularly with regard to key issues such as wages, working hours and working conditions. To date, national laws vary and do not always provide for an agreement in the healthcare and nursing sector. France, Belgium, Spain, Italy, Austria and other countries have such agreements. There is, however, no such agreement in Ireland. A collective agreement is in force for hospitals in Portugal, but is still being negotiated for nursing homes. In Germany, collective agreements may be negotiated at facilities where Works Councils have been set up. which means at approximately half of them.

The Group strives to ensure that its employees are at a minimum covered by a collective agreement in almost all the countries where it operates.

In cases where the Group is unable to negotiate an agreement due to the lack of labour representatives, it makes unilateral commitments to improve the quality of employees' work life. The Group is committed to ensuring the best conditions for negotiating collective agreements everywhere, and to ensuring the effectiveness of labour relations in each country. For example, in Poland, an agreement was recently signed with trade union representatives to ensure smooth daily interactions between employees, local management and union representatives.

Trade union diversity

The Group currently works with more than 20 trade unions in different countries. Trade union representation may vary depending on electoral cycles.

The Group's trade union landscape is diverse, and among all the trade union players that exist in the healthcare and nursing sector, many partner organisations derive from conventional national federations or independent trade unions, such as:

More than 20 trade unions represented in the Group

Staff representation at national and European level

Employee dialogue is now also a challenge due to the new trends emerging at European or even international level among all labour representatives.

In line with the actions implemented in each country and in order to take employee dialogue to a new and higher level, a European Works Council [EWC] has been set up and met for the first time in May 2021. It comprises the works councils of the European countries in which the Group has operations [99% coverage]. The EWC deals primarily with transnational issues, and also more broadly promotes experience sharing in areas such as:

The 18 members of the EWC from the various Group countries meet twice a year and are provided with resources to perform their duties (training, time off for trade union duties, expert assistance, etc.), all of which are in the process of being included in a set of regulations.

As a result of regular dialogue between its secretary and its members, the EWC has become a working laboratory, in particular thanks to the two permanent working groups currently being set up: one dedicated to labour issues such as employment, training, mobility, gender equality, diversity, etc., and the other to health, safety, occupational risk prevention and quality of life at work.

Also, plenary or cross-team meetings between employees and management are held on a regular basis to share information and further maintain the quality of labour relations. Each employee can choose to discuss a subject of concern with his or her manager or with an employee representative. Employees can also use the whistleblowing platform at any time (see section 4.2.2.8).

4.4.3 RETAINING AND ENGAGING EMPLOYEES THROUGH A DYNAMIC HUMAN CAPITAL DEVELOPMENT POLICY

The Group is continuously improving the employee experience in order to meet the company's strategic challenges and to anticipate changes in skills in a context of strong growth and high demand in the healthcare sector. ORPEA also wants to meet the new expectations of its employees. To do so, the Group has rolled out robust training and development procedures and tools and set ambitious targets. In 2021, the Group created its Boost programme which incorporates specific initiatives and tools to enhance each stage of an employee's career, whilst also focusing on their level of engagement.

4.4.3.1 ASSESSING AND IMPROVING EMPLOYEE ENGAGEMENT

In 2021, as part of its HR policy and its Boost programme, the Group launched its first employee engagement survey, which was conducted in partnership with a recognised external service provider. Analysing employee engagement serves to better understand their needs and expectations and adapt HR practices accordingly, thereby positioning ourselves as an employer of choice.

An initial pilot survey, conducted in France in early 2021, found that employees had high expectations in terms of remuneration and benefits, as well as highlighting certain strong points: excellent cross-team relationships, clear and effective communication from management, a satisfactory work-life balance, and a sense of carrying out stimulating and interesting work.

This survey was then rolled out to the rest of the Group's countries. It addresses the following issues: