Nexity : 9M 2015 business activity and revenue
(Thomson Reuters ONE) -
9M 2015 BUSINESS ACTIVITY
AND REVENUE
Paris, Tuesday, 27 October 2015
* Continued positive momentum for business activity in residential
development, in line with Nexity's expectations
* 7,504 net new home reservations in France at 30 September 2015, up 12% in
volume and 19% in value compared to first nine months of 2014
* Q3 2015 reservations: up 9% in volume and 13% in value (compared to Q3 2014)
* Commercial real estate: ?301 million in new orders over the first three
quarters
* Revenue of ?2.04 billion at 30 September 2015, up 19%, with growth in all
Group business lines
Outlook for 2015 confirmed
* Residential real estate: Nexity market share (12%) to be maintained in a
French new homes market estimated to grow at 94,000-100,000 units
* Commercial real estate: order intake of at least ?200 million (target
exceeded)
* Consolidated revenue target for 2015: at least ?2.9 billion
* Current operating profit target for 2015: at least ?200 million, after
taking into account ?20 million in expenses related to investments in
digital transformation and innovation
* Confirmation of a dividend payment of ?2 per share in 2016[1]
Alain Dinin, Chairman and CEO of Nexity, commented:
"Since the beginning of 2015, the French housing market has been on a double-
digit growth track compared to the low point of 2014. The recovery is
indisputable but heavily lopsided - driven massively by individual investors yet
hampered by weak sales to homebuyers - and the resurgence of institutional
investors remains slow.
As far as the housing sector is concerned, France's 2016 budget bill is at
present a complete non-event. President Hollande held a press conference on 19
October 2015 during which he spoke of the need for stimulus measures to help
home buyers. The next few months will tell us whether such measures are
effective in inverting the trend and restoring the purchasing power of
homebuyers, especially in the Paris region.
Our projections for the French housing market, revised upward in July, remain
valid in light of the above. Volumes should approach 100,000 units sold in 2015
(as against 86,800 in 2014), followed in 2016 by a return to the average for the
past 10 years (105,000 sales per year). As France's leading real estate group,
Nexity expects to achieve growth at least matching that of the market.
In Q3 2015, the pace of Nexity's business development continued unabated in the
residential sector as well as in commercial real estate, where new orders for
the year have already topped ?300 million. Over the summer, Nexity also won the
first two calls for proposals issued by Société du Grand Paris for real estate
projects in connection with the future rail stations at Bagneux and Créteil
l'Echat.
On the basis of all of these developments and a revenue growth figure of 19% for
the first nine months of the year, Nexity confirms the entirety of its outlook
and targets for 2015."
Business activity for the first 9 months of 2015
Residential real estate
The retail market for new homes in France was up 19% in the first half of the
year, compared to the first half of 2014[2]. After reaching a low point in June
(1.99% on average[3]), mortgage rates were revised slightly upward, averaging
2.19% in September. These low rates remained a significant driver of housing
demand.
-------------------------------------- --------- --------- ---------
Reservations (units and ?m) 9M 2015 9M 2014 Change %
-------------------------------------- --------- --------- ---------
New homes (France) 7,504 6,712 +11.8%
Subdivisions (building lots) 1,277 1,268 +0.7%
International 159 86 x1.8
-------------------------------------- --------- --------- ---------
Total reservations (number of units) 8,940 8,066 +10.8%
-------------------------------------- --------- --------- ---------
New homes (France) 1,483 1,247 +18.9%
Subdivisions 97 100 -3.4%
International 22 9 x2.6
-------------------------------------- --------- --------- ---------
Total reservations (?m incl. VAT) 1,602 1,356 +18.1%
-------------------------------------- --------- --------- ---------
* New homes
Over the first nine months of 2015, the Group recorded 7,504 net new home
reservations in France, a 12% year-on-year increase by volume. Expected revenue
from reservations grew more quickly, rising 19% (?1.483 billion incl. VAT)[4],
due to a greater proportion in the first nine months of 2015 of sales to
individuals (whose average purchase price is higher than that of professional
landlords) as well as a 13% increase in the average price of bulk sales (which
was up due to a more favourable client mix than in 2014 thanks to the ramp-up of
intermediate housing).
As a result of the introduction and strong reception of the "Pinel" buy-to-let
investment scheme, which has proved more attractive than its predecessor, sales
to individual investors increased by 52%.[5] This increase, however, was less
pronounced than in the first half (77%), when figures were inflated by a catch-
up effect on sales that had failed to materialise during the previous buy-to-let
investment scheme. The impact of the change in tax regime was particularly
favourable to a number of regional markets that were upgraded to a more
favourable bracket, enabling an increase in admissible rents and therefore a
better yield for investors.
Although interest rates remained very attractive, sales to homebuyers (down 7%
for Nexity from the first nine months of 2014) have yet to see the benefit of
the market recovery, due to the still-fragile French economy, a situation
further exacerbated in the Paris region by the PTZ (interest-free loan) reform
at the end of 2014.
All in all, for the first nine months of the year, net reservations by
individuals (investors and homebuyers) were up 24% compared to 2014 (17% like-
for-like).
The opposite trend held for reservations by professional landlords, which were
down 11% compared to 30 September 2014 due to a 24% decrease in reservations by
social housing operators. Nonetheless this trend did improve in the 3rd quarter
of 2015 (up 25%) compared to the 2nd quarter (down 36%), which was impacted by
an especially high number of social housing reservations on hold pending
building permits.
The portion of sales to professional landlords transacted with "non-social"
institutional investors made up 32% of total reservations (including 519
intermediate housing units reserved by SNI[6]), representing a substantial
increase (45%) compared to the previous year.
--------------------------------------- -------------- -------------- ---------
9M 2015 9M 2014 Change %
Breakdown of new home reservations by
client - France (number of units)
--------------------------------------- -------------- -------------- ---------
Homebuyers 1,875 25% 2,021 30% -7.2%
* o/w: - first-time buyers 1,434 19% 1,575 23% -9.0%
- other homebuyers 441 6% 446 7% -1.1%
Individual investors 3,499 47% 2,307 34% +51.7%
Professional landlords 2,130 28% 2,384 36% -10.7%
Total new home reservations 7,504 100% 6,712 100% +11.8%
--------------------------------------- -------------- -------------- ---------
As in the first half of the year, the geographic mix of Nexity's sales shifted
more towards the French regions compared to the Paris region (63% of total sales
at 30 September 2015, versus 56% for the same period in 2014).
The average price of residential units reserved by Nexity's individual
clients[7] in the first nine months of the year was down 2% relative to the same
period in 2014, due to a 3% decrease in average unit size, with the average
price per square metre remaining virtually stable (up 1%). This development
reflected the change in the customer mix, with individual investors - who on
average purchase smaller units than homebuyers - more widely represented since
the beginning of the year.
------------------------------------------- --------- --------- -------
9M 2015 9M 2014 Change
Average sale price & floor area*
------------------------------------------- --------- --------- -------
Average home price incl. VAT per sq.m (?) 3,841 3,812 +0.7%
Average floor area per home (sq.m) 56.0 57.6 -2.8%
Average price incl. VAT per home (?k) 215.1 219.6 -2.1%
------------------------------------------- --------- --------- -------
* excluding bulk sales, Iselection and PERL
As the market recovered, the number of units launched by Nexity increased by
21% in the first nine months of 2015[8] (7,521 units). The unsold completed
stock (85 units) within the total supply for sale (5,382 units) remained very
low and stable relative to end-December 2014. The average level of pre-selling
recorded at the time construction work was launched remains high (68% on
average).
At end-September 2015, the business potential[9] for new homes was up 19% from
end-September 2014 to 28,685 units, i.e. 3 years of development operations. The
growth in business potential was particularly strong in the Paris region (up
44% at end-September 2015 versus end-September 2014).
Lastly, during the 3rd quarter of 2015, Nexity won the first two calls for
proposals issued by Société du Grand Paris for property developments in
connection with the future rail stations at Bagneux and Créteil l'Echat (Paris
region). Those calls for proposals were for developments of mainly housing,
offices and shops, scheduled to start in 2018 and totalling a floor area of
55,000 sq.m.
* Subdivisions
Subdivision reservations totalled 1,277 units, remaining stable relative to the
first nine months of 2014, with the average price of net reservations from
individuals falling 5% to ?76k due to a 5% decrease in the average unit size.
* International
Nexity recorded 159 international new home reservations in the first nine months
of the year, of which 117 in Poland and 42 in Italy. In Poland, the 3rd quarter
was characterised by the launch (the second this year) of a project comprising
90 housing units at a development in Warsaw. In Italy, Nexity's announced policy
of risk mitigation continued to be implemented.
Commercial real estate
After the one-off decline observed in the 2nd quarter, the French commercial
real estate market was very active in the 3rd quarter, with significant
investment volumes (the strongest 3rd quarter since 2007). Investors showed
higher risk appetite, with renewed interest in "speculative" VEFA off-plan
arrangements in Paris and its inner suburbs. At end-September, transaction
volumes in the office segment were up 3%.[10]
For the same period, space taken up (volume of lettings and sales to users) in
the Paris region (1.5 million sq.m) was down 6% relative to the first nine
months of 2014 and remained 13% below the average volume for the past
10 years.[11] Business picked up in the 3rd quarter, however.
Nexity recorded ?277 million in new orders in the 3rd quarter of 2015, thanks
notably to the off-plan sale to EDF Invest of the Smart Side development
comprising 40,000 sq.m of offices and services on the border between Clichy and
Saint-Ouen (Paris region), which brought the total order intake to ?301 million
excluding VAT at the end of September, exceeding the annual target of at least
?200 million.
Services and Distribution Networks
In Real estate services to companies, the volume of units under management
totalled 12.5 million sq.m at 30 September 2015, up 6.5% from year-end 2014.
In Real estate services to individuals, the portfolio of units under management
(932,800 units at 30 September 2015) remained stable (down 0.3%) relative to
end-December 2014. On a like-for-like basis (excluding the sale of Nexity's
individual property management operations in Switzerland and Caen and the
acquisitions of independent firms in Paris, Dijon and Bordeaux, as well as the
Pierre Bérard firm in the Paris region), the attrition rate amounted to 2.2%, an
improvement over end-September 2014 (2.8%).
For Distribution Networks, in the market for existing properties, the number of
provisional sale agreements recorded at 30 September 2015 by Century 21 and Guy
Hoquet l'Immobilier was up 11% relative to the same period a year earlier,
despite a decrease in the number of franchisees (1,220 agencies at end-September
2015 versus 1,242 at end-December 2014).
Urban regeneration (Villes & Projets)
At end-September 2015, Nexity's urban regeneration business (Villes & Projets)
had a land development potential of 535,400 sq.m.[12] No additions to the
portfolio were recorded in the 3rd quarter, while nearly 28,000 sq.m moved into
the development phase.
9M 2015 revenue
In the first nine months of 2015, Nexity recorded revenue of ?2,041 million, up
19% relative to the first nine months of 2014[13] and representing increases
across all business lines. This ?319 million increase was mainly driven by the
rise in revenue recognised by the Residential division in France (up ?201
million from the first nine months of last year) and by the Commercial division
(up ?142 million).
--------- --------- ----------
? millions 9M 2015 9M 2014 Change %
------------------------------------ --------- --------- ----------
Residential real estate 1,352.4 1,160.3 +16.6%
Commercial real estate 305.0 163.0 +87.1%
Services and Distribution Networks 372.5 353.2 +5.5%
Other activities 11.3 45.8 -75.4%
Total Group revenue* 2,041.1 1,722.3 +18.5%
------------------------------------ --------- --------- ----------
* Revenue generated by the Residential and Commercial divisions from VEFA off-
plan sales and CPI development contracts is recognised using the percentage-of-
completion method, i.e. on the basis of notarised sales and pro-rated to reflect
the progress of incurred construction costs.
* Residential real estate revenue totalled ?1,352 million, up 17% relative to
the same period in 2014. This growth is the result of an increase in the
number of developments started versus the first nine months of 2014, as well
as more advanced stages of completion than last year. It is also due to the
strong growth of Iselection's revenues, spurred on by a high level of sales
to individual investors. It also results from the contribution of PERL,
which in the first nine months of the year posted revenue of ?77 million, of
which only ?58 million was included in Nexity's consolidated revenue after
accounting for restatements in the opening balance sheet and remeasurements
of assets and liabilities to fair value as part of the purchase price
allocation (PPA) whose impact was fully taken into account at 30 September
2015. Excluding changes in scope, revenue for the Residential real estate
division was up 14%.
* In Commercial real estate, continuing the trend seen since the 4th quarter
of 2014 of a ramp-up in major developments signed in 2013, including in
particular "Eco Campus" in Châtillon and "Le Nuovo" in Clichy, revenue at
30 September 2015 surged to ?305 million, up 87%.
* The Services and Distribution Networks division recognised revenue of ?373
million, up 5% from the first nine months of 2014. A ?19 million portion of
that increase was from external growth in property management for
individuals, including ?15 million from the consolidation of Oralia for one
quarter more than in 2014. Revenue from property management for individuals
came to ?230 million and, excluding changes in scope, was down 0.8% due to
the mechanical impact of attrition in the portfolio of units under
management, although this was partially offset by an increase in average
fees per unit. The revenue of Nexity Conseil et Transaction (formerly Keops
commercial real estate advisory) registered a significant increase thanks to
some major deals in the period.
* Revenue at 30 September 2015 for Other activities (?11 million versus ?46
million at 30 September 2014) included a sale of development rights acquired
through Villes & Projets to a third-party developer. In the first half of
2014, revenue included non-recurring income from the Group's April 2014
disposal of its shares in the OPCI real estate investment fund that owned
the Aviso building, located in Puteaux (Hauts-de-Seine).
In IFRS terms, revenue at end-September 2015 was ?1.900 billion, up 24% relative
to consolidated revenue of ?1.531 billion at 30 September 2014. This figure
excludes revenue from joint ventures, in accordance with IFRS 11, which requires
joint ventures to be accounted for via the equity method instead of
proportionately consolidated as they were previously.
Backlog - Order book at 30 September 2015
--------------------------------------- -------------- -------------- ---------
? millions, excluding VAT 30 Sep. 2015 31 Dec. 2014 Change %
--------------------------------------- -------------- -------------- ---------
Residential real estate - New homes * 2,598 2,591 +0.3%
Residential real estate -
Subdivisions 238 243 -2.0%
Residential real estate backlog 2,836 2,834 +0.1%
Commercial real estate backlog 459 449 +2.3%
Total Group backlog 3,295 3,283 +0.4%
--------------------------------------- -------------- -------------- ---------
* including international
The Group's order book at end-September 2015 stood at ?3,295 million, virtually
stable relative to year-end 2014 and equivalent to 16 months' revenue from
Nexity's development activities.[14]
***
Financial calendar and practical information
2015 annual results Tuesday, 16 February 2016
A conference call on 9M 2015 revenue and business activity will be held in
French and English at 6:30 p.m. CET on Tuesday, 27 October 2015. It may be
accessed using the code 3328649 by calling any of the following numbers:
- Calling from France +33 (0)1 76 77 22 27
- Calling from the rest of Europe +44 (0)203 427 1903
- Calling from the USA +1 646 254 3360
The presentation accompanying the conference call will be available on Nexity's
website starting at 6:15 p.m. CET at the following address: http://edge.media-
server.com/m/p/xufyzmji
To listen to a recording of the conference call, visit
http://www.nexity.fr/immobilier/groupe/finance starting on the next day.
Disclaimer
The information, assumptions and estimates that the Company could reasonably use
to determine its targets are subject to change or modification due notably to
economic, financial and competitive uncertainties. Furthermore, it is possible
that some of the risks described in Section 4 of the Document de Référence,
filed with the AMF under number D.15-0297 on 8 April 2015, could have an impact
on the Group's operations and the Company's ability to achieve its targets.
Accordingly, the Company cannot give any assurance as to whether it will achieve
the targets described, and makes no commitment or undertaking to update or
otherwise revise this information.
This press release is considered a quarterly financial report as defined in the
Transparency Directive transposed by the AMF.
______
AT NEXITY, WE AIM TO SERVE ALL OUR CLIENTS AS THEIR REAL ESTATE NEEDS EVOLVE
Nexity offers the widest range of advice and expertise, products, services and
solutions for private individuals, companies and local authorities, so as to
best meet the needs of our clients and respond to their concerns.
Our business lines - real estate brokerage, management, design, development,
planning, advisory and related services - are now optimally organised to serve
and support our clients. As the benchmark operator in our sector, we are
resolutely committed to all of our clients, but also to the environment and
society as a whole.
Nexity is listed on the SRD and on Euronext's Compartment A
Member of the indices: SBF 80, SBF 120, CAC Mid 60, CAC Mid & Small and CAC
All Tradable
Ticker symbol: NXI - Reuters: NXI.PA - Bloomberg: NXI FP
ISIN: FR0010112524
______
CONTACT
Amélie Laroche-Truong - Head of Investor Relations / +33 (0)1 85 55 15 49 -
investorrelations(at)nexity.fr
ANNEXES
ANNEX 1: RESERVATIONS BY QUARTER
-------------------- ------------------------- ------------------------
2015 2014 2013
-------------------- ------------------------- ------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
--------------- -------------------- ------------------------- ------------------------
Number of
units
New homes 2,368 2,949 2,187* 3,653 2,175 2,722 1,815 3,581 2,099 2,781 1,660
of which PERL 135 183 137 222 123
Subdivisions 400 556 321 836 395 547 326 765 448 521 370
International 103 42 14 7 73 10 3 19 26 41 11
Total (number 2,871 3,547 2,522 4,496 2,643 3,279 2,144 4,365 2,573 3,343 2,041
of units)
--------------- -------------------- ------------------------- ------------------------
Value, in ?m
incl. VAT
New homes 473 595 415* 677 419 475 353 654 438 546 327
of which PERL 38 57 34 58 29
Subdivisions 29 45 23 63 29 42 29 64 39 40 27
International 15 6 2 2 10 1 -2 2 7 12 5
--------------- -------------------- ------------------------- ------------------------
Total (?m 516 646 440 742 458 518 380 720 484 598 359
incl. VAT)
--------------- -------------------- ------------------------- ------------------------
*After adjustment for 47 PERL reservations of existing properties totalling ?10
million.
ANNEX 2: REVENUE BY DIVISION
According to IFRS but with joint ventures proportionately consolidated
------------------------------------ --------- --------- ---------
? millions 9M 2015 9M 2014 Change %
------------------------------------ --------- --------- ---------
New homes 1,226.7 1,035.8 +18.4%
Subdivisions 90.2 79.7 +13.1%
International 35.4 44.8 -21.0%
Residential real estate 1,352.4 1,160.3 +16.6%
Commercial real estate 305.0 163.0 +87.1%
Services 348.0 330.2 +5.4%
Distribution Networks 24.5 22.9 +6.7%
Services and Distribution Networks 372.5 353.2 +5.5%
Other activities 11.3 45.8 -75.4%
GROUP 2,041.1 1,722.3 +18.5%
------------------------------------ --------- --------- ---------
Quarterly progression of revenue by division
-------------- ------------------- ------------------------- ------------------------
2015 2014 2013
------------------- ------------------------- ------------------------
? millions Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
-------------- ------------------- ------------------------- ------------------------
Residential 460.3 531.5 360.5 672.4 425.2 394.4 340.7 636.2 391.8 440.0 364.1
real estate
Commercial 102.8 116.5 85.7 104.6 58.2 49.4 55.4 97.5 111.4 130.5 114.0
real estate
Services and
Distribution 129.8 121.2 121.5 131.2 122.9 123.6 106.6 115.2 109.9 113.0 107.4
Networks
Other 1.2 9.0 1.0 1.4 1.4 42.5 1.9 1.7 1.8 1.6 1.1
activities
GROUP 694.1 778.2 568.7 909.6 607.7 610.0 504.6 850.6 614.9 685.2 586.5
-------------- ------------------- ------------------------- ------------------------
--------------------------------------------------------------------------------
The financial data and indicators used in this press release - including
forward-looking information - are based on Nexity's operational reporting, with
joint ventures proportionately consolidated
(([1])) Pending decision of Nexity's Board of Directors and approval at the
General Shareholders' Meeting
[2] Sources: SOeS, ECLN
[3] Source: Observatoire Crédit Logement - rates for new-build home purchases
[4] On a like-for-like basis (excluding H1 2015 for PERL, consolidated since 1
July 2014), the net number of new home reservations grew 7% by volume and 12% by
value
[5] 38% at 30 September 2015 net of PERL reservations for the first half of 2015
[6] Under a framework agreement signed with SNI in December 2014 for 800-1,100
homes a year, Nexity signed a second preliminary reservation agreement in the
3rd quarter for 333 homes, in addition to the first agreement (February 2015)
for 569 homes
[7] Excluding bulk sales to professional landlords, and Iselection and PERL
sales
[8] Excluding PERL and Iselection for all data relative to selling, supply for
sale and business potential
[9] Includes the Group's current supply for sale, its future supply
corresponding to project phases not yet marketed on acquired land, and projects
not yet launched associated with land secured through options
[10] Source: CBRE France Investment MarketView Q3 2015
[11] Source: CBRE Ile-de-France Office MarketView Q3 2015
[12] Floor areas are provided for information purposes only and may be subject
to adjustment once administrative authorisations have been obtained
[13] Up 16% excluding changes in scope related to the consolidation of Oralia
and PERL (?45 million): Oralia has been consolidated with effect from 1 April
2014 and PERL with effect from 1 July 2014
[14] Revenue basis - previous 12-month period
9M 2015 business activity and revenue:
http://hugin.info/143515/R/1961800/715391.pdf
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other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Nexity via GlobeNewswire
[HUG#1961800]
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Datum: 27.10.2015 - 17:45 Uhr
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