2014 ANNUAL RESULTS | |
Paris, Tuesday, 17 February 2015 | |
Residential real estate
- 12,562 net new home and subdivision reservations (10,365 new homes in France, up 2%).
- €2,098 million in expected revenue from reservations including VAT (down 3%)
- Integration of PERL, which specialises in the division of property ownership
Commercial real estate
- Order intake of €190 million (versus an initial target of €100 million)
- With Ywood and Térénéo (majority stake taken), Nexity becomes France's largest timber-frame office buildings developer
Real estate services to individuals
- Improved margin for property management (7.6% in 2014 versus 4.1% in 2013)
- Acquisition of Oralia, France's 5th largest property manager, providing 164,000 additional units
Backlog as of 31 December 2014: €3.3 billion, stable overall (19 months' revenue from development activities)
Financial performance[1]:
#_edn1
- Consolidated revenue of €2.63 billion, down 3.8% year-on-year (initial target: €2.5 billion)
- Current operating profit of €184 million (initial target: €170 million). Operating margin stable (7.0%)
- Net debt of €167 million at 31 December 2014 (11% gearing ratio)
- Group share of net profit of €85.7 million excluding changes in the value of goodwill
Outlook for 2015
- Residential real estate[2]:
#_edn2: Nexity market share to be maintained at around 12% in a French new homes market estimated to grow slightly at 90,000-95,000 units - Commercial real estate: order intake of at least €200 million
- Consolidated revenue target for 2015: around €2.75 billion
- Current operating profit target for 2015: around €200 million (up 10%), after €20 million annual investment in innovation projects focused on digital transformation
- Confirmation of a dividend of €2 per share for 2015 and 2016[3]:
#_edn3
Alain Dinin, Chairman and CEO of Nexity, commented:
"2014 was consistent with our expectations, with fewer than 300,000 construction starts, a sharp drop (-12%[4]:
#_edn4) in the number of building permits and another deterioration of the residential market in France, which is expected to come in at 87,000 net reservations at best.
The French Prime Minister, Manuel Valls, has taken the bold step of breaking away from the pattern of defiance created by the ALUR act, an anti-growth act if ever there was one. He has taken a certain number of measures to boost demand, most of which have taken effect since 1 January, and we can hope to see order intake improve in 2015. A slightly better economic context than in 2014 and the first investments in intermediate housing are also positive factors. As things stand, we can expect to see reservations for 2015 between 90,000 and 95,000 (+6% with respect to 2014), which remains very much below the average for 2003-2013 (107,000 reservations per year), whereas French demographic trends continue to prove their dynamism.
But while we still need to push for structural reforms, we do not expect salvation to come from the hands of the French state. In an environment where our clients' resources remain under pressure, we are working particularly on our construction costs, to offer our clients the products that are the best suited to their needs at the best price.
Against this backdrop which is more than morose, Nexity has published 2014 annual results in line with its commercial and financial objectives, as has been the case every year since 2009. The Group again gained market share (around 12%) and maintained strong financial performance in development in France, without sacrificing margins and while being highly selective about the projects that we take on.
The real estate development businesses (comprising the Residential and Commercial divisions) achieved a 9% margin in 2014, stable compared with 2013 and higher than our competitors. We are staying on that basis for 2015.
Activities in property management for private individuals presented several causes for satisfaction, with the Nexity group welcoming the arrival of Oralia, which achieved robust financial performance, and the first positive signs following efforts to improve the results of Nexity's real estate services business. This lets us confirm our target of a 9% operating margin for private property management operations in 2015, and 10% in 2016.
We are firmly convinced that the future of Nexity will be digital. We are focusing first and foremost on creating value for our clients, for example by digitizing property management, apartment-sharing and searching for real estate online. We aim to be a digital leader in the real estate sector - which up until recently was relatively unaffected by the digital revolution - and every year we invest 10% of our operating profit toward that goal.
In 2015, Nexity aims to achieve growth of around 10% of its operating profit. Backed by its very healthy financial structure, the Group confirms its plan to keep its dividend level stable (at €2 per share) in 2015 and 2016."
***
At its meeting on Tuesday, 17 February 2015, chaired by Alain Dinin, Nexity's Board of Directors reviewed and approved the Group's consolidated financial statements for the financial year ended 31 December 2014, which can be found in Annex 3 of this press release. The Group's consolidated income statement and statement of financial position, included on pages 20 to 21 of this press release, have been audited by the Company's Statutory Auditors.
***
2014 business activity
Residential real estate
New homes
For the fourth year in a row, the market for new homes in France contracted. Despite the fact that interest rates continued to evolve downward throughout the year, reservations fell[5]:
#_edn5 more substantially than had been predicted at the beginning of 2014. A slow economy, combined with heavy tax burdens, weighed on consumer confidence and households' financial positions. The municipal elections in March 2014 also meant local authorities slowed or halted certain real estate development projects.
Despite this context, Nexity's net reservations for new homes in France were up 2.4% at 10,365 units. At a constant scope of consolidation, net reservations for new homes in France amounted to 10,120 in 2014 and 10,121 in 2013 with the number of commercial launches down 15%, i.e. 9,344 units.
In value terms, expected revenue from reservations decreased by 2.0% to €1,924 million including VAT, reflecting the combined impact of a drop in reservations by private individuals and a robust level of reservations by professional landlords, the latter of which are sold at a substantially lower unit price.
Reservations (units and €m) | 2014 | 2013 | Change % | |||
New homes (France, number of units)* | 10,365 | 10,121 | +2.4% | |||
Subdivisions (number of units) | 2,104 | 2,104 | 0% | |||
International (number of units) | 93 | 97 | -4.1% | |||
Total reservations (number of units) | 12,562 | 12,322 | +1.9% | |||
New homes (France, in €m incl. VAT) | 1,924 | 1,965 | -2.0% | |||
Subdivisions (€m incl. VAT) | 163 | 170 | -4.2% | |||
International (€m incl. VAT) | 10 | 25 | -59.8% | |||
Total reservations (€m incl. VAT) | 2,098 | 2,160 | -2.9% |
* Including 345 net PERL reservations made in the second half of 2014, and less 100 intra-group sales (homes sold in bulk sales by Nexity to PERL, then sold in retail by PERL), totalling 10,120 new home reservations in 2014 on a like-for-like basis (10,121 in 2013).
- Changes in client mix
Reservations by professional landlords were up noticeably (+8%) over the year, offsetting the drop in reservations by home buyers (-8%). Reservations made by individual investors increased by 6%, boosted by the integration of PERL in the second half of the year; however, excluding PERL, these reservations decreased by 4% in 2014. While the measures announced by the French government at the end of August 2014 had a positive impact on Nexity's clientele, they did not result in a significant increase in reservations by the end of the year. Nonetheless, the "Pinel" scheme, which is more favourable than its predecessor, should lead to growth in reservations by private investors in 2015.
Professional landlords accounted for 36% of Nexity's total reservations. One highlight of the first half of 2014 was the reduction in the VAT rate on social housing, from 7% to 5.5%, a change which was announced in 2013 and applied as from 1 January 2014. While the volume of reservations made by professional landlords remained stable in the second half of the year compared to the same period in 2013, the number of reservations made by non-social housing operators increased significantly, totalling 22% of this segment in 2014.
Government action favouring intermediate housing started to bear its first fruits: in December 2014, the SNI (a subsidiary of the Caisse des Dépôts group, which the French state has tasked with acquiring at least 20,000 homes in the coming years) entered into a framework agreement with Nexity, with between 800 and 1,100 reservations slated per year. In February 2015, a preliminary reservation agreement for 569 units was signed by the SNI and Nexity under the framework agreement. On the other hand, bulk sales to social housing operators could be adversely affected by political changes resulting from the 2014 municipal elections.
Finally, 12% of reservations (1,205 units) were for homes in serviced residences for seniors (compared with under 10% in 2013), attesting to the effectiveness of the Group's product diversification strategy.
Breakdown of new home reservations by client - France (number of units) | 2014 | 2013 | Change % | |||||
Home buyers | 2,802 | 27% | 3,037 | 30% | -7.7% | |||
o/w: - first-time buyers | 2,152 | 21% | 2,345 | 23% | -8.2% | |||
- other home buyers | 650 | 6% | 692 | 7% | -6.1% | |||
Individual investors | 3,798 | 37% | 3,585 | 35% | +5.9% | |||
Professional landlords | 3,765 | 36% | 3,499 | 35% | +7.6% | |||
Total new home reservations | 10,365 | 100% | 10,121 | 100% | +2.4% |
- Price trends[6]:
#_edn6
In 2014, the average price of homes reserved by Nexity's clients was down 2.2% compared to the previous year. Since average floor areas remained virtually unchanged, this shift was attributable to a negative price effect.
With the exception of Paris - where average prices per square metre, up by 2.2%, were not representative, considering the limited number of transactions and significant differences in location, and therefore in price per square metre from one year to the next - prices per square metre in the Paris region fell 6.7% due to a larger share of sales in 2014 than in 2013 in municipalities where the average price per square metre was lower. In the rest of France, the price per square metre increased by an average of 0.5%.
Lastly, in 2014, the share of reservations by private individuals in the Paris region decreased from 45% to 42%.
Average sale price & floor area* - France | 2014 | 2013 | Change % | |||
Average home price incl. VAT per sq.m (€) | 3,781 | 3,886 | -2.7% | |||
Average floor area per home (sq.m) | 56.6 | 56.3 | +0.5% | |||
Average price incl. VAT per home (€k) | 213.9 | 218.6 | -2.2% |
* excluding bulk sales, PERL and Iselection sales
- Currently marketed and business potential
For Nexity's new residential developments in France, the average presale rate recorded at the time construction work was started remained very high (71% on average in 2014), and completed stock held by the Group remained very low, at 81 homes at 31 December 2014 (31 December 2013: 66).
The Group's new home business potential[7]:
#_edn7 in France totalled nearly 24,800 units (up 7.5%), equal to 2.7 years of reservations on a rolling 12-month basis. This level of supply will enable Nexity to muster a well-timed, effective response when the market picks up again.
- Subdivisions
Subdivision reservations totalled 2,104 units, the same level as in 2013, with the average price of net reservations from individuals amounting to €77 thousand, down 4% year-on-year, mainly due to a drop in average surface area. This stability in volume terms compared favourably with the general trend in the land development and subdivisions market, which contracted by 8% in 2014[8]:
#_edn8.
- International
Outside France, reservations came to 93 units, almost the same volume as in 2013 (97 units). The increase in reservations in Poland, where business is being developed, nearly offset the decrease in reservations in Italy. The Italian residential market remained very weakened, even in the most economically attractive cities, with transaction volumes falling by about 40% and values down almost 20% since 2008 (source: Agenzia delle Entrate, Nomisma).
Commercial real estate
In 2014 the buy-to-let market grew by 13% year-on-year in the Paris region, with 2.1 million square meters taken up, thanks to an upswing in major transactions (source: CBRE).
More than 1.7 billion euros were invested in VEFA off-plan contracts for offices in the Paris region, an amount unseen since 2011 and an increase of 48% compared to 2013. This was 12% of the volume of office investments, the most since 2008 and a year-on-year increase of nearly 60% (source: Jones Lang LaSalle).
In November 2014, Nexity sold the VEFA-developed Influence project, a 32,700 sq.m complex of offices and services in Saint-Ouen (Seine-Saint-Denis), with no designated tenant. This sale enabled the Group to meet and comfortably exceed its 2014 target of more than €100 million in order intake for Commercial real estate, recording €190 million in new orders.
At the beginning of November, the Group took a majority holding in Térénéo to expand the geographic coverage of Ywood and form France's largest timber-frame office building developer.
Services and Distribution Networks
Oralia was integrated into Real estate services with effect from 1 April 2014. Oralia had 164,000 units under management at 31 December 2014, bringing the total portfolio of units under management in Real estate services to individuals to 936,000. With its acquisition of Oralia, Nexity has strengthened its foothold in France's major cities (primarily Paris and Lyon) and bolstered its No. 2 position in the French property management market. Excluding Oralia and other changes in scope, the Real estate services to individuals business continued to experience attrition in its portfolio of units under management (down 3.3% for condominium management, down 3% for rental property management).
In Real estate services to companies, total floor area under management amounted to 11.7 million sq.m at 31 December 2014, up 3% from 31 December 2013 after the signing of a major contract with RTE, France's electricity transmission system operator.
In the Distribution Networks business, the number of provisional sale agreements recorded in 2014 by Century 21 and Guy Hoquet l'Immobilier was down 5% from the previous year. The number of franchised agencies also dropped slightly to 1,242 agencies at 31 December 2014, from 1,261 at year-end 2013.
Urban regeneration (Villes & Projets)
At 31 December 2014, Nexity's urban regeneration business (Villes & Projets) had a land development potential of 563,000 sq.m[9]:
#_edn9 (stable versus 31 December 2013). 62% of that was in the Paris region and 38% in the rest of France. In 2014, the Group acquired two plots of land as part of the Acacias development project in Montreuil (Seine-Saint-Denis, Paris region).
Operations initiated by the urban regeneration business provided revenue for the Group's real estate development activities totalling €210 million in 2014 (of which €27 million was in Commercial real estate and €183 million was in Residential real estate), versus €296 million as of 31 December 2013. This business thus accounted for 10% of the Group's revenue from property development in 2014.
2014 FINANCIAL INFORMATION
IFRS 11 Joint Arrangements, which is required to be applied as of 1 January 2014, states that "joint ventures" must be accounted for using the equity method (whereas before they could be proportionately consolidated). Nexity's joint ventures are mainly co-development vehicles in Residential and Commercial real estate. For operational reporting and management purposes, Nexity continues to apply proportionate consolidation to its joint ventures, which in its view provides a more accurate reflection of the Group's performance and risks as measured by revenue, operating profit, working capital and debt. Below segment-specific presentations are based on operational reporting data.
The Group's external growth operations led to the following changes in scope:
- Oralia was integrated into the Services and Distribution Networks division with effect from 1 April 2014. The accounting and financial data presented below therefore consolidate Oralia's results for three quarters.
- PERL, acquired on 28 May 2014, was consolidated in the accounts of Nexity's Residential real estate division starting on 1 July 2014. The accounting and financial data presented below therefore recognise PERL's results for one half-year period.
- Térénéo was consolidated in the accounts of the Commercial real estate division starting on 31 December 2014.
Revenue
Consolidated revenue for 2014 totalled €2,632 million (down 3.8% from 2013).
€ millions | 2014 | 2013 | Change % | ||||
Residential real estate | 1,832.7 | 1,832.1 | +0.0% | ||||
Commercial real estate | 267.6 | 453.4 | -41.0% | ||||
Services and Distribution Networks | 484.4 | 445.5 | +8.7% | ||||
Other activities | 47.2 | 6.2 | x 7.6 | ||||
Total Group revenue* | 2,631.9 | 2,737.2 | -3.8% |
* Revenue generated by the Residential and Commercial divisions (through VEFA off-plan sales and real estate development contracts) is calculated using the percentage-of-completion method, i.e. on the basis of notarised sales pro-rated to reflect the progress of committed construction costs.
Residential real estate revenue remained stable with respect to 2013, amounting to €1,833 million. During the second half of 2014, an increased number of projects with respect to the second half of 2013, at more advanced stages of completion than in the first half of 2014, made it possible to achieve the same level of revenue as in 2013. In the second half of the year, PERL posted revenue of €101 million, of which only €23 million was included in Nexity's 2014 revenue after accounting for restatements in the opening statement of financial position and remeasurements of assets and liabilities to fair value. Outside of France, low sales volumes in Italy resulted in a decrease in revenue. At a constant scope of consolidation and excluding International figures, Nexity's Residential real estate division recorded revenue growth of 1.2% in 2014 (€1,754 million compared to €1,732 million in 2013).
In Commercial real estate, revenue for the year (€268 million) was down, as expected, by 41% from 2013, which was boosted by substantial contributions from the Solstys site (Paris, 8th arrondissement) and the T8 building, part of the "Paris Rive Gauche" urban planning programme (13th arrondissement), both delivered in 2013. In the fourth quarter of 2014, as expected, the contribution of the major projects launched in 2013, especially "Eco Campus" in Châtillon (Hauts-de-Seine) and "Le Nuovo" in Clichy (Hauts-de-Seine), which had both entered the finishing work phase, started to play an increasing role.
The Services and Distribution Networks division recognised revenue of €484 million, up 9% from 2013. Real estate services to individuals recorded €49 million in additional revenue from the consolidation of Oralia since the second quarter of 2014. Excluding Oralia, real estate services revenue was down 3%, particularly due to the low level of brokerage operations achieved by Keops and a drop in revenue posted by Studéa (which manages student residences) resulting from a reduction in its property portfolio and intensified price competition in its market. Despite the decline in the number of units under management and substantially reduced interest income from the holding of client funds, Nexity's property management operations (not including Oralia) achieved virtually stable revenue levels (€245 million, down 1%) thanks to efforts made to improve pricing and the growth of related activities (insurance, diagnostics, works, etc.). Revenue from the Century 21 and Guy Hoquet l'Immobilier networks came to €30 million, showing a small increase of 1%.
Revenue from Other activities (€47 million) included non-recurring revenue of €42 million from the Group's April 2014 disposal of its shares in the OPCI real estate investment fund owning the Aviso building, located in Puteaux (Hauts-de-Seine, Paris region).
Current operating profit
Nexity's current operating profit was €184 million in 2014 (versus €192 million in 2013), with a stable operating margin of 7.0%.
€ millions | 2014 | 2013 | ||
Residential real estate | 142.8 | 166.1 | ||
% of revenue | 7.8% | 9.1% | ||
Commercial real estate | 45.6 | 37.9 | ||
% of revenue | 17.0% | 8.4% | ||
Services and Distribution Networks | 26.7 | 22.1 | ||
% of revenue | 5.5% | 5.0% | ||
Other activities | (31.4) | (33.7) | ||
Current operating profit | 183.7 | 192.4 | ||
% of revenue | 7.0% | 7.0% |
The operating margin for the Residential real estate division was down 1.3 points compared to the previous year. While new home development and subdivision activities in France again posted a highly satisfactory margin (9.6% in 2014, versus 9.9% in 2013), contributions to the division's operating profit from outside France, particularly from Italy, were substantially negative. An Italian market in decline, local specificities of the development sector (completion and payment of sale on delivery), and below par management of the subsidiary led Nexity to record a €27 million loss in 2014 for residential real estate outside France. The subsidiary's management was changed at the end of 2014, and Nexity's activities in Italy will be radically rescaled.
The Commercial real estate division's operating margin was particularly high (17.0% in 2014), boosted by non-recurring items over the year (successful legal outcomes[10]:
#_edn10, reversals of provisions on projects previously delivered) and by the technical quality of the projects it handled. Commercial real estate development is an inherently more volatile activity than residential real estate development; however, the Group stresses that the usual margin for commercial real estate development is around 9% in the medium term.
The Services and Distribution Networks division turned in operating profit of €27 million, versus €22 million at 31 December 2013, up 21% and corresponding to an operating margin of 5.5% (31 December 2013: 5.0%).
- In the Services business, operating profit for property management more than doubled, totalling €22 million in 2014 thanks to the acquisition of Oralia and cost control measures for Nexity's real estate services to individuals. The profit margin for property management amounted to 7.6% in 2014, compared with 4.1% in 2013. At its Investor Day on 27 November 2014, Nexity announced its target of achieving an operating margin of at least 9% in 2015 and 10% in 2016 for property management, which has been confirmed. However, while this activity's margin improved, it was still affected one-off rationalization costs and by the decrease in financial income, which were only partially offset by the full effect of the CICE[11]:
#_edn11. Lastly, the Keops and Studéa businesses reported an operating loss, unable to cover structural costs with their lower revenue levels.
- Despite the continued slow activity in the brokerage market, Distribution Networks recorded €4 million in operating profit, a 9% increase.
Other activities posted an operating loss of €31 million in 2014, compared with an operating loss of €34 million in 2013. This division includes expenses related to developing the Group's innovative activities and its digital transformation plan, expenditures for which increased significantly but were more than offset by a reduction in unallocated holding company expenses, IFRS expenses related to share-based payments (totalling nearly €8 million), the results of Villes & Projets[12]:
#_edn12, investment activities and asset management activities, 80% of which was sold off in June 2014.
Net profit
€ millions | 2014 | 2013 | ||
Revenue Current operating profit | 2,631.9 183.7 | 2,737.2 192.4 | ||
Change in value of goodwill | (50.0) | 0 | ||
Net financial income/(expense) | (16.6) | (7.2) | ||
Corporate income tax | (75.5) | (74.6) | ||
Dividend tax (3%) | (3.4) | (3.3) | ||
Share of profit/(loss) from equity-accounted companies | 0.8 | (1.4) | ||
Non-controlling interests (minority interests) | (3.4) | (5.8) | ||
Net profit attributable to equity holders of the parent company | 35.7 | 100.1 |
After taking into account a €50 million goodwill impairment charge (attributable to the franchise networks and services businesses, excluding property management for private individuals), Nexity's operating profit came to €133.8 million.
The Group's net financial expense was €17 million (compared to €7 million in 2013) mainly resulting from an increase in the average amount of debt drawn down, following a dual-tranche €171 million bond issue in May 2014 and a €180 million convertible issue in June 2014, as well as the lower interest rates earned by its cash holdings.
Nexity's tax expense for 2014 included €3 million for the additional 3% dividend tax and €76 million in corporate income tax. Excluding the impact of the additional dividend tax, Nexity's effective tax rate was 45.2% versus 40.3% in 2013. This increase notably resulted from the non-allocation of losses outside France to the Group's taxable income. Adjusted to exclude this impact, Nexity's effective tax rate was 39%.
The net profit attributable to shareholders of the Nexity parent company was €35.7 million for the period (including the -€50 million goodwill impairment charge), compared to €100.1 million in 2013.
Working capital requirement (WCR)
€ millions | 31 Dec. 2014 | 31 Dec. 2013 | Change in €m | |||
Residential real estate | 633 | 533 | 100 | |||
Commercial real estate | (12) | (71) | 59 | |||
Services and Distribution Networks | (53) | (52) | -1 | |||
Other activities | 60 | 80 | -20 | |||
Operating WCR | 627 | 490 | 138 | |||
Corporate income tax | (1) | (12) | 11 | |||
Total WCR | 627 | 478 | 148 |
Nexity's working capital requirement increased by €148 million over the year, to €627 million at 31 December 2014 (year-end 2013: €478 million).
In the Residential real estate division, WCR increased by €100 million, including a €36 million increase in WCR at a constant scope of consolidation (notably due to the slower pace of sales activity, leading to an increase in supply under construction), and €64 million due to the consolidation of PERL's WCR.
The Commercial real estate division's WCR remained negative (-€12 million at 31 December 2014) but underwent a significant change with respect to the exceptionally favourable level achieved at the end of 2013, due to low order intake in 2014 and the gradual depletion of client advances.
The working capital requirement of Other activities mainly arises from Villes & Projets urban regeneration projects and from investment activities.
Goodwill
€ millions | 31 Dec. 2014 | 31 Dec. 2013 | Change in €m | |||
Residential real estate | 404 | 309 | 94 | |||
Commercial real estate | 60 | 52 | 8 | |||
Services and Distribution Networks | 652 | 556 | 97 | |||
Other activities | 0 | 0 | 0 | |||
Total goodwill | 1,116 | 917 | 199 |
The overall impact of acquisitions made in 2014, mainly PERL (Residential real estate), Térénéo (Commercial real estate) and Oralia (Services and Distribution Networks), led to a €249 million increase in goodwill recorded in Nexity's statement of financial position.
In the Services CGU (cash-generating unit) and the Franchise Networks CGU, goodwill was written down by a total of €50 million in 2014. This goodwill impairment reflected a downward revision of the future operating prospects of the franchise networks and services businesses, excluding property management for private individuals.
Financial structure
Nexity's consolidated equity (attributable to parent company shareholders) was €1,559 million at 31 December 2014, compared to €1,612 million at 31 December 2013, mainly after €108 million in dividends paid and the inclusion of net profit for the year (€36 million attributable to parent company shareholders).
Nexity had a consolidated net debt position of €167 million at 31 December 2014, as opposed to a net cash position of €252 million at 31 December 2013.
This €419 million variation in net debt over the year is the result of a combination of several factors: external growth costs (€323 million)[13]:
#_edn13, the increase in operating WCR (€79 million)[14]:
#_edn14, in addition to dividend payments (€108 million), taxes and interest payments (€86 million) and increased operating investments (€29 million). As a whole, these outlays were only partially offset by cash flow from operating activities before financial and tax expenses, which came to €203 million. Cash flow from operating activities (after interest and taxes paid) came to €117 million in 2014, up very slightly from 2013 (€115 million). As a result of the adverse change in WCR and the increase in investments, Nexity's free cash flow was only slightly positive (€9 million) in 2014.
€ millions | 2014 | 2013 | ||
Cash flow from operating activities before financial and tax expenses | 203.3 | 216.5 | ||
Change in operating WCR* | (79.1) | (55.9) | ||
Interest and tax payments | (86.5) | (101.3) | ||
Net cash from/(used in) operations | 37.7 | 59.3 | ||
Net cash from/(used in) operating investments | (29.3) | (17.4) | ||
Free cash flow | 8.6 | 42.2 | ||
Net cash from (used in) financial investing activities | (195.6) | (8.2) | ||
Dividends paid | (108.1) | (106.6) | ||
Net cash from (used in) financing activities, excluding dividends | 360.2 | 167.4 | ||
Change in cash and cash equivalents | 65.1 | 94.8 |
* Excluding changes in scope
At 31 December 2014, the Group had authorisations from banks to borrow up to €767 million, including available facilities of €300 million on its corporate credit lines (undrawn), the contract for which was renewed at the end of 2014 and extended until the end of 2018. The Group had drawn down €253 million of its authorised credit at 31 December 2014.
€ millions | 31 Dec. 2014 | 31 Dec. 2013 | Change in €m | |||
Bond issues (and accrued interest) | 534.9 | 199.0 | 335.9 | |||
Bank borrowings[15]: #_edn15 | 272.0 | 123.4 | 148.6 | |||
Other financial borrowings and other financial receivables | 4.5 | 5.4 | (0.8) | |||
Net cash and cash equivalents | (644.9) | (579.8) | (65.1) | |||
Net debt (net cash) | 166.5 | (252.1) | 418.6 |
In first-half 2014, the Group issued[16]:
#_edn16 a €171 million bond in two tranches of 6 and 7 years paying respective annual rates of 3.252% and 3.522%, as well as OCEANE convertibles redeemable in January 2020 for a total principal of €180 million and paying an annual coupon rate of 0.625%.
Nexity optimised its financing by completing two bond issues during the first half of 2014 for a total of €351 million, and extended the corporate credit line for new homes (€300 million) until the end of 2018.
The Group was in compliance with all of the financial covenants attached to its borrowings and lines of credit as of 31 December 2014.
Backlog - Order book at 31 December 2014
€ millions, excluding VAT | 31 Dec. 2014 | 31 Dec. 2013 | Change % | |||
Residential real estate - New homes* | 2,591 | 2,604 | -0.5% | |||
Residential real estate - Subdivisions | 243 | 265 | -8.3% | |||
Residential real estate backlog | 2,834 | 2,869 | -1.2% | |||
Commercial real estate backlog | 449 | 486 | -7.7% | |||
Total Group backlog | 3,283 | 3,355 | -2.2% |
* including outside France, Iselection and PERL
The Group's total order backlog at 31 December 2014 was €3.3 billion, down slightly from year-end 2013 and equivalent to 19 months' revenue from Nexity's development operations[17]:
#_edn17. Order backlog for new homes at 31 December 2014 was €2.6 billion, remaining stable compared to 31 December 2013.
Outlook for 2015
- Residential real estate: Nexity market share to be maintained at around 12% in a French new homes market estimated to grow slightly at 90,000-95,000 units
- Commercial real estate: order intake of at least €200 million
- Consolidated revenue target for 2015: around €2.75 billion
- Current operating profit target for 2015: around €200 million (up 10%), after €20 million annual investment in innovation projects focused on digital transformation
- Confirmation of a €2 per share dividend for 2015 and 2016[18]:
#_edn18
Financial Calendar & Practical Information
A conference call on 2014 business activity and results will be held in English at 19:00 CET on Tuesday, 17 February 2015, and may be accessed by dialling the following numbers:
- Calling from France | +33 (0)1 76 77 22 29 | Code: 2768283 |
- Calling from the rest of Europe | +44 (0)203 427 1911 | Code: 2768283 |
- Calling from the USA | +1 646 254 3363 | Code: 2768283 |
The presentation accompanying this conference may be consulted at the following address:
http://edge.media-server.com/m/p/d6fr46qp
This presentation will be available on the Group's website from 17 February 2015 at 18:45 CET.
| Tuesday, 28 April 2015 |
| Tuesday, 19 May 2015 |
| Wednesday, 27 May 2015 |
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.14-0304 on 8 April 2014, 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. 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 code: FR0010112524 ______ CONTACT Amélie Laroche-Truong Head of Investor Relations / +33 (0)1 85 55 15 49 - investorrelations@nexity.fr |
ANNEXES
ANNEX 1: RESERVATIONS BY QUARTER
2014 | 2013 | 2012 | |||||||||||||
Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||
Number of units | |||||||||||||||
New homes | 3,776[19]: #_edn19 | 2,052[20]: #_edn20 | 2,722 | 1,815 | 3,581 | 2,099 | 2,781 | 1,660 | 3,052 | 2,506 | 2,776 | 1,857 | |||
Subdivisions | 836 | 395 | 547 | 326 | 765 | 448 | 521 | 370 | 950 | 417 | 474 | 491 | |||
International | 7 | 73 | 10 | 3 | 19 | 26 | 41 | 11 | 54 | 17 | 173 | 7 | |||
Total reservations | 4,619 | 2,520 | 3,279 | 2,144 | 4,365 | 2,573 | 3,343 | 2,041 | 4,056 | 2,940 | 3,423 | 2,355 | |||
Value, in €m incl. VAT | |||||||||||||||
New homes | 677[21]: #_edn21 | 419[22]: #_edn22 | 475 | 353 | 654 | 438 | 546 | 327 | 575 | 447 | 520 | 318 | |||
Subdivisions | 63 | 29 | 42 | 29 | 64 | 39 | 40 | 27 | 75 | 33 | 37 | 37 | |||
International | 2 | 10 | 1 | -2 | 2 | 7 | 12 | 5 | 10 | 5 | 75 | 5 | |||
Total reservations | 742 | 458 | 518 | 380 | 720 | 484 | 598 | 359 | 660 | 485 | 632 | 360 |
ANNEX 2: FINANCIAL INFORMATION*:
#_edn23
IFRS 11 Joint Arrangements, which is required to be applied as of 1 January 2014, states that "joint ventures" must be accounted for using the equity method (whereas before they could be proportionately consolidated). Nexity's joint ventures are mainly co-development vehicles in Residential and Commercial real estate. For operational reporting and management purposes, Nexity continues to apply proportionate consolidation to its joint ventures, which in its view provides a more accurate reflection of the Group's performance and risks as measured by revenue, operating profit, working capital and debt. Below segment-specific presentations are based on operational reporting data.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
€ thousands | 31/12/2014 | 31/12/2013 |
Revenue | 2,631,922 | 2,737,212 |
Purchases | (1,723,557) | (1,866,707) |
Personnel costs | (452,558) | (417,546) |
Other operating expenses | (217,964) | (209,822) |
Taxes (other than income tax) | (34,757) | (35,795) |
Depreciation, amortisation and impairment | (19,349) | (14,941) |
Current operating profit | 183,737 | 192,402 |
Change in value of goodwill | (49,979) | |
Operating profit | 133,758 | 192,402 |
Financial expense | (24,418) | (18,731) |
Financial income | 7,848 | 11,564 |
Net financial income/(expense) | (16,570) | (7,167) |
Pre-tax recurring profit | 117,188 | 185,235 |
Corporate income tax | (78,861) | (77,951) |
Share of profit/(loss) from equity-accounted companies | 817 | (1,373) |
Consolidated net profit/(loss) | 39,144 | 105,911 |
Net profit/(loss) attributable to equity holders of the parent company | 35,731 | 100,115 |
Net profit/(loss) attributable to non-controlling interests (minority interests) | 3,413 | 5,796 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2014 | |||
ASSETS: #_edn24 € thousands | 31/12/2014 | 31/12/2013 | |
Non-current assets | |||
Goodwill | 1,115,883 | 917,147 | |
Other intangible assets | 61,313 | 45,299 | |
Property, plant and equipment | 41,400 | 24,615 | |
Equity-accounted investments | 27,474 | 26,876 | |
Other financial assets | 28,904 | 20,286 | |
Deferred tax assets | 5,892 | 4,748 | |
Total non-current assets | 1,280,866 | 1,038,971 | |
Current assets | |||
Inventories and work in progress | 1,387,149 | 1,357,646 | |
Trade and other receivables | 368,587 | 342,570 | |
Tax accounts receivable | 12,370 | 534 | |
Other current assets(1) | 1,048,268 | 828,715 | |
Other financial receivables | 22,033 | 12,766 | |
Cash and cash equivalents | 678,197 | 605,713 | |
Total current assets | 3,516,604 | 3,147,944 | |
TOTAL ASSETS | 4,797,470 | 4,186,915 | |
(1) of which, client working capital accounts (Services) | 655,252 | 485,829 | |
LIABILITIES AND EQUITY € thousands | 31/12/2014 | 31/12/2013 | |
Equity | |||
Share capital | 270,905 | 267,883 | |
Additional paid-in capital | 1,036,325 | 1,039,347 | |
Treasury shares | |||
Reserves and retained earnings | 215,752 | 204,746 | |
Net profit for the period | 35,731 | 100,115 | |
Equity attributable to equity holders of the parent company | 1,558,713 | 1,612,091 | |
Non-controlling interests (minority interests) | 20,134 | 20,703 | |
Total equity | 1,578,847 | 1,632,794 | |
Non-current liabilities | |||
Long-term borrowings and financial debt | 626,798 | 211,408 | |
Employee benefits | 30,732 | 25,868 | |
Deferred tax liabilities | 32,341 | 15,809 | |
Total non-current liabilities | 689,871 | 253,085 | |
Current liabilities | |||
Short-term borrowings, financial and operating liabilities(1) | 239,965 | 155,015 | |
Current provisions | 99,109 | 94,821 | |
Trade and other payables | 741,015 | 746,068 | |
Current tax liabilities | 13,108 | 12,088 | |
Other current liabilities(2) | 1,435,555 | 1,293,044 | |
Total current liabilities | 2,528,752 | 2,301,036 | |
TOTAL LIABILITIES AND EQUITY | 4,797,470 | 4,186,915 | |
(1) of which, bank overdrafts | 33,341 | 25,956 | |
(2) of which, client working capital accounts (Services) | 655,252 | 485,829 |
Revenue by division
Residential real estate:
#_edn25
€ millions | 2014 | 2013 | Change % | |||
New homes | 1,632.9 | 1,580.9 | +3.3% | |||
Subdivisions | 143.8 | 151.5 | -5.1% | |||
International | 56.0 | 99.7 | -43.8% | |||
Residential real estate | 1,832.7 | 1,832.1 | +0.0% |
Commercial real estate
€ millions | 2014 | 2013 | Change % | |||
Commercial real estate | 267.6 | 453.4 | -41.0% |
Services and Distribution Networks
€ millions | 2014 | 2013 | Change % | |||
Services | 454.0 | 415.4 | +9.3% | |||
Distribution Networks | 30.4 | 30.1 | +1.0% | |||
Services and Distribution Networks | 484.4 | 445.5 | +8.7% |
Quarterly progression of revenue by division
2014 | 2013 | 2012 | |||||||||||||
€ millions | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||
Residential real estate | 672.4 | 425.2 | 394.4 | 340.7 | 636.2 | 391.8 | 440.0 | 364.1 | 654.7 | 404.7 | 399.2 | 396.8 | |||
Commercial real estate | 104.6 | 58.2 | 49.4 | 55.4 | 97.5 | 111.4 | 130.5 | 114.0 | 204.3 | 126.2 | 105.2 | 81.8 | |||
Services and Distribution Networks | 131.2 | 122.9 | 123.6 | 106.6 | 115.2 | 109.9 | 113.0 | 107.4 | 120.0 | 112.8 | 112.1 | 107.8 | |||
Other activities | 1.4 | 1.4 | 42.5 | 1.9 | 1.7 | 1.8 | 1.6 | 1.1 | 1.3 | 1.7 | 1.2 | 1.4 | |||
Revenue | 909.6 | 607.7 | 610.0 | 504.6 | 850.6 | 614.9 | 685.2 | 586.5 | 980.2 | 645.6 | 617.6 | 587.9 |
Current operating profit by division
Residential real estate:
#_edn26
€ millions | 2014 | 2013 | Change % | |||
New homes | 156.1 | 156.2 | 0.0% | |||
% of revenue | 9.6% | 9.9% | ||||
Subdivisions | 14.0 | 15.2 | -8.2% | |||
% of revenue | 9.7% | 10.1% | ||||
International | (27.3) | (5.3) | ns | |||
Residential real estate | 142.8 | 166.1 | -14.0% | |||
% of revenue | 7.8% | 9.1% |
Commercial real estate
€ millions | 2014 | 2013 | Change % | |||
Commercial real estate | 45.6 | 37.9 | +20.3% | |||
% of revenue | 17.0% | 8.4% |
Services and distribution Networks
€ millions | 2014 | 2013 | Change % | |||
Services | 22.9 | 18.6 | +23.0% | |||
% of revenue | 5.0% | 4.5% | ||||
Distribution Networks | 3.8 | 3.5 | +9.5% | |||
% of revenue | 12.4% | 11.5% | ||||
Services and Distribution Networks | 26.7 | 22.1 | +20.9% | |||
% of revenue | 5.5% | 5.0% |
Other activities
€ millions | 2014 | 2013 | Change % | |||
Other activities | (31.4) | (33.7) | ns |
Half-yearly progression of current operating profit
by division
2014 | 2013 | 2012 | |||||||||||
€ millions | FY | H2 | H1 | FY | H2 | H1 | FY | H2 | H1 | ||||
Residential real estate | 142.8 | 84.2 | 58.6 | 166.1 | 102.2 | 63.9 | 180.1 | 107.1 | 73.0 | ||||
Commercial real estate | 45.6 | 32.4 | 13.2 | 37.9 | 14.4 | 23.5 | 25.2 | 10.1 | 15.1 | ||||
Services and Networks | 26.7 | 15.7 | 11.0 | 22.1 | 14.5 | 7.6 | 23.9 | 16.6 | 7.3 | ||||
Other activities | (31.4) | (21.8) | (9.6) | (33.7) | (23.9) | (9.8) | (28.8) | (14.8) | (14.0) | ||||
Current operating profit | 183.7 | 110.5 | 73.2 | 192.4 | 107.1 | 85.3 | 200.4 | 118.9 | 81.5 |
ANNEX 3: INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION (IFRS)**:
#_edn27
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014 (IFRS)
€ thousands | 31/12/2014 | 31/12/2013 restated |
Revenue: #_edn28 | 2,370,191 | 2,527,615 |
Purchases | (1,491,556) | (1,682,780) |
Personnel costs | (452,540) | (417,479) |
Other operating expenses | (217,718) | (207,422) |
Taxes (other than income tax) | (33,379) | (34,601) |
Depreciation, amortisation and impairment | (19,627) | (14,941) |
Current operating profit | 155,371 | 170,392 |
Change in value of goodwill | (49,979) | |
Operating profit/(loss) | 105,392 | 170,392 |
Share of profit/(loss) from equity-accounted companies | 27,682 | 20,390 |
Operating profit/(loss) after share of profit/(loss) from equity-accounted companies | 133,074 | 190,782 |
Financial expense | (23,349) | (17,494) |
Financial income | 7,347 | 11,699 |
Net financial income/(expense) | (16,002) | (5,795) |
Pre-tax recurring profit | 117,072 | 184,987 |
Corporate income tax | (78,745) | (77,703) |
Share of profit/(loss) from equity-accounted companies | 817 | (1,373) |
Consolidated net profit/(loss) | 39,144 | 105,911 |
Net profit/(loss) attributable to equity holders of the parent company | 35,731 | 100,115 |
Net profit/(loss) attributable to non-controlling interests (minority interests) | 3,413 | 5,796 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2014 (IFRS) | |||
ASSETS € thousands | 31/12/2014 | 31/12/2013 restated | |
Non-curren: #_edn29t assets | |||
Goodwill | 1,115,883 | 917,147 | |
Other intangible assets | 61,313 | 45,299 | |
Property, plant and equipment | 41,400 | 24,615 | |
Equity-accounted investments | 45,990 | 64,906 | |
Other financial assets | 28,904 | 20,286 | |
Deferred tax assets | 5,135 | 3,677 | |
Total non-current assets | 1,298,625 | 1,075,930 | |
Current assets | |||
Inventories and work in progress | 1,328,737 | 1,220,042 | |
Trade and other receivables | 343,606 | 305,761 | |
Tax accounts receivable | 12,100 | 413 | |
Other current assets | 1,023,558 | 793,095 | |
Other financial receivables | 98,136 | 89,555 | |
Cash and cash equivalents | 595,060 | 498,584 | |
Total current assets | 3,401,197 | 2,907,450 | |
TOTAL ASSETS | 4,699,822 | 3,983,380 | |
LIABILITIES AND EQUITY € thousands | 31/12/2014 | 31/12/2013 restated | |
Equity | |||
Share capital | 270,905 | 267,883 | |
Additional paid-in capital | 1,036,325 | 1,039,347 | |
Treasury shares | |||
Reserves and retained earnings | 215,752 | 204,746 | |
Net profit for the period | 35,731 | 100,115 | |
Equity attributable to equity holders of the parent company | 1,558,713 | 1,612,091 | |
Non-controlling interests (minority interests) | 20,134 | 20,703 | |
Total equity | 1,578,847 | 1,632,794 | |
Non-current liabilities | |||
Long-term borrowings and financial debt | 626,794 | 211,408 | |
Employee benefits | 30,732 | 25,868 | |
Deferred tax liabilities | 28,792 | 3,917 | |
Total non-current liabilities | 686,318 | 241,193 | |
Current liabilities | |||
Short-term borrowings, financial and operating liabilities | 239,283 | 125,699 | |
Current provisions | 98,573 | 93,368 | |
Trade and other payables | 695,926 | 705,539 | |
Current tax liabilities | 6,053 | 10,874 | |
Other current liabilities | 1,394,822 | 1,173,913 | |
Total current liabilities | 2,434,657 | 2,109,393 | |
TOTAL LIABILITIES AND EQUITY | 4,699,822 | 3,983,380 |
[1]:
#_ednref1 The financial data and indicators used in this press release are based on Nexity's operational reporting, with joint ventures proportionately consolidated
[2]:
#_ednref2 All prospective data relating to Nexity's business activity for new homes now includes PERL reservations in addition to Nexity's new home reservations in France and those resulting from Iselection's direct operator activity, net of intra-group sales
[3]:
#_ednref3 Pending decision of Nexity's Board of Directors and approval by the General Shareholders' Meeting
[4]:
#_ednref4 CGGD, Chiffres et Statistiques (figures and statistics) No. 601, January 2015. New housing starts in 2014: 297,000 (down 10.3%) of which 267,000 are classified as "actual new homes" (i.e. after deducting extensions to existing buildings).
[5]:
#_ednref5 7% drop in new home reservations in the first 9 months of 2014 compared to the first 9 months of 2013, according to the latest statistics available at the date of this press release (CGDD, ECLN No. 583, November 2014).
[6]:
#_ednref6 Excluding bulk sales to professional landlords, and Iselection, PERL and International sales
[7]:
#_ednref7 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.
[8]:
#_ednref8 Source: SNAL (national union of land developers and subdividers) in Le Moniteur on January 19, 2015
[9]:
#_ednref9 Floor areas are provided for information purposes only and may be subject to adjustment once administrative authorisations have been obtained.
[10]:
#_ednref10 In particular, the conclusion in 2014 of the legal proceedings initiated between Société Générale and Nexity following the damage that occurred in 2011 at the Basalte building worksite in La Défense.
[11]:
#_ednref11 Crédit d'impôt pour la compétitivité et l'emploi (French tax credit to encourage competitiveness and employment)
[12]:
#_ednref12 Revenue and operating profit from operations initiated by Villes & Projets are recognised in the Residential and Commercial real estate divisions.
[13]:
#_ednref13 External growth in 2014 breaks down as: €191 million from the price paid for shares net of cash acquired and €132 million from bank borrowings and purchase commitments on minority interests.
[14]:
#_ednref14 The difference between the change in WCR on the statement of financial position (€130 million) and the change in WCR on the cash flow statement (€79 million) arises from the fact that only the former takes into account changes in the scope of consolidation, notably the acquisitions of PERL, Térénéo and Oralia.
[15]:
#_ednref15 Includes IFRS restatements (fair value adjustment of derivatives)
[16]:
#_ednref16 See press releases dated 29 April and 12 June 2014.
[17]:
#_ednref17 Revenue basis - previous 12-month period
[18]:
#_ednref18 Pending decision of Nexity's Board of Directors and approval by the General Shareholders' Meeting
[19]:
#_ednref19 Of which 222 PERL reservations
[20]:
#_ednref20 Of which 123 PERL reservations
[21]:
#_ednref21 Of which PERL: €58 million including VAT
[22]:
#_ednref22 Of which PERL: €29 million including VAT
*:
#_ednref23 According to IFRS but with joint ventures proportionately consolidated
**:
#_ednref27 2013 data have been restated to account for joint ventures in accordance with IFRS 11
http://hugin.info/143515/R/1895130/672061.pdf
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Nexity via Globenewswire