Earnings Release • Oct 27, 2010
Earnings Release
Open in ViewerOpens in native device viewer
ALAIN DININ, CHAIRMAN AND CEO OF NEXITY, COMMENTED:
"Changes announced by the French government relating to its home-ownership assistance programs will have a positive impact. Easier to comprehend and focused on the geographic areas most in need of aid, these new measures will strengthen the ability of households to finance their purchases. The government's continued support for buy-to-let investment is also a move in the right direction, since renters currently account for nearly 43% of French households and they often experience difficulty finding adequate housing in the country's large urban centers. In the Commercial division, the Group has booked new orders in the French provinces and is confident that the recovering trend in orders will be confirmed.
The upturn in existing property transactions and the confirmed recovery in Iselection's business are benefiting the Services and Distribution division, where revenue increased 10% compared to the same period last year.
The strong commercial performance in the third quarter means we can be confident that the Group will meet the full-year commercial targets that it set itself."
* * *
1 Revenue basis – previous 12-month period
| € millions | 9M 2010 | 9M 2009 | Change % |
|---|---|---|---|
| Residential | 1,166.2 | 1,224.3 | -5% |
| Commercial | 287.4 | 370.1 | -22% |
| Services & Distribution | 398.3 | 363.7 | +10% |
| Other activities | 2.8 | 3.6 | - |
| Total Group revenue | 1,854.9 | 1,961.7 | -5% |
* Revenue generated by the Residential (excluding Italy) and Commercial divisions is calculated using the percentage-of-completion method, on the basis of notarized sales pro-rated to reflect the progress of committed construction costs.
In the first nine months of 2010, Nexity Group recorded revenue of €1,855 million, a 5% decline compared to the same period in 2009.
The French market remained very buoyant in the first nine months of 2010, reaping the benefits of mortgage rates falling to record lows (3.30% on average in September 2010 according to Crédit Logement, as against a high point for the last few years of 5.07%, reached at year-end 2008). The market continued to benefit from government stimulus measures in favor of private individuals (home-ownership assistance, encouragement of buy-to-let investment via the Scellier-Carrez scheme). For 2011, the principal conditions of the main incentives have been maintained: the new PTZ+ (for prêt à taux zéro renforcé), a reshuffled zero-interest loan, will increase the borrowing capacity of first-time buyers in urban areas. The tax benefit offered under the Scellier scheme, currently corresponding to 25% of invested capital, subject to certain conditions, is expected to be set at 22%, according to the draft Budget Act, for new homes meeting BBC (Bâtiment Basse Consommation) certification criteria for low energy consumption, beginning in 2011.
Net new home and subdivision reservations booked by Nexity Group amounted to 9,745 units (including 111 in Italy), up 5% compared to the first nine months of 2009, representing a total value of €1,698 million (including 31 in Italy).
| New home and subdivision reservations - FRANCE | Change | ||
|---|---|---|---|
| (units and € millions) | 9M 2010 | 9M 2009 | % |
| New homes (number of units) | 7,812 | 7,810 | - |
| Subdivisions (number of units) | 1,822 | 1,378 | +32% |
| Total new home and subdivision reservations | |||
| (number of units) | 9,634 | 9,188 | +5% |
| New home reservations (€m incl. VAT) | 1,534 | 1,411 | +9% |
| Subdivision reservations (€m incl. VAT) | 133 | 82 | +61% |
| Total new home and subdivision reservations (€m incl. VAT) |
1,667 | 1,493 | +12% |
| Breakdown of new home reservations by client - | Change | ||||
|---|---|---|---|---|---|
| FRANCE | 9M 2010 | 9M 2009 | % | ||
| Home buyers (number of units) | 2,158 | 28% | 2,199 | 28% | -2% |
| o/w: - first-time buyers | 1,618 | 21% | 1,615 | 21% | - |
| - other home buyers | 540 | 7% | 584 | 7% | -8% |
| Private investors (number of units) | 4,377 | 56% | 3,996 | 51% | +10% |
| Institutional investors (number of units) | 1,277 | 16% | 1,615 | 21% | -21% |
| Total new home reservations | |||||
| (number of units) | 7,812 | 100% | 7,810 | 100% | - |
Excluding block sales to institutional investors and Iselection sales,1 the average price including VAT of homes sold was €208 thousand for an average floor area of 58 sq.m. The rise in the average floor area of homes sold, combined with a geographic mix factor, has contributed to an increase in the average price of new homes.
| Average sale price & surface area* | 9M 2010 | 9M 2009 |
|---|---|---|
| Average home price incl. VAT per sq.m (€) | 3,574 | 3,380 |
| Average surface area per home (sq.m) | 58.1 | 56.9 |
| Average price incl. VAT per home (€k) | 207.6 | 192.4 |
* excluding block sales and Iselection
The unsold completed stock held by the Group remains very low, amounting to 156 homes as of September 30, 2010. In the first nine months of 2010, the level of pre-commercialization recorded at the time construction work was launched was exceptionally high, reaching 80% on average. The Group launched 89 residential programs during the first nine months of 2010, corresponding to nearly 7,300 units. However, the Group's available supply remains limited, close to its level at year-end 2009, due to very rapid pace of transactions.
The Residential division's business potential for new homes2 as of September 30, 2010 corresponded to the equivalent of 19,600 units,3 3% higher than its level as of December 31, 2009. Business potential for subdivisions amounted to 9,600 units, compared to 8,700 units as of December 31, 2009.
• The past few months have confirmed the upturn in the investment market, with a total amount of €2.4 billion committed in France in the third quarter, representing a year-on-year increase of 52%4 . Low bond yields encourage investment in commercial real estate, and foreign investment funds are becoming more active in this market. In spite of a recent trend towards greater diversification, most investors still prefer the safest investments as far as office premises are concerned. Yields in the Paris central business district are currently between 4.85% and 6%4 . As a result of few new project launches since the crisis, availability of new and restructured space is becoming scarce in the definite future office supply.
1 Sales of new homes as an operator, excluding commercialization on behalf of third parties
2 The business potential includes current supply for sale, future supply corresponding to project tranches not yet
commercialized on acquired land, and supply not yet launched associated with land secured through options 3 Excluding Villes et Projets operations portfolio
4 Source: CBRE
• Order intake recorded by Nexity in the first nine months of 2010 came to €123.7 million excluding VAT. Two new orders were booked in the third quarter, for a total of €50.2 million excluding VAT. These related to two office buildings located at the Tripode site in Nantes, as part of a project initiated by Villes & Projets, the Group's urban renewal division. Negotiations for a number of other projects are currently in the advanced stage.
In the Services business, the number of residential units managed as of September 30, 2010 came to almost 916,000, including 80,000 units outside France (in Germany, Belgium, Poland and Switzerland). The portfolio consists of 710,000 units in condominium management (down from 758,000 as of December 31, 2009) and 206,000 units in rental management (down from 209,000 as of December 31, 2009). The recovery in the market for existing property is reflected in a significant upturn in the volume of transactions handled by agencies. In the area of commercial real estate, total space under management amounted to 7.8 million square meters as of September 30, 2010, compared to 8.4 million as of December 31, 2009.
Within the Distribution business, activity in the networks of agencies (1,345 agencies as of September 30, 2010 compared to 1,405 agencies as of December 31, 2009) maintained its strong pace of growth, thanks in particular to low mortgage rates. Iselection continued to benefit from the extension of the Scellier tax benefits to investments made under the LMNP scheme for nonprofessional landlords of furnished property. As a vendor of real estate savings products on behalf of third-party real estate developers, Iselection sold 1,631 units during the first nine months of 2010, versus 1,522 in the first nine months of 2009.
| € millions (excluding VAT) | Sep. 30, 2010 | Dec. 31, 2009 | Change % |
|---|---|---|---|
| New homes* | 2,074 | 1,807 | +15% |
| Subdivisions | 249 | 237 | +5% |
| Residential division backlog | 2,323 | 2,044 | +14% |
| Commercial division backlog | 403 | 556 | -28% |
| Total Group backlog | 2,726 | 2,600 | +5% |
* including Italy
As of September 30, 2010, the Group's total order backlog amounted to €2,726 million, increasing by 5% compared to December 31, 2009, and represented 15 months of revenue from real estate development activities for Nexity.1 In the Residential division, the order backlog came to €2,323 million, up 14% compared to year-end 2009.
1 Revenue basis - previous 12-month period.
| - | Dial-in number (France) | + 33 (0) 1 70 99 35 14 | Access code: Nexity |
|---|---|---|---|
| - | Dial-in number (rest of Europe) | + 44 (0) 207 153 20 27 | Access code: Nexity |
| - | Dial-in number (United States) | + 1 (0) 480 629 97 25 | Access code: Nexity |
Playback will be available by phone after the conference call by dialing the following number:
+44 (0) 20 79 59 67 20 (code: 4376815#)
The presentation accompanying this conference can be accessed at the following address: http://www.thomson-webcast.net/uk/dispatching/nexity101028.
This presentation will be available on the Group's Web site as of 9 a.m. CET on October 28, 2010.
The information, assumptions and estimates that the Company could reasonably use to determine these objectives 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 chapter 4 of the Document de Référence, filed with the AMF under number D. 10-0398 on May 3, 2010 could have an impact on the company's ability to achieve these objectives. Accordingly, the Company cannot give any assurance as to whether it will achieve the objectives described, and makes no commitment or undertaking to update or otherwise revise this information.
This press release is considered to be a Quarterly Financial Report as defined in the Transparency Directive transposed by the AMF.
The largest fully integrated real estate group in France, Nexity uses its comprehensive range of sector-specific expertise to serve the private individuals, companies and local authorities that make up its customer base. As an established leader across the entire spectrum of real estate businesses, spanning property development (homes, offices, warehouses and distribution centers, hotels and other businesses), real estate services for private individuals and companies, franchise networks, property management and turnkey urban development, Nexity can provide global responses to the needs of its customers. Nexity is present throughout France and elsewhere in Europe.
Member of the Indices: SBF80, SBF120, CACmid100, Next150 and MSCI SmallCap France Mnemo: NXI - Reuters: NXI.PA – Bloomberg: NXI FP ISIN code: FR0010112524
NEXITY CONTACTS
Analysts/Investors Press Investor Relations Director Communications Director [email protected] [email protected]
Olivier SEUX +33 (0)1 71 12 15 49 Guillaume IDIER +33 (0)1 71 12 15 52
RESIDENTIAL
| € millions | 9M 2010 | 9M 2009 | Change % |
|---|---|---|---|
| New homes | 1,057.7 | 1,133.0 | -7% |
| Subdivisions | 97.7 | 90.9 | +7% |
| International | 10.8 | 0.4 | - |
| Residential | 1,166.2 | 1,224.3 | -5% |
| € millions | 9M 2010 | 9M 2009 | Change % |
|---|---|---|---|
| Office buildings | 278.5 | 276.6 | +1% |
| Logistic platforms and other business premises | 9.0 | 27.3 | -67% |
| International | - | 66.3 | - |
| Commercial | 287.4 | 370.1 | -22% |
| € millions | 9M 2010 | 9M 2009 | Change % |
|---|---|---|---|
| Services | 317.7 | 320.5 | -1% |
| Distribution | 80.6 | 43.2 | X 1.9 |
| Services & Distribution | 398.3 | 363.7 | +10% |
| 2009 | 2010 | |||||||
|---|---|---|---|---|---|---|---|---|
| € millions | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 |
| Residential | 329.0 | 477.4 | 417.9 | 602.8 | 342.9 | 442.9 | 380.4 | |
| Commercial | 123.7 | 140.0 | 106.4 | 105.8 | 81.7 | 102.1 | 103.6 | |
| Services & Distribution | 112.4 | 127.8 | 123.5 | 166.4 | 130.3 | 134.4 | 133.6 | |
| Other activities | 0.9 | 1.1 | 1.6 | 1.2 | 1.0 | 0.9 | 1.1 | |
| Revenue | 566.0 | 746.3 | 649.4 | 876.2 | 555.9 | 680.3 | 618.7 |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.