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Nexity: 9M 2022 Business activity and revenue - Results in line with our expectations - Annual targets confirmed
Источник: Nasdaq GlobeNewswire / 26 окт 2022 10:45:00 America/Chicago
Paris, France, 26 October 2022, 5.45 pm CEST
RESULTS IN LINE WITH OUR EXPECTATIONS
ANNUAL TARGETS CONFIRMEDVery strong performance of new home activity in a market declining sharply
11,446 new home reservations at the end of September 2022: down 8% by volume (vs. market decreasing by 21%1); and down 5% by value
9M revenue: €2,954m (down 4%)
Stable revenue excluding the H1 2021 base effect in Commercial real estate
Continued strong growth in Services (up 9%)
Completion of the acquisition of the Angelotti group, the regional leader in urban planning and residential development in the Occitanie region
Consolidation from 1 November 2022
Annual targets confirmed
- >14% market share in residential real estate in an expected market of 130,000 units2
- >4.6 billion in revenue and current operating margin of around 8%
Strong visibility, secured future business: high backlog of €6.3bn, i.e. 2 years of development activity
Key figures at end-September 2022
New home reservations in France 9M 2021 9M 2022 Change Volume 12,443 units 11,446 units -8% Value €2,693m €2,561m -5% Revenue (€m) 9M 2021 9M 2022 Change Development 2,492 2,312 -7% Residential real estate 2,133 2,063 -3% Commercial real estate 359 249 -31% Services 583 637 +9% Other activities 1 5 Revenue – new scope* 3,077 2,954 -4% * New scope excludes 2021 disposed activities, Century 21 consolidated until 31 March 2021 and Ægide-Domitys consolidated until 30 June 2021.
Véronique BEDAGUE, Chief Executive Officer commented
“In a difficult market environment, our position as a real estate leader, our size, the diversity of our products, particularly in managed real estate, and our territorial coverage allow us to outperform the market. Our Services activities continue to grow, driven by student residences and coworking. Revenue for the first nine months is in line with our expectations, our backlog secures future sales, and our potential gives us visibility. Nexity is confident in its ability to achieve its 2022 objectives. We are particularly vigilant in the current context about controlling our commitments and our debt.
In the medium term, Imagine 2026, our strategic plan, sets out a path of profitable and responsible growth by capitalising on the evolution of our business model towards that of a global real estate operator.”RESIDENTIAL REAL ESTATE
The new home market in France has been affected by the inflationary context observed since the beginning of the year, with new home reservations down 21% in the first half of the year according to the FPI (down 17% for retail sales and down 38% for bulk sales).Against this backdrop, Nexity's business activity held up well over the first nine months of the year, with 11,446 reservations (down 8% by volume compared with 9M 2021, down 5% by value at €2.6bn). Sales prices per square metre remain on an upward trend (up 2% for retail sales and up 6% for bulk sales compared to 9M 2021).
Business activity in the third quarter was contrasted by type of client. While retail sales fell more sharply (down 15% in 9M 2022 compared with -11% in the first six months of the year) due to higher mortgage rates, Nexity's privileged relationship with its institutional clients led to a sharp increase in bulk sales (up 11% in Q3 compared with -3% in the first six months of the year). This momentum is expected to continue in Q4 with a commercial strategy of rebalancing towards bulk sales. The Group also benefits from its differentiating expertise in managed real estate, which responds to the evolution of its clients' uses.
The supply for sale is gradually being rebuilt (up 14% to 8,180 lots compared with 7,199 at 30 June 2022) thanks to the increase in building permits (up 26% vs. 9M 2021), even though it remains at historically low levels. There is no completed homes in the supply for sale.
Revenue totalled €2,063 million in the first nine months, down 3%, in line with the trend observed since the beginning of the year resulting from the delayed new project construction starts due to the prudent management of the inflationary context leading to longer construction contracts negotiation times.
In terms of outlook, Nexity is maintaining its market share target of over 14%. The Angelotti group, which is expected to generate revenue of around €200 million in 2022, will be consolidated from 1 November 2022 and will therefore make a small contribution to the Group's 2022 results. We will remain vigilant on the adequacy of new production to market conditions, taking into account expectations of rising property mortgage rates.
COMMERCIAL REAL ESTATE
At the end of September 2022, Nexity recorded order intake of €108 million, a low point in a wait-and-see market.
Revenue for the first nine months amounted to €249 million, down 31% compared with the end of September 2021, which included the €124 million order intake contribution for the Reiwa building in Saint-Ouen. Adjusted for this base effect, revenue was up 6%. Revenue in the third quarter was up 11% compared to Q3 2021 and stood at €89 million, considering the progress of operations under construction.
The backlog (€827 million) and the business potential (€2.1 billion) give good visibility on future earnings prospects.
SERVICES
Services revenue for the first nine months totalled €637 million, continuing the strong growth observed since the beginning of the year (+9% compared to the end of September 2021), thus consolidating a sustainable business base. The increase is mainly due to the serviced properties business: student residences and particularly coworking activities.
€m 9M 2021 9M 2022 2022/2021 change Services Revenue 583 637 + 9% Property management 286 286 + 0% Serviced properties 110 155 + 41% Distribution 187 195 + 4% - Property Management revenue was stable over the first nine months, with contrasting activity depending on the business line. The condominium and rental management businesses posted a net increase in the number of units under management over the period, reflecting good commercial performance and improved customer satisfaction. Transactions and rental management are on the rise, which offsets the slowdown in rental activities reflecting the significant reduction in the rental offer. The current context of energy sobriety has led to an acceleration of Nexity's support for its clients in their condominiums’ energy renovation projects (+40% increase in the number of preliminary studies).
- In Serviced properties, Studéa recorded a 12% increase in revenue compared to the end of September 2021. The success of the marketing campaign for the 2022/2023 academic year is reflected in an occupancy rate close to 100% at the end of September. Revenue from coworking activities increased more than twofold compared to 30 September 2021. This increase is explained by the continued excellent occupancy rate of mature spaces and a faster filling rate of new spaces. This acceleration is the result of a broader client base (start-ups, scale-ups and large companies) in a Paris market that is under-supplied compared to other world capitals. A new flagship space opened in the heart of Paris in Q3, Morning Lafitte (representing Morning's largest space at c.9,500 sq.m and accommodating over 1,000 coworkers).
- Distribution revenue totalled €195 million, up +4% at the end of September 2022, reflecting the good level of transformation of reservations into notarial deeds. Business activity was down by only 8%, reflecting a good performance in the individual buy-to-let market.
This good growth dynamic should continue for the rest of the year.
IFRS CONSOLIDATED REVENUE
Under IFRS, reported revenue at end of September 2022 was €2,724 million. It excludes revenue from joint ventures in application of IFRS 11, which requires their recognition by equity accounting of proportionally integrated joint ventures in operational reporting. IFRS reported revenue at 9M 2021 (€3,022 million) is not comparable as it included the revenue of the disposed activities in 2021 (Century21 and Ægide-Domitys) for €196 million. On a like-for-like basis, decrease was limited at -4%.
As a reminder, revenue generated by the development businesses from VEFA off-plan sales and CPI development contracts is recognised using the percentage-of-completion method, i.e., based on notarised sales and pro-rated to reflect the progress of all inventoriable costs.
OUTLOOK
Nexity confirms its 2022 full-year guidance:
- >14% market share in 2022, in a new home market expected at 130,000 units3
- >€4.6bn revenue and a current operating margin around 8%
Nexity will continue to closely monitor the current economic, social and health situation.
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FINANCIAL CALENDAR & PRACTICAL INFORMATIONS2022 Full-Year results 22 February 2023 (after market close) Q1 2023 Business activity and revenue 26 April 2023 (after market close) 2023 Shareholders’ Meeting 16 May 2023 2023 Half-Year results 26 July 2023 (after market close) 9M 2023 Business activity and revenue 25 October 2023 (after market close) A conference call will be held today in French with a simultaneous translation into English at 6.30 p.m. (Paris Time), available on the website https://nexity.group/en/ in the Finance section and with the following numbers:
- Calling from France
+33 (0) 1 70 37 71 66 - Calling from elsewhere in Europe
+44 (0) 33 0551 0200 - Calling from the United States
+1 212 999 6659 Code: Nexity en
The presentation accompanying this conference will be available on the Group’s website from 6:15 p.m. (Paris Time) and may be viewed at the following address: 9M 2022 Nexity webcast
The conference call will be available on replay at https://nexity.group/en/finance from the following day.
Disclaimer: The information, assumptions and estimates that the Company could reasonably use to determine its targets are subject to change or modification, notably due to economic, financial and competitive uncertainties. Furthermore, it is possible that some of the risks described in Section 2 of the Universal Registration Document filed with the AMF under number D.22-0248 on 6 April 2022, 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 its stated targets and makes no commitment or undertaking to update or otherwise revise this information.
Contact:
Domitille Vielle – Head of Investor relations / +33 (0)6 03 86 05 02 – investorrelations@nexity.fr
Géraldine Bop – Deputy Head of Investor relations / +33 (0)6 23 15 40 56 – investorrelations@nexity.frANNEX: OPERATIONAL REPORTING
Quarterly reservations – Residential Real Estate
2020 2021 2022 Number of units Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 New homes (France) 3,450 5,402 3,848 7,299 3,508 4,843 4,092 7,658 3,490 4,149 3,807 Subdivisions 360 297 244 660 338 439 367 772 337 423 219 International 165 74 193 503 249 404 247 216 133 100 242 Total new scope 3,975 5,773 4,285 8,462 4,095 5,686 4,706 8,646 3,960 4,672 4,268 Reservations carried out directly by Ægide 207 392 336 143 389 348 Total (in number of units) 4,182 6,165 4,621 8,605 4,484 6,034 4,706 8,646 3,960 4,672 4,268 2020 2021 2022 Value, in €m incl. VAT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 New homes (France) 750 1,141 855 1,534 792 1,056 845 1,447 764 992 805 Subdivisions 30 25 19 57 29 42 33 55 27 37 18 International 26 11 29 91 41 72 48 31 18 2 56 Total new scope 806 1,177 903 1,682 862 1,170 927 1,533 808 1,032 880 Reservations carried out directly by Ægide 41 90 70 32 90 85 Total (in €m incl. VAT) 847 1,267 974 1,713 952 1,255 927 1,533 808 1,032 880 Cumulated reservations – Residential Real Estate
2020 2021 2022 Number of units Q1 H1 9M FY Q1 H1 9M FY Q1 H1 9M New homes (France) 3,450 8,852 12,700 19,999 3,508 8,351 12,443 20,101 3,490 7,639 11,446 Subdivisions 360 657 901 1,561 338 777 1,144 1,916 337 760 979 International 165 239 432 935 249 653 900 1,116 133 233 475 Total new scope 3,975 9,748 14,033 22,495 4,095 9,781 14,487 23,133 3,960 8,632 12,900 Reservations carried out directly by Ægide 207 599 935 1,078 389 737 737 737 Total (in number of units) 4,182 10,347 14,968 23,573 4,484 10,518 15,224 23,870 3,960 8,632 12,900 O/w new homes in France 3,657 9,451 13,635 21,077 3,897 9,088 13,180 20,838 3,490 7,639 11,446 2020 2021 2022 Value, in €m incl. VAT Q1 H1 9M FY Q1 H1 9M FY Q1 H1 9M New homes (France) 750 1,892 2,747 4,281 792 1,848 2,693 4,140 764 1,756 2,561 Subdivisions 30 55 74 131 29 71 104 159 27 64 82 International 26 36 65 156 41 113 161 192 18 20 77 Total new scope 806 1,983 2,887 4,568 862 2,032 2,958 4,491 808 1,840 2,720 Reservations carried out directly by Ægide 41 131 201 233 90 175 175 175 Total (in €m incl. VAT) 847 2,115 3,088 4,802 952 2,207 3,133 4,666 808 1,840 2,720 O/w new homes in France 792 2,023 2,948 4,515 882 2,023 2,868 4,315 764 1,756 2,561 Breakdown of new home reservations in France by client
In number of units, new scope 9M 2021 9M 2022 9M 2022 / 9M 2021
changeHomebuyers 2,447 20% 1,967 17% -20% o/w: - First time buyers 2,082 17% 1,687 15% -19% - Other home buyers 365 3% 280 2% -23% Individual investors 5,172 42% 4,534 40% -12% Professional landlords 4,824 39% 4,945 43% 3% O/w : - Institutional investors 1,519 12% 1,539 13% 1% - Social housing operators 3,305 27% 3,406 30% 3% Total 12,443 100% 11,446 100% -8% Services
December 2021 September 2022 Change Property Management Portfolio of managed housing - Condominium management 672,000 676,000 +1% - Rental management 155,000 158,000 +2% Commercial real estate - Assets under management (in millions of sq.m) 20.4 20.4 stable Serviced properties Student residences - Number of residences in operation 129 130 +1 - Rolling 12-month occupancy rate 93% 97% +4 bps Shared office space - Managed areas (in sq.m) 57,000 87,000 +30,000 - Rolling 12-month occupancy rate 74% 88% +14 bps Distribution 9M 2021 9M 2022 Change - Total reservations 3,716 3,419 -8% - Reservations on behalf of third parties 2,428 2,125 -12%
Quarterly figures - Revenue2020 2021 2022
in € millionQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Development 524 680 703 1,747 851 827 815 1,279 699 839 775 Residential Real Estate 467 434 642 1,216 655 742 735 1,146 626 750 686 Commmercial Real Estate 57 247 61 530 195 85 79 133 72 89 89 Services 171 161 198 237 176 209 198 270 195 226 215 Property management 91 84 99 95 91 94 100 94 92 96 98 Services properties 35 30 35 34 35 35 40 47 49 53 53 Distribution 45 47 65 108 50 80 58 129 54 77 64 Other activities 1 1 4 1 Revenue - New scope 695 842 901 1,983 1,027 1,036 1,013 1,549 895 1,069 991 Revenue from disposed activities* 92 88 120 134 104 107 Revenue 787 929 1,021 2,118 1,132 1,143 1,013 1,549 895 1,069 991 * Disposed activities are consolidated until 31 Mars 2021 for Century 21 and until 30 June 2021 for Ægide-Domitys
Backlog
2020 2021 2022 In € million, excluding VAT Q1 H1 9M FY Q1 H1 9M FY Q1 H1 9M Residential Real Estate 4,522 4,986 5,100 5,509 5,399 5,504 5,610 5,565 5,551 5,541 5,511 Commercial Real Estate 398 373 321 1,032 1,138 1,059 1,013 974 935 906 827 Total Backlog new scope 4,920 5,359 5,421 6,541 6,536 6,563 6,622 6,538 6,485 6,447 6,338 Restatement of operations carried out directly by Ægide 274 300 298 280 242 Total Backlog 5,194 5,659 5,719 6,820 6,778 6,563 6,622 6,538 6,485 6,447 6,338 GLOSSARY
Business potential: The total volume of potential business at any given moment, expressed as a number of units and/or revenue excluding VAT, within future projects in Residential Real Estate Development (New homes, Subdivisions and International) as well as Commercial Real Estate Development, validated by the Group’s Committee, in all structuring phases, including the projects of the Group’s urban regeneration business (Villes & Projets); this business potential includes the Group’s current supply for sale, its future supply (project phases not yet marketed on purchased land, and projects not yet launched associated with land secured through options)
Current operating margin: current operating profit compared to revenue
Current operating profit: Includes all operating profit items with the exception of items resulting from unusual, abnormal and infrequently occurring transactions. In particular, impairment of goodwill is not included in current operating profit
Development backlog (or order book): The Group’s already secured future revenue, expressed in euros, for its real estate development businesses (Residential Real Estate Development and Commercial Real Estate Development). The backlog includes reservations for which notarial deeds of sale have not yet been signed and the portion of revenue remaining to be generated on units for which notarial deeds of sale have already been signed (portion remaining to be built)
EBITDA: Defined by Nexity as equal to current operating profit before depreciation, amortization and impairment of non-current assets, net changes in provisions, share-based payment expenses and the transfer from inventory of borrowing costs directly attributable to property developments, plus dividends received from equity-accounted investees whose operations are an extension of the Group’s business. Depreciation and amortization include right-of-use assets calculated in accordance with IFRS 16, together with the impact of neutralising internal margins on disposal of an asset by development companies, followed by take-up of a lease by a Group company.
EBITDA after lease payments: EBITDA net of expenses recorded for lease payments that are restated to reflect the application of IFRS 16 Leases
Free cash flow: Cash generated by operating activities after taking into account tax paid, financial expenses, repayment of lease liabilities, changes in WCR, dividends received from companies accounted for under the equity method and net investments in operating assets
Joint ventures: Entities over whose activities the Group has joint control, established by contractual agreement. Most joint ventures are property developments (Residential Real Estate Development and Commercial Real Estate Development) undertaken with another developer (co-developments)
Land bank: The amount corresponding to acquired land development rights for projects in France carried out before obtaining a building permit or, in some cases, planning permissions
Net profit before non-recurring items: Group share of net profit restated for non-recurring items such as change in fair value adjustments in respect of the ORNANE bond issue and items included in non-current operating profit (disposal of significant operations, any goodwill impairment losses, remeasurement of equity-accounted investments following the assumption of control)
New scope: Scope of consolidation excluding the contribution of disposed activities (Century 21 and Ægide-Domitys) and capital gains. Disposed activities have been consolidated until 31 March 2021 for Century 21 and until 30 June 2021 for Ægide-Domitys.
Order intake: Commercial Real Estate: The total of selling prices excluding VAT as stated in definitive agreements for Commercial Real Estate Development projects, expressed in euros for a given period (notarial deeds of sale or development contracts).
Operational reporting: According to IFRS but with joint ventures proportionately consolidated. This presentation is used by management as it better reflects the economic reality of the Group’s business activities
Pipeline: sum of backlog and business potential; could be expressed in months or years of activity (as the backlog and the business potential) based on the last 12 months revenue.
Property Management: Management of residential properties (rentals, brokerage), common areas of apartment buildings (as managing agent on behalf of condominium owners), commercial properties, and services provided to users.
Reservations by value: (or expected revenue from reservations) – Residential Real Estate: The net total of selling prices including VAT as stated in reservation agreements for development projects, expressed in euros for a given period, after deducting all reservations cancelled during the period.
Revenue: revenue generated by the development businesses 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 all inventoriable costs.
Serviced properties: the Group’s business activities in the management and operation of student residences as well as flexible workspaces.
Time-to-market: supply for sale compared to reservations for the last 12 months, expressed in months, for new home reservations in France
1 Source: Q2 2022 new home market published on 15 September 2022 by FPI
2 Nexity estimate
3 Nexity estimateAttachment
