RESULTS FOR THE FIRST HALF OF 2018 NEXITY S FINANCIAL OUTLOOK REVISED UPWARDS FOR 2018

Transcription

1 RESULTS FOR THE FIRST HALF OF 2018 NEXITY S FINANCIAL OUTLOOK REVISED UPWARDS FOR 2018 Paris, Wednesday, 25 July 2018 New home reservations in France: up 6% by volume and up 10% by value (vs. H1 2017) Revenue: 1.6 billion (up 10%) EBITDA: 186 million (up 7%); EBITDA margin: 12.0% Current operating prit: 136 million (up 12%); operating margin: 8.7% Net prit before non-recurring items: 72 million (up 35%) Development backlog: 4.3 billion (up 7%) Net financial debt before application 16 1 : 739 million Individual Clients Revenue: 1,315 million (up 5%) EBITDA: 151 million (down 1%) Residential Real Estate: 9,282 reservations, which 8,252 new home reservations in France 2 up 6% by volume and 10% by value Business potential for new homes: 51,498 units, i.e. 2.7 years development operations (up 8% from December 2017) Controlling stake in Ægide-Domitys acquired in June 2018; provisional goodwill 251 million Commercial Clients Revenue: 239 million (up 52%) EBITDA: 38 million (up 43%) Commercial Real Estate: order intake 74 million as 30 June 2018 ( 138 million in additional orders between 1 and 25 July 2018, putting order intake on track to hit the 2018 target 400 million) Commercial Real Estate business potential 2.4 billion, i.e. 5.6 years development operations Agreement for major development signed on 13 July 2018: Engie s future eco-business park at La Garenne- Colombes (Hauts-de-Seine) FINANCIAL OUTLOOK REVISED UPWARDS Revenue and EBITDA now expected to grow by over 12% in Confirmation all other aspects the outlook communicated on 20 February 2018 The financial data and indicators used in this press release including forward-looking information are based on Nexity s, with joint ventures proportionately consolidated. The 2017 data has been restated to improve comparability, and a breakdown is provided in Annex 3 this press release. 1 Net debt totalled 1,020 million as 30 June 2018, which 281 million corresponding to leases accounted for under The balance includes 915 subdivision reservations and 115 international reservations. 3 Compared with growth around 10% in the guidance provided with the annual 2017 results (20 February 2018), upward revision mostly due to Ægide-Domitys consolidation. Page 1/33

2 Alain Dinin, Chairman and CEO Nexity, commented: In line with our expectations at the beginning the year, the French residential market contracted slightly (down 5% in the first quarter 2018). The key forces at work here were the withdrawal incentives in non-supply-constrained areas, the government s social housing policy and selling prices rising more rapidly than clients purchasing power. Yet Nexity s new home reservations in France rose 6% during the first six months the year, as we made good progress towards our target for market share growth. This performance was underpinned by our geographical positioning, our presence in rapidly expanding niche markets such as serviced residences and social home ownership the strong performance by the companies we have acquired in recent years, such as Edouard Denis, and our continuing ability to fer affordable prices. The housing market is experiencing a slowdown, and the ELAN bill, currently being debated by the French parliament, will not despite the undeniable improvements produce the anticipated supply-side shock. Coupled with the imminent 2020 municipal elections, this backdrop suggests that 2019 will be a less favourable year. However, this does not call into question the potential for sustainable and enduring growth in the French residential market. We remain on track with our business plan, which already factored in the aforementioned headwinds, and we intend to extend our leadership with our multi-product and multi-brand model, actively supported by our service businesses. Our acquisition a controlling interest in Ægide-Domitys, the French market leader in serviced senior residences, was the key development in these service businesses during the first few months the year. We aim to leverage this partnership to accelerate Nexity s growth in this very high-potential market. The Commercial Clients business lines delivered strong growth in highly supportive market conditions characterised by a shortage vacant high-quality fice space in France s major cities. After growing by 5% in the first quarter, Nexity s revenue continued to accelerate, rising 10% over the first six months the year. Given seasonal trends in the real estate market with business activity largely concentrated in the last few months the year and the impact Ægide-Domitys consolidation from the second half the year, Nexity is revising upwards its financial outlook for 2018 regarding revenue and EBITDA growth, both now anticipated at over 12% this year. As stated at Nexity s Investor Day on 19 June 2018, we have a high level visibility on our results, and so we are targeting growth 10% per year out to Beyond our financial goals, Nexity will continue to stand out through product innovation, tighter integration between our development and real estate services businesses and our commitment, which is hard-wired into our make-up, to be useful to our clients and society. *** At its meeting on Wednesday, 25 July 2018, chaired by Alain Dinin, Nexity s Board Directors reviewed and approved the Group s condensed consolidated financial statements for the half-year period ended 30 June 2018, which can be found in the annexes this press release. The 2018 half-year financial statements were subject to a limited review by the Statutory Auditors the Company. Page 2/33

3 BUSINESS ACTIVITY IN H INDIVIDUAL CLIENTS RESIDENTIAL REAL ESTATE In the first quarter 2018, the retail market for new homes in France 4 was slightly less buoyant than in 2017 with just over 30,000 net reservations, down 5% year on year. Mortgage rates for individual borrowers stayed at a very low level (1.44% on average in June ), and Nexity expects interest rates to rise gradually. Reservations (units and m) H H Change % New homes (France) 8,252 7, % Subdivisions 915 1, % International % Total reservations (number units) 9,282 9, % New homes (France) 1,666 1, % Subdivisions % International % Total reservations ( m incl. VAT) 1,755 1, % The impact the increase in VAT from 5.5% to 10% on reservations for social housing units signed before 31 December 2017 at the previous lower rate is not included in the amount reservations for the first half No reservations by pressional landlords were withdrawn following this VAT increase. Backlog, which represents future revenue, is expressed exclusive tax. New homes In the first half 2018, the Group s net new home reservations in France totalled 8,252 units, up 6% by volume and up 10% by value year on year compared with H Expected revenue from reservations rose more sharply than the volume reservations, particularly as a result the geographic mix and the far larger number reservations in the Paris region, where the average price for units reserved is higher. With respect to their geographic distribution, 88% the reservations were located in supply-constrained areas (the A, A bis and B1 zones under the current Pinel scheme). Reservations grew apace in the Paris region (up 12%) but more moderately in the rest France (up 2%). In the second quarter 2018, net new home reservations in France increased 8% by volume and 11% by value. Breakdown new home reservations by client France (number units) H H Homebuyers 2,296 28% 2,112 27% o/w: - first-time buyers 1,875 23% 1,582 20% - other homebuyers 421 5% 530 7% Individual investors 3,630 44% 3,729 48% Pressional landlords 2,326 28% 1,953 25% Total new home reservations 8, % 7, % Reservations by first-time buyers were up 19% on H Reservations placed by homebuyers made up 28% Nexity s total new home reservations in the first half. Reservations by individual investors declined in H (down 3% relative to H1 2017). Individual investors accounted for 44% new home reservations during the quarter, with 68% making use the Pinel scheme. 4 Source: ECLN Conjoncture de l immobilier (Results for the first quarter June 2018). 5 Source: Observatoire Crédit Logement 18 June Page 3/33

4 Reservations made by pressional landlords comprised 28% total new home reservations. They rose 19% compared with H1 2017, with significant growth in reservations made by investors in intermediate and non-social housing (2 times higher than in H1 2017). These accounted for 34% total reservations by pressional landlords in the first half 2018 (with the remaining 66% made by social housing operators). In this regard, Nexity has just reached an agreement on 2 framework agreements with leading pressional landlords, for significant new home sales volumes: One with CDC Habitat (former SNI), for 5,000 intermediate homes over 3 years; and The other one with in li, for 5,000 intermediate homes over 5 years. Nexity is thus further strengthening its leadership in bulk sales for pressional landlords, which harbor substantial growth potential. Average selling price & floor area* H H Change % Average price incl. VAT per sq.m ( ) 3,979 3, % Average floor area per home (sq.m) % Average price incl. VAT per home ( k) % * Excluding bulk reservations, reservations by iselection, PERL, Edouard Denis and Primosud, and international operations. The average price including VAT new homes reserved by Nexity s individual clients at end-june 2018 was up 5% compared with end-june 2017, reflecting among other factors a rise in the average price per square metre. The average level pre-selling booked at the start construction work remained very high at 75% at end-june 2018 (compared with 79% in H1 2017). Nexity launched a total 7,277 units in the first half 2018 (down 30% from H1 2017), reflecting a cautious approach. The supply homes for sale dropped back 3% from its end-december 2017 level to stand at 8,383 units at end-june 2018, i.e. an average time to market 5.3 months. 6 Unsold completed stock (118 units) as a proportion the total supply for sale remained very low. At end-june 2018, the business potential for new homes 7 came to 51,498 units, i.e. 2.7 years development operations, up 18% from end-june 2017 and up 8% from end-december In addition to providing a guarantee future supply, this growth has been achieved at land price conditions allowing Nexity to remain on track to meet its margin targets. Subdivisions Subdivision reservations totalled 915 units, down 21% relative to H Of these, only 30% were located in supplyconstrained areas. Business activity in other areas was affected by the phase-out the PTZ interest-free loan scheme in non-supply-constrained areas. The average price net reservations made by individuals rose 8% to 83k as a result the higher average price per square metre (up 8%) and the improvement in the geographic mix. International In the first half 2018, Nexity recorded 115 new home reservations outside France, down 20% from end-june These were all located in Poland. 6 Time to market: available market supply / reservations for the last 12 months, expressed in months. 7 See the glossary on page 33. Page 4/33

5 INDIVIDUAL CLIENTS REAL ESTATE SERVICES TO INDIVIDUALS In the Group s property management for individuals businesses, excluding franchises (condominium management, rental management, lettings, brokerage), the portfolio units under management totalled more than 880,000 units at 30 June 2018, with a low churn rate (1.4% at end-june 2018 on a like-for-like basis, compared with 1.2% at 30 June ). In franchise operations, Century 21 and Guy Hoquet l Immobilier signed 3.5% more provisional sale agreements in the first half 2018 than in the first half 2017, in a market for existing real estate in France that should remain buoyant in The number franchisees rose in the first half 2018 to 1,334 agencies at end-june 2018 versus 1,292 at end-december Nexity Studéa, a leading student residence management company (124 residences, i.e. over 15,200 units under management at 30 June 2018), posted an increase in its occupancy rate to 92.2% (compared with 90.9% at end-june 2017). Distribution activities under the iselection and PERL brands recorded 2,221 reservations in the first half 2018 (compared with 2,188 reservations in H1 2017). Business remained brisk despite the unfavourable impact the increase in VAT on social housing from 5.5% to 10%, affecting the number reservations recorded by PERL. Of these reservations, 1,142 were homes distributed on behalf third-party real estate developers or through the division ownership existing property. The remainder corresponds to Nexity s new home reservations recorded within Residential Real Estate sales. INDIVIDUAL CLIENTS - ÆGIDE-DOMITYS PARTNERSHIP On 30 May 2018, Nexity exercised the call option enabling it to acquire an additional 18% stake in Ægide, the parent company Ægide-Domitys, from its founders (via JMF Conseil). Nexity s ownership interest has thus increased from 45.16% to 63.16%, with JMF Conseil holding 36.84%. Ægide-Domitys will thus be fully consolidated in Nexity s accounts from 1 July Founded in 1999, Ægide-Domitys builds, owns and markets senior independent living facilities, for which it acts as both developer and operator. In the first half 2018: Ægide s development business recorded 1,187 reservations (331 which for units in co-development projects with Nexity), for expected revenue from reservations 223 million including VAT ( which 61 million in codevelopment projects with Nexity); Domitys opened six new residences during the period, increasing its portfolio serviced residences to 78, corresponding to around 9,200 residential units. INDIVIDUAL CLIENTS DIGITAL AND INNOVATION Nexity continued its transformation into a client-focused real estate services platform through in-house digitisation projects and investment in new services, including the following: Bien ici a next-generation property listings website in which Nexity has a 48% stake alongside a consortium real estate pressionals (Consortium des Pressionnels de l Immobilier) continued to receive a growing number membership requests from pressionals wishing to place paid listings (with 8,041 member agencies at end-june 2018 compared with 7,352 at end-2017). The number visits to the website has continued to grow, setting a new record 4.9 million visits in June 2018, making Bien ici the number-three real estate portal in the French market a mere two years after it was launched. Eugénie a digital service that connects residents to their home as well as their managing agent, neighbours and neighbourhood was launched in early Eventually, all Nexity homes will be connected to the system and 8 At current structure and exchange rates, the churn rate was 1.7% at 30 June 2018, versus 1.2% at 30 June FNAIM annual overview 10 January Page 5/33

6 occupants will be able to manage their homes using a range features (including smart appliances, a communication channel, a listing tool for approved service providers and a mini-community social network). COMMERCIAL CLIENTS 10 In the second quarter 2018, the French commercial real estate investment market was very strong, with more than 7 billion invested, bringing the total investment for the first half 2018 to nearly 11.5 billion euros. Office space in the Paris region accounted for 75% these volumes, including prime assets, some which traded at an all-time low yield 3%. The market for VEFA f-plan contracts for fices remained buoyant (at nearly 1.4 billion), still including a large proportion speculative deals, remaining stable at 47% transactions and reflecting investors appetite for risk in anticipation a shortage high-quality supply in the rental market. The rental market was again buoyant in the second quarter 2018, with take-up in the Paris region totalling more than 640,000 sq.m, bringing take-up (volume rental transactions and user sales) to 1.3 million sq.m in the first half 2018, up 15% from the first half New orders in the first half 2018 totalled 74 million excluding VAT, breaking down into: 41 million in orders in the Paris region (56% total new orders), including a 28 million development in Pré-Saint- Gervais (Seine-Saint-Denis), also spurred by the Nexity Contractant Général general contractor business, which logged 12 million in orders; and 33 million in orders outside the Paris region (44% total new orders), including a 15 million development in Nanteuil-le-Haudouin (Oise) and wood-frame developments representing a total 12 million in orders. The 138 million in additional new orders logged between 1 and 25 July 2018 means that Nexity remains on track to reach its order intake guidance for million. At end-june 2018, the Group s business potential for Commercial Real Estate 11 was 2.4 billion, representing 5.6 years development operations (up 53% since end-december 2017). In particular, this performance reflects the impact a major programme at La Garenne-Colombes (Hauts-de-Seine), developed under a financial and technological partnership with Engie. This 9-hectare plot will be home to Engie s new eco-business park, among other buildings. The volume units under management in Real Estate Services to Companies totalled 11.4 million sq.m at end-june 2018, stable with respect to end-december LOCAL AUTHORITY CLIENTS At end-june 2018, the land development potential Nexity s urban regeneration business (Villes & Projets) declined 2.8% to 571,700 sq.m. 12 Changes to the portfolio arose from the acquisition a 36,700 sq.m. plot land at Solliès- Pont (Var) and the intra-group sale residential development rights for the Nanteuil-le-Haudouin programme (Oise). At end-june 2018, Nexity s land bank 11 amounted to 109 million. CORPORATE SOCIAL RESPONSIBILITY (CSR) In June 2018, mindful its role as a responsible corporate citizen, Nexity announced the establishment a new entity, Nexity Non Prit, which has undertaken to create 1,000 places in boarding houses each year over the next three years, to help provide housing for those most in need. Nexity has also launched an initiative to fer vacant residential units in private residential properties to disadvantaged people, by working with specialist partners in supportive housing and solidarity-focused rental property management. In accordance with the commitments made by the Group, the business model for this activity will be financially neutral. 10 Sources market data: CBRE MarketView: Paris Region Office and France Investment Q See the glossary on page Floor areas are provided for information purposes only and may be subject to adjustment once administrative authorisations have been obtained. Page 6/33

7 H CONSOLIDATED RESULTS OPERATIONAL REPORTING 13 The 2017 data shown below has been restated to improve its comparability. A breakdown the restatements is provided in Annex 3 this press release. H H restated Change in m Consolidated revenue 1, , EBITDA % revenue 12.0% 12.4% Current operating prit Remeasurement Ægide-Domitys following acquisition control Operating prit Net financial income/(expense) (17.9) (19.5) 1.7 Income taxes (44.3) (40.8) (3.4) Share prit/(loss) from equity-accounted investments (0.9) (5.2) 4.3 Net prit Non-controlling interests (1.6) (1.9) 0.3 Net prit attributable to equity holders the parent company (in euros) Earnings per share Net prit before non-recurring items 13 attributable to equity holders the parent company came to 71.9 million in the first half 2018, up 35% from 53.4 million in H1 2017, or 1.28 per share 14 (compared with 0.97 in H1 2017), representing an increase 32%. REVENUE In the first half 2018, Nexity recorded revenue 1,556 million, up 10% relative to the first half H H restated Change % Individual Clients 1, , % Residential Real Estate* % Real Estate Services to Individuals % Commercial Clients % Commercial Real Estate* % Real Estate Services to Companies % Other activities % Revenue 1, , % * Revenue generated by Residential Real Estate and Commercial Real Estate from VEFA f-plan sales and CPI development contracts is recognised using the percentage--completion method, i.e. on the basis notarised sales and pro-rated to reflect the progress inventoriable production costs incurred. 13 See the glossary on page Based on average number shares outstanding over the period. Page 7/33

8 Individual Clients The Individual Clients division recognised revenue 1,315 million in the first half 2018, up 5% from H Residential Real Estate recognised revenue 969 million in the first half 2018, up 9% relative to H This growth reflects the increase in the backlog observed over the previous quarters. Real Estate Services to Individuals posted revenue 346 million in the first half 2018, down 5% relative to H In the first half 2018, the property management for individuals business (including franchises) generated 177 million in revenue, up 2% compared with H The serviced residences activities (Studéa) generated 44 million in revenue, up 3% compared with H Distribution activities, which are by nature more volatile, generated revenue 126 million in H1 2018, down 16% relative to H1 2017, due to a base effect on outstanding reservation agreements. Commercial Clients The Commercial Clients division posted revenue 239 million in the first half 2018, up 52% from H This strong growth reflects the good progress on development in the construction phase. Commercial Real Estate recognised revenue 208 million in the first half That represented a strong increase 63% relative to H both in and outside the Paris region, with wood-frame products playing a key role. Real Estate Services to Companies posted revenue 31 million in the first half 2018, up 7% relative to H Revenue under In terms, revenue to end-june 2018 totalled 1,488 million, up 10% relative to restated consolidated revenue 1,357 million in the period ended 30 June This figure excludes revenue from joint ventures, in accordance with 11, which requires joint ventures to be accounted for via the equity method instead proportionately consolidated as they were previously. Page 8/33

9 EBITDA 15 Nexity generated EBITDA 186 million in the first half 2018, compared with 175 million in the first half 2017, representing year-on-year growth 7% and an EBITDA margin 12.0%, down 0.4 points from its level in H H H restated Change % Individual Clients % % revenue 11.5% 12.2% Residential Real Estate % revenue 9.2% 8.8% Real Estate Services to Individuals % revenue 18.0% 20.4% Commercial Clients % % revenue 15.8% 16.9% Commercial Real Estate % revenue 18.0% 21.1% Real Estate Services to Companies 0.5 (0.4) % revenue 1.6% -1.4% Other activities (2.9) (4.7) na EBITDA % % revenue 12.0% 12.4% Individual Clients EBITDA from Individual Clients came to 151 million in the first half 2018, down 1%, or 1.5 million, compared with the first half That represented an EBITDA margin 11.5%, down 0.7 points from its level in H EBITDA from Residential Real Estate grew 14%, or 10.7 million, compared with H to reach 89 million in the first half 2018, reflecting smooth progress on housing and subdivision development projects. The margin widened by 0.4 points to 9.2%. EBITDA from Real Estate Services to Individuals decreased by 12 million and the EBITDA margin narrowed by 2.4 points to 18,0%, from 20.4% in H The primary factors behind this decline were: EBITDA from serviced residences decreased by 6 million (to 18 million) due to an automatic effect from 16: the number residences remained unchanged, but the increase in automatically renewable leases and those with a term less than one year led to higher operating expenses, whilst reducing the amount depreciation leasehold right 16 ; a contraction in EBITDA from property management for individuals including franchise networks (down 5million to 29 million) representing a margin 16.4%. This decrease reflects a negative impact from the seasonality between revenue in some activities (rental management, brokerage) and the straight-line method accounting for expenses, as well as an effect from 16 on a specific lease renegotiation; EBITDA from distribution decreased by 1 million (to 15 million) due to a lower volume activity. 15 Nexity defines EBITDA as equal to current operating prit before depreciation, amortisation and impairment fixed assets, net changes in provisions, share-based payment expenses and the transfer from inventory borrowing costs directly attributable to property developments, plus dividends received from equity-accounted investees whose operations are an extension the Group s business. See the glossary on page Automatically renewable leases and those with a term less than one year are excluded from the scope 16, and are not restated. Page 9/33

10 Commercial Clients EBITDA for Commercial Real Estate totalled 37 million in H1 2018, compared with 27 million in H (up 39%). Its margin stood at 18.0%, reflecting excellent financial and technical management ongoing projects as well as the healthier economic and financial climate. EBITDA for Real Estate Services to Companies was 0.5 million, compared with a loss 0.4 million in H Other activities EBITDA for Other activities (loss 2.9 million in the first half 2018, compared with a loss 4.7 million in H1 2017) includes prit/(loss) from the holding company, research and overhead costs incurred by Villes & Projets, as well as the development incubated start-ups and digital projects. OPERATING PROFIT Operating prit came to 215 million, reflecting the impact 79 million arising from the remeasurement (following the acquisition control) the 45% stake in Ægide-Domitys, which was previously accounted for under the equity method. In the first half 2018, Nexity generated current operating prit million, compared with 121 million in H (up 12%), yielding a margin 8.7%, compared with 8.6% in H The operating margin was virtually stable compared with H1 2017, whereas the EBITDA margin narrowed by 0.4 points, owing to the fact that the amount noncash expenses entering into the determination operating prit was lower in H than in H ( 50.4 million versus 53.8 million, respectively), mainly as a result lower amortisation charges under 16 in 2018 (- 7.6 million), which are transferred to operating expenses (see comments on the change in EBITDA for student residences). Individual Clients H H restated Change % % % revenue 8.5% 8.7% Residential Real Estate % revenue 7.7% 7.8% Real Estate Services to Individuals % revenue 10.7% 10.7% Commercial Clients % % revenue 14.8% 15.0% Commercial Real Estate % revenue 18.0% 20.4% Real Estate Services to Companies (2.0) (2.6) % revenue -6.4% -9.1% Other activities (11.6) (11.3) na Current operating prit % % revenue 8.7% 8.6% Remeasurement equity-accounted investments following acquisition control Operating prit % % revenue 13.8% 8.6% 17 See the glossary on page 33. Page 10/33

11 OTHER INCOME STATEMENT ITEMS Net financial expense was 18 million, versus 20 million in H This slight decrease in net financial expenses despite the higher level debt reflects a drop in Nexity s average borrowing costs. Net financial expense includes a 0.6 million expense in respect the change in fair value the 200 million ORNANE bond placement arranged in March In 2017, this item included a non-recurring expense 3.1 million, corresponding to the payment made at the early redemption a bond issue. The tax expense ( 44 million) was 3 million higher than in the first half This line item now includes the CVAE 18 levy, which was 5.1 million in the first half 2018, compared with 5.9 million in H The effective tax rate (excluding the CVAE levy) stood at 34.7% in the first half 2018, compared with 36.3% in H Equity-accounted investments made a negative contribution 1 million (compared with a 5.2 million loss in H1 2017). The main components this item were the contributions from Bien ici and Ægide-Domitys, which improved their results in the first half Financial expenses and tax rate changes, combined with the improvements in the contributions equity-accounted investments, led to growth in the Group share net prit appreciably higher than that EBITDA and operating prit. The Group share net prit was million, a 2.8x improvement over net prit in the first half After non-recurring items remeasurement the investment in Ægide previously accounted for under the equity method following the acquisition control (positive impact 79 million) and the change in fair value adjustment to the ORNANE bond issue (negative impact 0.6 million) net prit before non-recurring items came to 72 million, 35% higher than the Group share net prit in the first half CASH FLOWS AND WORKING CAPITAL REQUIREMENT (WCR) H H restated Cash flow from operating activities before interest and tax expenses Cash flow from operating activities after interest and tax expenses Change in operating working capital (excluding tax) (149.2) (9.2) Changes in tax-related working capital, dividends from equity-accounted investments and other 6.1 (3.5) Net cash flow from/(used in) operating activities (21.8) 98.2 Net cash flow from/(used in) operating investments (14.5) (15.4) Free cash flow (36.3) 82.7 Net cash flow from/(used in) financial investments (51.4) (2.6) 16 lease payments made (32.5) (41.2) Dividends paid by Nexity SA (140.3) (132.7) Net cash flow from/(used in) financing activities, excluding dividends (203.9) 59.1 Change in cash and cash equivalents (56.6) (34.6) Cash flow from operating activities before interest and tax expenses totalled 182 million in the first half 2018, up 14 million relative to H1 2017, mainly as a result the improvement in earnings over the period. Operating investments remained stable compared with H1 2017, at 15 million. 18 Contribution sur la valeur ajoutée des entreprises (contribution levied on business value-added). Page 11/33

12 Nexity s free cash flow 19 in the first half 2018 was - 36 million, compared with a positive figure 83 million in H1 2017, as a result a strong increase in WCR (which rose by 149 million). Net cash from financial investments amounting to 51.4 million mainly corresponds to external growth transactions (acquisition an additional 18% stake in Ægide and several firms in property management for individuals). Net cash from financing activities ( 204 million) corresponds to new borrowings ( 239 million), mainly the proceeds the ORNANE bond issue ( 200 million) reduced by payments relating to commitments to acquire minority interests (- 34 million). 30 June December 2017 restated Change in m Individual Clients Residential Real Estate Real Estate Services to Individuals Commercial Clients 78 (21) 100 Commercial Real Estate 77 (26) Real Estate Services to Companies 2 6 Other activities Total WCR excluding tax Corporate income tax WCR Operating WCR at 30 June 2018 was 966 million, up 153 million from its level in December For Individual Clients, the positive trend in WCR reflects the Group s strong business activity growth, with mixed results depending on the business: WCR for Residential Real Estate increased, in line with the momentum in this segment, but was fset by lower WCR at Real Estate Services to Individuals, given limited supply for its distribution activities. For Commercial Clients, WCR for Commercial Real Estate was up 103 million, due to higher levels for certain developments with less favourable client payment schedules. The change in the WCR Other activities reflects the impact occasional cash flow delays. This WCR also includes new land positions secured by the Group s urban regeneration business (Villes & Projets). GOODWILL Goodwills at 30 June 2018 were 1,474 million (versus 1,213 million at end-2017). This change mainly reflects 251 million preliminary goodwill from Ægide-Domitys acquisition control: price paid for the shares and repurchase agreement for the remaining shares for 142 million as well as the remeasurement at 109 million the investment in Ægide (previously accounted for under the equity method). 19 See the glossary on page 33. Page 12/33

13 FINANCIAL STRUCTURE Nexity s consolidated equity (attributable to equity holders the parent company) was 1,662 million at end-june 2018, compared with 1,663 million at end-december 2017, mainly after 140 million in dividends paid and the inclusion net prit for the half-year period ( 150 million in Group share). 30 June December 2017 restated Change in m Bond issues (incl. accrued interest and arrangement costs) Loans and borrowings Other financial borrowings and other financial receivables Net cash and cash equivalents (761) (817) 57 Net financial debt before lease liabilities (23) Total net debt 1, On 27 February 2018, Nexity issued bonds via a private placement that may be converted into cash and/or new shares and/or existing shares (ORNANE 2018), raising an amount 200 million and maturing in March 2025 (7-year maturity). These bonds bear interest at an annual nominal rate 0.25%. Net debt amounted to 1,020 million at 30 June 2018, compared with 647 million at 31 December 2017 (increase 373 million). At 30 June 2018, net debt stood at 61% equity and around 2.2x EBITDA over the previous 12 months. Net financial debt before 16 rose 396 million and stood at 44% equity and about 1.6x EBITDA excluding 16. This increase in net financial debt since 31 December 2017 is explained in particular by: the increase in WCR (up 149 million), detailed above; the acquisition an additional 18% stake in Ægide, which entails its full consolidation from 1 July 2018: this transaction had an impact 142 million on net debt financial debt in the first half (corresponding to the price paid for the additional stake, after accounting for commitments to acquire minority interests); Ægide-Domitys existing financial liabilities will be consolidated in the financial statements for the year ended 31 December 2018; and the usual seasonal impact for Nexity (payment 100% the annual dividend in the first half in the amount 140 million for H although less than half the annual cash flow from operating activities is generated during this part the year). At 30 June 2018, the average maturity the Group s debt was 3.8 years and the average cost debt was 2.5%, versus 2.9% at 31 December Nexity was in compliance with all the financial covenants attached to its bond borrowings at 30 June BACKLOG AT 30 JUNE June December 2017 restated Change % Residential Real Estate New homes 3,724 3, % Residential Real Estate Subdivisions % Residential Real Estate backlog 3,924 3, % Commercial Real Estate backlog % Total Group backlog 4,256 3, % The Group s backlog at end-june 2018 stood at 4,256 million, up 7% relative to end-december 2017 and equivalent to 18 months revenue from Nexity s development activities (revenue on a rolling 12-month basis). Page 13/33

14 Backlog in Residential Real Estate totalled 3,924 million, up 11% compared with at 31 December This backlog amounts to 19 months revenue (Residential Real Estate revenue on a rolling 12-month basis). Backlog in Commercial Real Estate totalled 332 million at end-june 2018, down 29% compared with at 31 December This backlog amounts to 9 months revenue (Commercial Real Estate revenue on a rolling 12-month basis). OUTLOOK FOR 2018 Revenue and EBITDA now expected to grow by over 12% in Individual Clients: continued growth in Nexity s market share, in a market expected to contract slightly while remaining at a high level (120,000/125,000 reservations expected in ) Commercial Clients: order intake 400 million Dividend per share payable in at least 2.50 STRATEGIC DIRECTION AND OBJECTIVES FOR THE PERIOD At its Investor Day on 19 June 2018, Nexity gave a detailed presentation its real estate services platform strategy and its objectives for the period Nexity s business targets for Individual Clients: strong market share growth for Residential Real Estate (up 3 percentage points between 2017 and 2021); growth in the number units managed in Property Management to Individuals in the period ; and strong development serviced residences for students with Nexity Studéa and for elderly people with the acquisition a majority stake in the share capital Ægide-Domitys, French market leader in senior independent living facilities; Commercial Clients: order intake doubled over the period compared with previous years; Local Authority Clients: reinforce its position as the leading private planner in France, by developing new services, around the inclusive smart cities and new urban uses, and complete its fer by the forthcoming creation a land bank company, a tool for local authorities development, whose capital will be majority owned by third-party investors. Nexity s medium-term financial targets Nexity announced the following medium-term targets: Compound annual revenue growth 10% ( ) Compound annual EBITDA growth 10% ( ) All the Group s business lines will contribute to this growth, and especially its Services businesses, which are expected to account for 45% the Group s total EBITDA by This strong anticipated growth will go hand-in-hand with a controlled increase in the Group s debt (target level for net financial debt about 2.5x EBITDA 24 ). This target level will allow Nexity to proceed with carefully selected external growth transactions in its different businesses. 20 Compared with growth around 10% in the guidance provided with the annual 2017 results (20 February 2018), upward revision mostly due to Ægide-Domitys consolidation. 21 Or 148,000/157,000 reservations for both the retail segment and bulk sales. 22 Subject to the decision Nexity s Board Directors and approval at its Shareholders Meeting. 23 See press release 19 June Excluding the impact 16 for both aggregates. Page 14/33

15 It will be accompanied by an ever-watchful eye on pritability, the maintenance a prudent risk prile and a strong solvency position. The Group s investments over the period will amount to around 65 million each year, including 30 million dedicated to digital initiatives, the balance being linked to business investments. The dividend will be set at a minimum 2.50 per share in respect each financial year in the period Furthermore, Nexity s Board Directors has decided that the Company will buy back shares each year, in the proportion necessary to fset the dilution caused by the vesting free shares with the Group s employees. These financial targets will be supplemented by a full range CSR initiatives, including the reduction greenhouse gas emissions resulting from the projects developed by Nexity. Page 15/33

16 FINANCIAL CALENDAR AND PRACTICAL INFORMATION 9M 2018 revenue and business activity Tuesday, 30 October annual results Tuesday, 19 February 2019 Q revenue and business activity Wednesday, 25 April 2019 Shareholders Meeting Thursday, 23 May 2019 A conference call on the results for the first half 2018 will be held in English today at 6:30 p.m. CET, accessible using code by dialling the following numbers: - Calling from France +33 (0) Calling from elsewhere in Europe +44 (0) Calling from the United States The presentation accompanying this conference will be available on the Group s website from 6:15 p.m. CET and may be viewed at the following address: The conference call will be available on replay at from the following day. The 2018 interim financial report (French version) was submitted to the Autorité des Marchés Financiers (AMF) today and can be accessed via the Nexity group website. Disclaimer The information, assumptions and estimates that the Company could reasonably use to determine its objectives are subject to change or modification notably due to economic, financial and competitive uncertainties. Furthermore, it is possible that some the risks described in Section 2 the Registration Document filed with the AMF under number D on 5 April 2018 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. AT NEXITY, WE AIM TO SERVE ALL OUR CLIENTS AS THEIR REAL ESTATE NEEDS EVOLVE Nexity fers the widest range advice and expertise, products, services and solutions for individuals, companies and local authorities, so as to best meet the needs our clients and respond to their concerns. Our businesses real estate transactions, 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 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 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: FR CONTACT Domitille Vielle Head Investor Relations / +33 (0) investorrelations@nexity.fr Géraldine Bop Deputy Head Investor Relations / +33 (0) investorrelations@nexity.fr Page 16/33

17 ANNEX 1: OPERATIONAL REPORTING The financial data and indicators presented below correspond to Nexity s, with joint ventures proportionately consolidated and reconciled with the new as applied since 1 January Nexity continues to apply proportionate consolidation to its joint ventures, which in its view provides a more accurate reflection the Group s performance and risks as measured by revenue, operating prit, working capital requirement and debt. The 2017 data shown below has been restated to improve its comparability. A breakdown the restatements is provided in Annex 3 this press release. QUARTERLY FIGURES Reservations: Residential Real Estate Number units Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 New homes (France) 4,634 3,618 5,736 4,821 4,288 3,506 5,201 3,624 4,121 2,947 Subdivisions , International Total (number units) 5,285 3,997 6,864 5,412 5,074 4,022 6,369 4,139 4,945 3,437 Value ( m incl. VAT) New homes (France) , Subdivisions International Total ( m incl. VAT) 1, , , Revenue by division (restated) 2017 (published) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Individual Clients , o/w Residential Real Estate o/w Real Estate Services to Individuals Commercial Clients o/w Commercial Real Estate o/w Real Estate Services to Companies Services Other activities Revenue , , Page 17/33

18 CONSOLIDATED INCOME STATEMENT 30 JUNE 2018 Revenue 30/06/2018 Restatement joint ventures 30/06/2018 Restatement nonrecurring items 30/06/2018 before nonrecurring items 30/06/2017 before nonrecurring items 1, , , ,412.6 Operating expenses (1,310.7) (59.5) (1,370.2) - (1,370.2) (1,238.0) Dividends received from equity-accounted investments 2.3 (2.3) EBITDA depreciation (31.1) - (31.1) - (31.1) (38.7) Depreciation, amortisation and impairment fixed assets (12.6) - (12.6) - (12.6) (11.1) Net change in provisions 3.2 (1.3) Share-based payments (5.6) - (5.6) - (5.6) (5.4) Borrowing costs directly attributable to property developments, transferred from inventory (3.0) (0.0) (3.0) - (3.0) (2.0) Dividends received from equity-accounted investments (2.3) Current operating prit Remeasurement equity-accounted investments following acquisition control (79.2) - - Operating prit (79.2) Share prit from equity-accounted investments 4.5 (4.5) Operating prit after share prit from equity-accounted investments (79.2) Cost net financial debt (19.9) (0.2) (20.1) - (20.1) (18.9) Other financial income/(expense) 2.2 (0.0) (0.6) Net financial income/(expense) (17.6) (0.2) (17.9) 0.6 (17.2) (19.5) Pre-tax recurring prit/(loss) (78.6) Income taxes (41.5) (2.7) (44.3) - (44.3) (40.8) Share prit/(loss) from other equity-accounted investments (0.9) - (0.9) - (0.9) (5.1) Consolidated net prit/(loss) (78.6) Attributable to non-controlling interests Attributable to equity holders the parent company (78.6) (in euros) Earnings per share Restatements non-recurring items are comprised : the remeasurement the investment in Ægide previously accounted for under the equity method following the acquisition a controlling interest in this company for 79.2 million; and the change in fair value adjustment to the ORNANE bond issue for million euros. ANNEX 1: OPERATIONAL REPORTING Page 18/33

19 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2018 ASSETS 30/06/ month period Restatement joint ventures 30/06/ /12/2017 Restated Goodwill 1, , ,213.4 Other non-current assets Equity-accounted investments 30.0 (30.0) Total non-current assets 1,958.2 (29.7) 1, ,707.9 Net WCR Total assets 2, , ,524.5 LIABILITIES AND EQUITY 30/06/2018 Restatement joint ventures 30/06/ /12/2017 Restated Share capital and reserves 1,511.6 (0.0) 1, ,480.0 Net prit for the period Equity attributable to equity holders the parent company 1,662.1 (0.0) 1, ,662.7 Non-controlling interests 6.9 (0.0) Total equity 1,669.0 (0.0) 1, ,668.8 Net debt , Provisions Net deferred taxes Total liabilities and equity 2, , ,524.5 NET DEBT AT 30 JUNE /06/2018 Restatement joint ventures 30/06/ /12/2017 Restated Bond issues (incl. accrued interest and arrangement costs) Loans and borrowings Loans and borrowings 1, , ,157.4 Other borrowings and other financial receivables (51.2) Cash and cash equivalents (714.6) (75.2) (789.8) (836.2) Bank overdraft facilities Net cash and cash equivalents (700.5) (60.1) (760.6) (817.2) Total net financial debt before lease liabilities Total net debt , ANNEX 1: OPERATIONAL REPORTING Page 19/33

20 STATEMENT OF CASH FLOWS 30/06/ month period Restatement joint ventures 30/06/ /06/2017 Restated Consolidated net prit Elimination non-cash income and expenses (36.4) (5.8) Cash flow from operating activities after interest and tax expenses Elimination net interest expense/(income) Elimination tax expense, including deferred taxes Cash flow from operating activities before interest and tax expenses Change in operating working capital (150.6) 1.4 (149.2) (9.2) Dividends received from equity-accounted investments 2.6 (2.3) Interest paid (12.5) (0.2) (12.8) (9.9) Net tax paid (41.8) 0.1 (41.7) (50.2) Net cash flow from/(used in) operating activities (29.5) 7.7 (21.8) 98.2 Net cash flow from/(used in) net operating investments (14.5) (0.0) (14.5) (15.4) Free cash flow (44.0) 7.7 (36.3) 82.7 Acquisitions subsidiaries and other changes in scope (47.6) 0.1 (47.6) ( 1.7) Other net financial investments (2.8) (1.0) (3.8) ( 0.9) Net cash flow from/(used in) financial investing activities (50.5) (0.9) (51.4) (2.6) Dividends paid to equity holders the parent company (140.3) - (140.3) (132.7) Other payments to/(from) shareholders (35.4) - (35.4) (3.8) 16 lease liability payments (32.5) - (32.5) (41.2) Change in financial liabilities and receivables (net) Net cash flow from/(used in) financing activities (115.3) Effect foreign currency exchange rate changes on cash and cash equivalents (0.2) - (0.2) 0.5 Change in cash and cash equivalents (65.7) 9.1 (56.6) (34.6) ANNEX 1: OPERATIONAL REPORTING Page 20/33

21 HALF-YEAR FIGURES BY DIVISION Current operating prit (restated) 2017 (published) H1 FY H2 H1 FY H2 H1 Individual Clients o/w Residential Real Estate o/w Real Estate Services to Individuals Commercial Clients o/w Commercial Real Estate o/w Real Estate Services to Companies (2.0) (0.4) 2.2 (2.6) Services Other activities (11.6) (43.2) (31.9) (11.3) (43.9) (32.2) (11.7) GROUP EBITDA (restated) 2017 (published) H1 FY H2 H1 FY H2 H1 Individual Clients o/w Residential Real Estate o/w Real Estate Services to Individuals Commercial Clients o/w Commercial Real Estate o/w Real Estate Services to Companies (0.4) Services Other activities (2.9) (23.1) (18.4) (4.7) (28.1) (20.7) (7.4) GROUP ANNEX 1: OPERATIONAL REPORTING Page 21/33