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CONTENTS
NEXITY IN BRIEF 2 4 CORPORATE GOVERNANCE REPORT 163 1 INTRODUCTION 4.1 Administrative and Executive Management OF THE GROUP 13 bodies 164 4.2 Preparation and organisation of the Board 1.1 Strategy 14 of Directors’ work 183 1.2 Individual Clients 22 4.3 Related-party transactions 193 1.3 Commercial Clients 50 4.4 Remuneration and benefits for the executive 1.4 Local Authority Clients 63 company officers 197 1.5 Internal Clients 66 4.5 Remuneration and benefits of the other 1.6 Investments, innovation and intellectual property 68 executives (non-company officers) 222 1.7 Legislative and regulatory environment 70 4.6 Pensions and other benefits 225 1.8 Material contracts 72 4.7 Interests of the executive company officers and members of the Board of Directors 2 RISK MANAGEMENT 75 in the Company’s share capital 226 4.8 Transactions in securities 227 2.1 Risk management and internal control system 77 4.9 Stock options and free shares awarded 2.2 Specific risk factors and their management 86 to the executive company officers 227 2.3 Business ethics and regulatory compliance 99 4.10 Major shareholders 228 2.4 Duty of care 101 4.11 Information on the share capital 230 2.5 Fraud prevention system 107 4.12 Requirements under the articles of association 237 2.6 Legal and arbitration proceedings 107 2.7 Procedures relating to the preparation 5 FINANCIAL REPORT 243 and processingof financial and accounting information 108 5.1 Operating and financial review 244 Trends5.2 260 3 STATEMENT OF 5.3 Consolidated financial statements NON-FINANCIAL at 31 December 2019 262 5.4 Parent company financial statements PERFORMANCE 111 at 31 December 2019 311 3.1 CSR, an integral part of Nexity group’s strategy 112 5.5 Additional items 338 3.2 Strengthening staff loyalty: being recognised as a preferred employer 120 6 INFORMATION ABOUT 3.3 Improving the Group’s environmental THE ISSUER 341 performance 134 3.4 Increasing the Group’s contribution to society 144 6.1 General information 342 3.5 Notes on methodology pertaining to disclosure 6.2 History of the Company at 31 December 2019 342 of workforce, environmental and societal 6.3 Organisation structure 343 information 149 6.4 Persons responsible for the Universal Registration 3.6 Report by the independent third party Document 346 on the statement of consolidated non-financial 6.5 Statutory Auditors 346 performance included in the management report 152 6.6 Other information 347 3.7 Cross-reference table with the statements 6.7 Cross-reference tables 348 of non-financial performance 155 3.8 Cross-reference table with the United Nations sustainable development goals 156 3.9 Summary table of CSR indicators 157
The elements of the annual financial report are identified in the contents by the AFR symbol. A French société anonyme with share capital of €280,648,620 Registered office: 19, rue de Vienne – TSA 50029 – F-75801 Paris Cedex 08 444 346 795 RCS Paris UNIVERSAL REGISTRATION DOCUMENT INCLUDING THE ANNUAL FINANCIAL REPORT 2019
This Universal Registration Document was filed with the French Financial Markets Authority (Autorité des marchés financiers – AMF) on 9 April 2020, as the competent authority under Regulation (EU) No. 2017/1129, without prior approval under Article 9 of the said regulation. The Universal Registration Document can be used for a public offering of securities or for the admission of securities for trading on a regulated market if it is supplemented by a prospectus and, as the case may be, a summary and all the amendments made to the Universal Registration Document. The whole is then approved by AMF in accordance with Regulation (EU) No. 2017/1129.
In accordance with Article 19 of Regulation (EU) No. 2017/1129, the following information is included in this Universal Registration Document: • The management report, the consolidated financial statements for the 2018 financial year and the corresponding Statutory Auditors’ report, set out on pages 224 to 245, 246 and 247 to 295, 296 to 300 of the Registration Document filed with AMF on 4 April 2019 under number D.19-0272; and • The management report, the consolidated financial statements for the 2017 financial year and the corresponding Statutory Auditors’ report, set out on pages 91 to 108, 109 and 110 to 158, 159 to 162 of the Registration Document filed with AMF on 5 April 2018 under number D.18-0272. This document is a free translation into English of the original French Document d'enregistrement universel, referred to as the “Universal Registration Document”. It is not a binding document. In the event of a conflict in interpretation, reference should be made to the French version, which is the authentic text. Copies of this Universal Registration Document may be obtained free of charge from Nexity, 19 rue de Vienne – TSA 50029 – 75801 Paris Cedex 08, and on the websites of Nexity (www.nexity.fr) and AMF (www.amf-france.org). Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 1 NEXITY IN BRIEF
NEXITY IN BRIEF
A unique model based on REAL ESTATE SERVICES
OUR RESOURCES AND OUR CLIENT EXPERIENCE CORE STRENGTHS Clients are our paramount concern. • No. 1 integrated real estate • Approach focused on user experience operator in France • Ability to meet the full range of our clients’ • Combination of real estate real estate needs development and real estate services • Employee-led transformation • A unique model • Diversified client base and geographical coverage balanced between the Paris region Organisational capital and the rest of France • Strong presence across • Market leader or major player (short, medium and long-term) cycles in France in each of the industry sectors • Asset-light model in which it operates • Risk management • Balance between decentralisation and control
Human capital ~18% of the share capital owned by employees and managers
>11,000 employees • Development of new homes Investment capital • Development of subdivisions Market capitalisation of €2.5bn • Commercial real estate development at 31 December 2019 • Villes & Projets: urban planning, urban projects, new urban uses Relational capital >400 locations across France Client capital INDIVIDUAL CLIENTS >1 million clients No. 1 in Residential Real Estate 1 million monthly visitors No. 1 in Sales and Lettings No. 2 in Property Management to Nexity’s sites for Individuals Social and environmental capital 4% of Residential Real Estate built using timber-frame techniques
>120,000 sq.m in Commercial Real Estate built with timber frames since 2011
Intellectual capital 25 projects incubated by the Startup Studio since its inception
/2 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 NEXITY IN BRIEF
A unique model based on REAL ESTATE SERVICES catering to the needs of OUR CLIENTS
OUR AMBITION
Being useful to our Clients, society and the world around us.
USEFUL REAL ESTATE Nexity develops real estate that Two complementary adapts to changing uses and has business lines an expanding service component assisting our clients as their AFFORDABLE REAL ESTATE real estate needs evolve Nexity uses every means at its disposal to lower real estate prices and its operating expenses
SUSTAINABLE REAL ESTATE Nexity is committed to high-intensity, sober urban development to create desirable, • Property Management for individuals low-carbon cities • Distribution • Serviced residences • Brokerage and advisory services • Property Management for Companies, commercial OUR PERFORMANCE RECORD Development Services real estate advisory services and space planning SINCE 2014 • Coworking spaces management • Partnership for the design and execution • Track record of growth of major urban projects or large-scale urban • A resilient business operating regeneration schemes in an upbeat market Revenue COMMERCIAL CLIENTS LOCAL AUTHORITY x1.7 No. 1 in Property Management CLIENTS for Companies Partner of choice for local Current operating profit No. 1 in coworking spaces in Paris authorities x1.9 No. 3 in Commercial Real Estate TSR* +84% INTERNAL CLIENTS Unique combination of real Carbon trajectory estate skills and expertise 15% reduction harnessed for each Client in greenhouse gas emissions per employee
* Total shareholder return (incl. reinvestment of dividends) to 31/12/2019.
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 3 NEXITY IN BRIEF
Our 2019 KEY FIGURES
2019 REVENUE Number one integrated €4.5bn real estate operator 1.4 point gain in the market share 76% Development of new homes 24% Services 16% 2019 EBITDA of 2019 revenue generated €573m by integrated solutions Leader in digital real estate 55% Development 45% Services 12 million visits to web platforms and the nexity.fr website, with Group share of net profit before some 12% of visitors looking non-recurring items at more than one business line €163m 10 projects incubated in the Startup Development pipeline Studio in 2019 €20.4bn • €5.1bn backlog • €15.3bn in business potential
Net debt 2.3x EBITDA after leases (€403m)
GROUP-WIDE CSR INDICATORS
34% 33 1 direct job at Nexity of Club 1797 members non-profit organisations = 11 jobs supported, i.e. are women supported by the Nexity over 100,000 jobs in total Foundation
/4 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 NEXITY IN BRIEF
Our 2019 KEY FIGURES
INDIVIDUAL CLIENTS COMMERCIAL CLIENTS 21,837 €521 million new home reservations in France order intake in Commercial in 2019 Real Estate 880,000 20 million units under management in Property sq.m under management in Property Management for Individuals Management for Companies 21 22 openings of serviced residences shared workspaces in service >27,000 managed units in serviced residences
LOCAL AUTHORITY CLIENTS INTERNAL CLIENTS Nexity won >11,000 many high-profile calls for proposals employees 540,400 sq.m 91% in the Villes & Projets portfolio of employees given an annual review ~18% of the share capital owned by employees and managers
777 No. 1 Member of the committed housing units in the BBCA’s 2019 real estate Bloomberg in family shelters developer rankings for low-carbon Gender-Equality Index building development (GEI)
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 5 NEXITY IN BRIEF
OUR STRATEGY
COMBINE SERVICES PLATFORMS BUILT FOR EACH CLIENT
Factor in CSR priorities Development supported Growth plan covering all from the outset by a digital transformation business lines Nexity’s strategy aims to plan programme Nexity is expanding across its demonstrate and enhance the Nexity’s aim is to be various business lines through: benefits of its activities for the market leader in digital society. It is structured around real estate, by: • Selective external growth 5 commitments: • Partnerships and organic • Investing in new digital developments assessed using services designed to create • Being recognised a multi-criteria matrix (about value for its clients as a preferred employer 30 acquisitions since 2014, • Designing sustainable, • Launching digitisation and new major partnerships in responsible cities paperless processing projects 2019) to facilitate improvements in • Plus an ever-watchful eye on • Delivering better access service and cost management to housing and higher-quality profitability, the maintenance neighbourhoods • Connecting its employees of a prudent risk profile and a more effectively by strong financial position. • Offering better building introducing mobile working practices for a higher-quality tools of life at work • Promoting a digital • Upholding the highest and innovation-led culture standards of corporate internally governance and business ethics
/6 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 NEXITY IN BRIEF
IN THE SPACE OF A FEW YEARS, NEXITY HAS GONE FROM BEING A SINGLE-PRODUCT GROUP AND REAL ESTATE DEVELOPER TO A REAL ESTATE SERVICES PLATFORM FOCUSED ON THE EXPECTATIONS, USES AND NEEDS OF ITS CLIENTS.
OUR RESULTS OVER THE PAST 3 YEARS
Revenue EBITDA (in billion euros) (in million euros) 4.5 573 4.1 523 3.6 Up 12% Up 11% 368 on average on average at end-2019 at end-2019
2017 2018 2019 2017 2018 2019
Individual Clients Residential Real Estate Commercial Clients - Order intake - Market share (1) (in million euros) 13.4 % 521 10.9 % 12.0 % Up 2.5 points 402 394 €439m at end-2019 on average per year between 2017 and 2019
2017 2018 2019 2017 2018 2019
(1) Market share calculated on the basis of total market data (Commissariat Général au Développement Durable for retail sales and Fédération des Promoteurs Immobiliers for bulk sales).
OUR TARGET IMPACTS
USEFUL REAL ESTATE AFFORDABLE REAL ESTATE SUSTAINABLE REAL ESTATE
Living together Access to housing Circular economy 1,000 housing units per year in around 20% 30% of developments family shelters for three years once the market share in reduced-VAT zones and services by 2025 plan reaches cruising speed Occupancy cost guarantee Targets in terms of reducing 100% classic homes with Increase in the number of turnkey GHG emissions by 2030: integrated services (Eugénie) by 2024 commercial real estate developments -35% per employee offering occupancy cost guarantees -30% per home delivered -21% per sq.m of office floor space delivered
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 7 NEXITY IN BRIEF
A model that CREATES VALUE
WE HAVE SET OURSELVES TARGETS THAT GUIDE OUR ACTIONS AND MAP OUR PATH FORWARD SO THAT WE CAN OFFER USEFUL, AFFORDABLE AND SUSTAINABLE REAL ESTATE. IN LINE WITH THESE GOALS, WE CREATE VALUE FOR OUR VARIOUS CLIENT CATEGORIES AND FOR ALL OUR STAKEHOLDERS.
INDIVIDUAL CLIENTS 100 Domitys serviced senior • Quality-driven, personalised residences, 17 of which opened in 2019 client experience 124 serviced student residences, • Cost savings 4 of which opened in 2019 • Ability to play a part and help shape the design of their homes 30,100 homes delivered in • Affordable housing reduced-rate VAT zones since 2006
21 condominium properties undergoing energy efficiency upgrades
84% of new and renovated/ COMMERCIAL CLIENTS redeveloped Commercial Real Estate • Workspaces geared to features planted areas contemporary work styles • Easy to rent buildings, - 5% in greenhouse gas emissions not obsolete per square metre of office floor space delivered (compared with 2015)
LOCAL AUTHORITY 15-year partnership with local CLIENTS authorities • Inclusive cities More than • Affordable housing 100,000 • Smart, connected, jobs supported low-carbon cities 4% of developments and services based on a circular economy approach
Diverse range of products
/8 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 NEXITY IN BRIEF for our STAKEHOLDERS
EMPLOYEES 70% of employees are • Attractive working shareholders conditions and pay hours of training • Opportunity to work ~152,000 for a responsible business Voluntary staff turnover rate below 10%*
*number of dismissals and non-renewal by employees at end of permanent-contract trial periods/average number of permanent employees (2018 scope)
€138 million in dividends SHAREHOLDERS paid out in 2019 • Reliable and up-to-date information total shareholder return 84% • Understanding of the strategy (ie. incl. reinvestment of dividends) and long-term vision since 2014
Environmentally responsible SUPPLIERS construction charter • Balanced and long-term relationship with Nexity Code of ethics for suppliers • Responsible purchasing programme
27 members of the NON-PROFIT Stakeholder Committee ORGANISATIONS / CIVIL SOCIETY Nexity Non Profit: • Joint design of social 777 committed housing units and environmental programmes in family shelters • Recognition of their importance • Funding Nexity Foundation: • Business partnerships 54 assignments supported
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 9 NEXITY IN BRIEF GOVERNANCE AND SHAREHOLDER INFORMATION
BOARD OF DIRECTORS
Board of Alain Dinin Luce Gendry Directors’ Committees Pascal Oddo Chairman Vice-Chairman Non-voting Board member Senior Independent Director P Independent Jean-Pierre Denis P Bruno Catelin Remuneration, Director Director Appointments representing and CSR Committee the employees 5 meetings 50% independent members 90% attendance rate Soumia Belaidi- Malinbaum Jérôme Grivet Independent 10 Director director MEMBERS* Audit and Accounts Committee
44% WOMEN** 4 meetings 67% independent members 88% attendance rate
Jacques Veyrat Magali Smets Director Independent director Agnès Nahum Charles-Henri Strategy and Independent Filippi Investment Committee director Independent 1 meeting Audit and Accounts Committee director 33% independent members Remuneration, Appointments and CSR Committee P 100% attendance rate * Excluding non-voting Board member Strategy and Investment Committee ** Exluding non-voting Board member P Committee Chairman and director representing the employees
OPEN AND RESPONSIBLE GOVERNANCE
Nexity’s governance is detailed in Chapter 4 “Corporate Governance Report” of this Universal Registration Document.
EXECUTE STRATEGY FORMULATE STRATEGY QUESTION STRATEGY
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SHAREHOLDER INFORMATION
Ownership structure at 31 December 2019 Nexity shares
Concert group A. Dinin, New Port(2) and Listing market Euronext Paris, compartment A, 19.9% other Nexity’s managers eligible for the deferred Crédit Mutuel Arkéa belonging to the concert settlement system (SRD) 5.3% group Initial public offering 21 October 2004 at the price 14.6% of €17.90 per share FCPE and other Indices SBF 80 employees(3) SBF 120 3.2% CAC Mid 60 Crédit Agricole CAC Mid & Small CAC All Tradable 56,129,724 Assurances shares(1) 6.4% Codes Mnémonique: NXI Reuters: NXI.PA Free float Bloomberg: NXI:FP 69.4% ISIN: FR 0010112524 Number of shares outstanding at 31 December 2019 56,129,724
(1) o/w treasury shares: 606,419 shares (1.1%) Market capitalisation (2) New Port: 8.1% at 31 December 2019 €2,513 million (3) o/w FCPE (Nexity Actions and Nexity Levier 2017): 2.7%
Share performance
2019 Nexity +14%
CAC MID 60 +20%
SBF 120 +25%
Shareholder information Nexity has agreed to issue regular communications about its business activities, strategy and outlook for its individual or institutional shareholders and, more generally, the financial community. During the 2019 financial year, Nexity’s managers and the Investor Relations Department made over 350 contacts with analysts and investors, primarily during roadshows, conferences and meetings in France, the United Kingdom, the United States, Switzerland, Belgium, the Netherlands and Germany. For the first year, the entire Group Strategic Committee participated in these various events.
Financial calendar 6 May 2020: Q1 2020 business activity and revenue 19 May 2020: Shareholders’ Meeting 28 July 2020: 2020 half-year results 28 October 2020: Q3 2020 business activity and revenue /12 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 1 INTRODUCTION OF THE GROUP
1 INTRODUCTION OF THE GROUP
1.1 STRATEGY 14 1.5 INTERNAL CLIENTS 66 1.1.1 An integrated real estate operator model with a real 1.5.1 Employees: levers of future growth 66 estate services platform 14 1.5.2 Significant computerisation and digitisation effort 67 1.1.2 Nexity’s value creation model 16 1.1.3 Economic, social and environmental trends 17 NVESTMENTS, INNOVATION 1.1.4 Nexity’s medium-term plan (2017-2021) 18 1.6 I 1.1.5 Main lines of Nexity’s strategy 19 AND INTELLECTUAL PROPERTY 68 1.6.1 Investments 68 1.2 INDIVIDUAL CLIENTS 22 1.6.2 Innovation 69 1.6.3 Intellectual property 70 1.2.1 Development strategy for Individual Clients 23 1.2.2 Residential Real Estate 24 1.2.3 Serviced residences 41 1.7 LEGISLATIVE AND REGULATORY ENVIRONMENT 70 1.2.4 Property management and intermediation 45 1.8 MATERIAL CONTRACTS 72 1.3 COMMERCIAL CLIENTS 50 1.3.1 Development strategy for Commercial Clients 50 1.3.2 Commercial Real Estate 52 1.3.3 Real Estate Services to Companies 60
1.4 LOCAL AUTHORITY CLIENTS 63 1.4.1 Overview of the market and competitive environment 63 1.4.2 Urban regeneration (Villes & Projets) 64 1.4.3 Fund dedicated to the transformation of office space into housing 65 1.4.4 Land optimisation fund (Terrae Optimae 1) 65 1.4.5 Operational organisation of Local Authority Clients 66 1 INTRODUCTION OF THE GROUP Strategy
Nexity1 is France’s leading integrated real estate services group, with business operations in all areas of real estate development and services (Residential Real Estate, Commercial Real Estate, Real Estate Services to Individuals and Real Estate Services to Companies and major urban projects) and enjoys a strong presence across all industry cycles (short, medium and long term). Nexity’s primary purpose is to serve its clients, society and the world in which it operates by: • Creating social and economic value for each of its clients; • Providing its clients with well-being, quality of life and social connections in cities; and • Jointly creating sustainable and resilient cities to reduce the impacts of climate change. Serving a clear purpose is a prerequisite for achieving a sustainable business performance.
1.1 STRATEGY
Nexity’s strategy cannot be defined independently from the general-interest mission (environmental and social) embraced by the Company, and without which no long-term strategy would be possible. Nexity therefore develops useful, accessible and sustainable living spaces.
1.1.1 An integrated real estate operator model with a real estate services platform
Since it was founded in 2000, Nexity has built a unique while also expanding into new geographical areas by business model as an integrated real estate operator improving its coverage of the regional markets in France capable of handling almost any type of client need or (see Section 6.2 “History of the Company at request and as a market leader or major player in France in 31 December 2019" of this Universal Registration each of the industry sectors where it operates. Document). The Group’s diversification gives it the required Apart from its core business in real estate development the resilience to mitigate the impact of market cycles, Group has successively extended its expertise into new by increasing the percentage of revenue generated by areas (urban regeneration, Real Estate Services to activities little or less exposed to these cycles. Individuals and Companies and serviced residences), The charts below illustrate Nexity’s growth since 2014:
GROUP REVENUE* (€m) 4,499
2,632 ×1.7 vs 2014
2014 2019 CURRENT OPERATING PROFIT* (€m) SERVICES REVENUE* AND MARGIN RATE (€m) 1,065
484 7.0% 7.9% ×1.9 ×2.2 353 vs 2014 vs 2014 184 2014 2019 NEW HOME RESERVATIONS 2014 2019 (in volume) 21,837
10,365 ×2.1 vs 2014
2014 2019
* Data from the operational reporting: According to IFRS but with joint ventures proportionately consolidated.
1 Hereinafter also referred to as “the Company” or “the Group”.
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Nexity can provide an unprecedented range of services and This platform is still being developed for Commercial trade expertise, enabling it to meet all of the real estate Clients with a service offering which enriches the range of 1 needs of its Clients – whether individuals, commercials or services offered to investors and users after the takeover of local authorities. Today, Nexity defines itself as a real estate Morning Coworking and Accessite at the end of 2018. services platform, organised per client type, and Nexity enjoys an unrivalled presence across the entire real characterised by ever closer integration between its estate value chain in France save for a few rare segments development operations and its real estate services, which are deliberately excluded. Without being dependent with the prospect of additional value creation. on a single industry sector or client category, Nexity relies Beyond the property development business lines, Nexity is on all of its business lines to develop and diversify its a leading French player in real estate services and is supply sources, flesh out its range of products, services and progressively developing its range of services, while solutions aimed at each of its clients, and ensure that these systematically retaining a connection with real estate offerings are consistently competitive, in particular by which is the basis of its expertise and legitimacy with developing products, services or solutions that meet the clients. Besides its historic business lines of property needs of the market, backed by the Group’s vast, diversified management for individuals, transactions, management and complementary distribution networks. and advisory businesses, the Group’s growth is being driven Apart from its original business portfolio, the second by the serviced residence sector (student residences and feature of Nexity’s strategic model is that it is geared more increasingly senior independent living facilities). towards flows and services than ownsership of inventories Nexity is able to offer specific solutions, products and (see Sections 1.2.2.1 “Legal and financial framework of real services to its various Clients (Individual, Commercial and estate development in France” and 2.1 “Risk management Local Authority), addressing the full spectrum of real estate and internal control system” of this Universal Registration needs. Nexity has developed original and innovative Document). offerings for both Individual Clients (such as packages for The Group capitalises on the specific characteristics of investors, guarantee against rental vacancy or capital losses French housing development regulation, i.e. the off-plan upon reselling a property, insurance or loan brokerage, sales model (Vente en l’état futur d’achèvement – VEFA) home automation, etc.) and Commercial Clients (such as its and the Land Bank model (land management based on occupancy cost guarantee on buildings built by the Group options and not on unconditional acquisitions), with no and its shared office space offering, with flexible letting activity based on the long-term ownership of assets except terms). in a marginal and speculative way, some high potential In 2019, Individual Clients accounted for 89% of revenue land or assets which the Group holds for future whilst Commercial Clients accounted for 11% of revenue. development notably within the scope of the Villes & Real estate development (residential and commercial) Projets (urban regeneration) business. represented 76% of Nexity’s revenue, whilst services This strategic orientation – which is reviewed on a regular represented 24%. In terms of EBITDA, the weight of the basis – has until now proven successful, given its services businesses in the Group’s total increased from advantages: 18% in 2014 to 45% in 2019 (excluding IFRS 16 in 2014), A model which is asset-light and less capital-intensive; illustrating the increased importance of the real estate • services platform. • Lower exposure to the risk of interest rate fluctuations; Moreover, its integrated model entails synergies • Providing more agility and flexibility; and lastly (particularly in terms of client acquisition, complementarity • Preventing any conflicts of interests between real estate of activities or cross-selling). development and property ownership, thus reassuring The clearest embodiment of this development is seen on clients, in particular Nexity’s institutional investors the services platform for Individual Clients where the (who are not in competition with a Group investment revenue from integrated development and services fund). solutions totalled €725 million in 2019, i.e. 16% of the Group’s total revenue: • €680 million for the serviced residences segment; and • €45 million for the other Real Estate Services to Individuals (property management for individuals and distribution).
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 15 1 INTRODUCTION OF THE GROUP Strategy
1.1.2 Nexity’s value creation model
Nexity is committed to regional life and endeavours to The service company model chosen by Nexity thus entails design products that take account of potential changes in that real estate capital is practically absent from its client behaviour and practices, as well as the changing production factors, while the presence of financial capital is expectations of city dwellers. Its client-oriented focus, relatively moderate (in comparison to some of its competitors long-term commitment to making real estate and city life or peers whose business model is more focused on land and sustainable, and its ambitious innovation policy are the real estate ownership, which is the case for most real estate cornerstones of Nexity’s strategy. developers abroad and, in France, for players in "real estate The Group serves three types of clients: individuals, property company and developer"). companies and investors, and local authorities. Likewise, the limited amount of intellectual capital is due to Nexity offers its various clients a unique range of products, the characteristics of the real estate sector services and solutions, wherever their real estate needs (little fundamental research but a lot of innovation, may take them (purchases, rentals, property management, which is generally not patentable). building operations, property or development sales, As a result, Nexity’s value creation model essentially relies investments, etc.): on human capital; for example: • For individuals, this includes a wide selection of • Nexity has been a company of entrepreneurs from the residential properties for homebuyers and buy-to-let start. It functions with a largely decentralised model for investors, a broad subdivisions offering, a operational and commercial decisions with an open comprehensive range of services (property architecture, a multi-brand model, and with subsidiaries management, managing agents services, transactions whose founders may also be minority shareholders beside and rentals, either direct or through the Century 21 Nexity; franchise network), marketing buy-to-let dwellings • Nexity’s employees and managers are very well (unfurnished or furnished, bare ownership) and represented in its shareholding. At 31 December 2019, operation of serviced residences (notably for students around 18% of the share capital was owned by the and seniors); Group’s employees and managers, one of the highest • For companies and investors, Nexity offers a range of proportions in the SBF 120; commercial properties (office space, high-rise buildings, • Nexity is the only SBF 120 company to have integrated logistics space, business parks, hotels, retail the notion of “Internal Clients” into its organisation, premises, etc.) and construction processes (concrete, i.e. its employees; wood), sustainable improvement solutions for existing office buildings, a selection of residential buildings for • Nexity regularly attributes free shares either in a targeted professional landlords, a full complement of services way to management or in plans to all employees. (commercial property management, building This increases the employee’s presence in the capital management, commercial real estate advisory, space and improves the alignment of interests; and planning and management of coworking spaces), • The Group is one of the 325 companies worldwide, as well as a co-investment offering; and including 12 French companies, selected for the 2020 • For local authorities, Nexity serves as a partner for the Bloomberg Gender-Equality Index (GEI) in recognition of design and execution of major urban projects or Nexity’s actions, such as the signature of the “Being large-scale urban regeneration schemes, with a strong Inclusive Together” Charter by the Strategy Committee environmental aspect as the case may be. and approved by 400 managers in September 2019, based on the fundamental principle of diversity, As a policy, Nexity has no income-yielding real estate including gender diversity. assets. The Group was one of the leading players in French real estate markets in 2019. It has a diversified client base and its geographical coverage is well balanced between the Paris region and elsewhere in France.
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1.1.3 Economic, social and environmental trends 1 All of Nexity’s business lines show medium- and long-term growth potential, given the economic, social and environmental background and trends in its underlying markets.
Demographic change In France, demographic changes are generating a structural In this context, the strong, enduring appeal of real estate as need for new homes, due to population growth, smaller a financial investment – boosted by the current low interest households and insufficient construction over recent rates and a general worry among the French population decades. This housing need is estimated at around 400,000 concerning their future pension entitlements – should new homes per year (see Section 1.2.2.1 “Overview of the constitute a long-term support factor for both residential residential real estate market and competitive and commercial real estate. environment” of this chapter). Beyond the prospects offered by population growth, Nexity This housing need concerns home ownership and, to an even pays constant attention to current and upcoming larger extent, housing rental. Due to the characteristics of the demographic and sociological changes (insufficient student French financial and banking system, combined with the accommodation, shortage of appropriate housing for relatively high property prices in large cities, home ownership single-parent and/or reconstituted families, etc.). The major is difficult to achieve for a certain number of households. investment made by Nexity in 2018 with the acquisition of This gives rise to a strong need for rental housing, whether a majority stake in its partner Ægide-Domitys (the leading owned by public investors (social housing operators), private provider of senior independent living facilities), reflects the investors (property companies dedicated to housing) Group’s strategy in respect of the population ageing trend. or individual investors.
“Metropolisation” “Metropolisation” covers the following trends: estate operators, namely those which – like Nexity – • The concentration of job growth, and thus housing have the size, resources, expertise, innovation capacity needs, in France’s 20 largest cities (the largest of which and very wide product range needed to meet this new is Greater Paris) and their surrounding areas, to the demand. detriment of rural areas, medium-size cities and certain Nexity considers that its extremely wide product range outer suburbs. Nexity is focusing most of its staff and its (which covers practically all real estate segments, except resources on these attractive major urban areas; and for certain aspects such as the development of large • The development of major mixed-use urban projects shopping centres), as well as its capacity to intervene both (housing, offices, public facilities, retail premises, etc.) upstream (through its property development expertise) in these same urban areas, with growing use of and downstream (through long-term property partnerships between local authorities and private real management), gives it a competitive edge in large cities. Service-oriented trend in real estate The shift from a “product” approach to a “usage” approach • The emergence of digital property management is particularly illustrated by: solutions based on open platforms (“smart home”, • A growing need for local services (concierge services, “smart building”, “smart city”, etc.); serviced residences for seniors, students, mixed • The development of new, increasingly digital modes of generations, etc.) and flexible real estate, based on use access to end-clients and the restructuring of value rather than long-term ownership (subletting, short-term chains with a search for platform-type positions: real rental, shared office space, division of property estate portals, matching platforms (e.g. for short-term ownership, etc.); rental) and the digitisation of data and documents; and • A strong trend for the development of shared-use • The perspective of new data-based business models solutions (co-living, coworking, co-design, car (e.g. property value estimators). sharing, etc.);
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Nexity holds a strong position, often as a pioneer, in the residences and in coworking premises in the Paris region, as various facets of this service-oriented shift of the real estate well as its significant stake in the new-generation real market (called “real estate as a service”), as shown, for estate portal Bien’ici (49%). example, by its leading position in student and senior Climate and sustainable development challenges The inclusion of these challenges involves: • The first signs of the revival of the “density” concept, • A move towards sustainable standardisation which involves the construction of high-rise buildings in (increasingly stringent standards, proliferation of supply-constrained areas, as density (which is often certifications, often imposed by investors and partners) politically contested) fully meets the economic and and the setting of specific targets, for example in terms ecological constraints of urban development of carbon trajectory (the real estate sector accounts for (optimisation of development rights through better around 25% of all greenhouse gas emissions); construction feasibility, limitation of urban sprawl and thus the reduction of soil degradation and urban car • The need for large local authorities and major cities to use). Should the first signs of this possible revival be adopt said approach and make it a key element of their confirmed, the impact would be highly positive for decision-making processes for selecting their real estate Nexity. operator partners; Buoyed by these positive macro-trends, as well as economic • Concerning existing buildings (residential or conditions that remain favourable over the short term commercial), the growing obsolescence of part of the (interest rates remaining very low and France’s relatively stock (e.g. buildings that do not meet the current energy positive economic situation), a generally favourable efficiency standards), which opens up development or regulatory environment and the Group’s leading positions renovation opportunities; in its markets, Nexity intends to perpetuate, over the • Beyond the climate and energy concern, which is of coming years the robust growth it has enjoyed since 2014. major importance, the emergence of new requirements, Nevertheless, Nexity is fully aware of the risks associated such as circular economy or biodiversity (and nature in with the markets in which it operates (see Chapter 2 “Risk the city); and lastly management” of this Universal Registration Document), as well as the fragility of the French economy and society.
1.1.4 Nexity’s medium-term plan (2017-2021)
Nexity’s medium-term plan presented below was suspended in April 2020 following the Covid-19 health crisis. It will be updated upon recovery from the crisis in the light of new economic conditions (see section 5.2.2.2 "Information relating to the impact of Covid-19 on Nexity's activities (press release dated 7 April 2020)" of this Universal Registration Document). Nexity’s medium-term plan presented during the Investor Nexity’s Board of Directors, chaired by Alain Dinin, Day of June 2018 is properly followed up and updated by announced the following medium-term objectives: Nexity’s Strategy Committee and Board of Directors. It is a • Compound annual revenue growth rate of 10% development and growth plan covering all the Group’s (2017-2021); businesses. • Compound annual EBITDA growth rate of 10% At 31 December 2019, the Group had very good visibility (2017-2021). with a backlog exceeding €5 billion and a business potential of over €15 billion in development revenue, These financial targets were supplemented by a full range in addition to its recurring service activities. of CSR initiatives, including the reduction of greenhouse gas emissions resulting from the projects developed by Nexity, namely: • Residential Real Estate: 30% per home completed; • Commercial Real Estate: 21% per square metre of office floor space delivered; and • Administrative sites: 35% per employee in 2030.
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1.1.5 Main lines of Nexity’s strategy 1 1.1.5.1 Corporate Social Responsibility (CSR) Nexity’s strategy takes full account of sustainability issues For example, Nexity is committed to housing disadvantaged and the new economic models – more responsible and less people through Nexity Non Profit, which was created in 2018, resource-hungry – being developed to respond to them in particular by building family shelters, friendly human size (such as the collaborative economy, circular economy and places where people suffering from isolation and who social and solidarity economy). The Group places this encounter difficulties in living in a traditional dwelling can commitment at the heart of its actions because it creates live indefinitely. sustainable value – for society at large as well as for Nexity In addition, as part of its CSR commitment, Nexity decided – and promotes the development of the region. to align the financing of its real estate projects with its CSR Since 2017, Nexity has included sustainable development objectives by issuing Green bonds. These Green Bonds fit in its wider Corporate Social Responsibility (CSR) strategy, with the Group’s CSR policy, the fight against global in order to fully embody its strategy as a responsible warming and the contribution to the transition to a employer, promote the Company’s ethical goals and ensure low-carbon economy in line with Nexity’s ambitious target that its governance meets the highest standards. of a 30% reduction in tonnes of CO2eq. per home delivered This strategy, which is underpinned by a desire to by 2030 (2015 basis). The funds from the Green Bonds are demonstrate and enhance the societal benefits of Nexity’s earmarked for residential real estate programmes which activities (see Chapter 3 “Statement of non-financial respect the eligibility criteria based on, among others, performance” of this Universal Registration Document), the European NZEB (Nearly Zero-Energy Buildings) is structured around five commitments: standards. Designing sustainable, responsible cities; The allocation of the funds to the Group’s eligible projects • will be the subject to a specific traceability process and • Delivering better access to housing and higher-quality annual reporting that will be audited and published on neighbourhoods; Nexity’s website. • Offering better building practices for higher quality of Nexity is a pioneer in wood-frame developments, life at work; with 120,000 square metres delivered over the past • Being recognised as a preferred employer; and 10 years and 19% of commercial space delivered in 2019 featuring a wood-frame design, and was ranked France’s • Upholding the highest standards of corporate number one low-carbon developer by BBCA in 2019. governance and business ethics. The development strategy for the main business areas is Now with quantitative targets, the Group’s CSR strategy is described in more detail in Sections 1.2.1 “Development poised to play a greater role in Nexity’s growth plans as it strategy for Individual Clients” and 1.3.1 “Development moves closer to becoming a real estate services platform. strategy for Commercial Clients” of this chapter. The Group aims to create social and environmental value both upstream and downstream of its activities, as an urban and regional planner, property developer or manager (condominium residence management).
1.1.5.2 Client-centric strategy The definition of a client-centric strategy – in which the • The ongoing gradual development of a client database focus on “clients” now has precedence over the “product” and a top-level Client Relationship Management (CRM) focus in Nexity’s organisation and management – rests on a system, allowing for optimal client treatment across the certain number of common themes: various business lines and increased cross-selling, • The ongoing aim of making “client value” and client on the basis of products developed by Nexity or its satisfaction an integral part all of its services and all of partners; and the Company’s policies, which involves a joint design and • The introduction of services platforms, for example on joint construction approach to new offerings with clients; the basis of the online client account (mynexity.fr) or a connected homes management platform (Eugénie application), allowing for the launch of new open architecture services.
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Individual Clients Currently the leading player in the French residential Lastly, the Group’s acquisition of a majority stake in market, Nexity has additional growth potential for the Ægide-Domitys, completed in June 2018, is a major growth coming years through: engine for Nexity’s Real Estate Services to Individuals. • Its multi-product, multi-brand model of open Domitys intends to roll out an ambitious development plan, architecture (with Edouard Denis in Residential Real with the opening of 15 to 20 residences per year in a Estate, for example, a company in which Nexity high-growth market. acquired a majority stake in 2016, and Ægide, Nexity’s Property Management for Individuals activities will the leader in the development of serviced independent push ahead with their digital transformation and continue living facilities for seniors); to stand out through the quality and diversity of the • Its position as a leader in practically all major French services offered to their clients. While strengthening their cities and a key player in high-potential niche markets profitability, these business lines should record growth in (priority urban planning districts, student residences, the number of units under management over the senior residences, single-family houses developed in 2019/2021 period. groups, etc.); and The growth in services should also stem from the • While remaining at the top level in its sector in terms development capability of the distribution activities of operating profitability, the Residential Real Estate (PERL, iSelection, etc.) and the Century 21 franchise division is targeting strong growth in market share over network. the coming years (the market share has already In Real Estate Services to Individuals special attention will increased significantly from 10.9% in 2017 to 13.4% in be focused on becoming more reactive and improving the 2019, i.e. a gain of 2.5 percentage points). customer experience. Nexity’s capacity to develop, market and capitalise on the The same applies to the Group’s know-how in cross-selling lessons learned from innovative services is an important which should continue to intensify over the period of the advantage for its model with new products, such as the plan and innovative packaged offerings combining smart home and residents’ social network solutions called development and services. Eugénie, Nexity Partners, an “industrial” and financial Nexity’s ability to structure its organisation through partnership which Nexity offers to small- and medium-sized recruitment, training and talent management means that it independent developers and which is increasingly successful, can optimise the territorial coverage for the Individual Clients or Nexity Non Profit, which offers family shelters to and deploy its product range to the whole of the Group. disadvantaged people (the Commitments Committee validated over 700 housing units during the 2019 financial year). Commercial Clients Nexity offers a large range of real estate solutions for its Beyond that, Nexity intends to develop its range of products investor clients and for the transformation of user and services, notably due to the increasing inclusion of companies through the roll-out of the Nexity Enterprise services offered by NSE for commercial real estate Solutions (NSE) platform last year and thanks to the development projects which will improve marketing and acquisition of players such as Morning Coworking (a the key reduce construction costs. players in the Parisian market for ready-to-use office The property management business will continue its digital spaces) or Accessite (a property manager and commercial transformation by developing tools to amplify its real estate specialist). commercial reconquest action and enhance its services. Nexity combines a strong position in the Paris region with a Finally, the stake in Bureaux à Partager (Morning growing presence in the major regional cities in Commercial Coworking) enabled the offer to user companies to be Real Estate in particular for wood-frame office buildings, strengthened with an ambitious growth plan on a for which Nexity holds the no. 1 position in France. Nexity has competitive but strongly growing market. greatly increased its business potential thanks to large mix-used projects, notably a major development in La Garenne-Colombes (92). This development should be sold at the end of 2020, providing the administrative permits are obtained, which would represent revenue of around €1 billion. This allows Nexity to foresee the possible doubling of order intake over the 2018-2021 period compared to previous years, i.e. around €650 million per year on average.
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Local Authority Clients Nexity intends to reinforce its position as a major player on In 2019, Nexity won several calls for bids for projects in 1 the French private urban planning market, by developing Tours (37), Toulouse (31), Montreuil (93) or the Athletes’ new services around the inclusive smart city and new urban Village in Saint-Ouen-sur-Seine (93) for the Paris Olympic uses. Games. These operations are described in Section 1.4.2.2 Nexity, which is an essential stakeholder in urban “Land development potential” of this chapter. responses, is able to align all the components to Furthermore, Nexity’s traditional model rests on the use of accompany local authorities and satisfy their requirements purchase options in order to control land. However, due to in terms of CSR performance and quality of life. stiff competition and the rise in land prices in certain As a key player in urban development, Nexity maintains areas, the Group has had to come up with new sources of close, long-term partnerships with Local Authority Clients financing in order to carry out its ambitious development throughout France. Local authorities can rely on the Group’s plan while continuing to pursue a controlled land bank territorial coverage, extensive know-how and expertise to strategy with limited risk-taking. In exceptional cases, provide them with comprehensive and enduring urban Nexity may take certain risks on land, within the solutions that are tailored to the needs of their €250 million limit set by the Group. At 31 December 2019, municipalities and regions. the amount of land bank totalled €120 million (based on net WCR). Internal Clients With more than 11,000 employees, Nexity’s strength lies in Nexity rejects all forms of discrimination based on gender, its human capital. To confirm and reinforce its objective of age, sexual orientation, social origins, etc., which is in being a “preferred employer” in its sector, the Group will complete contradiction with its values. Nexity has drawn up push forward with its employee shareholding policy a Charter called “Being Inclusive Together” which enables (employees and managers held 18% of Nexity’s share each employee to get involved in, and become a player in capital at the end of 2019), as well as its policy regarding inclusion. There is an in-house campaign to encourage the development of talents, the testing-out of new working employees to become individually involved by signing the methods, entrepreneurial culture and innovation. “Being Inclusive Together” Charter which has already been In early 2020, the Group launched "La Cité Nexity", a new signed by the members of the Strategy Committee and by entity for developing and enhancing human capital, and a the Group’s main managers. response to the ambition of Alan Dinin, the Chairman of the Finally, at the beginning of 2020 Nexity joined the Board of Directors, to make Nexity “a company which you Bloomberg Gender-Equality Index (GEI), becoming one of work for to leave your mark on the city, a place you come the 325 companies selected worldwide, including to, to grow and develop”. 12 French companies. This index singles out companies La Cité Nexity is aimed at all Nexity’s employees and future that take a transparent approach to gender equality and employees who wish to become actors in their own real promote gender equality in the following five areas: female estate careers and draws on the success of innovative leadership, male-female pay equity, inclusive culture, in-house projects and continues to develop them for the policies against sexual harassment and gender conscious benefit of Internal Clients and future employees. product offers.
1.1.5.3 Nexity as a leader in digital real estate Aware of the growing importance of issues connected with Nexity’s goal is to strengthen or defend its competitive digital transformation and social innovation, Nexity is position whilst increasing the quality of its service and its implementing a dedicated plan aiming to: customer satisfaction. It is backed by a significant increase in • Invest in new digital services designed to create value the resources allocated by Nexity to the development and for its clients; improvement of its IT systems, digital tools and technologies (see Section 1.5 “Internal Clients” of this chapter). • Launch digitisation and paperless processing projects to facilitate improvements in service and cost In digital client relations, the goal is to increase the online management; capture rate by making use of new ways to humanise the relationship (such as videoconferencing) and highlighting • Improve connectivity for staff by using mobile tools; and offerings using high-quality visuals and text. Relationships • Promote the development of a digital culture and a are also shifting towards more interactive collaboration culture of innovation within the Group. with clients, who will henceforth be asked for opinions on their experience with Nexity, and more accurate targeting thanks to predictive database marketing.
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For example, Nexity took part in creating and then to grow, with 8 million visits per month making Bien’ici the incubating Bien’ici, a next-generation property listings third largest real estate portal in the French market a mere website that has seen strong growth. Bien’ici was launched three years after its launch. in December 2015 and is now 49% owned by Nexity In 2018, Nexity also developed a connected property digital alongside a consortium of real estate professionals and a management tool, Eugénie (smart home management). financial investor. Bien’ici continues to receive a growing Eugénie was deployed in all marketed programmes at the number of membership applications from professionals end of 2019. In 2019, 814 housing units (14 residences) wishing to place paid listings (with 9,300 member agencies were delivered, representing a sharp increase on 2018 at the end of 2019 compared with 8,448 at the end of (221 housing units, i.e. 9 residences). 2017). The number of visits to the website continued
1.2 INDIVIDUAL CLIENTS
Nexity’s real estate services platform strategy aims to Thanks to a large range of over 32 products (home provide a comprehensive response to all of its clients’ real ownership, social and intermediate housing, accommodation estate needs, at each stage of their life cycle, by creating for people in need through Nexity Non Profit, wood-frame packaged offerings and relying on the power of its brand construction, serviced residences for students and and data storehouse. seniors, etc.), Nexity is able to satisfy the requirements of This strategy is based on a good understanding of the uses elected officials and the needs of their cities, as well as the of Nexity’s Individual Clients due to a field experience of the client demand at each stage of their real estate life as the territory by its network of agencies and residences. diagram below illustrates:
STUDENTS PROFESSIONALLY ACTIVE SENIORS
Nexity Partners
ONE LIFE JOINT COWORKING 1ST JOB COUPLE ARRIVAL DIVORCE RECOMPOSED CHILDREN SUCCESSION TENANCY 1ST CHILD FAMILY LEAVE HOME INHERITANCE WIDOWER ... CO-LIVING
... SERVICED ... 1ST RENTAL ...... 1ST SALE ...... PORTFOLIO TRADE-OFF ... ND RESIDENCE ...... 1ST PURCHASE ...... 2 PURCHASE ... REAL ESTATE ... SERVICED … BUY TO LET… LIVES RESIDENCE ... … RENTAL MANAGEMENT… … MANAGING AGENT’S MANDATE…
To implement this strategy more effectively, in 2018 Nexity Starting in 2019, client satisfaction is now monitored and continued to roll out its individual client-focused managed across all business lines; Nexity’s call centre – organisational structure, with a single management team – which handles over a million calls a year – and customer the Individual Clients Committee – providing integrated service team now cover the whole of the Individual Clients oversight of Residential Real Estate and Real Estate business. Furthermore, as the overlap between the Services to Individuals. The marketing, sales and digital development business lines and services is a vector for functions and organisational teams were brought together creating value, Nexity has intensified cross-selling between within two departments covering the whole of the the different business lines which is reflected by a 12% Individual Clients segment. multi-business line visit rate out of the 12 million visits to the Group’s web platforms and the nexity.fr website in 2019. The Group will increase these synergies in the future.
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1.2.1 Development strategy for Individual Clients 1 1.2.1.1 Residential Real Estate The Group aims to grow its market share in France, while • developing homes applying optimised design and maintaining a satisfactory level of profitability. construction processes (Nexity Access Design) in In order to achieve these objectives, the Group has adopted order to alleviate risks to financial security for a short- and medium-term strategy: first-time buyers; Consolidation or growth in the Group’s presence A broader product range, achieved through the following • • nationwide, in line with the changing face of local initiatives: markets, focusing on metropolitan areas as a priority, • increasing production tailored to first-time buyers by: (owner-occupiers purchasing a main residence for expanding the operations of its existing regional the first time), • offices, putting together a comprehensive solution to meet • external growth transactions, targeted acquisitions the needs of individual investors by offering, in • of land portfolios and/or partnerships with local addition to the home, a full complement of related developers (Nexity Partners), services, including mortgage brokering, property management for individuals, assistance with finding • building synergies between its subdivision and new the first tenant, insurance and 24-hour assistance home businesses, especially in regions where the for emergency service requests, size of the local market does not warrant the direct presence of a subsidiary on a permanent basis for establishing an offering of homes aimed at • the new home business, and professional landlords, namely social housing operators for the most part, but also and to a • taking advantage of the additional distribution growing extent institutional investor, unlisted real capacity provided by iSelection, which has signed estate investment vehicles (SCPIs) and funds partnership agreements with the Caisse d’Épargne (OPCIs), etc., and Banque Populaire networks; • via PERL, developing innovative real estate solutions • Pursuing its policy of aiming for the highest possible based on techniques for the division of ownership profit margin (in a given context) rather than simply (distinction between usufruct and bare ownership) increasing sales volume, by renegotiating the purchase to promote access to housing, price of land or centralising the purchasing of certain equipment (such as lifts or bathroom furniture) and developing social or freely-financed serviced • services (such as lift maintenance); and residences (which accounted for 29% of net reservations in 2019: chiefly student residences in • Seizing land acquisition opportunities, particularly in the partnership with Nexity Studéa, among other Paris region, that arise in connection with the Group’s entities, and senior residences in partnership with urban regeneration business (Villes & Projets), described Ægide-Domitys), in Section 1.4.2 “Urban regeneration (Villes & Projets)” • developing sustainably designed, environmentally of this chapter. friendly and energy-efficient homes, and
1.2.1.2 Serviced residences Nexity runs serviced residences through its Studéa and Ægide-Domitys is responding to this issue thanks to its Ægide-Domitys subsidiaries for students or seniors whose know-how and its mastery of three areas: real estate units belong to individual or institutional investors. development, marketing and residences' management. The operator guarantees a return to the investor. It must The development strategy to reinforce the Group’s presence therefore ensure that the residences are fully occupied by on the serviced residence market is as follows: providing a good level of services for the tenant occupiers. For Domitys serviced senior residences: In less than 20 years, the Ægide-Domitys Group has • become the leading player in senior independent living • continue to grow the park whilst optimising the facilities. This new concept, which it created and which it filling phase for recent residences, sells under the Domitys brand, corresponds to the • capitalise on its residences management experience expectations of independent seniors and is attracting a to envision a deployment of individual dwellings, growing number of individual and institutional investors. It is a high potential market, closely linked to the challenge of an ageing population.
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• pursue its ambitious development policy both in • For Studéa student residences: France and abroad, in particular in the European boost the development of its park of residences, countries facing the same challenges, and • • continue the residence modernisation plan, • improve commercial efficiency and advisory services to investors, namely with the development of • continually adapt specifications to changes in Domitys Invest; student use, and • tackle the co-living market.
1.2.1.3 Property management and intermediation The other Real Estate Services to Individuals are structured challenge to carry out energy efficiency renovation work, etc.) around two large areas of expertise: management and and with a highly recurring income stream, the Group’s aim is intermediation. to grow its market share through the following actions: Management covers condominium management • Continually improving its services, developed in (management of common areas) and rental management cooperation with clients; (management of private areas). Intermediation covers the • Increasing the perceived value of its services by transaction and rental business lines. The professional is the ensuring that clients are satisfied and remain loyal; intermediary between a vendor client and a purchaser client or a lessor client and a tenant client. • Enhancing the client experience by capitalising on Nexity’s expertise in all its business lines and its ability The development strategy for the property management to propose innovative solutions; business is as follows: • Differentiating itself through its transparent sales • For condominium management: continue to grow the strategy and pricing policy, and through the digital Group’s leadership in energy efficiency renovation transformation of Nexity’s service businesses, so that it whilst consolidating the fundamental business lines; can offer innovative products that meet clients’ and emerging needs; • For rental management: provide lessors with know-how • Securing external and partnership-based growth in a which is close to operating know-how. business that is becoming increasingly industrialised; The common goal for these business lines is to continually • Structuring an offer aimed at institutional investors by improve client satisfaction. creating an investment fund (PERL); and In a market supported by structural growth factors (population • Opening up to new individual investor targets through growth in France, lifestyle changes, regulatory developments, packaged products. gradual changes in the uses of real estate, a significant 1.2.2 Residential Real Estate
Nexity is a major player in the development of new homes among the country’s top new home developers, together and subdivisions in France. In 2019, the Group recorded with 2,088 reservations for subdivisions. 21,837 reservations for new homes in France, ranking it
The table below shows the number of reservations recorded in the years ended 31 December 2017, 2018 and 2019:
RESERVATIONS (FRANCE) At 31 December 2019 2018 2017 Reservations (number) New homes 21,837 19,609 18,351 o/w Ægide (reservations made independently of Nexity) 1,486 549 - Subdivisions 2,088 2,063 2,601 TOTAL 23,925 21,672 20,952
The Group operates its property development and In 2019, 12% of the subdivision reservations were recorded subdivision activities throughout France. In 2019, 38% of in the Paris region and 8% elsewhere in France, managed by the new home reservations recorded by the Group were for the Group’s 23 agencies. Furthermore, this business recorded units located in the Paris region, with the remaining 62% 70% of its reservations in non-supply-constrained areas (B2 elsewhere in France, managed through the and C zones), down 3% in volume compared to 2018. Group’s 27 regional divisions.
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Nexity’s Residential Real Estate clients are: The Group offers homes in all client segments, covering First-time buyers (of homes or plots of land); both owner-occupancy and investment (including serviced 1 • residences), for both private individuals and professional • Other buyers (who already own their main residence) landlords, spread across France’s main urban areas. purchasing a new home (or a plot of land) to live there; The Group works to provide sustainable offerings so as to be • Individual investors purchasing a buy-to-let home able to propose widely accessible, low-carbon, (whether furnished, unfurnished or under a division of energy-efficient products designed to suit every stage of life. property ownership known as démembrement); and Residential Real Estate thus serves a broad range of clients. • Professional landlords purchasing an entire building to A breakdown of Nexity’s business activity in 2019 is set out generate rental income (social housing operators or in Chapter 5 “Financial report” of this Universal Registration operators of intermediate or freely available housing). Document.
1.2.2.1 Overview of the residential real estate market and competitive environment In 2019, the French market for sales of new homes On 1 January 2019, France was the second most populous continued its shift after a decrease of 7% in 2018 country in the European Union behind Germany (83 million compared to 2017 (a record year). This change is due to a inhabitants) and in front of the United Kingdom and Italy. In slowdown in reservations for individual investors and 2019, France’s fertility rate is stabilising at 1.87 children professional landlords in a context of a one-off problem per woman, after four years of decline between 2015 and relating to the approach of the municipal elections in the 2018. spring of 2020 and to the fact that prices were too high in In 2016, there were 28.5 million households2 in mainland some locations. France, i.e. 1.1 million more than in 2011. Many factors Demographic factors1 influence growth in the number of households and changes in their structure: the ageing population, the fact that The French market for new homes appears to be structurally people are waiting longer before living together as a couple, demand-led, supported in particular by demographic factors more fragile marriages and increasing numbers of people and accumulated delays in housing starts. living alone and single parents. Demand for new housing in France is structurally Households consisting of people living alone have shown expanding, principally due to demographic factors. the highest growth over the past few years (up 857,807 On 1 January 2020, France’s population was 67 million. between 2011 and 2016). They account for 36% of The population has grown by 0.3% per year since 2017, but households. Couples with no children and single-parent more slowly than in previous years: up 0.4% per year families are also increasing in number (up 142,308 and between 2014 and 2016 and 0.5% per year between 2008 263,410 respectively), while the number of couples with and 2013. The growth in France’s population mainly stems children is declining (down 63,731). from the natural balance ( up 141,000 people) rather than immigration (up 46,000 people). The demand for new housing is also sustained by the increasingly large proportion of people who are over 65 in Population growth is the highest in the outer suburbs of the the French population. On 1 January 2020, more than one major urban areas (up 0.8% per year between 2011 and person in five in France was aged 65 and over. According to 2016, versus an average of 0.4% in France). It should be projections produced by INSEE, the proportion of the noted that this growth is continuing at a much less steady population over 65 will have risen to 29% by 2070. pace than between 2006 and 2011 (up 1.2% per year). Conversely, following a decrease in the immigration deficit, the pace of growth in the major metropolitan areas is increasing (up 0.4% per year between 2011 and 2016 versus 0.3% per year between 2006 and 2011). Small and medium-sized areas are not affected by growth and their population is no longer progressing.
1 Sources: INSEE Première 1730 Bilan démographique 2018 for the population data; INSEE Couples-Familles-Ménages en 2015 of June 2013 for the data on households; INSEE Première 1619 of November 2016 Projection de la population à l’horizon 2070 for the INSEE projections. 2 The French National Statistics Office (INSEE) defines a household as a group of people who live under the same main roof.
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Financial solvency of households1 Sales of new homes in France are closely tied to household The incomes of households who perform these transactions financial solvency, i.e. families’ ability to contract and increase almost three times less fast than the costs of the honour a loan for the purchase of real estate. operations performed, in response to the increase in the share Mortgage rates have remained very low (1.13% in the last of young and modest homebuyers. The level of contribution quarter of 2019), enabling loan terms to stabilise at also falls because of improvements in lending conditions and 19 years, a level never seen in the past. Without this, the the easing of the conditions for granting loans. decline in the financial capacity of borrowers affected by The financial capacity for the demand did not really rising property prices and the dwindling state support improve despite easier loan conditions for households to would have impacted the real estate and loan markets. perform real estate projects. Financial capacity is According to the monitoring bodies (Observatoire Crédit continuing to be impacted by the reduction in state support Logement/CSA), the relative cost of transactions involving and the consequences of the increased costs of the new property stabilised at 5.4 years of income in the first transactions. quarter of 2019, which is a comparable level to the end of 2018. New-build homes In France, demographic changes are generating a structural need for new homes, due to population growth, smaller households and insufficient construction over recent years. The chart below illustrates Nexity’s estimate of the need for new homes in France:
400 - 450k units (Nexity estimate) Plugging the 378 construction 364 364 shortfall 359 330 Regional 322 312 population shifts 294 130 127 Obsolescence 85 130 130 84 100 83
117 113 101 124 109 109 107 109 Growth in number of households
137 128 104 103 113 135 120 126
2012 2013 2014 2015 2016 2017 2018 2019 2040 according to Nexity Developers (1) Sales Social housing (2) Financing authorisations Single-family houses (3) Sales
(1) Gross sales of developers, i.e. individual and collective housing – source: Commissariat Général au Développement Durable. (2) Number of housing units financed excluding ANRU – source: Ministère de l’égalité des territoires et du logement – Bilan des logements aidés 2012-2017 – Ministère de l’égalité des territoires et du logement for 2018 and 2019. (3) Construction contracts for individual houses – source: Union des Maisons Françaises 2012 – LCA/FFB for 2017 to 2019.
According to the French General Commission on apartment blocks (down 1.7%) and pure individual (down Sustainable Development (Commissariat général au 1.7%), whilst housing residences with services and développement durable), the continuous decline in the individual homes developed in groups increased over this number of housing starts recorded since 2011 halted in period (up 0.4% and up 3.7% respectively). 2015 with housing starts that progressed until 2017, with The Group is primarily active in private residential 428,600 new housing starts. The number of building sites development (apartment blocks, serviced residences and started for new homes has declined steadily over the last houses developed in groups) and bulk sales to social and two years (down 3% between 2017 and 2018 and down intermediate housing operators, although it is also active in 1% between 2018 and 2019) to stand at 410,300 units in the individual home market through its subdivisions business. 2019. Between 2018 and 2019, this decline was due to
1 Source: Observatoire Crédit Logement.
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Private residential development (MALONE) The analysis of the private residential development market Other surveys exist but may cover a different scope, 1 set out in this report is based on figures from the survey an example being the survey provided by the Observatory of on the marketing of new homes (Enquête sur la the French Federation of Real Estate Developers (Fédération commercialisation des logements neufs – ECLN) published des Promoteurs Immobiliers – FPI) based on data supplied by by the French General Commission on Sustainable various regional observatories and covering 90% of the Development (Commissariat général au développement property development market. It records net home sales in durable). the retail segment (to occupiers and investors) and bulk sales. The ECLN covers developments and building permits for five To estimate the overall market for private residential or more homes intended for sale to residential buyers, development, Nexity has decided to compare the data from irrespective of financing method and end-use retail sales from ECLN with the data from bulk sales by the FPI. (main residence, secondary residence or buy-to-let). The chart below shows the change in sales of new homes in It excludes multi-ownership reservations and homes built to France. In 2019, retail sales were stable year-on-year at around be let directly by the developer or the instructing party as 129,550 units (source: ECLN). Bulk sales declined year on year social housing (intended for rent or rent-to-buy), as well as (down 3% to 33,100 units according to FPI). The overall employee accommodation. Cancellations are not deducted. market saw a decline of 1% to 162,650 reservations after peaking at 168,600 units in 2017.
Number of new home reservations in France
169,000 163,600 162,650 153,700
125,600 121,100
105,900 108,600 107,500
2011 2012 2013 2014 2015 2016 2017 2018 2019
Retail sales Bulk sales
Sources: Commissariat Général au Développement Durable (Sit@del2 basis) for retail sales - Fédération des Promoteurs Immobiliers for bulk sales
Buyers of new homes in France New home supply for sale and time to market for Private buyers of new homes in France break down into two available supply categories: those planning to live in the home Between the end of 2018 and 2019, the available market (owner-occupiers) and individual buy-to-let investors. supply fell by 9.4%. At the end of December 2019, there Sales to investors decreased by 2% between 2018 and 2019 were a total of 102,100 homes available, equivalent to to around 62,900 units. They now represent 49% of the 9.5 months’ sales. reservations market for individuals (down 1.1 points year on This available market supply comprised 94,400 new year). apartments and 7,700 single-family houses developed in The other half of sales were made to homebuyers. Thanks groups. 84% of the new apartments available for sale are to favourable financing conditions, sales to home buyers located in supply-constrained areas (Abis, A and B1 zones), rose by 2% to 66,600 units. compared to 60% for grouped single-family houses.
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The average sale price of new apartments in France Legal and financial framework of real estate exceeded the €4,000 per square metre threshold in 2018. development in France It increased by 4.1% between 2018 and 2019 to €4,250 per VEFA off-plan sales contracts model square metre. The average selling price of single-family houses was €278.8 thousand in 2019 (up 4.8% compared Real estate development in France falls almost entirely with 2018). within the VEFA off-plan framework, an original model arising from the Act of 3 January 1967 and gradually In ten years, prices rose by 19.5% for apartment blocks and perfected, characterised by a limited level of risk (relative to by 17.2% for grouped single-family houses. other models) for developers, clients and banks. Furthermore, most market operators secure options on land, with conditions precedent that must be met before those options can be exercised, thus reducing the risk borne by Nexity. VEFA model Projects phases 1 2 3 4 5 6 7 Purchase Administrative Pre-sales Purchase Start Sales phase, Delivery option on set-up: phase: option of transfers of ownership,
land M0 to M12 M6 to M12 exercise works construction: M12 to M36
100%
60%
40%
Revenue recognition* Reservation rate
M0 M6 M12 * According to the percentage-of-completion method M36
5% upon reservation Payment 30% 35% 25% 5% at completion at completion at completion at key schedule of foundations of construction of all works handover except for water connections 1st transfers of ownership for reservations made during the pre-sales phase
Form of sales and schedule of payments In any event, the amount paid by the client upon signing The Group sells homes via reservation contracts and the reservation contract is deposited in an account opened subdivisions via purchase contracts followed by definitive in the client’s name and which cannot be seized, notarised deeds of sale. transferred or made available. This amount remains blocked with a financial institution until the definitive sales The Group sells its new homes under off-plan sales contract is signed, at which date it is definitively acquired contracts (VEFA or Vente en l’État Futur d’Achèvement). by the Group. This amount is refunded to the client if the Under the VEFA system, total payments made by clients definitive sales contract is not signed within the specified cannot exceed the following statutory limits: 5% upon time period due to the Group’s fault or under the legal reservation; 35% when the foundations are completed; provisions that protect the rights of clients to withdraw 70% when construction, excluding water connections, their reservations. is completed; 95% upon completion of construction; and 100% when the keys to the new home are handed The buyer of a subdivision lot pays 5% of the price upon over. Intermediate calls for payment are made between the signature of the agreement to purchase (deposited in an different phases based on the progress of construction. escrow account) and 95% upon signature of the definitive sales contract.
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Fiscal framework intended to promote real estate The decree of 19 June 2013 allows regional state development in France representatives (préfets) to lower the applicable rent 1 Tax arrangements intended to promote buy-to-let ceilings to adapt them to local rental markets. Such rent investment ceiling terms must be set by order of the préfet. For more than 20 years, the Group’s construction and The 2019 Finance Act sets out the measures aimed at development activities in respect of new housing have capping the amount of fees and commissions paid by benefited from various successive tax schemes designed to developers to intermediaries involved in the sale of housing favour buy-to-let investment by private individuals. units covered by the Pinel scheme. With effect from 1 September 2014, the Pinel scheme, The Pinel scheme has been extended until based on the principle of an income tax reduction, replaced 31 December 2021. the earlier Duflot scheme, introduced on 1 January 2013 The Censi-Bouvard scheme (which had itself replaced the depreciation-based Scellier, A tax relief option known as the Censi-Bouvard scheme, Robien and Borloo schemes). based on the Scellier scheme, was introduced by the 2009 For the application of these various schemes, France is Supplementary Budget Act to favour certain property divided into several zones. These areas were redistributed investments in the private furnished rental sector. from 1 October 2014. Tax relief is available on investments in any of the The Pinel scheme following: All taxpayers, regardless of their tax bracket, who purchase • Serviced student accommodation; new or off-plan (VEFA) homes between 1 September 2014 and 31 December 2021 are eligible for tax relief tied to the • Accredited serviced accommodation for seniors or amount of their investment provided that they undertake to residents with disabilities; and rent out the property as a main residence for at least six • Accredited social and medical care facilities. years, with the option to extend the lease for two further The basis of the tax relief, calculated on the sales price of three-year periods. the purchased home(s) may not exceed 300,000 euros for Taxpayers may qualify for this incentive on the purchase of the same tax year. Its rate of 11% and spread over nine no more than two homes in a given tax year. years, with one-ninth of the total amount of relief applied The amount of tax relief is calculated on the cost of the each year starting in the year the property is completed. home up to a purchase price ceiling of €5,500 per square The 2020 Finance Act extended this scheme until metre of living space, not to exceed €300,000 in respect of 31 December 2021, but specified its applicability to senior a given year. The rate of tax relief is set at 12% when the residences. rental commitment is entered into for six years, increasing There are no criteria linked to the region in which the to 18% for a 9-year commitment and 21% for a 12-year property is located, rent ceilings or tenants’ income. commitment. Tax relief ceilings Tax relief is spread over six, nine or twelve years. It is The annual income tax relief granted to any given granted in respect of the year in which construction is household in respect of its expenditures, investments and completed or the year in which the property is purchased, financial aid qualifications is subject to an overall ceiling. whichever is later; it is applied to the tax payable for that Since 1 January 2013, this overall cap has been set at year and then to the tax payable for each of the 5, 8 or €10,000 per fiscal year. 11 years following at a rate of 2% each year for nine years and then 1% each year for the following three years. Financial and tax arrangements intended to favour first-time buyers For purchases completed on or after 1 January 2015, there is an option to rent the property to an ascendant or Interest-free loans (PTZ) descendant provided that the rental terms are met. The PTZ interest-free loan scheme aims to support the construction of new homes and boost social home Rents are also capped depending on which zone the ownership by facilitating access to ownership for property falls into and how large it is. Municipalities located low-income households. The scheme, under which in B2 zone are eligible for the scheme provided they have interest-free loans are granted to first-time homebuyers, been granted prior approval and the permit was applied for is codified in Articles L.31-10-1 et seq. of the French before 31 December 2017. In addition, to ensure eligibility, Construction and Housing Code. the sales contract must have been concluded before 15 March 2019.
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With effect from 1 January 2015, PTZ interest-free loans Reduced-rate VAT in ANRU and QPV areas can be used to finance the following: France’s National Housing Commitment Act (ENL) of • The purchase of a new or newly renovated home; 13 July 2006 introduced reduced-rate VAT eligibility for purchases of new homes in or within 500 metres of • The construction of a new home (potentially including neighbourhoods covered by a “CRU” urban renovation the acquisition of building rights or land on which the agreement, subject to the buyers (who need not necessarily home is to be built); be first-time buyers) using the property as their main • The conversion for residential use of premises not residence and passing a means test according to their intended for habitation; geographic location and household situation. The Act of • The purchase of a home covered by a rent-to-buy 25 March 2009 on mobilisation for housing and the agreement; and prevention of social exclusion added a further condition in relation to the maximum selling price for such properties. • The purchase and improvement of an existing home (in a limited number of rural areas). The 2014 Finance Act reduced the perimeter around ANRU urban regeneration zones eligible for a reduced VAT rate To be eligible for the scheme, applicants: from 500 metres to 300 metres and modified the VAT rates • Must not have owned their main residence for the as follows: previous two years and must be planning to use the • With effect from 1 January 2014, deliveries of projects property as their main residence; and located in ANRU zones and the 300-metre perimeter • Must pass a means test based on income in Y-2 around these zones are eligible for VAT at a rate of (year before last). 5.5%, which applies retroactively to the entire purchase price; and The amount and repayment terms of a PTZ interest-free loan depend on the following: • Deliveries of projects located within the 300-metre to 500-metre perimeter around the ANRU zone are still • The purchase price of the property; eligible for VAT at a rate of 7% as long as the building • The number of people who will be living at the property; permit was filed before 31 December 2013. • The geographical location (A, B1, B2 and C zones); and France’s Framework Act (Loi de programmation) • The buyer’s income basis for tax purposes based on the No. 2014-173 of 21 February 2014 for urban planning and year before last (i.e. 2014 for a purchase in 2016). cohesion – known as the Lamy Act – established priority urban planning districts (called QPVs in French), which offer In order to accelerate and amplify the upturn in the same housing stimulus measures as ANRU urban construction, the 2016 Finance Act strengthened the regeneration zones, including for homes situated within a measures promoting home ownership, in particular through 300-metre radius around them, and will thus be able to significant changes in the terms of PTZ interest-free loans accommodate new developments earmarked for social home since 1 January 2016: ownership at the reduced VAT rate of 5.5%. A total of • Raised ceilings for household income; 1,300 QPV priority urban planning districts have been created in mainland France and in its overseas departments, Saint Reduction to three income brackets for repayment • Martin and French Polynesia. terms, each with a total deferment of 5, 10 or 15 years; Under the 2017 Finance Act, subject to certain conditions, the Extension of the maximum repayment periods from • reduced VAT rate of 5.5% can be extended to apply to the 300- 20 to 25 years; and to 500-metre apron surrounding QPVs covered by an NPNRU • Broadened scope of 2016 PTZ loans to include existing (New National Programme for Urban Renovation, known as homes, in all zones, provided that renovation works are “ANRU 2”) agreement. Homes earmarked for social home carried out in an amount at least equal to 25% of the ownership that form part of a property complex located less total cost for the transaction. than 500-metres from QPV-ANRU 2 neighbourhoods and that Repayment terms are based on the borrower’s income fall partly within the 0- to 300-metre apron surrounding such bracket. neighbourhoods are eligible for reduced-rate VAT provided that the building permit application is submitted on or after The amount of a PTZ interest-free loan is calculated on the 1 January 2017. This measure should apply to around basis of a percentage of the total purchase price, varying by 450 QPVs. The 2018 Finance Act made the reduced-rate VAT geographical region, up to a maximum authorised amount accessible to homes situated in the 300- to 500-metre apron and depending on the size of the household. surrounding QPVs, based uniquely on the signing of a prefatory The 2019 Finance Act extended the scheme for memorandum (protocole de préfiguration) for a future NPNRU investments located in supply-constrained areas, but did agreement, provided that the latter is signed within 24 months not amend the planned extinction of the scheme in non of the signing of the prefatory memorandum (for building supply-constrained areas (B2 and C zones) at permit applications filed from 1 January 2018). 31 December 2019. The 2019 Finance Act did not amend the scheme. The 2020 Finance Act continued the scheme unchanged for new homes.
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VAT rate applicable for new-build homes intended for In order to increase the construction of new homes for the social housing poorest households, the 2020 Finance Act reduced the VAT 1 The 2018 Finance Act raised the VAT rate applicable to all rate on the more social operations from 10% to 5.5%: new-build homes intended for social housing from 5.5% to • Construction of social housing financed through 10% (developments under the direct supervision of social Social-Housing-Construction Incentive Loans housing operators, off-plan (VEFA) purchases of social (Prêt Locatif Aidé d’Intégration - PLAI) for people in the housing from real estate developers, homes developed first four income-bracket deciles); under the social usufruct rental scheme with division of property ownership, etc.). • When they are built within the framework of the New National Programme for Urban Renovation (ANRU 2), In order to maintain the level of construction starts for social housing financed through Social Housing Loans, social housing, the French government announced a intended to potentially house the first six package of financial measures designed to offset the income-bracket deciles. impact of this 4.5% increase in the cost or purchase price of these homes: two-year freeze on the interest rate for the Livret A savings account and therefore the borrowing rate for social housing operators with Caisse des Dépôts et Consignations and maturity extensions of up to 10 years for social housing loans marketed by Caisse des Dépôts in particular. Competitive environment New homes Numerous new-build residential real estate developers are Kaufman & Broad (active in the markets for new homes, active at both the national and regional levels. The largest individual houses in communities and apartments) and of Nexity’s national competitors are Bouygues Immobilier Altarea Cogedim (which operates in the new homes, (which operates in the new home market as well as the office space and retail premises markets). office space, shopping centre and hotel markets),
The following table shows the number of reservations for France’s leading residential property developers:
NEW HOMES (1) 2019 2018 2017 2016 Nexity (new homes) 21,837 19,609 18,351 15,893 Bouygues Immobilier not reported 13,449 15,199 13,866 Altarea Cogedim 12,128 11,782 11,189 10,011 Kaufman & Broad (2) 8,222 9,122 9,027 8,017 Vinci Immobilier 6,215 6,333 6,330 5,485 Icade Promotion 5,067 4,938 5,776 5,665
(1) Based on statements made by the companies in the absence of a shared methodology. Some of the Group’s competitors include “residential unit equivalents” (subdivisions, retail space, etc.) in their figures, whereas Nexity applies a stricter definition. (2) Financial year differs from calendar year. Sources: company press releases. Nexity’s market share figures are now calculated using the According to the latest figures published, the market share number of new home reservations booked in France, retail reaches an historic level of 13.4%. During the 2019 and bulk sales, set out in the section on “Private residential financial year, it increased by 1.4 points compared to 2018 development” above. and by 2.5 points compared to 2017. The market share in the Paris region, 15.2%, was up by 1.2 points compared to 2018. In the rest of France, it increased by 1.5 points to 12.5%.
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 31 1 INTRODUCTION OF THE GROUP Individual Clients
The Group’s market shares by region in 2019 and 2018 (excluding bulk sales) are shown below:
West North East 11.5% 15.5% (9.2%*) (12.7%*)
Paris region 12.5% (11.5%*)
South West South East 8.8% 7.7% (9.5%*) (6.7%*)
* 2018 market share figures, based on data published in the Survey on the Marketing of New Homes (Enquête sur la Commercialisation des Logements Neufs - ECLN). Source: new housing orders: French General Commission on Sustainable Development (Commissariat Général au Développement Durable - ECLN).
According to ECLN, 110,200 new homes were put on the market in 2019, i.e. 13.3% less than in 2018. The fall is more marked for individual homes (down 27.8%) than for collective residences (down 12.1%), and in the Paris region (down 19.7%) than in the rest of France (down 10.6%). Nexity’s share of new retail sales on the market held steady at 13% in 2019. Site development and subdivisions Through its Site development and subdivisions business, highly fragmented. The remaining players not mentioned the Group is one of the leaders in this market, with above are either regional or local, with average annual new 2,088 reservations in 2019. The other national players are business volumes of fewer than 100 subdivision lots, or mainly Capelli, Procivis Immobilier, Francelot, Angelotti and public operators such as publicly controlled companies Ataraxia. The site development and subdivisions market is (sociétés d’économie mixte).
1.2.2.2 New homes Access to housing Social housing As a real estate operator, Nexity is conscious of its need to Article 55 of the Solidarity and Urban Regeneration Act help facilitate access to housing for all. Since 2006, (Loi SRU) of 13 December 2000 established a minimum the Group has demonstrated its commitment to social home threshold of 20% social housing to be achieved in certain ownership notably by way of its strong presence in urban municipalities. The penalties imposed on local authorities regeneration zones, the development of social housing not achieving these thresholds have gradually been programmes and the launch of a product line dedicated to stepped up. The Act of 18 January 2013 on the use of cost-efficient housing. The Group also helps its homebuyer public land for housing raised the minimum threshold from clients manage their homes in environmentally friendly 20% to 25% in areas that need extra social housing to be ways. At the same time, Nexity continues to examine built. This social obligation imposed on local authorities is economic solutions that may be put in place to facilitate and passed on to developers via urban planning authorisations. assist with access to housing for low-income populations.
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As such, since 2011, new social housing built by Nexity has Nexity’s business in reduced-rate VAT zones exceeded the 20% threshold laid down in the Solidarity and Back in 2005, Nexity resolved to assist local authorities 1 Urban Regeneration Act (23% in 2019, or with development projects for neighbourhoods that had 5,037 reservations). been targeted for urban regeneration by the ANRU Reservations by PERL with Individual Clients are mostly (the French national urban regeneration agency) and their “purposed” for social housing. Taking into account PERL immediate vicinity. These urban projects aim to make reservations, the portion of social housing in Nexity’s output target neighbourhoods attractive again. The application of would be 27%. reduced-rate VAT supports these projects by making it Beyond this legal obligation, since 2005 Nexity has made easier for homeowners to move house and increasing the the strategic decision to meet social housing operators’ solvency of lower-income households. Since the needs in terms of urban planning, social cohesion and introduction of the reduced-rate VAT in ANRU urban sustainable development. In order to make more homes regeneration zones, and its extension to priority urban accessible to lower-income households in France, the Group planning districts (called QPV in French) in January 2015, is committed to increasing the number of homes targeted the Group has conducted numerous operations under the to social housing operators, investors that use an reduced-rate VAT scheme, amounting to 4,189 homes in intermediate or low-income rental housing loan to finance 2019, representing 19% of its new home reservations. their investment and buyers eligible for an interest-free or A detailed description of the system is presented in the low-income home loan. This strategy of diversifying toward Section “Financial and tax arrangements intended to favour social housing operators and institutional investors aims to first-time buyers” included in this chapter. provide each social housing operator with the most suitable The QPVs have replaced the ZUS category of disadvantaged solutions, notably by offering off-plan (VEFA) sales urban districts. In all, 1,300 QPVs (plus the 300-metre contracts for homes that meet criteria relating to radius around them) benefit from new-build developments geographic location, price and environmental standards. for low-income homebuyers at the reduced VAT rate of For example, Nexity is committed to housing 5.5%, as opposed to the fewer than 500 neighbourhoods disadvantaged people through Nexity Non Profit, which was (plus the 300-metre radius around them) heretofore created in 2018, in particular by building family shelters, targeted by the ANRU. friendly human size places where people suffering from Some 700 French municipalities (communes) contain QPVs, isolation and who encounter difficulties in living in a located within about 300 urban, peri-urban and other traditional dwelling can live indefinitely. intermunicipalities (communautés). They are covered by This structure is developing three types of offer with its intermunicipal urban planning agreements. national partners (Fondation Abbé Pierre, Habitat & Humanisme, Groupe SOS, Aurore, Emmaüs Solidarités, Cités Intermediate rental housing du Secours Catholique, FAS, UNAFO, FAPIL, SOLIHA, etc.): While confirming the importance of developing social • Supportive family housing solutions, in partnership with housing, the government, in its Ordinance No. 2014-159 of a social landlord and a non-profit organisation in charge 20 February 2014, developed a new form of housing, of property rental management. Nexity has undertaken intermediate rental housing. to create 1,000 places in family shelters per year over Accordingly, since 1 January 2014, two new tax advantages the next three years, at a steady rate, which is have been introduced to stimulate intermediate rental equivalent to half of the French State’s commitment in housing, exclusively offered to non-individual buyers this domain. These supportive family housing initiatives (legal entities), all of whose shares or units are held by will not generate any profit for Nexity. In 2019, a first other legal entities subject to corporate income tax, as well family housing development was delivered in La Ciotat. as social housing operators and their specialised It comprises 18 studio flats with fitted kitchen and subsidiaries, or buyers belonging to the Action Logement bathroom in a residence of first-time buyers homes and network (agencies collecting contributions to 1% Logement a child minders’ house. A configuration which is faithful and their specialised subsidiaries): to Nexity’s intention to promote social diversity in its • VAT at the reduced rate of 10%; and projects. In 2019, 10 building permits for 253 homes were filed; • A property tax exemption for built assets for the duration of building ownership, not to exceed 20 years. • Management of vacant housing units via the implementation of social leases. In 2019, 36 solidarity SNI (a subsidiary of Caisse des Dépôts and founder of the leases were signed permitting accommodation for just first French Intermediate Housing Fund (Fonds de logement over 100 people; and intermédiaire – FLI), tasked by the French government to acquire 30,000 to 35,000 intermediate rental housing units • Emergency housing: several temporary solutions will be by the end of 2019), signed a framework protocol with set up in 2020. Nexity in December 2014, subsequently revised in October 2018. This agreement now provides for an annual volume of 5,000 intermediate housing reservations and 3,000 social housing units for a period of three years, versus 800 to 1,100 intermediate rental housing units per year under the previous agreement (see Section 1.8 “Material contracts” of this chapter). Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 33 1 INTRODUCTION OF THE GROUP Individual Clients
In 2017, a number of new market players and investors The Group is also working to expand the range of solutions entered the intermediate housing sector. On offered to professional landlords (social housing operators 23 January 2018, Action Logement announced its plans to and other professional investors): senior independent living acquire 100,000 intermediate housing units in France facilities, multigenerational social senior residences, between now and 2025 intended for middle-income social-purpose apartment hotels and career starters’ workers and households, including 80,000 in the Paris residences. region via its subsidiary in’li. A framework protocol was signed with Nexity in October 2018 for 3,000 intermediate Geographical breakdown of new home reservations housing units over a period of three years (see Section 1.8 The number of new home reservations recorded by the “Material contracts” of this chapter). Group outside the Paris region amounted to 13,503 units in In 2019, Nexity recorded 1,078 intermediate rental housing 2019 (62% of the total). The Group also continued to reservations. capitalise on its historically strong position in the Paris region, representing 38% of the reservations booked in Other residential bulk sales 2019 (versus an average of 35% between 2008 and 2018). As well as reservations with social housing operators or for The Group stepped up its development in the most intermediate rental housing, Nexity also makes bulk sales supply-constrained areas (Abis, A and B1 zones), which to institutional investors (such as banks, insurers and asset accounted for 86% of its reservations, stabilising at a high managers). In 2019, these reservations accounted for 22% level. of the Group’s bulk sales (versus 21% in 2018), i.e. 1,755 reservations, notably in serviced residences. Business potential The following chart shows Nexity’s business potential1 for new homes over the past ten years.
Change in business potential for new homes (in units) (excluding international, including Ægide from 1 July 2018) 2.5 YEARS OF BUSINESS ACTIVITY +3%
55,354 53,602
47,560
41,813 41% 44%
34,453
23,941 24,832 22,824 23,143 23,100 21,285 28% 19,057
56% 59%
72%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Rest of France Paris region
At 31 December 2019, the business potential totalled almost €11 billion in potential consolidated revenue net of tax, i.e. 3.7 years of potential revenue (over a rolling 12-month period).
1 Represents the total volume of potential business at any given moment (expressed as a number of homes and/or revenue excluding VAT) for future projects in Residential Real Estate (New homes, Subdivisions and International) approved in Committee, in all structuring phases; the business potential includes the current supply for sale; the future offer corresponds to project phases not yet marketed on purchased land, and projects not yet launched associated with land secured under options.
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Project procedures and risk management Approval of projects by the Commitments Committee The process of developing a new residential programme Each site for which a purchase contract is expected to be 1 generally involves a number of steps: land selection, signed (or if a contract has already been signed, a financial signature of the land contracts, validation of the project by commitment is to be given) is submitted to the Group’s the Commitments Committee (described below), permit Commitments Committee. request, marketing, land acquisition (after validation by the Approval for small projects is given by a Commitments Acquisition Committee), building start, construction and Sub-Committee, composed of Residential Real Estate delivery. Each programme is monitored by the relevant local general management, as well as the Managing Director of subsidiary, the Commitments Committee and the Group’s the relevant subsidiary, and possibly others working on the Financial, Legal and Management Control Teams. project; approval for the biggest projects is given by the Land selection Group Commitments Committee, on which the Nexity Each subsidiary undertakes its own search for land and its Executive Management has a mandatory seat. own feasibility studies. This approach enables the Group to The Committees meet whenever necessary, including any benefit from the subsidiary’s experience in its local market, time the programme planned for a given site is changed in its knowledge of the area and its speed of execution. a significant way. Implementation of the Commitments The Group’s subsidiaries use customary methods of Committees’ decisions is followed up by the Group’s Legal searching for available land, including real estate register and Financial Teams. searches; systematic searches in communities; contacts The Commitments Committees make their decisions on the with local service providers such as subcontractors, basis of a review of the engagement file, which includes the suppliers, real estate agencies, notaries, architects and land description of the site, a market study, a feasibility study, surveyors; and networking. a projection of the potential costs and benefits of the Construction feasibility and the project’s potential profitability project, a legal risk assessment and the verification of the are essential criteria. The Group does not have a minimum effective application of sustainable development criteria. size requirement and instead focuses primarily on a For the project to be considered acceptable by the provisional budget prepared by the relevant subsidiary, which Commitments Committee, the project’s provisional budget, is based on a planned programme of new homes or plots. supported by internal and external market studies, generally Except when special opportunities arise, the Group’s must, among other things, forecast a minimum net margin Residential Real Estate strategy does not include buying land and a rate of return on invested funds in line with the to create a real estate portfolio or as a speculative investment. objectives set by Group Management. A legal analysis and environmental report are submitted for each project which Land contracts is presented to the Commitments Committee. After the Group has found a site, it signs an agreement with The procedure is the same for the Land Acquisitions the owner of the land, generally a purchase contract subject Committees. to conditions precedent. Except for some marginal cases, the Group’s commitment to buy is conditioned upon These procedures apply to all the development subsidiaries obtaining necessary permits for the realisation of the project as well as the service activities. (building permits, demolition permits and/or subdivision Permit requests permits) and the expiry of the period during which such Once the purchase option has been signed, the subsidiary in permits may be challenged by a third party or rescinded. charge of the project requests a building permit from the It is also subject to conditions regarding the nature of the local authorities in whose jurisdiction the site is located. soil and the presence of pollution or installations such as This request is examined by the local government’s those classified under the French Environment Code as planning department and is closely monitored by the requiring environmental impact assessment. Prior to the subsidiary. The examination often takes longer than the acquisition of any land or buildings, the Group generally legal examination period, which is three to five months. commissions specialised firms to study soil and subsoil Once a permit is issued, the Group must observe a waiting quality and pollution levels along with the history of the period of three months before starting construction. site, and, in buildings to be renovated or restructured, to test This includes the period during which third parties, such as for asbestos. When soil samples indicate the possible associations or local residents, may contest the permit on presence of pollutants, the Group’s obligation is also the grounds that it does not comply with local urban conditional upon environmental evaluations and, where planning laws, zoning plans (ZAC, etc.) or the Town necessary, site rehabilitation measures. Planning Code (two months and fifteen days from the Draft purchase options subject to conditions precedent posting of the permit at the mayor’s office and at the must be validated by the in-house legal counsel assigned to building site). This waiting period also covers the time the subsidiary before being signed. Under certain during which the State’s local representative (préfet) can circumstances, a purchase contract may be signed prior to challenge the legality of the permit, which runs from the approval by the Commitments Committee (described date the préfecture (subregional administrative authority) below), but no financial commitment (often including a received the decision granting the permit. In addition, bank guarantee) may be provided without the this three-month period covers the time during which the Commitments Committee’s prior approval. Generally, such permit may be rescinded by the granting authority financial commitment must be provided in the month (usually the mayor), who must do so no later than three following the signing of the contract, failing which the months after the date of issuance of the permit. contract is cancelled. Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 35 1 INTRODUCTION OF THE GROUP Individual Clients
Financing plan Once the building or subdivision permit has been obtained, The subsidiary verifies the financial soundness of the Nexity’s Finance and Management Control Teams approve a subcontractors and suppliers it hires and their financial financing plan prepared by the subsidiary. This financing plan ability to perform their obligations (in light of the includes an estimate of the marketing costs and an update of subcontractor or supplier’s size in relation to the project). the data in the engagement file, with such information The subsidiary also ensures that these companies’ liability constituting the reference budget for the project. is covered by the appropriate insurance and that they The Group has authorised and unused "corporate" credit comply with applicable employment laws. Contracts signed facilities of €555 million to finance and guarantee its real with subcontractors and suppliers include construction estate development programmes. If appropriate, the Group schedules and late delivery penalties as well as a legal can assemble programme-specific bank financing, withholding equal to 5% of the contract amount, the amount of which is set according to the project’s cash sometimes replaced with a guarantee by bond, which is flow plan (see Section 5.1.6.3 “Financial structure” of this released one year after completion of the work. Universal Registration Document). The Group can also In order to obtain a reliable estimate of the costs of a finance the programme in part or in whole via its available project, the subsidiary sometimes negotiates with technical cash. service providers and subcontractors prior to the final Suppliers and subcontractors acquisition of a plot of land (without making any financial commitment). The subsidiary generally selects its suppliers and subcontractors through competitive bidding among Budget monitoring different companies that separately bid for various parts of The budget for each project is monitored by the relevant the project. subsidiary and by the Group’s Management Control Teams. The Group does not have any exclusivity policies with This monitoring includes: specific subcontractors or suppliers. However, it forges • Systematic updating of each budget item as work special relationships with certain suppliers and contracts are signed or expenses committed; subcontractors that satisfy its qualitative and financial • A monthly report on the rate at which homes in the criteria and the Group consults them regularly for bids. project are being absorbed into the market, including a In 2019, the Residential Real Estate division’s leading review of the status of reservations and the supplier accounted for €35 million, representing 2.3% of appropriateness of the price scale; and the total costs, while the top ten suppliers accounted for a total of €219 million, representing 14.3% of the total costs • A quarterly review of the budget by the Management (including VAT). Control Teams. A Group supplier selection and approval policy enables better Sales and construction control of the price and quality of certain products such as Each market launch is signed off by the Commitments lifts, bathroom components, tiles, partitions and doors. Committee after reviewing the adjusted commitment budget. Subsequently, any proposed acquisition of land is The subsidiary decides whether to use specialised service examined by an Acquisition Committee based on that providers. During the preparation of the project, the budget and the success of marketing operations. subsidiary may hire one or more bureaux d’études (specialised engineering firms) to provide technical advice The average size of a new-built residential development is and to assist with technical recommendations, plans and the around 70 homes. selection of subcontractors. Certain technical studies may Generally, before construction can begin, the Group requires also be required by insurance companies for the arrangement that at least 40% of the value or number of homes in the of building damage (Dommages-Ouvrage) insurance. relevant project or project stage be reserved. In addition to A general contractor can also be involved in overseeing the the percentage of housing reserved, the Group also checks work, even though most of the subsidiaries have the on the status of the buyers’ loans. However, the progress of necessary resources and expertise to oversee all or part of the the marketing of each programme (including the type of construction work. The subsidiary selects an architect from homes reserved in light of those still remaining in the outside the Group to design the programme through a programme) is considered on an individual basis before competitive bidding process or a private agreement. construction begins. Accordingly, the average rate of The subsidiary considers technical skills, financial terms, successful pre-selling that the Group recorded before organisation and quality of prior work, particularly that carried beginning construction of new homes was 73% in 2019 out for Nexity, in choosing its specialised service providers. (69% in 2018 and 78% in 2017). In all cases, construction starts for each project are subject to formal approval by the Regional Director, the Management Committee member responsible for the subsidiary.
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Construction work is monitored by the Group’s engineers Client assistance during the marketing process and technicians and/or by a general contractor hired by the The Group accompanies its clients throughout the process 1 subsidiary. Inspections of the work are carried out regularly of buying a new home, from the first phone call or online by either the subsidiary’s field supervisors or an external contact to the appointment with one of its subsidiary’s general contractor. commercial consultants, up to the final delivery of the Whenever possible, the Group’s residential programmes are home. Each of its subsidiaries’ commercial consultant is divided into stages. Dividing the residential programmes into able to assist clients in assessing their purchasing power, stages provides increased security by permitting work to preparing a financing plan and, for buy-to-let investments, commence on the second and subsequent stages depending if needed, performing a simulation of the tax treatment of on the rate at which homes are absorbed into the market. their investment with assistance from Group experts. Delivery of homes in stages also provides greater flexibility This analysis allows the Group to check each buyer’s because it enables the Group to vary the types of apartments financial resources and thereby limit the risks of the or houses to be produced in the programme, depending on reservation lapsing due to a failure to meet the condition reservations already made. Upon a decision to make such a precedent of obtaining financing. change, the Group files a request for the corresponding The Group’s salespeople are encouraged to complete its amended building permit and the Commitments Committee degree-bearing sales training programme. This programme reviews the project. ensures the consistent quality and expertise of the Group’s Delivery sales force. The definitive sales contract signed with the buyer sets The Group considers its client assistance programme to be forth the calendar quarter during which the new home is to one of its key assets. As part of its Question Immo be delivered to the buyer. The definitive sales contract programme, the Group provides its clients with a real estate generally provides that the delivery date may be extended information and assistance service, in person or via the due to force majeure or a legitimate cause for delay. Once Nexity internet site, which also offers the option of construction is completed, the home is delivered to the modelling the financial implications of a planned property buyer, who is required to have paid 95% of the price of the purchase, including notary fees, loans and insurance. home by completion of construction and 100% by the time Through its brokerage and loan activity, the Group also the keys are handed over. Nexity has a policy of not offers a selection of financial solutions suitable to its clients handing over the keys to a home if the buyer has not paid buying new homes. the remaining balance of the purchase price (see Section 1.2.2.1 “Legal and financial framework of real Nexity pays particular attention to client satisfaction. estate development in France” of this chapter for a Efforts are focusing on the quality of services offered to description of the schedule of payments). clients in order to increase client satisfaction. To achieve this, Nexity created a single Client Satisfaction Department When the keys are handed over, a report is prepared to for all the Individual Clients business lines at the end of indicate that the buyer has performed a formal inspection of 2018. Each business line now has tools, reporting and the home and verified that it conforms to the sales contract. management methods to help them improve the client The work and management of the Production and Delivery relationship (see Section 3.4.3.1 “Improving transparency Quality Department help improve control over delivery and client relationships” in Chapter 3 of this Universal deadlines as well as finishing quality on projects Registration Document). (by managing the number of defects on delivery). Warranties given by the Group After-sales service For sales of new homes under the VEFA system, the Group The Group provides buyers with after-sales service for two is required by law to provide certain warranties for the years following delivery of the home. The purpose of this benefit of its clients: service, which is provided by the Group’s subsidiaries and which was created at the request of its insurers, is to • A warranty against visible defects (garantie des vices provide buyers with high-quality client service, avoid apparents), covering visible construction defects increases in insurance premiums and minimise insurance reported by the buyer within one month of the buyer’s claims by managing the warranties provided with the taking possession of the home; purchase of a home. When a client claims a defect (whether • A perfect completion warranty (garantie de parfait during inspection of the home at delivery or later) covered achèvement) covering all problems or faults relating to by the one-year perfect completion warranty or the non-conformity of the home to the description given at two-year proper operation warranty, the Group’s after-sales the time of sale (valid for one year from date of delivery); service team handles the claim, coordinates any work to be A proper operation warranty (garantie de bon done with the relevant subcontractors (who are also bound • fonctionnement) covering malfunctions of items of by the warranties) and, where appropriate, contacts the equipment separate from the construction itself, insurance companies (see Section 2.1.2.3 “Insurance” valid for two years from date of delivery; and of this Universal Registration Document).
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• A ten-year warranty (garantie décennale) covering The Group also ensures that the insurance of the problems that involve the solidity of the construction’s subcontractors it hires adequately covers its respective structure or the suitability of the structure for its obligations under the proper operation and ten-year intended purpose (valid for ten years from date of warranties, and that their insurance premiums are paid. delivery). Lastly, on behalf of its buyers and in accordance with the For Residential Real Estate, the Group systematically law, the Group provides a financial completion guarantee obtains the mandatory insurance, including building backed by leading banks or insurers, thus ensuring the damage (Dommages-Ouvrage) insurance, to cover its proper completion of all construction operations. commitments under the proper operation and ten-year warranties (see Section 2.1.2.3 “Insurance” of this Universal Registration Document).
1.2.2.3 Site development and subdivisions The Site development and subdivisions business develops In 2019, the Site development and subdivisions business and subdivides sites, rendering the land suitable for recorded 2,088 reservations. construction and dividing the land into plots. The Group At 31 December 2019, the potential of the Subdivisions sells the plots primarily to private individuals who then business totalled 14,500 units and represented potential have their own houses built on the plots, as well as revenue of €1.2 billion. occasionally to residential real estate developers who then develop groups of houses or apartments on the land. In December 2019, Nexity signed a partnership with the non-profit organisation Humanité & Biodiversité for In most cases, the Group assembles a development site protecting biodiversity with the goal by 2050 of “zero net from multiple plots of land belonging to different owners. It land take”. A commitment which will see Nexity audit its renders land suitable for construction with facilities own land take imprint and then develop an action plan to improvements such as surface water drainage, sewage limit its future impact in this domain. connections, water, electricity, telecommunications, private roadways, parks and gardens. On average, there are around Particularities of subdivision projects 30 plots per development. This activity gives the Group an The Group’s subdivision projects involve processes and indirect presence on the individual house building market, procedures similar to those of its residential projects. which is a major sector of the French real estate market. The land search process and the process for buying land are The Group’s new home development business and its carried out in the same way: they must meet the same subdivisions business have a number of similarities with criteria for permits and generation of margins and are respect to the search for suitable land and the types of reviewed by the Group’s Commitments Committee and clients served. management control teams. For local authorities, the Site development and subdivisions French law provides that reservation contracts for subsidiary develops neighbourhoods designed to meet subdivision plots, which generally take the form of a economic, social and environmental challenges. Apart from unilateral promise of sale between the Group and the assessing and controlling environmental consequences on buyer, may be signed only after the subdivision permit has soil, rainwater, traffic, urban landscapes and biodiversity, the been obtained. This purchase option is followed by a sale development of these residential districts also focuses on: contract, pursuant to which the Group transfers ownership • Building energy performance (BBC-Effinergie® of the land and undertakes to complete all work (with the certification, HQE® approach, etc.); Group’s undertaking backed by a bank guarantee). • A bioclimatic approach to district planning in which Client assistance during the marketing process buildings use passive solar energy; Clients of the Group’s subdivisions business have access to • Social diversity; professional advisors, a dedicated website and a free phone number. The Group’s advisors assist clients in determining • The possibility for low-income households to purchase the best layout and integration of their projects on the land houses and land; and they are considering buying, and in establishing a financing • Controlled management of traffic. plan and schedule for the work to be performed. Advisors The subsidiary also raises awareness of its environmental also provide information on clients’ rights and the approach among its Individual Clients, elected officials and construction process. service providers. This commitment is in line with the planning priorities of the Grenelle environmental round table and meets the requirements of the ISO 14001 standard, which systematically provides procedures for coordination in projects taking place in ZAC areas.
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Warranties given by the Group For its subdivision programmes, the Group also provides its In addition, the Group obtains insurance covering its civil 1 clients with a financial warranty covering work not yet liability for ten years (as of delivery date) for any defects that performed, which is mandatory for the signature of the final may compromise the structure’s solidity or render the work or sales contract. equipment unsuitable for its intended use (see Section 2.1.2.3 “Insurance” of this Universal Registration Document).
1.2.2.4 International Outside France, the Group is present in the segment of new International business potential at the end of 2019 totalled home development in Italy, Poland, Belgium and, since over 5,100 units representing potential revenue of 2019, Portugal. €0.6 billion. In Italy, developments in the marketing phase were mostly Furthermore, on 9 March 2020, Nexity announced that it located in the Milan and Turin regions. In 2019, had acquired 65% of the capital of Pantera AG, a German 81 reservations were recorded and the business potential real estate developer, and is planning to develop its totalled 270 units, representing potential revenue of services platform in Germany through this company €101 million. (see Section 5.2.2.1 “Acquisition of Pantera AG” of this In Poland, there were 560 new home reservations in 2019, Universal Registration Document). mainly in Warsaw, and prospects for development in other Particularities of residential projects outside Polish cities. The business potential amounted to France 4,852 units, representing potential revenue of €483 million. Residential developments outside France can differ in In 2019, land for two plots was acquired in Portugal, certain respects from residential developments in France. In in Lisbon and Porto, representing almost 400 units. particular, land may be purchased before the required final Project procedures and sales terms are adapted to each building permits have been obtained, and ownership may country’s legal, regulatory and marketing constraints not be transferred until construction is complete, leading to (including administrative authorisations to be obtained, the a higher working capital requirement. The development and process of selling to buyers and guarantees granted). marketing process for these projects is adapted to the legal and economic particularities of each country, and care is taken to maintain a consistent level of risk management within the local context.
1.2.2.5 Operational organisation of the Residential Real Estate division The organisation of the Residential Real Estate division is At 31 December 2019 there were 2,428 employees working based on a strategy of permanent local establishments, in Residential Real Estate. 87 people were dedicated to either subsidiaries (majority or minority owned) or agencies international business, with 55 in Poland, 16 in Italy and 9 run by professionals who are generally local, such as in Portugal. Edouard Denis with its 19 regional divisions and In France, the Residential Real Estate division’s territory is 440 employees. divided into various regional departments in addition to Nexity’s multi-product and multi-brand strategy enables it national ones (including Créateur de Quartiers, Immobilier to identify the purchasing preferences and trends in the Patrimonial, the Site development and subdivisions regions where it is established and to familiarise itself with business and Conseil & Patrimoine). the procedures for obtaining the administrative permits The Group’s Residential Real Estate division is made up of a required for a new housing or subdivision project. By giving holding company (Nexity Logement), operating subsidiaries its operating subsidiaries significant autonomy in their (nominal partnerships called sociétés de moyens marketing and technical approaches to land searches and corresponding to the regional and national departments team management, while maintaining centralised described above), a joint company (George V Gestion) that Group-level control over legal and financial risks as well as provides management and supervisory services to the over the allocation of Group resources (including equity, operating subsidiaries and programme-specific vehicles that credit facilities, human resources, information technology are established for each residential programme, in the form of resources and management resources), the Group can either multi-programme companies having the status of provide the subsidiaries with high-quality resources and simplified public limited companies (SAS or sociétés par allows staff at subsidiaries and agencies to focus on their actions simplifiées), special-purpose real estate companies specialities. Nexity’s Residential Real Estate division has a (SCI or sociétés civiles immobilières), or partnerships (SNC or presence in France’s main metropolitan areas. sociétés en nom collectif), generally 100% owned by the Group. For subdivisions, the resources of the Site development and subdivisions business as well as the work on the projects themselves, with rare exceptions, are managed by a single company (which has local agencies instead of regional subsidiaries).
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The Group’s operating subsidiaries or agencies are • With these products, Nexity aims to encourage home responsible for the entire real estate project and are staffed ownership through very competitive selling prices by specialists. Specific service companies common to the (as much as 15-20% lower than market prices) while entire Group may also assist its operating subsidiaries by meeting the most stringent demands for comfort, setting up specialised operations or providing marketing or to improve the quality of delivery and to shorten technical assistance. delivery timescales, in accordance with a In addition, some projects may be co-developed with high-performance environmental approach (FSC or PEFC partners that operate locally or nationwide through Nexity accreditation, a preference for materials sourced from Partners, whereby the various technical and management France, the hygroscopic properties of wood, etc.); responsibilities involved in the projects are divided among • The Procurement and Services team selects and the co-developers. Of the 418 projects under construction catalogues building fixtures and designs ranges of at the end of 2019, 65 involved co-development services for new homes. As such, part of its work is to arrangements. centralise procurement. This approach aims to optimise The Group’s project portfolio includes developments the cost and quality of procurement and propose currently being sold to clients, as well as its land portfolio, services suited to the various target categories of clients which consists of “secured” land that it has the right to while lowering construction costs; purchase under contracts or options. This portfolio, which • Nexity’s in-house multidisciplinary design office, Nexity gives the Group a certain degree of visibility regarding its Ingénierie, dedicated to all the Group’s Residential Real future business, is comprised of the number of new homes Estate businesses (whatever a building’s destination), and plots it could produce if all of its potential programmes carries out project management (design and execution (ongoing programmes and projects planned on secured at competitive prices); and land) were realised. For a description of the land search • The Tools and Processes unit constitutes an operational process and the process of buying land, see Section 1.2.2.2 centre of excellence that designs and consolidates best “Project procedures and risk management” of this chapter. practice and develops and distributes shared tools, Controlling construction costs notably via the technical academy (an in-house construction project management training programme). The Production and Cost Control Department is a The various training modules offered by the technical cross-functional department that helps operational teams academy are designed to provide complete training to reduce costs through optimisation in the following areas: each member of technical staff in a maximum of • The Access Design and Other Construction Methods 36 months. team develops innovative construction methods aimed The average cost of building a classic residential property at offering clients controlled-price homes and provides varies according to its geographical location: in 2019, them to regional development teams; €1,509 per square metre of living space (SHAB) on average • The whole of the available range is based on industrialised in the Paris region (excluding Paris) and €1,205 per square construction processes that make substantial use of wood. metre of SHAB on average outside of Paris (compared to Apart from the Access Design product, other new offerings €1,421 per square metre of SHAB and €1,181 per square were developed in 2015: intergenerational residences, metre of SHAB respectively in 2018). houses and student residences; Project costs The following table presents the distribution of the average cost of projects by type of cost for projects delivered during the 2017-2019 period:
(as% of total cost) 2019 2018 2017 Land costs 21.3 22.3 21.2 Roads & miscellaneous infrastructure (land development) 4.0 4.4 3.9 Construction work 51.5 50.1 50.9 Fees and insurance (1) 15.2 15.1 15.5 Financial expense 0.9 1.1 0.9 Marketing and advertising (1) 7.1 7.0 7.6 TOTAL 100.0 100.0 100.0
(1) Including intra-Group fees, which are generally around 10% of the total. For a description of the financing arrangements for the Group’s programmes, see Section 5.1.6.3 “Financial structure” of this Universal Registration Document.
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Marketing methods The Group’s subsidiaries generally market their Subsidiaries use the customary industry methods to market 1 developments using their own personnel, and if homes: sales offices, point-of-sale (POS), advertising, appropriate, involve real estate agencies. For certain billboards, press and trade shows. They also increasingly products, particularly those targeted to individual investors, use digital channels, including a website, accessible directly marketing is done by special centralised sales forces, and through links on the most visited real estate web independent asset advisors or iSelection. portals and search engines, and a centralised appointment system that allows the Group to provide potential clients with initial guidance before directing them to its subsidiaries. Lastly, Nexity is moving towards designing and producing fully digital launches.
1.2.3 Serviced residences
Nexity is a major player in France’s serviced residence • Senior independent living facilities: Nexity offers under market: the Domitys brand an appropriate response to • Student residences: under the Studéa brand, Nexity independent seniors’ need for housing by operating offers solutions meeting the specific requirements of residences and paying rental income to investor-owners students and career starters while managing residences (individual or institutional) in cases of long-term leases. and providing rental income to investor-owners under At the end of 2019, a total of 224 student and senior long-term leases; and residences were under management, representing nearly 27,100 housing units managed.
1.2.3.1 Overview of the market and competitive environment Student residences • International clientele: it creates direct demand, due to The student residence market is highly dynamic, due to a the mandatory move away from the parents’ home and number of factors. They include the significant growth of to specific needs in terms of access to housing; and the student population (up 1.7% on average between 2018 • An increase in institutional and private investments to and 2020), the students’ strong drive to leave the family diversify portfolios and capitalise on an asset class that home, heavy rental pressure on the stock of private studio performs well and shows resilience in an economic apartments in major French cities and an increasingly downturn. international market due to the growing mobility of A change in students’ housing needs and expectations in students. terms of client experience is also to be noted. This concerns Furthermore, the stock of student residences posts a flexibility, convenience, ease of access and central living positive development rate, but which proves insufficient to quarters (closer to the city centre, or near public transport for meet student demand. Difficult development due to the easier access to the campus and the city centre). rarity of quality plots near student hubs. In student In the specific market for student residence management, residences, the occupancy rates are thus generally above 1 under the Studéa brand, the Group is France’s leading 90%, with a highly positive market potential . private operator of managed student residences, with a Student housing is a growth market buoyed by a growing market share of 14.9%, ahead of the Réside Études drive to leave the parents’ home, and motivated by the (les Estudines), Appart’City, Club Étudiant O.S.E., and choice of a selective education programme and the growth Studélites Résidences BNP Paribas groups1. in the number of international students in France, who, New French and international players with a relatively according to latest studies, totalled more than 320,000 in small market share are emerging: 2018. • French players with mid-range offerings, such as Kley Today, the student real estate market seems to be affected (investor-manager), Student Factory by Vinci by three trends: (developer-operator), Opener by Quartus • Ongoing real estate development: the size of the stock (developer-operator), Whôo from the Legendre Group, of student residences does not match that of the whose distinctive features are large-size offerings student population in certain under-equipped or focused on client experience and principles of common high-growth regions (e.g. Toulouse); spaces; however, they are located outside city centres and are accessible from campuses; and
1 Source: XERFI survey, Les résidences étudiantes, September 2017.
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• International players intent on developing premium Life expectancy at birth is also rising, with 79.5 years for men large-capacity offerings to meet the needs of the and 85.3 years for women in 2017, and 84 years for men and international clientele and providing greater flexibility, 91 years for women by 2050. The central scenario for a broader range of services and mixed use in places such population forecasts suggest that life expectancy at birth in as The Student Hotel and Chapter. 2070 could be 93 years for women and 90 years for men. On average, life expectancy increases by 1.5 years every Studéa is continuing to respond to students’ expectations 1 via an innovation plan covering both new openings and the 10 years for women, and by 2 years for men . current park (renovation of housing units and common Women represent 53% of the population aged 65, 63% of areas in progress). the population aged 85, 77% of the population aged 95 Student residences offer numerous services: and 84% of the population over 100. The gap in the difference in life expectancy between men and women has • Digital services: internal application and dynamic narrowed since the mid-1990s. This is mainly due to an screen in the hall; acceleration in the increase in male life expectancy. • Social events: theme parties, cooking workshops, From the central scenario for population forecasts, in 2070, sports courses, etc.; the gap will only be 2.9 years at birth and 2.5 years at 652. • Civic action courses: DIY workshops, first-aid Starting in 2025, the number of people aged 75 to 84, courses, etc.; the core target of serviced senior residences, will increase tenfold due to the ageing of the baby boomer3 generation. • Psychological support; Moreover, it is estimated that one quarter of people over Local services with local players; and • the age of 75 live in housing that is ill-suited or unsuited to • Alternate mobility solutions. their degree of self-sufficiency. A new real estate product is emerging in the form of a Public opinion concerning senior residences is changing co-living residence intended for young workers, people on significantly. Nearly one person in two envisages moving to short stays, travellers or creators of startups. This is a a serviced senior residence when they retire and 83% of the residence with a purpose-specific design, offering numerous French population have a good opinion4 of them. services and common spaces and access to a lively, caring In 2019, there were 760 senior residences in France, community. Nexity is a partner of Urban Campus, which runs i.e. almost 60,000 housing units. Domitys is the undeniable two co-living residences, two coworking spaces and one leader in the sector with a market share of 20.4%. Domitys foodlab in Madrid. is ahead of five major competitors with a market share of Senior residences over 5%. This concerns Senioriales, Girandières, Villages d’Or, Jardins d’Arcadie and Hespérides. The latest studies show that there are 17.5 million people aged over 60 in France, i.e. one in four people (26.1%). Domitys’ acceleration translates into higher growth than the market: +14% in 2018 compared to +12% for the market. The largest category is seniors aged 65 to 74. They represent Domitys also has a stronger contribution in the regions when 10% of the total population whilst the 75 to 84 age bracket we consider average residence size. Each Domitys residence represents 6% and people over 85 represent 3%. It is has 25% more units than its competitors. Domitys’ senior forecasted that there will be 22.3 million people aged over residences contribute to increasing the density of the local 60 in 2050, i.e. one in three people1. residential offering for independent seniors5. The ageing rate during the next 50 years should be the Domitys is the undisputed leader in serviced senior same as the rate for the last 50 years: the portion of seniors residences in France and is deeply involved in the creation multiplied by 1.5 in the last 50 years and should do so of the first quality label for this sector. Called VISEHA again between 2018 and 2070. In point of fact ageing (Vie Senior & Habitat), this initiative is based on 13 real accelerated from 2011, the year when the first baby estate and service criteria. VISEHA is a tool for organising boomer generation reached 652. the market and clarifying the offering in a context of the arrival of a large number of new players.
1 Source: INSEE. 2 Source: INSEE Références, édition 2018 – Éclairage – Les seniors de 1870 à 2070. 3 Source : Étude XERFI, Les résidences seniors, January 2018. 4 Source: IFOP survey for Synerpa, Grand âge et enjeux du vieillissement, April 2017. 5 Source: Domitys Observatoire de la concurrence, February 2019.
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1.2.3.2 Student residences 1 Nexity’s serviced student residences were created to meet the All the units within these serviced student residences are needs of students who must live in a city, either temporarily furnished flats (studios to 2-room flats) close to city centres or over the long term. These modern, furnished residences and/or educational institutions, offering services similar to make daily life easier for clients, allowing them to live and those provided in hotels (reception, housekeeping, work comfortably in apartments conveniently located close breakfast, household linen and crockery rental and social to campuses in France’s leading university cities. events), laundry, common and relaxation areas. For each new student residence, which the Group manages These residences are also intended for young workers. under the Nexity Studéa brand, the Group now commits to a The Group also operates outside France, with three student fixed ten-year term under a commercial lease agreement, as residences in Geneva and Lausanne. provided for by the Pinel Act. The Group thus leases each Four new student residences were opened in 2019 (three in property for ten years from its investor-owner, who receives 2018) representing 425 units. They were opened in Amiens guaranteed rental income over this entire period; it then (101 units), Malakoff (103 units), Toulouse (130 units) and becomes a lessor, sub-letting the furnished property to a Villeneuve d’Ascq (91 units). tenant found by the Group. However, residences that entered into operation before the implementation of the Pinel Decree At 31 December 2019, the portfolio of residences managed are not affected; their nine-year lease terms remain valid. by Nexity consisted of 124 residences representing almost Driven by the increasing demand for housing for the younger 15,400 units managed in France and Switzerland. population, Studéa student residences are a tailored and long-term response to a pressing societal issue in France.
1.2.3.3 Senior residences Housing demand for senior citizens is a societal challenge Domitys’ serviced senior residences generally comprise that cuts to the core of the current national debate on the 120 apartments (from studio to 2-bedroom apartments) demographic changes taking place. To meet the current of a surface area averaging 48 square metres, as well as and future housing expectations of senior citizens, 800 to 1,000 square metres of space dedicated to a Nexity proposes made-to-measure solutions that take into comprehensive range of services for residents. The service account each occupant’s level of autonomy and financial offering is structured around three pillars: comfort, safety resources. Bulk sales to institutional clients account for and conviviality. These services cover access to quality almost half of Nexity’s serviced senior residence business. catering (meals prepared on site with fresh products), In addition to selling to private investors, the Group is the possibility of engaging in regular physical activities developing “social” senior residences to meet the needs of (open-access sports hall and swimming pool, aqua-aerobics social housing landlords on this extremely promising or gentle exercise sessions) as well as numerous cultural, market. Such residences provide a solution to the problems social and sporting activities (over 50 activities available faced by the aging population, who often end up alone in each month at each residence). oversized, poorly insulated homes. At 31 December 2019, the Ægide-Domitys group had Senior independent living facilities 2,900 employees. In 2019, the Ægide-Domitys group launched the marketing of 20 programmes, representing Nexity has held 63.16% of Ægide-Domitys’ capital since approximately 2,350 housing units, including 9 being June 2018, with the balance being held by the three co-developed with Nexity, i.e. 1,050 housing units. founding directors. At 31 December 2019, Domitys operated 100 residences Founded in 1999, the Ægide-Domitys group develops a representing 11,700 housing units. concept of new-generation independent living residences for seniors (restaurant, housekeeping services, round-the-clock assistance, etc.). The group designs, develops and manages its residences. Their management is handled by Ægide’s wholly-owned subsidiary Domitys.
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100
83
72 42
59
52
41 36
25 58
15
2011 2012 2013 2014 2015 2016 2017 2018 2019
Residences opened more than 2 years ago Residences opened less than 2 years ago
Social residences for seniors and COMPLICITY® Nexity has developed COMPLICITY®, the multigenerational multigenerational residences residence since March 2018, in response to the demographic transition and re-creating living together. These residences combine private adapted housing units ® with many relaxation and leisure areas that enable fragile COMPLICITY is an “inclusive living” solution which provides seniors to live comfortably and independently. Mainly built social programmes in the residence to assist senior as rented and social housing, they guarantee access to a residents in tailored accommodation and residential large population including seniors, people with disabilities spaces, and to facilitate inter-relations and harmonious and younger working people eligible for social housing. co-living among all residents. There is a “social and shared This “inclusive living” concept (within the meaning of the living project” for every residence. This ambitious social ELAN Act of 23 November 2018) creates shared living spaces project, hailed by local elected officials, is the fruit of joint and provides an answer to the risk of isolation for seniors. development with the municipality, the social housing At the request of elected officials, social residences for operator, the condominium management agent (in the case seniors frequently incorporate an intergenerational of private-sector operations) and the social life coordinator. dimension, in which case they are known as In 2019, Nexity signed two partnership agreements to “multigenerational social residences”. Set within attractive promote this type of inclusive multigenerational housing green spaces and located close to amenities, these with the ADMR community network and the SOS-Seniors residences combine environmental performance with social Group, one of the eight members of the social economy and utility. solidarity Groupe SOS. As of today, COMPLICITY® totals 26 projects under way across France (i.e. around 2,100 housing units) and over 15 projects under development. The first deliveries are expected at the end of 2021.
1.2.3.4 Operational organisation of serviced residences At 31 December 2019, Studéa, had 254 employees and At 31 December 2019, Domitys managed 100 residences, managed 116 residences (representing nearly 14,400 units) including two in Belgium, for a total of 11,700 units. in France, spread across 50 cities. Outside France, In 2019, 17 residences opened, i.e. around 2,000 housing it operates three residences in Geneva and Lausanne units. At cruising speed, a Domitys residence employs (Switzerland), totalling about 450 units. around 20 to 22 full-time equivalent employees to ensure the residents’ well-being. In addition, the Group manages five senior independent living residences under the Edenéa brand name, representing nearly 300 units.
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1.2.4 Property management and intermediation 1 Nexity is a major player in the real estate services sector in • Its franchise network, Century 21, the leader in France France (and occasionally in Belgium and Poland) serving all after the sale of its majority interest in the Guy Hoquet client segments – individuals, family ownership groups, l’Immobilier network during the second half of 2019; institutional investors and companies – with activities in and the following areas: • Intermediation activities through PERL and iSelection. • Real Estate Services to Individuals, including all property PERL operates at a crossroads of societal interests: management services (condominium management, in housing through the production of social and rental management, sales and lettings), offered to intermediate housing, and retirement for French people Individual Clients (owner-occupiers, investors and by offering individuals an investment in bare ownership tenants), are provided throughout France thanks to the to constitute secure retirement income. iSelection’s coverage offered by its network of agencies. Nexity is activities are the selection and marketing of residential France’s second-largest provider of property real estate products enabling clients to save via real management services for individuals. In Europe, the estate assets. Its distribution network is built in Group is present in Belgium and Poland; particular on a partnership agreement signed with • Large corporations and private investors, to assist family regional banks in the Caisse d’Épargne network, Banque offices and institutional clients in the management and Populaire branches and a number of independent enhancement of their residential real estate assets by financial advisors. offering them a set of tailored real estate services, At the end of 2019, the Group’s Services activty managed as well as assistance in the unit sale of their assets; about 884,200 units (including 31,700 outside France), consisting of 174,700 under rental management and 709,500 under condominium management.
1.2.4.1 Overview of the market and competitive environment Property management and intermediation The real estate property management market includes In France’s residential market there are 6,443 property rental management for owners, condominium management management firms2. The revenue of property management and also brokerage (rental and property sales) activities. firms increased by 2.5% in 2019. This growth was notably In the French market for Real Estate Services to Individuals, due to the increase in the fees of managing agents and the one indicator used to measure activity is the number of robustness of the transactions market in older properties. existing home sales recorded. Transactions reached an For the past few years, the sector has been in an active all-time high in 2019 at over a million, 10% up on 20181. consolidation phase characterised by an increase in M&A The real estate services market is highly fragmented. activity and the emergence of major players, particularly in There are more than 50,000 companies active in the sector, condominium management services and rental property most of which are small, independent entities. But this management services, such as Foncia, Nexity/Oralia, fragmentation belies the existence of a number of franchise Groupe Arche/Citya/Laforêt/Guy Hoquet, Immo de France networks and groupings with a considerable market and Square Habitat. presence. In fact, it is estimated that between 20% and 25% With nearly 45,000 buildings under condominium of all real estate agencies are affiliated with these management and about 360,000 rental units under overarching structures, which account for over one third of management, Foncia is the leading individual property all revenue generated. Agents networks are continuing their management firm in France. Nexity ranks second in this growth beside traditional physical agencies (CapiFrance, sector, with 709,000 condominium units and I@D, etc.). In 2018, certain networks (Keller Williams and 175,000 rental units under management. Keymex) continued their development in France, returning The sector has also been affected in recent years by the to the initial model of the agency-free network, with increase in digital and the continuous emergence of new independent advisors and the deployment of large business players in response to the changing needs and habits of centres. In 2018, Digit RE (CapiFrance, OptimHome and consuming real estate services: the penetration of online Refleximmo) was acquired by the investment company LFPI. managing agents especially for small condominiums, online rental management services and digital self-management tools. To counter this offensive, historical property management firms are supplementing and enriching their services with digital tools.
1 Source: Note de conjoncture immobilière n° 48, published on 28 February 2019. 2 Source : Étude XERFI, Les armes des administrateurs de biens face aux bouleversements réglementaires, December 2019.
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Market players are looking to set themselves apart from the Intermediation activities competition by developing activities in related areas (estate The distribution market, especially the rental property planning, asset management, insurance brokerage, etc.) and investment market, consists of many players, developers by becoming comprehensive providers of services like and platforms in relation with developers, subsidiaries of Foncia, which offers to put its clients in touch with banking groups, or asset management advice companies. professionals for cleaning, maintenance and home improvement, gardening, car rental and ride sharing services. The business of the Nexity subsidiary iSelection is to select and market residential units as buy-to-let investment Real estate agencies offer brokerage, advisory and appraisal products for Individual Clients. services for the purchase, sale or rental of property. Many of them also engage in other related business activities, The division of property market comprises players who are including rental property management and managing solely marketing agents (such as I Plus – Foncia group, agent services. Fidex, etc.), as well as real estate developers who market part of their production through this model. The top five real estate agencies in France (ORPI, Century 21 France, Laforêt Immobilier, Guy Hoquet l’Immobilier and Era Immobilier) operate around 3,500 agencies1.
1.2.4.2 Property management for individuals and intermediation Property management for individuals and brokerage Through some of its subsidiaries, the Group provides In this business line, the Group’s areas of expertise run the property management services (as a property manager, full gamut of services dedicated to individuals, whether building manager or managing agent) and brokers property they are owners or tenants, providing them with long-term transactions (as an estate agent or property developer). support as their real estate needs evolve. A property manager is appointed by the owner The digitisation of our clients’ journey continued in 2019 (or condominium association) of a residential property, with for example: office space or retail premises and is responsible for the • Over 56,000 co-owners, lessors and tenants, investors day-to-day management, upkeep and maintenance of the and first-time buyers downloaded the mobile Espace property in question (including insurance, taxes, Privé application; maintenance, cleaning and repairs). He or she advises the owner(s) on the management of their property or properties • 37,850 members of condominium co-owners and their rights and responsibilities and, if applicable, committees now have their account, i.e. a 70% initiates any procedures necessary to protect their interests. activation rate of the overall potential; He or she may also be tasked with managing rentals on • Co-owners are connecting to Espace Privé more often behalf of the owners (including finding tenants, drawing up with a 7% increase in number of re-connections in the leases, preparing inventories, collecting rental payments first six months; and and calculating charges). • Online subscription to the service for electronic An estate agent, on the other hand, acts as an intermediary transmission of convening letters and reports of general between two or more parties in connection with the meetings, means over 40,000 co-owners no longer queue purchase, sale or rental of a building, a business or shares of up at post offices. This represents around 800,000 sheets an entity (owning built or unbuilt property or a business). of A4 paper saved, or about four tonnes of paper. In this respect, for example, the subsidiaries of the Residential Real Estate division engage in brokerage The online customer account Espace Privé Client is now a operations. real services platform for all clients (more than 400,000 connected clients) with means of payment and Professionals operating in these roles must, subject to 100% dematerialised documents. The client is criminal penalties, comply with the provisions of Act interconnected with the agency’s employees and suppliers. No. 70-9 of 2 January 1970, known as the Hoguet Act, and Each has access to real-time information on the operations its Implementing Decree No. 72-678 of 20 July 1972, under way in the buildings managed by Group. described in Section 1.7 “Legislative and regulatory environment” of this chapter.
1 Sources: websites, internal data for Century 21
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Condominium management Energy efficiency renovation The range of services provided by the Group’s managing Actively seeking to make living together better, Nexity is guiding 1 agents on behalf of condominium property owners aims to the condominiums’ energy transition throughout the territories. ensure that: Since 2012, Nexity has actively undertaken the renovation • All communal facilities and equipment work as they of condominium properties in order to provide concrete should; solutions to its clients. The goals are to reduce their energy Common areas in buildings are well maintained; bills, improve their living comfort, increase the value of • their assets and improve living conditions for everyone. • Condominium maintenance expenses are well managed and under control; and As a signatory to the charter promoting energy efficiency renovation of condominiums in 2015, Nexity fulfilled its • Regulatory developments and changes in safety commitments in 2018 by signing a Green Deal with the standards are monitored on a constant basis. Sustainable Building Plan (Plan Bâtiment Durable – Rental management a voluntary commitment contract co-signed with the French government) comprising a certain number of precise The Group’s property management professionals look after objectives to be achieved by 2020, including the following: the real estate assets of individual investors, providing a complete package of services to meet their objectives in • Having qualified at least 20 employees as energy efficiency terms of value enhancement, secure rental income and renovation specialists (training validated by an external optimal return on investment: third party and completion of a renovation project); and Tenant selection; • Having overseen and allowed the renovation of at least • 30 condominiums. Negotiation of leases; • Nexity also supports national actions in favour of energy • Collection of rental payments and service charges; efficiency renovation. In 2018, Nexity signed the better • Technical, logistical and legal assistance; housing commitment charter created by ANAH (France’s national housing agency) and in 2019 the "Engagé pour Regulatory and safety standard monitoring; and • FAIRE" charter. Guarantees against loss of rental income due to tenant • Beyond its specific condominium goals, Nexity aims to non-payment, property damage or vacancy periods. assist all of its clients, sellers, buyers, landlords, tenants Two management contracts have been created: a “Security and co-owners in their property improvement and Contract” for existing properties and a “Serenity Contract” eco-renovation projects. for new properties. In both cases, the client is offered a Awareness of the importance of energy efficiency management contract that guarantees income if the renovation property is vacant, rent is unpaid or no tenants are found when the property is first offered for rent. In 2019, Nexity deployed a mechanism in several stages for its employees. Lastly, management teams are structured so as to capture the largest possible number of rental management More than 500 employees received digital training on the contracts as soon as a new residential property is reserved. importance of energy efficiency renovation (quiz and videoconference). Lettings/Brokerage More than 100 employees participated in workshops Working in close collaboration with the rental management dedicated to energy efficiency renovation enabling the teams, the lettings teams handle all aspects of the real emergence of new projects. estate letting process. This includes arranging visits, drafting In June 2019, 10 Renovation Coaches were also qualified lease agreements, carrying out property inspections and internally. These coaches have followed a five-month taking care of administration. face-to-face and e-learning training programme. The brokerage teams assist with all aspects of property Over recent years, the Group has been rolling out an sales or acquisitions: property viewings, advertisements information campaign for its clients on the topic of energy and introducing sellers and buyers, complying with all efficiency renovation in condominiums (including information regulatory requirements of a technical, legal or meetings, posters, leaflets, videos, newsletters sent to administrative nature, drafting provisional sale agreements condominium co-owners committees, client evenings, etc.). and following the sale through to completion. Nexity continued this information campaign in 2019 and organising evening roundtable meetings for clients. This enabled over a hundred condominium co-owners committees (i.e. almost 500 co-owners) to be informed of the challenges of energy efficiency renovation. The regular report on the renovation operations carried out or still under way in the Group raised the awareness of its clients on the major trends observed in these operations (types of work carried out, total cost of the operations, average cost per owner, expected energy savings, financial subsidies, etc.).
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Energy efficiency renovation projects Financing energy efficiency renovations In order to offer an efficient and “turnkey” assistance One third-party financing solution has already been tested solution to condominium owners for the preparation and by Nexity at a first condominium building in the structuring of projects and the renovation work itself, Hauts-de-France region. Nexity enlisted the services of two specialists in this field, With the assistance of the dedicated Nexity team and SOLIHA and URBANIS, to ensure the presence of a project Hauts-de-France Pass Copropriété since November 2014, management assistance team at each site. Résidence Hélène, which comprises 228 residential units As such, the Nexity and project management assistance divided between two buildings, launched a two-year teams support condominium owners at every stage of a renovation programme in April 2016 to achieve energy project (from awareness-raising and diagnostics to savings of nearly 44%. renovation solutions and financing plans). This technical, social and financial support provides certain condominium Business outside France renovation solutions that have made it possible to achieve Outside France, the Group is present in various types of real energy savings ranging from 30% to 60%, with financing estate services in two European countries: plans including up to 90% collective and individual • Belgium: with 41 employees and a portfolio of almost financial support (depending on co-owners’ income). 13,100 condominium units for which Nexity serves as In 2019, approximately ten condominium properties were managing agent and 254 units for which Nexity renovated and more than 170 condominiums have stated their provides rental management services; the Group is now interest (approximately 17,700 units), more than one of the leading firms in this sector in Brussels; and 70 (approximately 9,200 units) of which have requested project • Poland: with premises in Warsaw, Lodz, Wroclaw and management assistance or are undergoing renovation works. Gdansk and 64 employees; the Group is a significant Nexity also takes part in the programmes launched by local real estate management player in this country, where it authorities, such as Operation Mur|Mur 2 in Grenoble (38), operates under the Gestor brand, with a portfolio of Ecoréno’v in Lyon (69) and Eco-Rénovons in Paris. nearly 18,400 condominium units under management. Innovative solutions Franchise networks Nexity helps its clients determine which financing solutions In May 2019, Nexity sold its stake in the Guy Hoquet are best suited to improving their property’s thermal l’Immobilier franchise network, of which it had been the performance. To this end, the Group is working closely with majority shareholder since 2006, to the company Arche, banks as it continues to consider how best to roll out holding of the Citya group. innovative financing solutions (such as third-party financing, increasing building density and increasing the The Group owns Century 21 France, France’s largest real height of buildings). estate franchise network, with 898 agencies and 6,989 employees. Energy performance contract In 2012, on the behest of a condominium property in The network is active in all real estate business lines: Neuilly-sur-Marne (93), Nexity signed the first private brokerage, housing rental management, condominium condominium energy performance contract (Contrat de management services, commercial transactions (offices, retail Performance Énergétique – CPE) in France, following the premises and business premises) for professional activities. winning of a call for proposals launched by ADEME. At the end of 2019, the Century 21 network had 113,181 The objective of the CPE is to guarantee a 45% reduction in units under rental management and 93,124 units under the condominium property’s heating consumption over a condominium management. period of ten years. The work carried out in 2013 mainly In the course of the past year, 52,590 provisional sale focused on the buildings’ thermal insulation and on agreements and 34,629 rental agreements were signed improving the heating system. This work made it possible through the Century 21 network, and the network gained to obtain the BBC-Rénovation® certification. Over the 12,400 new units under rental management. 2014-2015 season, the savings in heating energy Naxos, a Century 21 France subsidiary, develops and amounted to more than 46%. distributes software for Century 21 agencies. Since 2015, the building has achieved a heating energy saving in the region of 50% compared to its pre-renovation situation (i.e. in line with the Group’s commitments).
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1.2.4.3 Intermediation activities 1 PERL iSelection Nexity is the majority shareholder of PERL, a pioneer and iSelection distributes products on behalf of third-party real leader of a real estate model based on the temporary estate developers but also functions as a direct operator. In separation of property ownership from property use. PERL the latter case, iSelection makes bulk purchases of all or has retained its own brand, governance and open part of developments and sells the units within these architecture, for the benefit of the partners that the developments individually. company has managed to bring together (property Its teams serve a client base made up of individual developers, social housing operators and marketing investors, to whom they offer several types of properties: networks). As shareholder, Nexity is in charge of the risk control functions. • New furnished apartments in serviced residences, eligible for LMNP status (non-professional landlords of Since 2000, PERL has been offering individual and furnished property) for amortisation or under the institutional investors the possibility of acquiring the bare Censi-Bouvard scheme (see Section 1.2.2.1 “Fiscal ownership of a property. At the same time, it sells the use framework intended to promote real estate of the property to a social housing operator, which manages development in France” of this chapter). These serviced and maintains the property throughout the usufruct period residences are intended for students, seniors, (between 15 and 20 years). The model attracts a growing holiday-makers and business travellers; number of investors looking for an appropriate investment solution. PERL offers its clients a secure investment through • Unfurnished units covered by tax relief schemes for a range of personalised services and handles all stages of individual buy-to-let investors, notably the Pinel the investment scheme. scheme; and As the leader in this segment and since its creation, PERL • Investments in bare ownership covered by the Malraux has operated in more than 100 supply-constrained cities, scheme (historic monuments) and property tax losses. offering high-quality property developments (in prime In 2019, iSelection recorded 3,911 reservations. Out of locations, with amenities that meet the demands of both these reservations, 2,431 were recorded on behalf of occupiers and professional landlords, located close to third-party real estate developers. The remainder business areas), and regularly works with nearly 70 social corresponded to new home reservations recorded within housing operators. Residential Real Estate sales. In the 2019 financial year, PERL recorded 759 reservations. iSelection recorded 3,431 notarial deeds representing a Amongst these reservations 97 were performed by the business volume of €609 million. division of ownership of existing property with the balance corresponding to new home reservations.
1.2.4.4 Operational organisation of Other Real Estate Services to Individuals Property management and Century 21 franchise network With 3,242 employees and a nationwide network of • Professionalism of staff, who receive significant training 191 local agencies, Century 21, providing Real Estate throughout the year to ensure they are always at the Services to Individuals, is a leader in the French market for cutting edge in terms of skills and regulatory knowledge; individual property management. These services are offered • Digital tools offered to clients to remain in step with under three brands: Nexity, Oralia and Richardière their lifestyles and behaviours; (with the latter only in Paris and the surrounding region). • High value for money, with exclusive commitments To meet its clients’ expectations, the Group draws on its key within each business area and committed end-to-end strengths: support for every real estate project; • A strong, professional and stable management team; • Proximity with the buildings managed through the • Efficient management tools, particularly in the areas of network of agencies spread out throughout the country. sales performance and client satisfaction; With this coverage, the Group can make the most of its • A capacity to innovate to satisfy its clients’ expectations in-depth knowledge of the local players, properties and as far as possible. This innovation is technological, specific uses on each market; as1 well as organisational and marketing; • Transparency in client relationships, by providing clear • Transparent client communications, in particular via the and accurate legal and accounting documentation Group’s individual property management survey of tailored to each client’s situation and expanding the charges (the first of its kind in the French market), personalised content made available via each client’s which clearly shows to what the condominium and My Nexity page; management charges relate to;
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• Innovation and offerings that set Nexity apart in the market, The Century 21 network had a total of 6,989 employees and including an effective information system, a website serving 898 agencies in France on 31 December 2019. as a genuine showcase for the Group’s range of products and services and numerous initiatives to promote Intermediation activities sustainable development and corporate responsibility; With 101 employees spread across seven sites in mainland • Enhanced skills in digital marketing and business France at 31 December 2019, PERL is the leading player in development; bare ownership investment through the structuring of real estate projects in social, intermediate and freely accessible • A dedicated structure serving large private investors like rental usufruct. family groups. This service offers services tailored to its clients’ circumstances, including budget, cash flow and iSelection had 259 employees as of 31 December 2019. Its taxable income simulations, expert advice, in particular distribution network is built in particular on a partnership tax experts and bankers, focused on portfolio valuation agreement signed with regional banks in the Caisse d’Épargne and optimisation; and network, Banque Populaire branches, Milleis Banque branches and a number of independent financial advisors. • A Key Accounts Team, together with a national structure dedicated to niche businesses (high-rise buildings, shopping centres, combined office and retail premises, etc.).
1.3 COMMERCIAL CLIENTS
Nexity launched the Nexity Enterprise Solutions integrated enhancing the management of its assets and assisting the services platform a year ago in order to implement the transformation of user clients on the other, so that client-focused real estate services platform strategy. It is commercial real estate becomes a tool for transforming designed to accompany the real estate strategies of their organisation, structuring their strategy and asserting Commercial Clients, to develop tailored offers and to cover their raison d’être to their stakeholders, whilst constituting all development, management and operating requirements. a means for attracting talent. It is aimed at the investor client on the one hand by 1.3.1 Development strategy for Commercial Clients
Commercial Real Estate is being transformed in the wake of management. It now includes new services to accelerate the the digital revolution and new uses. For Commercial Clients, capacity to transform companies by developing operating the development strategy is based on the analysis of services. The platform is now operational from the design to societal changes, with the backing of the Group’s legacy the operation. It guarantees flexible real estate with turnkey business lines real estate development and property solutions and real-time management tools.
DEVELOPMENT
Commercial real estate (offices, logistics, hotels, business parks, retail premises), wood products
T N R IO A T N A ENHANCEMENT S F M O R R O M F S A N T A IO R N T
Investors Our strength: MANAGEMENT support our clients’ Property Management, commercial real estate Occupiers User transformation companies advice, space planning, digital platform
SATISFACTION ATTRACTIVENESS
T R A N N O S I F T O A R M M R O AT F IO S N AN OPERATION TR
Short-term space management, corporate concierge services
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The development strategy is based on the co-construction In 2019, Nexity transferred Nexity Conseil et Transaction to of five priority areas (control of performance risks, Paris its managerial team through a management buyout. 1 region geographical strategy, regional geographical From project ownership to the control of uses, Nexity strategies, synergies between real estate development and Enterprise Solutions offers the largest range of services on services, and anticipation of risk scenarios) with the the market which is also available online through its employees from the commercial real estate development dedicated website: solutions.entreprise.nexity.fr. activity. It is also based on the increase in management and operational expertise through external growth and the launch of project favouring intrapreneurship.
1.3.1.1 Commercial Real Estate In a structurally sound but cyclically affected commercial real • by diversifying the product offering notably by estate market, the Group’s aim is to grow its market share, developing retail spaces and more broadly the essentially in France and through the following actions: hybrid use of workspaces which integrate changes in • Territorial presence: use and new working methods, by strengthening and accelerating research and securing prime real estate within the city of Paris • • development actions to offer products with and its inner suburbs for office buildings, and in the innovative construction processes, north and south-west of the Paris region, by integrating the most stringent energy efficiency a bigger presence in large regional cities through • • standards to meet the requirements of major diversified products tailored to local challenges, investors and user comfort, notably with the development of wood-frame office buildings, and • by proposing turnkey real estate development programmes (rehabilitation of all or part of the real stepping up commercial prospecting among • estate assets, interior fittings, tenant assistance during investors with a view to helping them restructure the leasing transaction or vacancy reduction), and their obsolete properties; by improving the quality and control of product life Developing user relations to increase the safety of the • • through the deployment of Building Information offering made to investors: Modelling (BIM) to enhance the value of models • by offering projects with total or partial pre-leasing through data quality and accuracy; and to final investors thanks to the know-how acquired • Continuous management improvement: in performing complex transactions and the capacity to offer innovative value-sharing solutions, • by maintaining a rigorous risk management and cost control policy, and • by the creation of a key accounts and strategic partnerships Department, • by developing synergies between the real estate promotion and services businesses to anticipate the integration of new uses.
1.3.1.2 Real Estate Services to Companies After creating the General Contractor business in 2015 to The Property Management division’s development strategy assist user companies in their development, space planning consists in strengthening the Group’s leading position by and more broadly change management for any creating more added value for its clients: This is reflected by: transformation project, a new development phase has begun. • Transforming operating models (new technologies, Real Estate Services to Companies is becoming a major contract re-engineering and transformation of profiles); player in real estate valuation with an increasingly global • Conquering strategic asset types (commercial districts, offering for the management, operation and coordination of high-rise buildings, logistics facilities and complex workspaces. These solutions may target building owners products); and (expanding range of property management services), occupying companies (planning, optimisation and • Diversifying the product range and using a management of office space), as well as their employees target-specific approach according to client segments. (well-being in the workplace).
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 51 1 INTRODUCTION OF THE GROUP Commercial Clients
To supplement and diversify its management offering, • Accelerated the constitution of its operating business by Nexity: taking a majority 54% stake in the capital of Bureaux à • Acquired in 2019 a majority 71% stake in Accessite, Partager (Morning Coworking, the leader in short-term a property management company specialised in retail workspace in the Paris region), a minority 20% stake in premises and offering marketing and advisory services, Anticafé and the development of Hiptown in the and acquired 100% of Etoile Property Management. regions; and These acquisitions reinforce management know-how in a • Continued to develop the offer to occupiers through context of the digital transformation of property coordinating spaces (Week’in, Service Personnel) and by management; taking a 6% interest in Cocoon Space, an on-demand • Rolled-out its new interface at the end of 2019, meeting room rental offer. dedicated to commercial monitoring called “Building Cockpit”, a joint offer between Nexity and Intent Technologies, involving ownership stakes; • Launched Nexity Digital Solutions in May 2019 to design, integrate and market new digital products or services;
1.3.2 Commercial Real Estate
Nexity is a leading player in France’s commercial real estate • Large private or institutional investors, French or development market. It deals mainly with office space, foreign, seeking to derive rental income from real especially in the Paris region and other major metropolitan property and eventually profit from capital gains on areas such as Lyon, Marseille, Bordeaux and Lille. The Group their real estate assets; and also develops business premises and, on a more occasional • End-user businesses having buildings constructed to basis, retail premises. meet their own space needs. By acquiring a majority stake in Térénéo, a wood-frame Thanks to the wide range of investors active in the French developer based in the Haut-de-France region, Nexity investment market, Nexity is not generally dependent on increased its specific expertise in the development of one or more clients. wood-frame, low-energy “green” buildings. Nexity is France’s number-one developer of wood-frame office buildings. The backlog amounted to €456 million in revenue at 31 December 2019, versus €308 million at 31 December 2018. The Group’s commercial real estate projects are mostly pre-sold and are carried out mainly on behalf of two types In 2019, the Group carried out 31 operations representing of clients: over 194,400 square metres of office space.
1.3.2.1 Overview of the market and competitive environment The investment market1 After a very sharp increase in 2018, the French commercial sectors of the Paris region which saw an increase of over real estate market continues to attract investors with a 40% year-on-year. La Défense saw its highest volume of 20% increase in investments in ordinary commercial real commitments since 2008 whilst the Inner suburbs and the estate2 in 2019, i.e. a total of over €36 billion. Western Crescent are also bordering on record levels. VEFA Paris overtook London in terms of invested foreign capital. off-plan programmes increased on the Paris region market In a disrupted and closely monitored worldwide economic (a total of €3.8 billion) buoyed by the amounts committed context (trade war between China and the United States, to pre-marketed assets. Brexit, geopolitical tensions) real estate’s low volatility Offices, with €24 billion invested 2019, total more than two gives it a favourable and attractive spread compared to the thirds of the volumes committed at a national level. bond market. The industrial and commercial segments each exceeded Similarly to 2018, investors in 2019 showed their appetite €5 billion recording increases of 32% and 35% year-on-year for assets with safe returns, well located Core/Core+ respectively. property, in a context of the rarity of the Value-add offer. International investors accounted for 44% of the volumes Large transactions of over €100 million clearly dominated invested. The North Americans remain the most active the market, alone comprising 62% of the volumes. There (13% of international capital), followed in 2019 by a was a clear rebalancing in commitments between Paris, breakthrough by the South Koreans with 12% of foreign which remained the privileged location, and the peripheral commitments.
1 Source: CBRE. 2 “Ordinary” assets: offices, warehouses, business premises and commercial premises excluding specialised assets (hotels, residences, etc.).
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After a cooling off in 2018, the national market was (4% in La Défense), for the highest-quality office assets. The strengthened by the very high growth in volumes invested prime rate for logistics assets compressed even more 1 by general public real estate investment funds, such as SCPI strongly reaching 4% at the end of the year. The ECB’s and general public OPCI, representing 31% of the domestic continued accommodating monetary policy in 2020 implies capital invested. The prime yields eroded, at between 2.8% a new compression in rates. and 4% at the year-end in Paris Centre West
The office market Take-up* of office space in the Paris region
in millions of sq.m 5%
4% 3.0
3%
2%
2.0 1%
0%
-1% 1.0 -2%
-3%
0.0 -4% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
New-build & refurbished French GDP
* Take-up refers to all transactions, both sales and lettings, by end-users.
Sources: CBRE & OECD.
The market’s fluidity was hindered in 2019 by very low At 31 December 2019, the immediate supply in the Paris vacancy rates and the sharp rise in rental values in the region stood at 2.7 million square metres, a fall of 8% in a central zone. Large transactions of more than 5,000 square year. The consequence of sustained letting activity and a metres are in decline with a reduction of 14% year-on-year. limited volume of deliveries is that the decrease is more These 72 signatures totalled 872,700 square metres. Paris marked in Paris Centre West, the privileged location for users, concentrates 26% of the volumes placed on this segment where vacancies are at their lowest level since 2001 (1.6%). whilst the Western Crescent sets itself apart with 31% of The definite future offer stands at 2.4 million square volumes thanks to a return to the very large transactions of metres, 62% of which is new or restructured surface areas over 30,000 square metres which strongly boosted the of over 5,000 square metres mainly located in La Défense, Boulogne-Billancourt and Issy-les-Moulineaux markets. the inner suburbs and the Western Crescent. The decline of Transactions of less than 5,000 square metres are down by the offer combined with strong demand for central 7% partly impacted by the slide in the offer and the locations by users is contributing to a movement of demand for coworking centres (190,000 square metres transactions towards Western Paris and an increase in face leased by these operators in 2019). values. The average rent of new or restructured marketed After the 2008 crisis, the aggregate supply of immediately surfaces is up 5% year-on-year on a regional level, with a available office space in the Paris region significantly marked increase in the inner suburbs (up 8%). increased, reaching a high point of 4 million square metres in 2014. Since then the immediately available offer has not stopped declining.
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 53 1 INTRODUCTION OF THE GROUP Commercial Clients
Take-up in the top five metropolitan areas
in sq.m
1,200
1,000
800
600
400
200
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Lyon Lille Toulouse Bordeaux Aix-en-Provence / Marseille Sources: CBRE & Local Observatories.
In the regions in the five principal commercial centres areas also increased by 5% year-on-year but also under the (Lyon, Lille, Toulouse, Bordeaux and Aix/Marseille), the volume effect of projects initiated in the regions (up 10%). With a of office transactions was 1.2 million square metres, decrease of 6% in the surface areas authorised in the Paris an increase of 10% compared to 2018. New premises account region, the renewal of the quality offer appears to be for 46% of the total volumes. The vacant offer is mechanically contained and controlled. down with 1 million square metres immediately available in these cities, or 11% less than in 2018. The logistics market The Lyon metropolis is clearly out in front with a historic After the records reached in 2017 and 2018 the logistics take-up rate of 440,000 square metres, followed by Lille market (warehouses of more than 5,000 square metres) (265,000 square metres) and Bordeaux (200,000 square declined below its 2016 level with 3.8 million square metres, or up 35% in a year). metres marketed. The volumes remained above the average over the last 10 years by 20%. The vitality of e-commerce In Lyon, two thirds of the overall market involved combined with the increase in household consumption is transactions of more than 1,000 square metres. The new increasing the need for new logistic sites. offer was largely sought by users and formed the basis of more than 60% of transactions in volume. Almost 75% of Importantly, the Lille-Paris-Lyon-Marseille backbone, which is the surface areas for these new signatures concern usually the basis for 60% of the take-up rate, only accounted pre-sales buildings. Faced with this dynamism, the offer is for 46% of volumes in 2019. Conversely, the large “XXL” at its lowest, with a reduction of 26% year-on-year with a signatures of over 50,000 square metres characterised the vacancy rate of around 4% across the metropolis. Centre, Pays de la Loire and Grand Est regions. Although the Lille market is down by 6% after a record The challenges involved in optimising logistics circuits and performance in 2018, the take-up rate remains largely above their corollaries, the automation and modernisation of the average for the decade (up 44%) boosted by the increase warehouses have made users keen for new products. New in large surface areas. In Bordeaux the office market is products constituted two thirds of the surface areas in performing very well whilst the immediately available offer 2019, a portion which had never been reached before. remains very contained (93,000 square metres). Turnkey projects are up. Tensions in the offer are reducing and the vacancy rate Office starts increased over the year. At 31 December 2019, In 2019, with 3.9 million square metres, the surface area the immediately available supply was 2.8 million square starts in mainland France were stable (down 1% compared metres. The new offer under construction is continuing to to 2018). In the Paris region, with 1.1 million square increase (615,000 square metres). Currently, 2.6 million metres, office starts decreased by 7%, nevertheless square metres hold preliminary authorisations for “ready to remaining largely above the average for the last 10 years start” sites usually pending users. Nevertheless, there are (up 27%). Office starts increased markedly in the strong disparities between areas, with sub-offer pockets in Hauts-de-France (up 10%), Pays-de-la-Loire (up 17%) and Lyon and Marseille. Nouvelle-Aquitaine (up 44%) regions. Authorised surface
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Competitive environment The positioning of Nexity Entreprise Solutions, a services logistic projects). Bouygues Immobilier, Vinci Immobilier, 1 platform integrating design to operation expertise from the BNP Paribas Real Estate, Linkcity and Icade are strong Commercial Clients team, is an innovation in market. influences in the market. Some groups now combine commercial real estate Nexity is the leader in timber-frame developments, with an development and property management (such as BNP Real increase of more than 20% in the surface areas delivered Estate or Vinci Immobilier). between 2018 and 2019 (and an equivalent increase The Group is one of the three most active players in expected in 2020). commercial real estate development. In the Paris region, The prospects for deploying developments in the regions, Nexity has had an average market share of 6.9% of all the continued integration of new services in the office starts in the last eight years (2012-2019) whilst the restructuring or operating phase, the systematisation of BIM 60,600 square metres delivered in 2019 represented over (from the design to the operation of commercial real estate 9% of deliveries in the region. Altarea dominates the projects) and the consolidation of know-how in competitive landscape banking on a mixed developer and timber-frame construction should consolidate Nexity’s commercial real estate investor model (via Altafund) and a competitive positioning in commercial real estate. multiproduct offering (large mixed urban, commercial and 1.3.2.2 Commercial Real Estate development Nexity draws on its extensive experience in Commercial This alternative construction method offers: Real Estate to offer its clients a broad and well-rounded • Excellent performance (energy, insulation, greater fire range of services, covering everything from the construction resistance than concrete); of towers at La Défense to the development of office space in suburban business parks. • An optimized carbon footprint compared with traditional concrete construction; Conscious of the sustainable development challenges associated with building and construction, Nexity has for • A clean building site (waste reduction and re-use); some years pursued a proactive policy in this area. • Building processes tailored to the operation: use of As a result, the Group has implemented innovative materials such as large-size CLT panels, wood frames or techniques for building construction (bio sourced materials, mixed-material frames; circular economy in site management, etc.) and renovation (as attested by various international certificates) as well as • Building façade in keeping with clients’ preference: for their day-to-day management (energy management, wood, mixed materials, zinc or greyed wood; etc.). This intention is also reflected by the setting of more • The search for optimum thermal and acoustic comfort; and ambitious targets than the regulatory requirements. • Shorter delivery lead-times: construction is twice as fast All office developments delivered in the Paris region in as for a conventional structure. 2019 (77,440 square metres): Wood-frame buildings are designed to combine daily • Are BREEAM-certified (Excellent or Very Good); comfort and compliance with the most stringent • Recycled at least 70% of the site waste; and environmental standards: Achieved a performance level RT 2012 -30%. • Involvement of all players from the project planning • phase and throughout the design phase; In addition, 80% of the total office space delivered in the Paris region (i.e. 61,725 square metres) have planted areas. • Use of natural, renewable, recyclable and energy-efficient materials; The development of wood-frame office building solutions under the Ywood and Térénéo brands complements the • Focus on the quality of the living environment and Group’s offering. By the end of 2019, nearly 120,000 square employee well-being: joint optimisation of thermal inertia, metres of wood-frame office buildings had been delivered natural lighting, energy consumption and the lower (since 2011), of which 36,100 square metres in 2019. carbon footprint of wood compared to concrete; and Through these innovative and environmentally friendly • Compliance with the latest environmental standards, construction processes, Nexity is providing practical labels and certifications – BBCA, BEPOS, BREEAM, low-carbon solutions and anticipating future regulatory BDM, etc. requirements. The wood-frame office buildings are built In 2019, Nexity was ranked the number-one low-carbon using cross-laminated timber (CLT) from sustainably real estate developer in France by BBCA. managed European forests (100% PEFC-certified).
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 55 1 INTRODUCTION OF THE GROUP Commercial Clients
Land development potential1 The Group has a portfolio of 1,607,800 square metres of Under both the VEFA and CPI frameworks, the Group bears projects underway or in the planning stage, including the construction risk insofar as it undertakes to complete 540,400 square metres of long-term value enhancement the work at a certain cost and within a certain time frame. through its urban regeneration business (see Section 1.4.2 The Group is also involved in projects with delegated “Urban regeneration (Villes & Projets)” of this chapter) and project ownership (Maîtrise d’ouvrage déléguée – MOD). 1,067,400 square metres currently in the construction, These are fee-based consulting services that carry less risk development, or structuring phase in the Commercial Real than CPI agreements, in particular because they include no Estate division. This category encompasses projects not yet price or works deadline guarantees. delivered for which an agreement with an investor or end-user has been reached and/or a promise to The Group may also conduct speculative or semi-speculative sell/purchase (under certain conditions) has been signed. projects in which it acquires land and starts the construction work on a building without having found an investor (speculative project or opération en blanc), or with only a Commercial Real Estate business potential future end-user secured on a rental basis, but no investor as at 31 December 2019 (in millions of euros) yet (semi-speculative project or opération en gris). +6% Speculative projects place considerable risk on the developer, who bears both the construction risk for the 2,966 2,796 building and the business risk involved in finding a buyer. Project procedures and risk management The average project life cycle lasts around three to five 1,550 72% 77% years and includes the following phases: 48% • Searching for and securing land, planning, and 52% 28% 23% structuring the project with the investor: 6 to 12 months; 2017 2018 2019 • Obtaining the required permits: 9 to 12 months; Rest of France Paris region • Construction: on average 18 to 24 months (for office buildings) or 6 to 12 months (for logistics); and The Group has a project portfolio representing a potential of • Defects liability period: 12 months with effect from almost €3.0 billion (or 8 years of Commercial Real Estate delivery (including a contractual 3- to 6-month period development). That represents the total volume of for completion of outstanding work). developments at a given date, expressed in terms of All financial commitments for Commercial Real Estate potential revenue excluding taxes, consisting of future purposes must receive prior validation from the Group’s projects, validated at the Committee stage, on land secured Commitments Committee. through options or already acquired, all stages of completion combined, including Villes & Projets; the potential includes To manage its operational risks as effectively as possible, the existing and future supply for sale. the Group applies the following principles: Project types • Generally securing land for purchase on the conditions precedent that the necessary permits be obtained and Most of the projects conducted by Nexity are pre-sold, satisfactory soil quality assessments performed, with before it purchases the land involved. For these projects, the right to withdraw in return for an option fee usually the Group uses two distinct types of legal instruments: amounting to 5% to 10% of the land value; • Off-plan sales contracts (Vente en l’état futur • Limiting speculative projects, or opération en blanc d’achèvement – VEFA), in which the Group sells a (see “Project types” above) to exceptional cases in building as well as the land on which that building will which the Group deems the business risk involved to be be constructed; and low, particularly with opportunities presented by • Real estate development contracts (Contrat de attractive property prices or exceptional geographic promotion immobilière – CPI), which are similar to VEFA locations; contracts except that the investor already owns the land or the existing building. The Group’s interventions are limited to constructing the building on this land or to major renovations to the existing building.
1 Represents the total volume of transactions on a given date (expressed in the revenues excluding tax) of future projects approved in Committee, in all structuring phases, including Villes & Projets (urban regeneration); the business potential includes the current supply for sale; the future offer corresponds to as yet unmarketed project phases on purchased land, and projects not yet launched associated with land secured under options.
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• Following the risk control procedures defined centrally obtains the final permits needed to undertake the project by the Group’s Finance and Legal Departments, and completes studies of the property, in relation to any 1 including monitoring each project’s total budget on a pollution and the land’s geotechnical characteristics. quarterly basis; and In certain cases, the Group also ensures that the purchase • For office buildings, retail space or hotels, incorporating option includes a condition precedent of successful sale project management assistance teams (assistants à that releases it from any obligation to buy the land if the maîtrise d’ouvrage) with technical expertise into each project is not sold to an investor or end-user based on project team, particularly to monitor construction costs specifically agreed terms. on an ongoing basis. At this point, the Group offers the project to one or more The Group generally awards separate work contracts by clients (investors and/or users). The Group then signs an trade, assigning different parts of the job to companies agreement promising to sell or to lease the building specialising in different building trades, in order to optimise planned for construction to the client. This agreement costs while also ensuring the quality of the work. contains terms delimiting the price or the rent of the building and, in most cases, the same conditions precedent A project’s technical specifications or the need to hedge (except the condition precedent of sale) as the Group’s work costs may also lead Nexity to award a single work original agreement to purchase the land. contract (where one contractor gets the entire project). As soon as the necessary permits are obtained, the Group: Projects undertaken under VEFA are generally broken-up into four successive phases (planning, set-up, construction • Puts in place any bank financing needed for the project and the defects liability period), the most important (see “Project financing” below); features of which are presented in the sections that follow. • Takes out the necessary insurance policies (civil liability, Projects undertaken under CPI agreements have the same building damage insurance including overall features except that the Group does not have to Dommages-Ouvrage) and a builder’s all-risks policy; purchase the land where the building will be built, Signs the definitive land purchase deed; and as it already belongs to the client. • Signs the definitive CPI or VEFA deed with the client. For developments undertaken outside France, the • framework outlined above is adapted locally as needed, Construction phase in particular from a legal standpoint. Subcontractors and suppliers Planning phase The construction phase of the project begins with a request to open the worksite and the hiring of subcontractors and During the project planning phase, the Group generally suppliers under separate trade-based contracts starts by finding the land (usually through site developers). (or sometimes under a single contract), of which there may It then designs the project, has it validated by the be up to forty for a large worksite. The building contractor Commitments Committee and takes the first step towards the Group designates is highly involved at this stage, securing the land with a reservation agreement. coordinating all of the subcontractors at the worksite, For planning purposes, the Group entity undertaking the managing the construction schedule, verifying and project also uses this first phase to select its partners for monitoring the subcontractors and validating the work the job, i.e. the architect, legal counsel, contractor, design reports prepared by them each month (thus providing a office, oversight firm and health and safety (Sécurité et basis for tracking work completion and making payments). protection de la santé or SPS) coordinator who will help The Group does not have any exclusivity policies with define the project (initial drawings by the architect) as well specific subcontractors or suppliers. However, it enjoys as calculate the figures involved (construction cost privileged relationships with certain contractors and estimate by the contractor, for comparison with estimates suppliers that satisfy its qualitative and financial criteria provided by the Group’s departments). and the Group consults them regularly for bids. Depending From the commercial point of view, project planning mainly on the number of development projects in a given year, consists of market surveys that will confirm the rental value the leading supplier may potentially account for a of buildings marked for construction and determine a significant portion of the Group’s Commercial Real Estate project’s capitalisation rate (profitability) so as to appraise its expenses that year. The Group verifies the financial economic feasibility given the estimated construction costs. soundness of the subcontractors and suppliers it hires as Set-up phase well as their financial and human resources capacity to Projects that make it through the planning phase then meet their obligations (in light of the subcontractor or enter the set-up phase, which starts with the securing of supplier’s size in relation to the project). Nexity also closely land through purchase options. As part of its risk monitors employment conditions for on-site personnel to management policy and barring some occasional ensure than they are legally compliant. exceptions, the Group agrees to purchase land only if it
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 57 1 INTRODUCTION OF THE GROUP Commercial Clients
Environmental management and preventing disturbances No provisions have been established in the Group’s In the construction phase, the Group applies the provisions financial statements for environmental risks or guarantees. ® of the HQE , BREEAM and LEED certifications applicable to Delivery “low-impact” construction sites. In particular, construction At the end of construction, certain procedures are carried out sites are subject to requirements governing waste prior to the subcontractors delivering the work and the management, sorting and recovery. Likewise, a procedure building being handed over to the client. Once the building has for the regular monitoring of water use at construction sites been handed over to the investor, the client files a delivery is implemented by Nexity for all Commercial Real Estate acceptance report listing any outstanding defects in the work. projects seeking HQE®, BREEAM and/or LEED certification. Lastly, measures to limit noise pollution are applied at all of Acceptance/delivery the Group’s construction sites. During a contractual period of three to six months following delivery of the building, the Group undertakes any Management of soil pollution and soil quality outstanding work needed to reach final completion based Before acquiring any land or buildings, Nexity generally on the investor’s delivery acceptance report. commissions an assessment of the quality and pollution levels of the soil and subsoil, the history of the land at the The client is also covered by a perfect completion warranty site and the presence of any asbestos in the buildings to be under the applicable legislation which covers any defects refurbished or rebuilt. Nonetheless, the Group may still found in the year following the building’s delivery and encounter environmental or soil quality problems during or provides a two-year proper operation warranty and a after construction. Although the seller or most recent user ten-year warranty. of the land or building can typically be held liable for such During this period, the Group also obtains the certificate of matters, discovery of environmental or soil quality non-contestation of administrative conformity. problems may result in serious delays as well as additional costs and may have significant financial consequences. The Project financing Group has not had any significant legal action based on The breakdown of costs by type varies considerably from environmental claims brought against it in the past. one project to another. In general, construction makes up Asbestos-related risks for development projects are more than half of VEFA costs and more than two thirds of marginal and are accounted for in the offers to purchase CPI costs. land and buildings. The financing of projects depends on the timing of The same procedures also apply to Villes & Projets payments from clients. For VEFA or CPI projects, after developments. making a down payment upon signing the contract In exceptional circumstances Nexity may, when purchasing generally amounting to 10-20% of the project’s price, land, undertake, in accordance with the third-party applicant clients settle the remainder either by instalments as the procedure set out in Articles L.512-21 and R. 512-76 et seq. project progresses or as a lump sum upon delivery. of the French Environment Code, to pay for the remediation When the client pays the full price (excluding the initial down of the land for a use which is at least comparable to the last payment) upon delivery of the project, the project is funded period of activity in order to release the vendor from its with bank financing set up specifically for it, most often in remediation obligations as the last operator of installations the form of credit facilities. This bank financing is generally classified for environmental protection. secured by assigning the bank the proceeds from the first Aside from the specific issues raised above, Nexity is not demand guarantee required as a general rule from the client exposed to any other environmental risks, given the nature to ensure payment of the purchase price, and by the Group of its activities. ceding to the bank the receivables to which the Group is entitled under its contract with the client (cession Dailly). When the client pays by instalments on a percentage-of-completion basis, it is generally not necessary to obtain bank financing except to deal with certain cash flow discrepancies requiring temporary credit facilities.
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Warranties given by the Group Completion bonds To limit the risks involved, the Group generally caps the 1 As part of any project carried out under a VEFA or CPI amount of a rental guarantee at no more than one year’s agreement, the Group provides a completion bond similar rent (including building expenses) and manages the search to that required by the regulations applicable to the VEFA for potential tenants through specialised real estate agents off-plan sales contracts entered into by the Residential Real such as Nexity Conseil et Transaction, BNP Paribas Real Estate division. The ten-year warranty and proper operation Estate, Jones Lang LaSalle or CBRE. warranty also apply to commercial real estate Rental guarantee conditions are carefully negotiated and developments (see Sections 1.7 “Legislative and regulatory precisely defined, particularly with regard to: environment” and 2.1.2.3 “Main insurance policies” of this Universal Registration Document). • The amount covered by the rental guarantee (rent and building expenses); Rental guarantees The type of tenants that the investor will have to accept The Group sometimes provides a rental guarantee to investor • and the rent levels at which the property may be leased; clients who request it, pursuant to which the Group and guarantees, for a limited time, some rental income on the real estate asset purchased from it by the investor, or, if necessary, • The conditions for terminating the guarantee, which a reduction of the sale price by an equivalent amount. require that one or more potential tenants be found, but do not cover their solvency or adherence to lease clauses. The Group always includes, within each project budget, the cost that would be incurred if the rental guarantee were called upon, thus allowing for forecasts of two different profit outcomes depending on whether or not the guarantee is exercised.
1.3.2.3 Nexity Contractant Général Through its interior fitting expertise, Nexity Contractant transform entrance halls, make company restaurants and Général can refurbish all or part of the real estate assets of common areas multi-functional, and upgrade office floors its owner clients. It also offers them assistance to limit to current rental standards. vacancy in their buildings and to help their tenants during In 2019, Nexity Contractant Général took orders with a the leasing process. value of €7 million relating to operations mainly in Paris Nexity Contractant Général can also help owners upgrade and the Paris region, but also in Lyon (69), Rennes (35), their office buildings in line with user expectations. Nice (06), Rouen (76), Bordeaux (33), Toulouse (31) and The architects and designers produce tailored solutions to Strasbourg (67).
1.3.2.4 Operational organisation of the Commercial Real Estate division In France, the Commercial Real Estate division is organised division also takes advantage of synergies with the around teams bringing together the required skills. Residential Real Estate division’s regional development The Commercial Real Estate business encompasses the subsidiaries, which have denser territorial coverage in France. development of office space, logistics facilities and other The Group develops some of its projects jointly with other industrial space. It also includes the development of real estate developers or major construction companies. wood-frame office buildings. Such an organisation enables The Group may decide to co-develop projects as part of a the Group to segment its offering. marketing strategy to increase its chances of being selected Since the market is concentrated in the Paris region, most of for a project, or as part of a risk-sharing effort. the 115 commercial real estate employees are based at the These ventures generally take the form of partly-owned registered office in Paris. Regional establishments in Lille, special-purpose companies created specifically for a given Lyon and Marseille help take a hands-on approach to local construction job. business development, particularly regarding the Nexity Contractant Général has 14 employees, based development of wood-frame office buildings. To find mainly in the Paris region. customers and obtain permits, the Commercial Real Estate
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1.3.3 Real Estate Services to Companies
In this business line, the Group offers companies, • Property Management: management of portfolios of institutional investors and public and para-public bodies a residential properties, offices or retail premises through full range of services covering every stage in a building’s life the Nexity Property Management and Accessite cycle, from advisory services for those planning to acquire subsidiaries; and properties to the management of real estate assets possibly • Operation and services to occupiers: management of including either unit or bulk sales and, where applicable, short-term workspaces (Morning Coworking), condominium management. enhancement of spaces (Hiptown) and company Real Estate Services to Companies mainly comprise: concierge services (Service Personnel).
1.3.3.1 Overview of the market and competitive environment The property management market The fitting-out market The traditional core activities of property managers, i.e. Over recent years, the traditional office real estate model rental management, accounting and technical and the workspace layout have taken a radical turn, driven management, is supplemented with numerous ancillary by open space concepts, flexible working hours and missions: tax advice, audits, energy recommendations, nomadic work, in an increasingly digitalised and connected technical management solutions, construction assistance, environment. In addition, occupational well-being has selection of suppliers, platform of services for become a major concern for numerous companies, occupants, etc. Over recent years, the sector has had to as employees seek a better work/life balance. In view of cope with pressure on prices, the compression of demand these developments, companies are seeking to adapt their and the ending of the annuity income model following the workspaces while also providing a new service offering. erosion of interest rates. The paradigm shift induced by The classic office concept is being challenged and users are higher-quality expectations on the part of occupants now favouring facilities that optimise the workspace, increase offers key prospects to property managers able to rise to collaborative work and provide agility. In 2018, the most the smart building challenges and deal with energy, innovative constructions have included aspects such as: consumption, comfort and security issues through efficient flex offices, adaptable shared spaces, privacy bubbles, data management. The increasing broadening of the service coworking spaces, the integration of relaxing activities and offering covers a variety of technical building management the design of spaces dedicated to services. Small-scale solutions, dashboards and a data room to track users are increasingly seeking “plug and play” offices. performance, as well as connected objects and services dedicated to occupants. These structural changes, Among those specialising in the fitting-out of workspaces, combined with the mass return of foreign investors in four types of players stand out: 2018, have modified the landscape by unleashing the • Specialists in commercial real estate services such as market’s hitherto limited growth potential. JLL (Tétris) and CBRE (CBRE Design & Project); Within the French property management market, some • Commercial real estate development players like Vinci 15 operators manage surface areas exceeding 2 million Immobilier with its Openwork concept; square metres. The property management subsidiaries of Consultancy firms specialised in fitting-out projects: BNP Paribas Real Estate and Nexity dominate the • Majorelle, Artdesk Group and Goodwill Management; and competitive landscape in France. They are the only operators to manage more than 10 million square metres. • Coworking players, such as Morning Coworking and It should be noted that Foncia entered the market at the WeWork, with a concept and solutions inspired by their end of 2016 through the acquisition of Icade PM. Unlike in own coworking spaces. the Residential Real Estate segment, the number of operators able to meet the requirements of major investors in terms of management and reporting is limited. The increase in the size of the assets managed by the leading operators (in particular Nexity, BNP Real Estate PM, Adyal, Yxime, Septime, Telmma, CBRE PM and Foncia) acts as a barrier to potential newcomers.
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The operations and services to occupiers market Since 2016, coworking centres of more than 2,000 square Influenced by multiple trends, users are increasingly metres have accounted for 69% of new openings, versus 38% 1 demanding services integrated into the building. Among between 2008 and 2015. In 2017, the average surface area these trends are nomadism, the increase in remote involved in the transactions reached nearly 4,000 square working, the streamlining of real estate parks, the influence metres. Large surface areas which cater for all audiences: of digital natives on tools and the organisation of work, the freelancers, small businesses, SMEs and large companies. heavy competition to attract talent and the arrival of the Studies1 show that the sector is split in two: on the one new thinking valuing well-being at the work place. To adapt hand small independent spaces (40% of coworking spaces to these new usages and increase the attractiveness of their have less than 20 workstations), whilst on the other large facilities and their brand, businesses are stepping up open spaces held by the large coworking players (8% of initiatives adding service in the broad sense for their centres have over 200 workstations and represent 45% of employees. These initiatives are varied and sometimes still the market in terms of square metres). in the experimental phase, with for example, renewed Unlike the business district segment – which is management of food service spaces, current services to well-structured and has been relatively stable for a number employees or focused on well-being, namely through an of years – the segment of coworking spaces and office rental increased supply of concierge services. agents (in particular web-based platforms and sites) With significant growth levels, concierge services are raising is highly fragmented and sees a large number of a lot of interest. Through a variety of players – including newcomers. In fact, two thirds of spaces are less than three digital players, independent specialists (like To Do Today, years old. Sodexo), upmarket players, facility management groups like The market in France is mainly concentrated in the Vinci Facilities and insurance companies – strategies are business districts in the capital and is now continuing its crossing paths and the landscape is taking shape. On the development in the large regional metropolitan areas: Lyon, whole, in terms of services to building occupants, numerous Bordeaux, Marseille and Nantes. players have taken position and the increasing hybridisation of the various sectors (office, hotel and retail) should Among the most recognised operators of coworking spaces generate growing competition in the future. are Bureaux à Partager, Néo-nomade, Agorabiz, Base10 or Geolocaux. Another basic trend, third-party locations, flexible/hybrid spaces or coworking centres are developing rapidly around the Four players share 24% of the square metres dedicated to work, particularly in major cities. In France, there were coworking in France: WeWork with more than 1,700 coworking spaces in 2019 (three times more than 90,000 square metres; Morning Coworking (Nexity) with 2017), i.e. 1 million square metres dedicated to coworking. Of more than 60,000 square metres; Wojo (Bouygues these spaces, 35% are in the Paris region, including 23% in Immobilier) with more than 55,000 square metres; and Paris (Source: Bureauxapartager.com, Indice du coworking Spaces (IWG) with more than 46,000 square metres. 2019). Competition is stiff in this segment, which now seeks to The boom in these new spaces corresponds largely to new capture a large part of the service offering aimed at users of expectations by office users in terms of time and space small- and medium-sized premises in Paris, in particular. flexibility. The dynamism of the digital economy, the The players are now facing a major challenge, namely that explosion in the number of startups, particularly digital, and of keeping their occupants. Creating occupier loyalty first of in the number of independent workers, and, more recently, all involves the services and the events which are offered: the demand by major corporate accounts for more coordinating the community, organising conferences, flexibility in their organisations are driving the market up. holding training courses and different events in order to create an environment which is favourable to business, The major coworking names are inevitably becoming exchanges and well-being. renters in business districts around the world. Like in New York and London, the current trend is for the opening The coworking market is still experiencing difficulties in of large hybrid workspaces (exceeding 2,000 square metres terms of achieving profitability. For example, the market and up to 20,000 square metres). leader, WeWork, sustained very heavy losses before it floated on the stock market in September 2019, with its value falling from $47 billion to $8 billion in two months.
1 Source: Bureauxapartager.com, Indice du coworking 2019.
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1.3.3.2 Property Management At the end of 2019, Nexity Property Management (NPM) The work overseen includes the refitting, renovation and managed 19.5 million square metres with 8 million square refurbishment of buildings of all sizes. It involves providing metres under technical management alone. assistance to the owner or delegated project management. Its clients are mainly French and foreign investors The other activities include security management, (insurance companies, banks, pension funds, public or insurance management, the management of jointly-held para-public corporations, asset managers and international commercial buildings and shopping centres, as well as investment funds), key accounts and other government occupancy cost guarantees. agencies and quasi-governmental organisations A wide sustainable development offering is available, such (public industrial and commercial undertakings, public land as energy monitoring for buildings managed by Nexity, management agencies, etc.). environmental certifications (HQE®, BREEAM, LEED EBOM), Property management consists in taking charge of all or part a collaborative platform for the follow-up of environmental of the real estate assets of the Group’s clients, whether annexes, as well as a tool to analyse the attractiveness of institutional, public or private, with the constant goal of the buildings (attractiveness index). optimising the financial return on the assets managed In early 2019, Nexity pursued its services platform strategy (rental return and capital yield through a dynamic approach for Commercial Clients by taking a majority stake in the focused on tenant satisfaction for the benefit of the owner). In company Accessite, providing property management France, Property Management is governed by the Hoguet Act. services as a broker and specialised advisor in retail The services offered include rental management (lease premises. Accessite, which manages almost 1 million negotiation and contracting, surveys, legal monitoring, square metres, therefore supplements Nexity’s historic accounting, financial reporting, etc.), technical property management offering. management (scheduling of maintenance operations, services and regulatory checks, energy and fluid management, and preparation and implementation of multi-annual work plans).
1.3.3.3 Short-term workspaces: Morning Coworking (Bureaux à Partager) In 2019, Nexity pursued its services platform strategy for The total occupancy rate for the spaces is 85% with a Commercial Clients by taking a majority stake in Bureaux à clientele of mainly startups and SMEs. A key accounts Partager (Morning Coworking), the player of reference on approach has begun in the Clichy Batignolles space. the Paris ready-to-use office market. The specificity of the model lies in the signature of short At the end of 2019, Morning Coworking had 22 coworking leases (representing 67% of the spaces used) which gives spaces including 19 new spaces opened in 2019 in Paris, Morning Coworking the opportunity to benefit from Neuilly and Levallois. The space represents more than attractive financial terms for prime locations. 60,000 square metres today offering up to 6,700 nomad or fixed workstations inside a shared space or a private and closed office.
1.3.3.4 Other services and new tools The Group operates in other business areas to round out its • Building works supervision and transfer management: offering and provide services for end-users and investors, this area of expertise, serving clients interested in by forming partnerships built on an in-depth analysis of client renovating and outfitting their office space, requirements and expectations, thus enabling the Group to encompasses space planning, drawing up specifications, tailor its solutions through a shared quality-focused approach: managing invitations to tender, supporting project • Building branding: project management support as well owners and providing guidance on transfers of as architectural and marketing solutions to promote a undertakings as part of the occupant services offering; building’s brand; • Technical solutions consulting for the real estate and • Digital solutions: development of digital collaboration construction sectors: providing property owners, platforms for buildings and users; construction project owners and real estate asset managers with high added-value technical solutions • Services to users: concierge services, events, (technical expertise, assistance to construction project marketplace, etc.; owners and renovation project management) and/or • Consultancy: helping clients bring their plans to fruition compensation-related solutions (assistance with claims by carrying out technical, regulatory, organisational and management); and financial audits and drawing up specifications; • Intent: a digital platform specialising in the installation of information sensors in buildings, allowing real-time data analysis.
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1.3.3.5 Operational organisation of Real Estate Services to Companies 1 The Group’s Real Estate Services to Companies had After negotiations which began in January 2019, Nexity sold 863 employees on 31 December 2019, including the majority of the equity in its subsidiary Nexity Conseil et 615 employees in Property Management and 248 Transaction to the management on 29 March 2019, employees in recent acquisitions (Accessite, Bureaux à keeping a 16.3% interest in the capital. Partager, L'Espace and Service Personnel) mainly in the Paris region but also covering all of France’s regions with a network of 19 regional offices in the major urban centres.
1.4 LOCAL AUTHORITY CLIENTS
As a key player in urban development, Nexity maintains authorities’ requirements. It provides concrete solutions to close, long-term partnerships with Local Authority Clients the transformation of the city and its uses. The Villes & throughout France. Local authorities can rely on the Group’s Projets subsidiary, dedicated to the Group’s major urban territorial coverage, extensive know-how and expertise to projects, intervenes as an urban designer: it coordinates all provide them with comprehensive and sustainable urban the skills available to Local Authority Clients, to assemble solutions that are tailored to the needs of their and control the whole value chain of urban projects. municipalities and regions. Nexity Villes & Projets is developing its expertise in the As a major player in the private urban planning and design conversion of industrial sites in order to limit the market in France, Nexity initiates reflections on the consumption of new land and combat soil degradation whilst definition of the urban project, in line with the local promoting urbanism that interacts closely with nature.
1.4.1 Overview of the market and competitive environment
In France, like everywhere else in the world, the Nexity is aware of these new social demographic, economic, sociodemographic changes (demographic growth, the urban and environmental challenges and its ambition as an migration of residential and working populations to large integrated real estate services platform is to provide support urban centres, the ageing population, changing family for local authorities to create tomorrow’s urban spaces. structures, etc.) are reflected by an extension and As a player with a long-term commitment to urban densification of urban areas (55% of the world’s population development, the Group is contributing to the live in urban environments representing 2% of the Earth’s transformation of territories by providing local authorities surface area). with solutions to their problems. Nexity, confronted with these demographic and Thanks to its range of products which is the largest on the geographical changes, is reconsidering its relationship with market, Nexity is able to position itself on large mixed space, the city, mobility and services. These challenges projects, combining its expertise in residential and therefore create the need to reinvent districts, rehabilitate commercial real estate and services, notably through its peripheral isolated areas or wastelands, and create new serviced residences. living environments which satisfy the current and future needs of the different profiles of inhabitants.
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The main large mixed projects in which the Group has been involved, in particular through its urban regeneration subsidiary (Villes & Projets), are summarised below:
Total Surface Area* Retail (in sq.m., 100% Serviced Office premises Public Scheduled Location share) Housing residences space Hotels Logistic facilities delivery date ZAC Berliet - Saint-Priest (69) 233,500 x x x x 2011-2023 Saint-Ouen (93) 280,000 x x x x x 2015-2019 Marseille (13) - Les docks Libres 70,000 x x x x x 2015-2019 Gare d'Ermont-Eaubonne (95) 89,000 x x x x 2016 Asnières-sur-Seine (92) 120,000 x x x x From 2016 Montreuil (93) - Acacias 113,000 x x x x 2016-2025 Bordeaux (33) - Belvedère** 143,000 x x x x x 2020-2025 ZAE Drusenheim-herrlisheim (67) 280,000 x x 2020-2035 Sollies-Pont (83) 38,000 x x 2021-2023 Saint-Jean-de-la-Ruelle** (45) 26,000 x x 2022-2026 Hérouville-Saint-Clair (14) 88,000 x x 2022-2030 Jolimont** - Toulouse (31) 15,000 x x x x 2023 Amouroux** - Toulouse (31) 12,000 x x 2023 La Garenne-Colombes** (92) 195,000 x x x x 2023-2026 Porte de Montreuil** (93) 58,500 x x x 2023-2026 Pontault-Combault (77) 100,000 x x x 2023-2026 Saint-Ouen (93) - Village des athlètes** 53,000 x x x x 2024 Bry-Sur-Marne (94) 140,000 x x 2024 Bruneseau** - Ivry-Sur-Seine (94) / Paris (75) 95,000 x x x x 2025-2026
* Floor areas are provided for information purpose only and may be subject to adjustment once administrative authorisations have been obtained. ** Co-developments
1.4.2 Urban regeneration (Villes & Projets)
Through its subsidiary Villes & Projets, Nexity is positioned Villes & Projets is one of the French leaders in private as both an urban developer and project manager for urban development today, drawing on the Group’s national regeneration, thereby generating a medium- and long-term network of real estate development subsidiaries, and has construction portfolio for all its development subsidiaries in been at the origin of 22 large urban projects since its Residential and Commercial Real Estate. Villes & Projets is creation, with over 1 million square metres developed in a designer of urban projects and provides a comprehensive 10 years. urban development solution to local authorities by Several national competitors have developed a similar reinventing districts and guaranteeing a sustainable approach on the private development of territories niche. balance between homes, economic activities, services and They include the following: Eiffage, Bouygues (Linkcity and living spaces. UrbanEra), Altarea-Cogedim, BNP Paribas Immobilier, Icade, Nexity is committed to a societal and environmentally Vinci (Adim) and Quartus. responsible approach by using innovative and efficient products and services to build sustainable territories. 1.4.2.1 Arranging and structuring development When advising local authorities or large landowners on the projects development of their urban spaces, Nexity proposes ecological, sustainable and concrete solutions which are Villes & Projets takes part in urban development projects tailored to the requirements and specificities of each from their earliest stages. Its project teams bring together territory. Its innovative and proactive approach to all the skills and expertise needed for design and execution. sustainable development satisfies the requirements of local Nexity’s teams, whose composition varies depending on the authorities in a holistic way by favouring living together type of properties involved (homes, offices, hotels, business (energetic efficiency, biodiversity, nature in the city, parks, retail premises, or public facilities) may also enlist alternative and carbon free methods of mobility, well-being, the services of external partners with specific expertise quality of life, social connections, etc.). (such as urban planners, landscapers, engineering firms, etc.).
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Site planning projects Once the project has reached an advanced stage, the Group This project will be exemplary, notably in terms of being 1 sets up a special-purpose entity to acquire land rights, carry a sustainable city, and the consortium will bring out preparatory works and resell construction rights to the together more than 50 French companies from all over Group’s real estate development companies or to the country as part of a low-carbon initiative. Eiffage third-party operators designated by the local authorities Construction is proposing a cost-efficient construction (social housing operators in particular). method combining wood and low-carbon concrete which will reduce the project’s carbon footprint by 75% Urban design projects compared to the London Games; Villes & Projets uses urban planning techniques to design • On 26 September, the judges for the Reinventing Cities and structure complex real estate projects. In these cases, competition, launched by the City of Paris and C40, implementation (project ownership) is left to the relevant awarded the contract for reinventing the Porte de development subsidiaries. Montreuil district to the consortium comprising Nexity, Aire Nouvelle, the Engie Group’s real estate 1.4.2.2 Land development potential development subsidiary and Crédit Agricole Immobilier. Through its urban regeneration subsidiary (Villes & Projets), Faced with the multiple challenges of redesigning the the Group develops 11 urban projects with a total potential district, the consortium has decided to transform, floor area of 540,400 square metres. At the end of 2019, by 2023, Place de la Porte de Montreuil into a 73% of these projects took place in the Paris region and carbon-free area that is designed for its inhabitants, is 27% in the regions. socially and economically anchored in its territory and is reversible in order to anticipate changes in lifestyles 2019 was marked by the following significant and uses; developments: • The judges for the Dessine-moi Toulouse urban • On 22 November, Société de Livraison des Ouvrages innovation project awarded the contracts for converting Olympiques (SOLIDEO) awarded the consortium the Halles Amouroux site and the Jolimont multimodal comprising Nexity, Eiffage Immobilier, CDC Habitat, EDF interchange station to the consortia led by Nexity; and Groupama the contract for building Sector E of the Athletes’ Village for the Paris Olympic Games in • The town of Saint-Jean-de-la-Ruelle and Renault Saint-Ouen-sur-Seine (93). awarded the Nexity/Sully Promotion consortium with the contract for an ambitious urban project to redevelop Sector E will cover around 56,000 square metres of floor the Renault-TRW site on the banks of the River Loire; area in a diverse programme of more than 500 housing units, an office building, a crèche and business and • The Pays Rhénan municipal grouping awarded the commercial units which should accommodate a little contract to develop an economic activity zone of over 2,500 athletes and para-athletes in the summer of 78 hectares to the Nexity and Alpha Aménagement 2024. In 2025, the sector will be opened to local consortium. The development concession agreement residents. was signed on 13 December 2019.
1.4.3 Fund dedicated to the transformation of office space into housing
The Group holds a 20% stake in a fund managed by Harvestate for the transformation of office space into housing units. In this connection, a first operation is due to be initiated in Boulogne-Billancourt (92).
1.4.4 Land optimisation fund (Terrae Optimae 1)
Nexity’s traditional model rests on the use of purchase In order to increase its capacity to invest in high potential options in order to control land. However, due to stiff land, Nexity has entered into a partnership with Harvestate competition and the rise in land prices in certain areas, AM via the Terra Optimae 1 land optimisation investment the Group has had to imagine new sources of financing in fund created at the end of July 2019 in order to acquire order to carry out its ambitious development plan while land for reconversion in order to develop predominantly continuing to pursue a controlled land bank strategy with residential developments in France’s main urban centres. limited risk-taking. In exceptional cases, Nexity may take certain risks on land, within the €250 million limit set by the Group. At 31 December 2019, the amount of the land bank1 totalled €120 million (based on net WCR).
1 Represents the amount of projects for which the Group has acquired development rights, before obtaining a building permit and in some cases planning permissions, expressed as an amount recognised within the working capital requirement.
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The funds raised at the end of this first closing, raised This innovatively structured fund satisfies CSR investment mainly from French institutional investors, equip Terrae criteria and can also constitute a new tool for local Optimae 1 with a capacity to invest in equity of over authorities suffering high-pressure on their financial €130 million. resources. A first land located in Hauts-de-Seine (92) was signed at the end of December 2019.
1.4.5 Operational organisation of Local Authority Clients
In each of the territories (large cities, urban areas and Villes & Projets operates throughout France with a peripheral areas), the Group’s local subsidiaries develop multidisciplinary team of over 23 people including urban close relations with Local Authority Clients. In addition, planners, architects, engineers, experts in soil and building Nexity relies on its Villes & Projets subsidiary to enhance treatments. The structure covers all the phases of an urban and maintain long-term partnership-based relationships project from the development phase to the construction with these clients, through its know-how as an urban phase and has four skills centres (competition, developer and designer, a participant in innovative urban development and new services, land development and land projects and a service provider to local authorities. bank, construction and polluted sites and soils) with transverse tasks (commercial solutions, institutional communication and support, engineering).
1.5 INTERNAL CLIENTS
“Internal Clients” firstly include all Nexity employees, • Internal Audit; whose expertise and commitment are the prime key factor Internal Communications; for the success of the Group’s strategic plan. This means • that employees are treated like clients, by paying attention • Finance; to their motivation levers, listening to them, taking their • Risk Management and Control; suggestions into account, adapting to their changing requirements and aspirations, providing them with a host • Real estate, purchasing and central services; of user-friendly, easily accessible, professional services • Innovation and new business lines; (relating to the management of human resources, worktime • Legal affairs; management, the management of workspaces, IT tools and services, concierge services and other services to improve • Strategic marketing; their everyday life, etc.). This strategy, initiated in • Social and environmental responsibility; 2017-2018, has given rise to notable breakthroughs, Human resources; such as the mainstreaming of teleworking at Nexity in 2018 • (see Chapter 3 “Statement of non-financial performance” • Strategy and development; and in this Universal Registration Document). • Technologies and IT systems. In Nexity’s organisational structure, the Internal Clients The following brief presentation focuses on the strategy of comprises all the functions which are mainly focused on Nexity’s Internal Clients. It describes the main issues employees, on Nexity’s cross-functional concerns and on concerning the management of human resources and IT support for the operational teams dealing with external systems. clients, i.e. mainly the following departments and teams:
1.5.1 Employees: levers of future growth
The men and women who make up Nexity’s teams are the Remuneration is a prime factor to attract and retain Group’s “human capital”. Nexity considers its human capital employees. Nexity thus seeks to recognise and reward to be its main resource and the cornerstone of its business Group employees for their contributions, taking into model and as such, believes that its main risk is that of the account both individual and collective performance, loss of skills. Against a backdrop of stiff competition on the while guaranteeing fairness and promoting solidarity. labour market, one of the Group’s main challenges is thus Nexity has put in place an attractive remuneration policy its capacity to attract and retain talents – the Group’s key involving a profit-sharing scheme (€17 million paid out in production factor and its future growth lever. 2018 under the Group’s profit-sharing and incentive programme).
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Moreover, the Group has had an employee shareholding Nexity wishes to develop its relationships with schools by policy for a number of years to allow each employee to diversifying its partnerships, for example: 1 become a shareholder (at the end of 2019 employees and • The Group’s senior executives were involved in the 2H managers held nearly 18% of Nexity’s share capital). MasterClass at ESTP, to make the Nexity brand more Furthermore, in order take the provisions of the PACTE Act visible for recruiting; into account, on the one hand, and to encourage more employee shareholding, on the other hand, Nexity on • A partnership with the “School of the second chance” January 2020 paid a unilateral matching contribution to in order to connect directly with students through the enable all employees to become shareholders in the Group. transfer of skills; and In order to develop talents and boost employee • Encouraging young people to go on observation work commitment, Nexity has implemented a more inclusive placements with the Group’s business lines. recruitment and career management policy encompassing In this respect, and with the aim of becoming a preferred in particular: employer, the Group has set itself ambitious goals in these • Skill development, for example through a personalised areas, including: and collective development programme called Next • Doubling the number of employees having benefited aimed at employees who meet certain objective criteria from an internal transfer by 2020; defined during talent review meetings (144 employees have taken part in this programme since its creation); • 35% women (compared to 34% in 2019 and 31% in 2018) at the end of 2020 in “Club 1797” bringing • Internal mobility: almost 300 employees benefited from together the Group’s top 100 managers; and an internal transfer in 2019; and • Employee voluntary turnover rate: less than 10%. • Monitoring of diversity. 1.5.2 Significant computerisation and digitisation effort
Quality of life at work is a major factor to attract and retain The Nexity Group has initiated an in-depth transformation employees. In this respect, Nexity offers a wide range of of its “IT Systems” function, with the aim of taking better measures that enhance its employees’ well-being, improve advantage of the disruptive opportunities offered by digital their working conditions and promote a good work/life technologies. balance. These initiatives include: This transformation is materialised by an in-depth change • The roll-out of nomadic working; in the operating model, which has been refocused on the The pilot-testing of flexible office concepts; and Group’s core skill to build, in close connection with • operations, the very high-added-value tools making it • Training and the roll-out of new collaborative working possible to deliver and develop business operations. methods (lean startup, etc.). The concrete elements that materialise this transformation Nexity is also bringing about in-depth changes in its fixed include the following: and mobile work tools in order to provide its employees with the latest state-of-the-art technologies to improve • A transition towards mainly public cloud computing, their communications (video-conferencing or instant with the aim of becoming a company without a data messaging) and collaboration (on-line document sharing, centre in 2019. This objective was achieved in July 2019 corporate social network and internal data search). with the closure of the last data centre belonging to the Group; In 2019, the Group invested €26.5 million in its IT systems and digital technologies (versus €16 million in 2018). • Entering into strategic long-term agreements with This increase in capital expenditure, which will continue partners who are leaders in the sectors of facilities without affecting the Group’s profitability, is due to: management, IT system renewal and development. These agreements are based on reciprocal • An overall upgrade across the real estate sector; commitments to results, in order to guarantee service • Nexity’s rapid shift towards a service-oriented company levels and secure investment programmes; and model, implying, by definition, the more intensive use • A sharp increase in expenditure for the renewal and of IT and communication technologies; development of digital tools for the Group’s core • An unprecedented effort to redesign the Group’s main business activities, i.e. real estate development and business-specific applications (mostly developed services. in-house) and upgrade the employees’ IT tools; and The aim of these investments is to improve the client • Digitisation of the Board of Directors’ processes. experience, significantly increase productivity and improve the security of the IT system.
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These investments were materialised as follows in 2019: To ensure their success, these investment programmes are • The activation of a dynamic steering system for new real accompanied by the bolstering of the teams in charge of estate sale prices; their implementation, through the hiring of numerous experienced employees coming from business segments • The commissioning of a new quality management tool boasting high digital maturity. (market standard), known as Kaliti; These investment programmes have already improved and • The conclusion of a fixed-price contract to design and will continue to improve the agility of the IT system, develop the first batch of the new back office for making it much more open to the outside for the benefit of residential real estate and to launch the works; the Group’s clients, partner suppliers and subcontractors, as • The selection of the “Oracle ERP cloud” accounting well as more secure and offering numerous solution to replace all the Group’s accounting systems high-added-value services. and the conclusion of a fixed-price implementation The IT system will be made more agile and open through contract for this solution; and an assertive strategy allowing high upgradability and • The conclusion of a design and development contract interoperability. for an integrated solution for the transactions and At the end of this multi-annual investment cycle, Nexity lettings business line. will have a state-of-the-art IT system generating high added value and placing the Group at the cutting edge of the real estate sector.
1.6 INVESTMENTS, INNOVATION AND INTELLECTUAL PROPERTY
1.6.1 Investments
Apart from the financing of purchases involved in the External growth investments over the last three years are operating cycles of its development activities (Residential presented below. Real Estate and Commercial Real Estate) and its urban The Group did not carry out any significant acquisitions in regeneration business (Villes & Projets), which mainly 2017. consist of inventory components and work in progress held for sale (land, refurbishment and construction work, etc.), In 2018, the Group acquired an additional 18% stake in the various types of investments are carried out by the Group: Ægide-Domitys group, bringing its total equity interest to 63.16%. It also took a majority stake of 53.80% in the • Day-to-day operating investments for its activities capital of Bureaux à Partager (Morning Coworking) and (fitting out, IT, furniture, maintenance and renovation of acquired various individual property management firms. serviced residences and short-term rental and The total purchase price of the shares was €81.9 million, to surfaces, etc.); which is added an estimated €141.6 million in • External growth investments with the aim of developing commitments to acquire minority interests. the Group’s business by way of acquisitions of In 2019, the Group acquired 71.3% of the capital of companies, equity interests, business goodwill or Accessite, a French company specialising in advice and contributions; and management for commercial property assets, acquired • Investments that are more financial in nature, through 100% of Etoile Property Management (a property manager acquisitions of minority interests (in particular as for large international investors) and various property carried out by the investment business). management firms. The total purchase price of the shares For further information on purchases involved in the was €14 million, to which is added an estimated operating cycles of the Group’s development activities and €4,6 million in commitments to acquire minority interests. its urban regeneration business (including land The Group’s investment activity cannot be compared in a acquisitions), as well as minority interests acquired by the meaningful way to the main players in the market in France investments business, see the following Sections of this because they are often connected to large real estate chapter: 1.2.2.2 “New homes”, 1.3.2.2 “Commercial Real investment funds. Estate develoment”, 1.4.2 “Urban regeneration (Villes & Projets)” and 1.4.3 “Fund dedicated to the transformation of office space into housing”. The current operating expenses represented €63 million net in 2019 for the whole Group (€48 million in 2018 and €33 million in 2017), including €20 million for fitting out Domitys residences for seniors and €6.1 million for short duration workspaces (Morning Coworking), the remainder pertaining to the IT investments (€26.5 million).
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In particular, since 2018 the Group has held two interests in these funds (see Sections 1.4.3 “Fund dedicated to the land optimisation funds in order to facilitate land sourcing transformation of office space into housing” and 1.4.4 1 in partnership with other investors. In 2018 and 2019, “Land optimisation fund (Terrae Optimae 1)” of this €0.4 million and €5.2 million, respectively, were invested in chapter.
1.6.2 Innovation
Nexity’s transformations in recent years have been Nexity is considering the industrialisation of its construction accompanied by an innovation policy involving all the processes in response to a context in which construction Group’s subsidiaries and employees and is basically costs are increasing, but also to improve its environmental structured around three large areas: the dissemination and footprint, the quality of its products and its delivery times. stimulation of innovation at all Group levels, the incubation This involves industrialised, off-site factory construction of new real estate trades and investment as a strategic tool. with the standardisation of processes, the massification of volumes, and the automation of assembly lines, whilst preserving the differentiation of architecture and the personalisation of the dwellings.
1.6.2.1 360° innovation In order to disseminate, support and coordinate innovation • Presence at major national (Vivatech, Mipim for all its employees, Nexity provides assistance to all its Proptech, etc.) and international events operational personnel in their innovative actions through: (CES, Websummit, etc.) in order to maintain a Methodological support; and panoramic view of innovation in the sector and to • provide targeted reports to operational personnel; and • The identification of relevant players (from a database of over 1,600 startups in all real estate sectors). • Participation in the efforts by players in the sector (Smart Building Alliance, Paris&Co, Impulse Partners, The teams also maintain a permanent watch activity for Real Estech, etc.). the Group’s deciders and entities: This positioning, which is both anchored in the operational personnel’s daily work and at the heart of the innovation ecosystem, enables the innovation teams to contribute to the development of the Group’s strategy.
1.6.2.2 Incubator for new real estate business lines The real estate business lines must reinvent themselves in Nexity Startup Studio response to technological, societal and environmental Startup Studio, which has been running for three years, is revolutions. Nexity’s strength in this contact lies in the located at the heart of the Group’s registered office. Every collective intelligence of its employees. A range of actions year, this 250-square-metre space is the venue for two has been set up to harness this intelligence: promotions of five projects with a four-month • Nex’Idea brainstorming (involving almost one accompaniment programme, during which each team has employee in six in 2018 and 2019); the methodology to transit from the idea to the functional • Training and awareness on new tools and methods product including obtaining the first revenue. (construction of the business plan, pitch, design Startup Studio is the origin of several activities which are thinking, etc.); being deployed in the Group, in particular an offer called • Intrapreneurship within Startup Studio (see section Ateliers NX (https://www.lesateliersnx.fr/) in customised below); and real estate codesign, Voltaïc, an advice and equipment offer to encourage self-consumption of renewable energies in • Welcoming and assisting external startups to bring urban complexes, or Real Value to redevelop and enhance employees into contact with relevant themes. the basements of commercial buildings.
1.6.2.3 Investment strategy Nexity also invests in young innovative companies either Taking interests, often minority interests with the prospect via venture capital-type funds or directly. of taking control in the future in favourable cases is used as an accelerator for innovation and guarantees an alignment of interests in the medium- and long-term.
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1.6.3 Intellectual property
The intellectual property rights of the Group and its • Certain individual property management networks, such subsidiaries mainly consist of brands and domain names as as Oralia, or certain property developers such as well as, occasionally, patents, designs and models. Edouard Denis or Primosud, and Ægide-Domitys for The Nexity brand and its logos, style guide and associated serviced residences for seniors, use their own brands Internet domain names are constantly monitored to protect because of the specific nature of their business and them from any fraudulent usage that would damage the their strong brand identity in their markets. Group’s image. Moreover, the Group continues to add new brands to its The Group’s activities are either covered by the Nexity portfolio on a regular basis, using them to promote its brand or by their own specific brands. subsidiaries’ flagship products and services. For example: The Group owns or holds the rights to use all its brands. All the intellectual property rights of the Group and its • The Century 21 brand is used under a licensing subsidiaries are protected in France and, when their agreement entered into with Century 21 Real Estate business so requires, internationally. Corporation, which is governed by United States law. This case is an exception since the Group generally The Group’s Legal Department centralises and coordinates owns all the brands it uses; the management of the intellectual property rights portfolio of the Group and its subsidiaries. It is assisted by • iSelection and PERL, which work with various specialised firms that provide regular updates and developers, and therefore continue to use their own monitoring. It is also in charge of putting into action the brands; and necessary procedures and avenues of legal recourse should a third party breach the intellectual property rights of the Group and its subsidiaries.
1.7 LEGISLATIVE AND REGULATORY ENVIRONMENT
There is no specific regulatory regime governing the Group’s Environment Residential and Commercial Real Estate operations in France. The Group must nevertheless comply with The Group is also bound by environmental regulations. numerous rules and regulations in carrying out its operations. The Group’s activities are governed by several legal frameworks including, at the national level, the provisions of Act No. 2016-1087 of 8 August 2016 on reclaiming Urban planning biodiversity, nature and landscapes; Order No. 2016-1058 of 3 August 2016 on the reform of project environmental In its role as project owner (maître d’ouvrage) and designer assessment procedures, applicable from 1 January 2017 of its property developments, the Group must comply with and 1 January 2018; and Order No. 2017-80 of 26 January applicable urban planning regulations set forth in local 2017 relating to the single environmental authorisation, zoning laws promulgated by city governments applicable from 1 March 2017. (plans locaux d’urbanisme). Such regulations include rules The Group is also bound by the applicable provisions on regarding the height of buildings, space between buildings, polluted sites and soil (see Sections 1.3.2.2 “Commercial principles for installation on land, permitted waivers and Real Estate development” and 1.3.2.2 “Project procedures the exterior and aesthetic aspects of structures. and risk management” of this Universal Registration The successful completion of complex projects requires the Document). partners involved to have well-rounded capabilities as well as a high level of expertise in real estate development. Recent years have seen significant urban planning reform in France (ALUR, Pinel, Mandon, Macron, Maptam, etc.), whether enacted by ordinances or under the new ALUR Act facilitating access to housing and promoting urban renewal, and more recently through the ELAN Act of 23 November 2018.
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In addition, the ALUR Act introduced the following provisions reserved property with the provisions of the final sale deed; relating to polluted land and the remediation of sites: the obligation to place the reservation deposit in escrow; 1 • Measures to notify the public have been tightened, in and the obligation to comply with the schedule for future particular by creating “ground information zones” (SIS in payments. However, these protective rules apply only to the French) with stricter notification requirements when “protected” sector, meaning buildings or portions of property transactions (sales or rentals) take place; buildings for residential use or mixed use (professional and residential) sold to individuals. Buildings intended • Increased responsibility for ground pollution has been exclusively for professional use are in the deregulated placed on real estate operators via a requirement for sector, and sales of such buildings, if sold under a VEFA project owners to include in building permit and contract, may include contractual conditions freely development permit applications a certificate issued by negotiated between the parties, in particular with respect to a certified surveying organisation guaranteeing the the preliminary contract, future payments and the completion of ground surveys and establishing pollution completion warranty. management measures, which must also be incorporated in the project’s design, whenever a development falls within a SIS ground information zone Liability or land undergoes a change of use following the cessation of activity at a facility that is registered In its Residential and Commercial Real Estate activities, (classé) for environmental protection purposes; and the Group is subject to liability regulations that apply to all parties involved in the construction of a building (proper When or after a registered facility is permanently • operation and ten-year warranties). According to applicable decommissioned, an interested third party may request regulations, there is a presumption of liability on the part of authorisation from the State’s local representative all persons involved in the construction of the building for (the préfet) to take over the facility from the operator any defect, including those resulting from defects in the with its consent and refurbish it for its own intended use. land itself, that compromises the structural integrity of the These provisions have been clarified by various decrees and building or an item of equipment in such a way as to render orders. Lastly, there are regulations in France covering the it unsuitable for its intended use. installation and management of electrical grids to promote Buyers benefit from a ten-year warranty for all structural energy self-sufficiency (collective self-sufficiency, closed defects (i.e. problems that make the building unfit for its systems such as microgrids serving a single building). intended purpose) and a two-year proper operation warranty for all items of equipment separate from the Right to sell construction. Clients can make claims against the Group, which can in turn pursue the party responsible for the As a seller of real estate products, the Group must comply construction defect. This warranty scheme is rounded out with the legal requirements for sale to private individuals. with compulsory insurance instituted by Act No. 78-12 of Article L.271-1 of the French Construction and Housing 4 January 1978, called building damage insurance Code grants non-professional buyers the right to withdraw Dommages-Ouvrage, which must be obtained at the from a purchase for ten days from the day after they receive beginning of construction. This insurance allows the non-notarised contract of sale or the reservation pre-financing for the repair of defects that trigger the contract, if one exists. Therefore, the contract does not proper operation or ten-year warranties. The legal benefit of enter into effect until the end of this cooling-off period, this coverage is transferred to the Group’s clients when they which was lengthened from seven to ten days by the acquire the home, and to their successors if their home is Macron Act of 6 August 2015. The Group must also comply sold. This insurance, together with the other insurance with regulations governing VEFA sales and consumer schemes related to the Group’s business, is described in protection laws as amended by the Hamon Act of Section 2.6.2 “Main insurance policies” of this Universal 17 March 2014, with the exception of its provisions relating Registration Document. to agreements entered into remotely and outside the With respect to the Group’s construction sites, the Act of Company, as real estate transactions were subsequently 31 December 1993 and the Decree of 26 December 1994 excluded from the scope of this legislation by the Macron require the construction project owner (maître d’ouvrage) Act of 6 August 2015. to designate, from the time the construction project is The Mandon Act of 20 December 2014 designed, a safety and public health (Sécurité et protection (Act No. 2014-1545) amended and corrected certain de la santé or SPS) coordinator. Aside from designating this provisions of the Hamon and ALUR Acts. coordinator, the Group’s policy is to anticipate and identify the risks associated with its construction projects. As regards the VEFA scheme covering off-plan property The Group puts in place prevention plans at construction sales, the regulations lay down a number of public sites to identify risks and notify the various involved parties provisions designed to protect homebuyers. They include an of potential risks. Under its obligation of due diligence, obligation to sign the contract of sale in notarised deed it also monitors compliance with provisions intended to form; the obligation to provide a warranty of completion (in prevent illegal labour and subcontracting; as such, it bars the form of a bank guarantee); the obligation to sign a access to construction sites for companies it has not preliminary contract with clauses related to the client’s approved. assessment of the compliance of the project and the
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Hoguet Act on intermediation activities • Take out professional indemnity insurance to protect them against losses arising from mistakes made in the The Group, through some of its subsidiaries, engages in course of performing their duties; and brokerage operations. • Maintain a register of agreements. Professionals may Professionals operating in these roles must comply with the only act where they hold a written agreement signed by provisions of Act No. 70-9 of 2 January 1970, known as the the individual on whose behalf they are acting and Hoguet Act, and its Implementing Decree No. 72-678 of stating their responsibilities and the amount and terms 20 July 1972, subject to criminal penalties. In particular, of their remuneration. Each agreement must be they are required to: numbered and recorded in a register. Any professional who does not comply with this requirement is liable to • Hold a professional licence issued by a chamber of incur criminal penalties (up to two years in prison and a commerce and industry for a period of three years, €30,000 fine) and administrative sanctions, including subject to conditions relating to professional having his or her professional licence revoked, such that competence and good standing. This licence must state he or she is no longer able to carry on the profession. the activity or activities undertaken by the holder (“property and business transactions” and/or “property management” and/or “managing agent services” and/or Condominium law “tourist services”); The condominium management agent profession is strictly Be covered by a professional guarantee issued by a bank • regulated by Act No. 65-557 of 10 July 1965, as amended or industry body (Article 3 of the Hoguet Act and its by Order No. 2019-1101 of 30 October 2019 reforming said Implementing Decree of 20 July 1972) for an amount of profession, and in particular: at least €110,000 (€30,000 if they were first licensed within the last two years). However, Act No. 2010-853 • Contractual tasks specified in a standard term contract of 23 July 2010 on chambers of commerce and listing: industry, retail, trades and services removed the • the services which are subject to an annual fixed obligation to be covered by a professional guarantee for sum invoiced to the Condominium Owners’ estate agents who make a sworn statement to receive Association, and no funds, bills or securities from their clients, by the associated services which are exhaustively amending Article 3 of the Hoguet Act; • listed; • The term of the condominium management agent’s contract and the organisation for regular and competitive tendering; and • The administrative and accounting organisation due to its status as an agent (keeping archives, opening separate accounts for each property under management, etc.).
1.8 MATERIAL CONTRACTS
Nexity considers the contracts it signs to be material when they have a significant weight in the Group’s business activity focused on a sole counterparty or which could have reputational importance given their visibility if they were badly performed or delivered late.
Partnership agreements with CDC Habitat (formerly SNI) and in’li (Action Logement group) – social and intermediate rental housing
In October 2018, Nexity signed a new memorandum of In October 2018, Nexity also entered into a five-year understanding with CDC Habitat (formerly SNI), bringing framework agreement with in’li (Action Logement group) the intermediate housing target to 5,000 units for the for the annual construction of 1,000 intermediate rental 2018, 2019 and 2020 financial years. This new housing units in the Paris region. In early 2018, Action memorandum of understanding also provides for the Logement announced that it would acquire 100,000 annual construction of 1,000 social housing units to be sold intermediate housing units in France by 2025. off-plan over the 2018-2020 period. In 2018, in’li reserved 192 intermediate homes in In 2019, CDC Habitat, directly or indirectly through the programmes developed by Nexity (versus 189 in 2018). intermediary of Fonds de logement intermédiaire (FLI) or Société pour le logement intermédiaire (SLI), reserved 1,240 intermediate and social homes (“Contractualised affordable homes”) 10% to 15% below the market rent in programmes developed by Nexity (compared to 2,015 homes in 2018).
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Signature of an agreement for the sale of the eco campus in La Garenne-Colombes (92), in partnership with Engie (future user) 1
In 2018, Nexity signed a financial and technological This operation will represent potential revenue (Nexity’s partnership with Engie to jointly1 acquire and transform a share) of around €1 billion recognised as the project 9-hectare industrial site located in La Garenne-Colombes, advances (between the signature of the final agreement in Hauts-de-Seine (92), into an eco-district. and delivery). An agreement subject to the condition precedent of obtaining the administrative authorisations was signed in December 20192 with Swiss Life Asset Managers France to acquire (planned for the end of 2020) this complex with a total surface area of 135,000 square metres.
Partnership between Société de Livraison des Ouvrages Olympiques (SOLIDEO) and the consortium comprising Nexity, Eiffage, CDC Habitat, EDF and Groupama to build sector E of the Athletes’ Village in Saint-Ouen-sur-Seine (93) for the 2024 Paris Olympic Games.
Sector E will cover around 56,000 square metres of floor This project will be exemplary, notably concerning the area in a diverse programme of more than 500 housing sustainable city, and the consortium will bring together more units, an office building, a crèche and business and than 50 French companies involved in a low-carbon initiative commercial units which should accommodate a little over over the whole of France. Eiffage Construction is proposing 2,500 athletes and para-athletes in the summers of 2024 an economic construction method combining wood and and 2025. low-carbon concrete which will reduce the project’s carbon footprint by 75% compared to the London Games. The respect of the delivery date (the end of 2023) is essential to ensure that the Paris Games run smoothly.
1 See press release dated 13 July 2018. 2 See press release dated 20 December 2019.
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2 RISK MANAGEMENT
2.1 RISK MANAGEMENT AND INTERNAL CONTROL 2.4 DUTY OF CARE 101 77 SYSTEM 2.4.1 Procedures for assessing the situation 2.1.1 General framework and objectives of risk at subsidiaries, subcontractors and suppliers 106 management and internal control 77 2.4.2 Whistleblowing procedure 106 2.1.2 General organisation and objectives of the 2.4.3 Monitoring system for measures implemented 106 Enterprise Risk Management Department (ERMD) 80 2.1.3 Internal Audit Department 86 2.5 FRAUD PREVENTION SYSTEM 107
2.2 SPECIFIC RISK FACTORS AND THEIR MANAGEMENT 86 2.6 LEGAL AND ARBITRATION PROCEEDINGS 107 2.2.1 Summary of the main risks of Nexity 87 2.2.2 Description of specific risk factors and risk control systems 88 2.7 PROCEDURES RELATING TO THE PREPARATION AND PROCESSINGOF FINANCIAL AND ACCOUNTING INFORMATION 108 2.3 BUSINESS ETHICS AND REGULATORY 2.7.1 Procedures for preparing and approving COMPLIANCE 99 the consolidated financial statements 108 2.7.2 Budget procedures 108 2 RISK MANAGEMENT
The Nexity Group operates in a continuously changing procedures on the issues of prevention of the risks of environment and, like all companies in its sector, corruption and influence peddling, money laundering is inevitably exposed to risks whose occurrence could have and financing of terrorism. It also ensures compliance material impacts. with the legal obligations pertaining to transparency in To ensure its continued development and the achievement public life. Lastly, in close collaboration with the CSR of its objectives, the Group ensures that it identifies and Department, it ensures the roll-out of the Group’s duty manages its risk exposure in the regions where it operates of care; and in its different areas of activity: development and • The Group’s Compliance Officer who is responsible for completion of real estate projects; and real estate services. the processing and monitoring of alerts relating to Nexity’s risk management approach is defined and ethical issues and situations that might give rise to implemented by the Enterprise Risk Management conflicts of interest or risks to the Company. Department (ERMD) under the responsibility of Executive He performs his duties with complete independence, Management. It encompasses a range of resources, reporting directly to the Chairman and to the Executive behaviours, procedures and actions to manage the Management of Nexity; Company’s main risks. • The centralised functional departments, responsible for To ensure the proper functioning of the system, Executive areas of expertise such as finance, legal affairs, human Management also relies on: resources and information systems, in coordination with the subsidiaries and the Group’s operational • The Internal Audit Department, following a restructuring departments; and in 2019, reports directly to Executive Management for the sake of independence; • The network of Risk and Compliance Officers, launched at the end of 2019 by the ERMD in collaboration with • The Compliance Department, which is now part of the the Compliance Department, consists of 53 officers for Legal Department, following a restructuring in 2019, an extensive coverage of the Group’s subsidiaries and and reports directly to Executive Management. departments. Their role is to act as relays, in their It designs and implements the Group’s compliance respective entities, for the various information and programme. It has the necessary expertise and awareness-raising initiatives on the prevention and independence to define and implement the rules and control of Group risks.
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2.1 RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
2.1.1 General framework and objectives of risk management and internal control 2 Internal audit Risk management
Compliance Officer System efficiency Risk identification audit and assessment
RISK
Risk control Decision on Insurance and transfer handling risk Executive Safety – Management Prevention
Risk checks and process
Internal Compliance control
The risk and compliance officers are involved throughout the process
Reference framework Nexity uses the key principles contained in the reference framework recommended by the AMF (Autorité des Marchés Financiers) and its implementation guidelines published in January 2007, and updated in July 2010, to define its internal control and risk management reference framework. This ensures a consistent and uniform approach across the Group and facilitates compliance with the French Financial Security Law (known as LSF - Loi de sécurité financière).
Objectives of risk management and internal control Key principles of risk management • Rally the Group’s employees around a shared vision of Risk management refers to a permanent set of the main risks and make them aware of the issues and arrangements that enable Executive Management and risks relating to their activities. Nexity’s managers to identify, assess and contain any risks Key principles of internal control that could have a material adverse impact on the Company’s ability to achieve its objectives, its staff, assets, The Group’s internal control system is defined by Executive environment or reputation. Risk management forms an Management and implemented by all employees. integral part of all Group processes (business lines and It complements the risk management system, since it support functions) and informs decision-making. serves to identify and analyse risks while playing an active role in addressing them, in particular through the In particular, risk management aims to: implementation of controls. Internal control helps control • Safeguard decision-making and the Group’s strategic, all activities, the efficiency of its operations and efficient operational and support processes in order to facilitate use of its resources. It thus allows the Group to the achievement of objectives; appropriately assess material risks, whether strategic, operational, financial, employee or compliance. • Create and protect the Group’s value, assets and reputation by identifying and analysing the main threats and opportunities; and
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More specifically, the system aims to ensure: The Enterprise Risk Management Department, in conjunction Compliance with applicable laws and regulations; with the Group’s Executive Management and all functional • departments, focuses its actions in the following specific • The application of instructions and guidelines set by areas: Executive Management; • Promoting the management and control of risks from • The proper functioning of the Group’s internal start to end of the value creation chain: risk analysis, processes; and prevention, monitoring plans of action, transfer to • The reliability of financial and accounting disclosures. insurance, internal control; Generally speaking, the internal control system plays an • Supporting Nexity’s development and transformation by essential role in the conduct and management of the encouraging calculated risk taking; Group’s activities. • Strengthening and promoting the dissemination of a Principles of action and behaviour shared risk management culture, encouraging innovation and Nexity’s development; The control environment, essential to the internal control system, proper risk management and the application of • Supporting subsidiaries and cross-functional procedures, is also based on behaviours, actions, organisation departments in identifying and implementing action and employees. plans (in particular by putting in place a consistent risk identification and assessment methodology appropriate The smooth running of the Nexity’s organisation is based for Nexity); and on, among other factors, compliance with the clear principles of action and behaviour that frame its activities • Giving management at all levels a consolidated view of and its development: risks and of the related control measures. • Strict application of the Group-wide rules, particularly in terms of committed transactions, for Individual Clients as Risk Management Committee well as Commercial Clients and Local Authority Clients; Set up in 2019, the objective of the Risk Management • Knowledge of and compliance with the Group’s Code of Committee is to ensure the effectiveness of the risk Conduct, the principles of which are reiterated in the management system in place within the Group. It meets Codes of Conduct of companies which are majority-owned every two months and may be asked to issue an opinion on by the Group (see Section 2.3 “Business ethics and the main Group risk policies. regulatory compliance” of this chapter); It is a body that monitors and approves the action plans • Transparency and loyalty of employees towards their relating to the Group’s material risks. line managers at the operational level and at the This Committee is led by the Director of ERMD and chaired central functional departmental level (divisions and the by the Deputy CEO in charge of Internal Clients and Group holding company); Company officer. The Committee also consists of the Group • Responsibility of the executives of operating entities in Company Secretary, the Compliance Director, the communicating the above principles to their teams Compliance Officer, the Operational Legal Director and DPO, using the most appropriate means. the Head of Information Systems Security, the Internal Audit Director (and, as and when required, the Group CFO Risk management governance at Nexity and the Group Human Resources Director). Risk management and internal control is everybody’s Risk Communication/reporting concern, from the employees to the governance bodies. The Enterprise Risk Management Director provides a status This system, managed at the central level by Executive report on a regular basis on the management of the main Management with the support of the Enterprise Risk risks (change, criticality, mitigation measures, controls) Management Department (ERMD), is continuously to the Risk Management Committee, the Operational monitored in order to ensure that it is relevant and Management Committee and the Strategy Committee. adequate for the Group’s objectives and challenges. Executive Management also ensures that information is The main bodies involved in internal control and risk properly and regularly reported to the Board of Directors management are: and to the Audit and Accounts Committee. The Audit and Accounts Committee; • To ensure better information on the monitoring and control • The Strategy Committee; of the Group’s main risks, a specific meeting of the Audit • The Operational Management Committee; and Accounts Committee is now also held, in addition to the regular items on the agenda on these matters. The first • The Commitments, Purchasing and Investment meeting of the Audit and Accounts Committee on this Committees; and subject was held in January 2020. • The Risk Management Committee. Thanks to these actions, the Group is able to inform its shareholders, clients, partners and employees on the proper management and control of its risks.
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Risk appetite In order to prevent and effectively manage its risks, Nexity Overall, the Group considers that its managers and adopts a moderate risk appetite policy leading it to limit employees demonstrate a shared culture of risk and control acquisitions of high-risk land assets, manage its management and works continuously to reinforce it. real estate development operations within a prudential Risk analysis is integrated into the Company's various 2 framework, ensure its commitments are highly diversified, processes: governance, operational and support processes. and avoid speculative activities and those with high fixed Measures aimed at the continuous improvement of risk costs. management are regularly implemented, in particular by The Group also aims to ensure that it conducts its business raising the awareness of employees and involving them in activities at all times in compliance with the legal the deployment of control systems. requirements applicable to its various business lines and with the rules on business ethics. In this regard, it requires its employees to refrain from taking any decisions for which they, the Group’s executives or any Group companies may be held criminally liable, and has introduced appropriate training for its employees (see Section 2.3 “Business ethics and regulatory compliance” of this chapter).
Board of Directors Audit and Accounts Committee
Executive Management Strategy Committee/Operational Management Committee/Risk Management Committee
1st LINE OF DEFENCE 2nd LINE OF DEFENCE 3rd LINE OF DEFENCE Line managers Departments Internal Audit External All entities Finance Compliance Officer Audit All activities Human resources Legal affairs Compliance Information systems
Network of risk and compliance officers Risk Management and Control Department
The 1st line of defence corresponds to the risk The 2nd line of defence corresponds to the various The 3rd line of defence covers the effectiveness and management and control measures implemented by functions that contribute to monitoring risk control and consistency of the first two lines of defence and consists employees and managers within the operating entities compliance. This involves the Risk Management and of Internal Audit, reporting to Executive Management, for and coordinated by the Risk and Compliance Officers Control, Legal affairs, Finance, Compliance, and overall assurance, and the Compliance Officer, whose role within the subsidiaries Information Systems Departments, as well as other is to ensure the proper application of the rules of ethics functional teams responsible for areas of expertise
Three lines of defence The risk control system implemented by Nexity is based on Under this model, the roles and responsibilities of the three lines of defence illustrated above (in accordance operational management, cross-functional departments with the model defined by the French Institute of Audit and and Internal Audit are defined. Internal Control – IFACI) and is under the supervision of Executive Management.
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2.1.2 General organisation and objectives of the Enterprise Risk Management Department (ERMD)
2.1.2.1 Organisation of the ERMD The Enterprise Risk Management Department (ERMD) is At 31 December 2019, ERMD had 20 employees and tasked with the optimised coordination of the overall risk consisted of the following units: management system within Nexity. • Risk Management and Internal Control; It is a department that serves Internal Clients, contributing Insurance; and to Nexity’s performance through its advice and expertise, • and ensuring its safety through preventive actions and • Prevention and Safety. appropriate controls.
2.1.2.2 Risk Management and Internal Control This team is responsible for spearheading and guiding the Control measures are then identified. Their effectiveness is Group’s overall risk management. It also contributes to the taken into account to determine the control level or the risk dissemination of a common and shared culture among all coverage level. This control level is also classified on a employees and the reinforcement of the crisis management four-level scale: Absent to Highly Satisfactory. system so that the Group can respond appropriately in the The risk’s residual criticality level can then be determined event of occurrence of a crisis. based on the following factors: major, important, significant This team is also responsible for the definition of a risk or minor. analysis methodology, which is regularly updated to ensure A summary of the major risks is then presented to the Risk alignment on current best practice and with a view to Management Committee and approved annually by the continuous improvement. This methodology, which is Strategy Committee and the Audit and Accounts Committee shared internally, serves as the basis for drawing up the (see table of presentation of the major risks below with the Group’s risk mapping. In 2019, the scales and thresholds risks grouped under seven new categories). In March 2020, were reviewed to ensure a uniform presentation of the risk the risk of a health crisis was added following the Covid-19 levels. Each risk is characterised by its two components, epidemic. As it is a systemic risk, it is not included in the namely its impact and its likelihood of occurrence. These scale of analysis of the residual criticality level. are classified on four levels from Low to Very High as regards impact, and from Certain to Exceptional as regards the likelihood. Moreover, the impact is defined according to its nature: financial, legal, reputational. Major
INFORMATION HEALTH CRISIS* STRATEGY SYSTEM (NET RISK)
HUMAN COMPLIANCE BUSINESS LINE RESOURCES
RELATIONS WITH FINANCIAL THIRD PARTIES RESIDUAL CRITICALITY LEVEL
Minor * Item added in March 2020 following the Covid-19 epidemic
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CATEGORIES RISK DESCRIPTION Health crisis* Strategy Disruption of the business model Unfavourable changes to taxation or regulations applicable to real estate 2 Shortcomings in the management of major partnerships Non-compliance with CSR requirements Shortcomings in reputational crisis management Difficulty in the management and control of subsidiaries Information system Failure in Information System continuity Information System obsolescence Shortcomings in the management of authorisations and accesses Human resources Mismatch between skills and changes in the Group’s business lines Turnover Extended unavailability of a key executive Compliance Non-compliance with compliance rules Non-compliance with delegation rules Business lines Land shortage Construction cost overruns Serious incidents at construction sites Difficulty in the management of businesses outside France Client solvency Relationships with third parties Quality defect in products/services Counterparty risk Financial Internal/external fraud Liquidity risk
* Item added in March 2020 following the Covid-19 epidemic.
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Presentation of the major risks 2019 LOW LOW IMPACT IMPACT
• Internal/external fraud • Difficulty in the management of businesses outside France MODERATE MODERATE
• Shortcomings in the management of authorisations • Counterparty risk • Extended unavailability of a key executive and accesses • Non-compliance with compliance rules • Difficulty in the management and control of subsidiaries • Quality defect in products/services • Non-compliance with delegation rules • Shortcoming in reputational crisis management • Land shortage • Serious incidents at construction sites • Liquidity risk • Construction cost overruns • Non-compliance with CSR requirements • Client solvency risk
SIGNIFICANT • Shortcomings in the management of major partnerships • Turnover • Mismatch between skills and changes in business lines
• Unfavourable changes to taxation or regulations • Disruption of the business model • Health crisis* applicable to real estate • IS obsolescence • Failure in IS continuity VERY SIGNIFICANT VERY
CERTAIN LIKELY UNLIKELY EXCEPTIONAL LIKELIHOOD OF OCCURRENCE RESIDUAL CRITICALITY LEVEL MAJOR IMPORTANT SIGNIFICANT MINOR
* Item added in March 2020 following the Covid-19 epidemic
The Group's risk analysis was carried out at the end of Furthermore, through the regular update of the risk December 2019, and was validated by the Audit and analysis, the Risk Management and Internal Control Team Accounts Committee on 23 January 2020. At that time, the identifies the control procedures to be updated and risk of an epidemic was not considered to be major for the documented. Group. With the involvement of local management and As of the date of this Universal Registration Document, and operational staff, and, in 2020, with the Risk and taking into account the current health situation, the Group Compliance Officers, it endeavours to identify and define has implemented appropriate health precautions, and a control activities and their traceability, and estimate the crisis management unit is monitoring the situation as it extent to which the associated risks are covered. The team evolves. Business continuity arrangements have also been is then involved in determining a formal risk and control defined and are in operation. They will be adjusted in matrix for monitoring purposes. accordance with developments in the situation. As early as At the same time, it raises awareness and assists 20 March 2020, the Group has communicated on its employees in any need to improve control systems and current inability to determine the impact of the coronavirus may make recommendations if necessary. crisis on Nexity's 2020 results and on the outlook given to the market, the main unknown being the duration of the Achievements in 2019 epidemic crisis and the duration of precautionary health The 2019 financial year was primarily dedicated to work to measures (see paragraph 5.2.2.2 "Information relating to improve the risk management and internal control system, the impact of Covid-19 on Nexity's activities (press release in particular by analysing existing practices. The main dated 7 April 2020)" of this Universal Registration objective of this analysis was to identify improvement Document). levers to make the existing system more dynamic. The risk factors that are most significant and specific to the Company are presented below in Section 2.2 “Specific risk factors and their management”. The risks related to CSR issues are detailed in Section 3.1.2 “The Group’s main CSR risks” in Chapter 3 “Statement of non-financial performance”.
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This analysis covered the identification of control measures 2.1.2.3 Insurance within the Group’s various entities and an assessment of their maturity level. This team works to secure the Group’s portfolio and assets, comply with legal obligations, contractual commitments with Following this analysis, the team reviewed its priority regard to clients and insurers/partners and ensure that measures based on a roadmap presented to the Strategy insurance cover is constant, and adapting it if necessary. 2 Committee and the Audit and Accounts Committee. The Insurance Team checks that the Group’s current The team’s work in 2019 concerned in particular: insurance policies provide optimal coverage of the risks • Update of the major risk mapping; that Nexity has chosen to transfer to the insurance market • Continued support to the central departments and and, whenever possible and appropriate, implements business lines to prepare and update their mappings Group-wide insurance programmes that cover all its (methodological support to the Compliance Department subsidiaries. It also supports Nexity’s activities with regard and the CSR Department for updating their CSR to insurance matters. mappings, duty of care and corruption) During the 2019 financial year, an audit of the insurance (see Section 3.1.2 “The Group’s main CSR risks” in policies of the last acquisitions was performed. In line with Chapter 3 “Statement of non-financial performance”); the mobility strategy, the implementation of the Group’s • Continued awareness-raising initiatives among new car fleet insurance policy has been finalised. In 2020, employees about risks; the Insurance Team plans to continue the following actions: • Update of the crisis management procedures of the • Optimising and/or integrating recently acquired subsidiaries business lines (serious accidents at construction sites); into the Group insurance programmes; • Strengthening of the organisation around risk • Gathering the missing documents concerning the building management and internal control via: damage insurance policies (Dommages-Ouvrage); and the setting up of the Risk Management Committee, • Digitising the contractual documents and rolling out the • electronic signature of construction insurance policies • the setting up of a network of Risk and Compliance for Commercial Real Estate and corporate insurance Officers identified in each subsidiary for an extensive policies. coverage of the Group’s business lines; They are involved to: Policy with respect to insurance - raise awareness and relay information on risk The strategy of covering risk by transferring it to the management and compliance, insurance market is validated by Executive Management. - guarantee the proper conduct and The Group has opted for a strategy of transferring its main documentation of controls by operational staff, risks to insurers wherever possible and retaining only a - actively feed back information to the ERMD and small proportion of risk. the Compliance Department, in particular in the Insurable risks are identified taking account particularly of event of failures in internal control and information relating to legal disputes as provided by the compliance, Legal Departments. The Insurance Department takes out The creation of the network at the end of 2019 and appropriate insurance and supervises all teams responsible its coordination is a long-term project initiative at for managing insurance. embedding risk management in Nexity’s corporate Currently, the Group is insured primarily with five insurers, culture; arranged through three main brokers. The aim of this • Update of control procedures; and diversified approach is to ensure continuous risk coverage, • Contribution to cross-functional projects essential to the negotiate the best possible rates and build close Group in order to guarantee that the internal control relationships with brokers in terms of underwriting and recommendations are taken into account. claims management. The Risk Management and Internal Control Team plans to Today, the Group and its operating subsidiaries generally work roll out its roadmap in 2020. with three brokers: Gras Savoye, Deleplanque and Marsh. The main insurers providing cover for the Group’s professional The priority areas will particularly concern the training and liability are Allianz, SMA, MMA, Liberty and Zurich. coordination of the network of Risk and Compliance Officers, improvement of the internal control self-assessment system SMA and Allianz also serve as main insurers for the (extension to other Nexity entities) and update of the Group’s Residential Real Estate and Commercial Real Estate crisis management and business continuity system. construction risk.
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Furthermore, regarding Dommages-Ouvrages (equivalent to provide the necessary infrastructure) each take out a building damage insurance) policies in connection with real Globale Aménageur policy (site developer’s all-risks) with estate development for new homes, the Group has set up SMA, including cover for the ten-year warranty they are an after-sales service team that aims to maintain insurance required to provide by law (Articles 1792 et seq. of the premiums at current levels by increasing excesses and French Civil Code) in the event of building defects arising covering any repair costs within the limit of this excess after delivery. amount. In-house training on construction insurance and For projects developed outside France, construction risk builders’ professional liability insurance is delivered to insurance policies are taken out in each country through operational staff, notably through e-learning modules and local brokers, providing cover that meets or exceeds the awareness-raising actions in subsidiaries. levels required under applicable laws. Main insurance policies Liability insurance for property management Mandatory insurance and brokerage activities Building damage insurance (Dommages-Ouvrage) and In accordance with the Hoguet Act of 2 January 1970 additional cover (see Section 1.7 “Legislative and regulatory environment” of In accordance with the regulations applicable in France to the this Universal Registration Document) a Group policy Residential and Commercial Real Estate business activities managed by Gras Savoye is taken out with MMA to cover described in Sections 1.2.2. “Residential Real Estate” and the subsidiaries operating in this activity. Supplemental 1.3.1.1. “Commercial Real Estate” of this Universal Registration coverage is provided by the umbrella policy taken out with Document, Group companies take out mandatory insurance Liberty, which has a limit of €15 million. This policy has an policies as required by the Act of 4 January 1978 to cover both excess corresponding to the amount of cover offered by the the building under construction (Dommages-Ouvrage, underlying policies, or €300,000 if triggered initially. equivalent to building damage insurance) and liability at the Insurance not required by law level of project management (Constructeur Non Réalisateur, or Construction site insurance CNR, equivalent to site insurance for property developers), A construction site all-risk policy (Tous Risques Chantier, or as well as supplemental ten-year contractor’s liability insurance TRC) providing protection against risks incurred during (Contrat Collectif de Responsabilité Décennale, or CCRD). construction projects is taken out for each project without For the Group’s Residential Real Estate business, insurance exception. Liability insurance for environmental damage policies are taken out with two insurers through two may also be taken out to cover site clean-up risks if deemed brokers: with SMA through Deleplanque and with Allianz necessary by risk analysis. Apart from the required liability through Gras Savoye. insurance in connection with the ten-year structural defects warranty (garantie décennale) in France, the Group also The Dommage-Ouvrage, CNR and CCRD insurance policies takes out coverage for the proper operation guarantee are subject to an annual rate review with SMA and Allianz (garantie de bon fonctionnement), consequential damage so as to obtain a highly competitive premium rate in and, where deemed necessary, damage to existing property relation to rates available in the market, due in particular to and contingent damages. the Group’s establishment several years ago of an after-sales service team. For the Group’s Commercial Real Liability insurance Estate business, Dommages-Ouvrage, CNR and CCRD Liability insurance taken out by the Group covers the insurance policies are taken out individually for each following areas: project, mainly via the insurance broker Marsh. Professional liability. Each Group company takes out its Ten-year project manager’s guarantee insurance own coverage for operational and professional liability, (Assurance décennale Maîtrise d’oeuvre) for example that of the developer in relation to third parties Group companies that serve as project managers are covered or that resulting from project management activities. by specific project manager’s ten-year guarantee insurance In addition, an umbrella plan covers the liability of Group policies. This type of insurance covers payment for repairs companies in excess of the primary coverage taken out by required to address defects arising over a ten-year warranty each entity, in varying amounts. This plan consists of a first period in a building to which the Company contributed as a policy taken out with Liberty Mutual Insurance for a limit of project manager, should its liability be invoked on the basis cover equal to €30 million per loss and per year. This policy of a presumption established under Articles 1792 et seq. of has an excess corresponding to the amount of cover offered the French Civil Code. by the underlying policies, or €300,000 if triggered initially. Ten-year site developer’s guarantee insurance For projects taking place outside France, the Liberty policy (Assurance décennale Aménageurs-Lotisseurs) either is triggered first or provides secondary coverage over Group companies acting as aménageurs-lotisseurs and above existing local policies. This is supplemented by a (a separately defined group of site developers in France, second policy taken out with Zurich, with a limit of cover of who assemble sites, subdivide them into building plots and €20 million per loss and per year.
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Directors’ and officers’ (D&O) liability. D&O liability is Other insurance coverage covered by two policies: one taken out with AIG, with a The Group also has the following insurance programmes in coverage amount of €25 million, and the other taken out place: with Chubb as supplementary insurance, with a coverage An insurance programme taken out with MMA and amount of €10 million. This policy covers the personal • managed by Siaci Saint-Honoré, covering liability and liability of directors and officers as well as both French and 2 damages to the Group’s vehicles and employees’ foreign civil and criminal legal defence costs, whether de personal vehicles used for work purposes; facto or de jure. There is no excess, except in the event of a claim involving non-US securities (€150,000). • An insurance programme taken out with AXA and managed by SATEC, covering damages and liability for Labour-management relations: The Group has taken out owners and renters, for operating premises and property an employment disputes insurance policy with AIG Europe, related to construction projects; and which provides liability coverage for Group companies, their executives and employees as a result of any infringement • An insurance policy covering the risks of personnel in the performance of their duties of rules relating to undertaking business trips abroad. labour-management relations. The cover provided under this policy amounts to €3 million per dispute and per year, with an excess of €25,000. “Cyber Risk/Fraud” insurance The Group has taken out a combined cyber risk/fraud policy with Chubb via the insurance broker Marsh, with a limit of cover and warranties suited to the Group’s risk assessment.
2.1.2.4 Prevention and Safety This team is involved in managing risk and the potential • Conducted classroom-style training sessions in the new impact of the Group’s activities on the health and safety of subsidiaries and “safety and health” modules as part of the Group’s employees, suppliers and clients. the business lines’ professional training; As regards Nexity’s employees, it assists the Human • Continued its analysis of the compliance of assets with Resources Department of each entity in updating the Single regulations based on the purpose of the locations Documents for the Assessment of Occupational Risks (residential, commercial, establishments open to the (SDAOR) and puts in place, in conjunction with the Work public - ERP, high-rise buildings - IGH, facilities requiring Environment Department, the necessary tools for the environmental impact assessment - ICPE); and management of ongoing risks affecting safety. • Maintained the supervision of the verification of From clients’ point of view, it coordinates collaborative electrical and fire hazards, as well as means of platforms on health and safety aspects so as to harmonise evacuating people from Nexity agencies and premises. the quality of reports and establish a risk monitoring policy Furthermore, the team is informed of serious incidents at in accordance with the policy desired by each client. construction sites or managed sites. An incident form is filled Moreover, following inspections of buildings and a in and forwarded for a better understanding of the facts. documentary analysis, it assesses the extent of any The Prevention and Safety team is thus able to assist deviation from regulations and establishes an action plan operational staff, assess strengths and weaknesses in terms to be followed over time. of safety and recommend emergency corrective measures. Lastly, risks generated by the work of internal suppliers or Depending on the nature of the events, the Prevention and clients require an analysis of the joint activity, leading to Safety teams may go on-site and put in place additional the drafting of a prevention plan in accordance with the action plans to prevent the recurrence of these events. applicable regulations. In 2020, the Prevention and Safety team will particularly In 2019, the Prevention and Safety team: focus on: • Established a first mapping of the risks impacting the • The conduct of the Safety Protection Health (SPH) joint activity at construction sites before defining coordination work at construction sites and the roll-out targeted improvement actions while continuing to of good practices by the operational teams; and conduct regular visits and provide advice on the prevention of these risks; • The analysis of certain occupational risks to which Group employees are exposed.
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2.1.3 Internal Audit Department
The Internal Audit Department works with subsidiaries and Progress made on the audit plan and a summary of cross-functional departments to check and assess recommendations are monitored at least monthly by the employees’ knowledge and the proper use of the risk Group’s Executive Management and presented quarterly to management and internal control arrangements in place. the Audit and Accounts Committee. The duties are defined on the basis of a provisional audit In 2019, the Internal Audit Department intervened for plan, which is approved by the Strategy Committee and different Clients of the Group conducting the following submitted to the Audit and Accounts Committee. This audit assignments in particular: plan is prepared taking into account the risks following from the risk mapping. At the request of the Group’s • Individual Clients: Compliance audits of Nexity Lamy Executive Management, internal audit may also carry out agencies, audits of selection processes for construction special assignments relating to any issue or event that firms, review of the separation of duties in client requires analysis, specific assessment or feedback. accounting for Oralia; Regular audits are performed in accordance with a work • Internal Clients: Audit of expense reports and travel costs, programme based on the documentation describing the risk review of the self-assessment by internal control; and management and internal control arrangements and • Commercial Clients: Audit of selection processes for preliminary interviews with management of the Group or the construction firms. audited entity. The recommendations issued at the end of the internal audit assignments and the remediation plans are In 2020, Internal Audit will continue to carry out its attached to the Group risk mapping. This makes it possible to assignments concerning the Group’s different business update the assessment of identified risks and their control. lines and cross-functional issues. The audited themes will be determined on the basis of an approach focusing on risks related to the Group’s challenges and priorities.
2.2 SPECIFIC RISK FACTORS AND THEIR MANAGEMENT
The Group's risk analysis was carried out at the end of As early as 20 March 2020, the Group has communicated December 2019, and was validated by the Audit and on its current inability to determine the impact of the Accounts Committee on 23 January 2020. At that time, the coronavirus crisis on Nexity's 2020 results and on the risk of an epidemic was not considered to be major for the outlook given to the market, the main unknown being the Group. duration of the epidemic crisis and the duration of As of the date of this Universal Registration Document, and precautionary health measures (see paragraph 5.2.2.2 taking into account the current health situation, the Group "Information relating to the impact of Covid-19 on Nexity's has implemented appropriate health precautions, and a activities (press release dated 7 April 2020)" of this crisis management unit is monitoring the situation as it Universal Registration Document). evolves. Business continuity arrangements have also been defined and are in operation. They will be adjusted in accordance with developments in the situation.
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2.2.1 Summary of the main risks of Nexity
The Group’s executives pay particular attention to the Issues relating to the real estate development industry, control of all the 23 major risks grouped by categories such as turnover, management of partnerships or serious presented in Section 2.1.2.2 “Risk management and incidents at construction sites, are not detailed. Neither are 2 internal control” of this chapter. However, in order to issues which concern any company such as the risk of fraud provide relevant information on the main risk factors to or of non-compliance. The risks related to information which the Group is exposed, and in accordance with the systems are grouped together for ease of reading. regulatory requirements, only risk factors specific to Nexity Hence, this chapter details the 12 risk factors, broken down are presented in this section. into 5 categories, and deemed to be the most critical and specific to the Group. In March 2020, the risk of a health crisis was added following the Covid-19 epidemic. As it is a systemic risk, it is not included in the scale of analysis of the residual criticality level.
Table of the main risk factors
RISK FACTORS AND CATEGORIES RESIDUAL CRITICALITY LEVEL Health crisis* Strategy Disruption of the business model Major Unfavourable changes to taxation or regulations applicable to real estate Major Non-compliance with CSR requirements Major Shortcomings in reputational crisis management Important Difficulty in the management and control of subsidiaries Important Information System Failure in Information System security and operations Major Human resources Mismatch between skills and changes in the Group’s business lines Major Extended unavailability of a key executive Important Business lines Land shortage Major Construction cost overruns Major Client solvency Major Finance Liquidity risk Important
* Item added in March 2020 following the Covid-19 epidemic.
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2.2.2 Description of specific risk factors and risk control systems
The main risk factors to which the Group deems it is exposed at the date of this document, as well as the main risk control measures in place, are detailed below.
HEALTH CRISIS RISK* Risk description Risk management A major health crisis could cause the French economy to The Group has implemented appropriate health precautions, grind to a halt and could have a significant impact on the and a crisis management unit is following all developments Group’s business, financial position and results. While this is of the situation. Business continuity arrangements have also an exceptional risk, it is present in France since been defined and are in operation. They will be adjusted in 15 March 2020. accordance with developments in the situation. As early as 20 March 2020, the Group has communicated on its current inability to determine the impact of the coronavirus crisis on Nexity's 2020 results and on the outlook given to the market, the main unknown being the duration of the epidemic crisis and the duration of precautionary health measures (see paragraph 5.2.2.2 "Information relating to the impact of Covid-19 on Nexity's activities (press release dated 7 April 2020)" of this Universal Registration Document).
* Item added in March 2020 following the Covid-19 epidemic.
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2.2.2.1 Strategic risks
STRATEGIC RISKS/DISRUPTION OF THE BUSINESS MODEL Risk description Risk management 2 Nexity’s activities are exposed to major developments over To protect against this risk, the Group has adopted a strategy which the Group has no control: the rapid digitisation of of diversification of its activities. Nexity has chosen to society, the transformation of consumer demands and the position itself as a real estate services platform, with a arrival of new players on the market every year are some of presence on several market segments (residential real the factors that motivate the Group to place creativity and estate, commercial real estate, development of services). innovation at the core of its concerns. The Group offers a diversified range of products and services. Given that Nexity operates in a highly competitive It develops real estate projects and services for all stages of environment, the emergence of new players, such as digital life, thus addressing current demographic and social issues. giants or rapidly growing start-ups, could cause major In particular, Nexity has enhanced its service offering: disruptions in the markets served by Nexity. • To students, through a new accommodation concept In real estate services (€1.1 billion of revenue in 2019), combining several uses: short-, medium- and long-term these new competitors could, by leveraging new accommodation, food, digital concierge system, fitness technologies, destabilise traditional brokerage and real areas, co-working, wellness, etc.; estate management players such as Nexity. • To senior citizens, particularly with the integration of In real estate development (€3.4 billion of revenue in 2019), Ægide-Domitys into the Group; these new competitors could offer new concepts of the city, • Around energy efficiency renovation: supporting habitat or office, through new highly differentiated products households with a view to improving the energy and services, potentially less expensive than those offered performance of their homes; and by the Group. • To occupants, particularly with the roll-out of the Eugénie Such changes in the competitive landscape could have an application: solution that facilitates the operation of home adverse impact on the Group’s results by undermining its automation systems and the creation of links between capacity to sell its products and services, leading to a loss of occupants and their environment (interaction with market share and compromising its leadership positions. neighbours via a network, contacts with the condominium manager, etc.). In addition, the following actions have also been implemented: • Market intelligence and encouragement to innovate within the Group; • Coordination of an internal Startup Studio: incubator to support the creation of new innovative businesses and new projects promoted by Group employees; • Support and monitoring of the digital transformation strategy; and • Diversification of the profiles of new recruits to better meet the changing nature of businesses and the needs of clients.
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STRATEGIC RISKS/UNFAVOURABLE CHANGES TO TAXATION AND REGULATIONS APPLICABLE TO REAL ESTATE Risk description Risk management Unfavourable changes to taxation or regulations applicable In its strategy, the Group’s governance takes into account the to real estate (introduction of new taxes or levies, removal of possible impacts of these changes, in particular through the tax incentives) could have a material impact on Nexity’s following mitigation measures: activities, financial position and results. • Diversification of the marketing strategy (expansion of In fact: bulk sales including for Residential Real Estate, • Adverse changes in the government’s tax incentive partnership with social landlords, etc.); policies such as the home-ownership support measures • Diversification of service activities in addition to the and the increase in the VAT applicable to the sale of new historical real estate development activities; homes, could have an impact on the Group’s overall • Development of management activities with serviced Residential Real Estate business activity (68% of the residences; Group’s revenue); and • Awareness-raising initiatives directed to policy makers • The abolition or change of certain tax benefits, or the (open letter to the government with concrete proposals on tightening of regulations on rent controls, could have a housing policy); and material impact on the volume of reservations from individual investors achieved by the Group (representing • Lobbying by the Group. 45% of its reservations in 2019).
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STRATEGIC RISKS/NON-COMPLIANCE WITH CSR REQUIREMENTS Risk description Risk management Nexity’s CSR strategy is underpinned by the desire to create Nexity’s CSR strategy was revamped in 2017. It now includes value and to be useful to its clients and to society as a whole. the creation of a climate trajectory which is accompanied by 2 As an integral part of Nexity’s strategy, CSR focuses on the targets in terms of reducing greenhouse gas emissions, commitments made by managers and executives of the and the provision of a system (Carbon Pro) to operating staff Group on issues such as living together, social diversity, involved in residential real estate projects whereby they can respect for the environment, preservation of biodiversity, etc. model the performance of their projects based on standards called E+C- (Positive Energy and Carbon Reduction). However, due to the Group’s business lines (development and services activities) it is exposed to major challenges and Other commitments concern support to condominium to strict environmental regulations. properties for their energy efficiency renovation works, increase in operations and services which are part of a In France, housing is the sector which has the highest carbon circular economy initiative, more construction in wood and footprint with 27% of greenhouse gas emissions. support to subsidiaries for responding to RFPs and tenders The construction phase represents 60% of the carbon (in particular on CSR-related matters). footprint for a new building (source: BBCA Association). As a result, non-compliance with regulations (in particular The Nexity Group’s civic engagement also involves actions the new environmental standard RE 2020 that will replace undertaken by its Nexity Non Profit subsidiary and Nexity RT 2012) or bad performances compared with the Group’s Foundation, which work on the implementation of concrete reduction targets in terms of greenhouse gas emissions, initiatives to provide housing for those in need. In particular, could have an impact on the Group’s business, financial Nexity Non Profit is committed to the production of position and results and thus compromise its leadership 1,000 homes in family shelters per year by 2021. positions in the markets in which it operates. Furthermore, a CSR risk mapping was drawn up and updated Furthermore, the increase in extreme weather events in 2019 in order to specifically identify the Group’s main CSR (heatwave, flood, storm, extreme cold) could cause issues (see Section 3.1.2 “The Group’s main CSR risks” significant delays at construction sites, impact relations with in Chapter 3 of this Universal Registration Document). our customers and partners (delays in marketing and These different issues and mitigation measures are also delivery), and give rise to an increase in insurance premiums. detailed in Section 2.4 “Duty of care” of this chapter and Finally, the scarcity of resources could lead to an increase in in Chapter 3 on the Statement of non-financial performance. the cost of raw materials essential for the smooth conduct of activities, which could in turn impact production and compel Nexity to increase its selling prices. The Company may also have to face the risk of cancellation of a transaction due to unavailability of certain materials (e.g. low-carbon concrete, timber).
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STRATEGIC RISKS/SHORTCOMINGS IN REPUTATIONAL CRISIS MANAGEMENT Risk description Risk management In a situation of over-coverage by the media and the The Group is careful about the Nexity brand’s image on development of the use of social media, any serious incident various media. or a badly managed crisis could undermine the Group’s A number of internal procedures have been established reputation and image. Furthermore, media exposure of its including a monitoring and alert system, procedure sheets to executives and the leadership positions of the Group in its support external statements, and training and different markets increase this reputational risk. awareness-raising sessions for employees, executives and Moreover, Nexity may be exposed to various serious events directors to help them better understand the world of social or incidents which could have a material impact on client media and their impacts. Specialist service providers also satisfaction and the proper management of its business monitor the Nexity brand on social networks, blogs, activities. They may take various forms, such as a breach of websites, etc. security on a construction site or in a managed residence, The Group pays particular attention to the quality of all its non-compliance with regulations, failure of a key supplier, counterparties to limit the risk of counterparty default in its etc., and could have material adverse consequences partnerships, by way of its Supplier Ethics Charter. (slowdown of work on construction sites, increased costs, In addition, suppliers are selected on the basis of their delays in deliveries, or deterioration in client confidence in performance, which is assessed based on objective criteria the Nexity brand, etc.). and taking into account ethical criteria that are important to As the development business represents 76% of Nexity’s Nexity (see Sections 2.3 “Business ethics and regulatory revenue (€3 billion in 2019), these various factors could impact compliance” and 2.4 “Duty of care” of this chapter, the Group’s business activity, financial position and results. and Section 3.4.3.2 “Supplier relations”). Nexity takes care to protect its client relationships particularly through training for its client-facing employees, and compilation of a baseline on key moments of the client experience. The Group is continuing to implement control measures to strengthen its client-focused culture and to conduct client satisfaction surveys. Finally, site visits are conducted prior to delivery to ensure that all contract requirements have been satisfied. Internal systems, such as prevention-focused training, awareness-raising initiatives and crisis management procedures, have been set up to manage reputational risk in the event of incidents at construction sites.
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STRATEGIC RISKS/DIFFICULTY IN THE MANAGEMENT AND CONTROL OF SUBSIDIARIES Risk description Risk management As part of its strategy of being a real estate services platform, The Group has adopted the prevention and mitigation Nexity undertakes significant acquisitions of companies or measures below to get subsidiaries to converge towards an 2 equity investments for the purpose of developing its alignment of their practices with those of the Group and activities and improving its products and services. contain the risk of strategic divergence. The organisation of the Group’s Residential Real Estate At the strategic level, a convergence plan has been designed division (€3 billion revenue in 2019) is based on a strategy for each subsidiary including in particular a section on risk of permanent local establishments, with subsidiaries and management and information systems. agencies, run independently by professionals who are Organisations and bodies promoting exchanges among the generally local. Group’s business lines have been set up: The management autonomy granted to them and the A network of cross-functional risk and compliance officers; structuring of teams on the basis of a decentralised model • could cause issues when consolidating and managing new • Regional synergy committees; companies. • A regional delegates committee; and The divergence in subsidiary strategy, lack of synergy between • An internal social network (Nexity Live), promoting the teams and a failure to comply with Group rules (by entities in development of community-based work, the sharing of France and/or abroad) could have consequences as to the civil good practices and documentation. and criminal liability of executives and the Company’s financial position in the event of abuses and non-fulfilment of Group rules on the organisation of the Commitments commitments. Committees have also been defined. For the control of businesses outside France, teams from the Holding company (Finance, Digital Solutions and Innovations, Legal affairs, Compliance, etc.) provide support to the subsidiaries for the application of the Group’s rules. Decision-making or commitments relating to operations outside France are also subject to approval by the Group.
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2.2.2.2 Risks related to information system (IS)
FAILURE IN INFORMATION SYSTEM SECURITY AND OPERATIONS Risk description Risk management The management of the Group’s business and the transfer of Nexity has initiated several strategic projects with a view to information from management systems to information reinforcing the control of information system risks and the systems (such as accounting) must be reliable, secure and resilience of the Group’s operations. maintained. In the absence of a strategy of continuity of A large number of projects relating to the replacement or these systems, the Group may face an extended breakdown revamping of cross-functional business applications have been (longer than a week) of its information systems. launched as part of the Group’s IS transformation programmes. With the sharp growth of Nexity (revenue growth of 71% One example is the setting up of a finance ERP common to the compared with 2014) and of its workforce, the information Group (management software package) and a transformation system has become complex, silo-based per business line and modernisation plan of the lower layers of the IS. and sometimes obsolete. At the end of 2019, the Group had Nexity is also positioned in a process of innovation of its over 11,000 employees (up 58% compared with 2014), tools and of their migration to more recent technologies all requiring account access and management. (such as secure cloud services) through contracts with The absence of a strategy for improving and modernising the competitive players guaranteeing the appropriate service information systems could expose the Group to the commitment. emergence of exploitable security failures and to negative As regards access management, an IAM (Identity Access impacts with knock-on effects: blocking of certain flows Management) project with the objective of defining the (flows of management IS to accounting IS), unauthorised strategy for the management of identities and rights for the access to data and even leakage of sensitive data, holding of Group’s IS as a whole has been launched. multiple incompatible positions, etc. Short- and medium-term actions have also been taken: • Review of security policies; • Gradual migration of critical applications and tools to specialist service providers; • Central management of security-related issues and support to business lines as regards security-related developments; • Initiatives to raise employee awareness of cyber risks; • Reinforcement of the General Data Protection Regulation (GDPR) system in conjunction with the Legal Department; and • Taking out a cyber insurance policy.
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2.2.2.3 HR risks
RISKS RELATED TO THE MANAGEMENT OF HUMAN RESOURCES/MISMATCH BETWEEN SKILLS AND CHANGES IN THE GROUP'S BUSINESS LINES Risk description Risk management 2 The success of Nexity’s strategy of being a real estate services Nexity recruits and finds talent and supports its employees platform requires employees to adapt to the new services, by taking a long-term career view where training plays a key uses, tools and products marketed. In the face of the role throughout their career. In this regard, Nexity offers its constantly changing nature of Nexity’s business lines, employees a training plan consisting of a common combined with the scarcity of certain key expertise in a tight foundation, business line and managerial training, and real estate market, one of Nexity’s key challenges is how to individual support solutions. keep attracting future candidates, and how to retain talented The Group has also put in place: individuals by providing opportunities for future career development. Therefore, investing in employee training has • The “Cité Nexity”: in-house training and skills become a key priority for the talent management and development centre; development strategy. • “Employee experience officers” to support the Group’s As a result of the above factors, along with a turnover employees depending on the inherent specifics of the specific to the real estate sector, Nexity could face a categories to which they belong (young employees, mismatch between the availability of and need for resources potential to grow, senior employees, etc.); and certain specific skills necessary for the success of its • An integration charter defining the commitments and transformation projects. concrete actions to promote diversity and gender balance. In the absence of a solid human resources strategy in terms This charter has been signed by the Strategy Committee of appeal, loyalty, continuous training and forward-looking and the 400 managers participating in Managerial management of employment and skills, Nexity, a company Universities in 2019, and was then rolled out to all with a strong human capital, could lack skills that are vital employees of the Group; for its development and for maintaining its leadership • Talent review meetings serve to identify employees with a positions in the markets where it operates. strong potential and to develop their skills in particular via the management of the “Next” program scheme; • An attractive and motivating remuneration policy, tailored to the different job profiles (with a view to developing employee loyalty); • A flexible working environment allowing employees to work one day a week from an external Nexity site or at home (Nomad); • An employee shareholding policy promoting loyalty; • The inclusion of CSR criteria in the calculation of the compensation of executives (variable portion based on employee retention); and • Actions for improving employee satisfaction and commitment and thus the Group’s appeal to employees (Great place to work).
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RISKS RELATED TO THE MANAGEMENT OF HUMAN RESOURCES/EXTENDED UNAVAILABILITY OF A KEY EXECUTIVE Risk description Risk description The departure or unexpected loss of one of its key executives In order to control the impact of the departure of a key could pose a risk to the Company’s sustainability. resource or a key manager, Nexity has set up: In particular, the members of the Strategy Committee are • A succession plan for executive corporate officers deemed to be essential for the Group, given their reputation monitored by the Board of Directors; with investors and their respective skills and experience, like The appointment of two corporate officers; Alain Dinin, who contributed to the creation of the Company • and who incarnates the Nexity brand. • A Club 1797 bringing together approximately 100 key executives to promote their loyalty to and participation in The departure, extended absence or death of one of them the Group's strategy; could have the following consequences: • An employee shareholding policy; and • Disruption of the Group’s economic and financial balance; • A "talent pool" monitored by the talent review meetings • Concerns by partners over the sustainability of the to identify and develop tomorrow's talent (Next program). Company; • Deterioration of the Company’s brand image; and • Disorganisation of the Company and a climate of uncertainty among staff with the desire for early retirement (loss of decision-makers and experts).
2.2.2.4 Risks related to business lines
RISKS RELATED TO BUSINESS LINES/LAND SHORTAGES Risk description Risk management Nexity’s business is linked to its capacity to manage To better control these land-related challenges, the Group buildable land and perform operations compatible, in terms has developed a Land Bank via its Villes & Projets entity. of location and price, with the needs and financing capacity Through its subsidiary Foncier conseil, the Group is also of its customers. working on the constructability of areas which are not The scarcity of buildable land, either due to inadequate buildable currently. supply or to strong competition from developers on the The Company also openly expresses its stands on possible same land, puts upward pressure on land prices. changes to the housing and construction policy, for example Moreover, any constraints, such as a delay in obtaining with an open letter sent to the government containing building permits, change in governance at local authorities, concrete proposals. This letter is available on Nexity’s website. variable land pricing policies depending on local authorities, add further complexity to the capacity to secure land. On average, land accounts for 21% of the cost of a project. Considering the Group’s high annual volume of reservations (21,837 new home reservations in France in 2019), the lack of control over the above issues could have a material impact on the Group’s business, financial position and results.
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RISKS RELATED TO BUSINESS LINES/CONSTRUCTION COST OVERRUNS Risk description Risk management The strategy of affordable real estate desired by Nexity could In order to optimise and manage construction costs: be compromised by an increase in construction costs, which • A study on Nexity's procurement was conducted in 2 could constrain Nexity’s ability to increase its sales prices. particular for finishing-work and main structures; As a matter of fact, these costs account for about 51% of the • A project on the industrialisation of construction has also cost of a project for the Group, and have a direct impact on been launched. The objective is to build better, within the the cost of new homes marketed, thus affecting the best possible time, at reduced cost, while limiting profitability of these projects. shortcomings and hazards. In this context, a study of strategic partnerships on new building processes was conducted; • A works contracts system has been introduced in order to validate the actual construction costs before the start of works; and • Partner companies are selected on the basis of multicriteria choices including price, references, reliability and any past experience with Nexity.
RISKS RELATED TO BUSINESS LINES/CLIENT SOLVENCY Risk description Risk management The acquisition of a home is a significant investment As regards client solvency, the Group offers its clients impacting the buyer’s financial position over many years. financing plans according to their profiles through the The sale of products by Nexity, particularly of residential real services of Nexity Solutions Crédit. Verification and analysis estate products, depends largely on the purchasing power of of the financial and tax position of individual prospects clients and their capacity to meet their loan repayment seeking to buy new properties and monitoring of the obligations in respect of their acquisition. progress made in financing are then conducted. The insolvency of clients could lead to the non-recovery of This mitigates the risk of non-recovery of receivables. debts, impacting the Group’s cash position. A new partnership for financing real estate projects for Furthermore, a tightening of credit conditions, down- individuals was also signed with Orange Bank in 2019, payments, collateral requirements, loan period or an increase in order to assist clients seeking financing. in interest rates leading to a fall in potential buyers’ solvency, Furthermore, in order to facilitate access to home ownership could negatively impact the demand for new homes. for first-time buyers, Nexity offers its clients products As an example, for Nexity’s customers who are first-time combining a high-quality living space and an attractive price. buyers, a sudden increase in interest rates could make it difficult for them to secure a loan and thus change their plan to purchase a property, as their monthly repayment would exceed the debt capacity tolerated by the banks (33% threshold).
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2.2.2.5 Financial risks
FINANCIAL RISKS/LIQUIDITY RISK Risk description Risk management Loan agreements entered into with our banking partners The operational management of liquidity and financing is cover the events of default that can trigger the early under the responsibility of the Financing and Cash repayment of the amounts outstanding. Hence, Management Department. non-compliance with commitments or obligations, which The Group’s balance sheet assets include cash of €1.1 billion Nexity is unable to remedy within the prescribed periods, at 31 December 2019. This is the first tool for the constitutes a case of default, giving rise to the compulsory management of liquidity risk. early repayment of the amounts due. Part of this cash is classified as non-available to the Group, In addition, the cross-default clause, which stipulates that in but is available to the subsidiaries that carry it. The amount the event that a member of the Group fails to make timely of this restricted cash was €435 million at payment of any amount in respect of any debt that is certain 31 December 2019. and due and for which payment is demanded above a certain threshold, could also trigger early repayment of amounts At that date, in addition to the available cash of borrowed by other members of the Group. €673 million, the Group also had €656 million of additional available cash and cash equivalents (in confirmed corporate Through the effect of these clauses, a significant amount in credit lines that had not been assigned) and €521 million respect of the Group’s debt of about €800 million would of available cash and cash equivalents for projects. have to be repaid. The covenants (financial ratios) with which the Group must The Group would then be exposed to a liquidity risk if it does comply concern corporate bonds and banking loans for not have the financial means to meet its contractual €1.2 billion. commitments, its debt maturities and the financing of its development plan. This could significantly impact business Overall, Nexity takes the view that its funds are in line with continuity, give rise to the risk of penalties and tarnish the its liquidity needs. Company’s image. The following additional initiatives have also been taken In addition, in the context of VEFA (off-plan sales contracts) with a view to maintaining the risk coverage level at an transactions, the law requires the developer to provide the acceptable level in a sustainable manner: purchaser with a bank guarantee (performance bond) • Centralised management of the Group’s cash and debt; to cover the risk of default by the developer. These guarantees are issued as part of a €1.5 billion signature • Diversified funding sources (intermediated and commitment line at 31 December 2019. non-intermediated debt) with maturities well-spread over time; In the event of an external financial crisis, the Group's liquidity could be compromised, cash receipts could be • Increase in undrawn bank credit facilities, representing affected and certain loans could become due. In addition, €656 million covering repayment at the maturity dates since part of the Group's debt is at variable rates, the Group (over more than 3 years); could be subject to an increase in interest rates, leading to • All commitments made are centrally monitored and an increase in financial expenses. complied with: at 31 December, Nexity complied with all its covenants; and • A significant portion of the Group’s debt also consists of fixed-rate financial instruments (> 80% of the Group’s net debt).
The list of risks dealt with in this section is not exhaustive. Only the most significant risks are detailed here. Nexity maintains a risk reference framework classified by criticality and magnitude of impact for the Group, which is re-assessed every year. Additional risks not currently known to Nexity may also adversely affect its business and financial performance. Any of these risks could cause significant differences with the forward-looking information released to the market and filed by the Group with the AMF.
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2.3 BUSINESS ETHICS AND REGULATORY COMPLIANCE
Business ethics and stakeholder relations
Ethical concerns are paramount for Nexity: they are key to For the purposes of its roll-out in foreign subsidiaries, the 2 maintaining confidence and building healthy, long-lasting Code of Conduct has been translated into English, Polish relations with stakeholders. As a participant engaged in and Portuguese. communities and regions, the Group sees this challenge as Edouard Denis adopted its own Code of Conduct in 2018 an imperative and therefore ensures that preventive and disseminated it to its employees. All new employees measures and controls are in place to guard against must acknowledge that they have received and read it practices not consistent with the principles of integrity and when they sign their employment contract. fairness in business relationships both at the individual and collective levels. These ethical concerns relate primarily to Ægide-Domitys adopted its own Code of Conduct in 2019 fighting against corruption and influence peddling, and disseminated it to its employees. promoting transparency in public life, fighting tax evasion, money laundering and terrorism financing, protecting data, Whistleblowing procedure and complying with procurement procedures. Nexity's stakeholders expect the Group and its employees to behave The whistleblowing procedure provides that any employee responsibly in the course of the Group’s operations. who witnesses a situation of non-compliance with the Code These concerns are also a guarantee of sustainability and of Conduct can notify his line manager or the Compliance economic performance. Officer using the address provided for this purpose. The whistleblowing procedure is described in the Code of In terms of compliance, Nexity undertakes to conduct its Conduct and on the Group’s intranet. It has been the activities while complying with the legal and regulatory subject of a number of internal communications to provisions (see Section 2.1.1 “General framework and employees. objectives of risk management and internal control". The person using the whistleblowing procedure benefits The main actions are described below, although this list is from the guarantee of confidentiality in doing so and from not exhaustive. protection against any discriminatory practice or disciplinary measure for having raised an alert in Sapin II Act – Prevention of corruption accordance with the conditions set out in the law.
Law No. 2016-1691 of 9 December 2016, known as Risk mapping pertaining to corruption and “Sapin II”, requires companies, as part of the fight against influence peddling corruption, to implement measures to create a corruption prevention system in companies. This law entered into force The risk mapping pertaining to corruption and influence in June 2017. peddling, initiated in 2017, was updated in the fourth quarter of 2019. On that occasion, the scope of the Code of Conduct concerned subsidiaries was broadened. Based on interviews with the executives of the subsidiaries, it led to an update The Code of Conduct was updated and disseminated to of the risks of corruption and influence peddling. employees in January 2018. It presents the applicable rules and the behaviours prohibited by the Group. As such, Training it deals with matters relating to the Group’s internal functioning (protection and respect for persons, the Group’s For the purpose of raising awareness among employees, a assets, the Group’s image, reliability and accuracy of video on fighting against corruption and influence peddling information, due regard to confidentiality) as well as was disseminated in October 2018. To train the most relationships with its partners and third parties exposed employees, an e-learning course was rolled out. (management of conflicts of interest, gifts, invitations, It presented the issues relating to combating corruption and sponsorship actions and political activities, etc.). influence peddling for the Group, with practical cases and a Each employee must confirm having read the Code of knowledge assessment quiz. This e-learning course, which Conduct and undertakes to comply with its provisions. will be updated in 2020, was followed by about 2,200 employees and by the Group’s main executives and The Code of Conduct is available on the Group’s website managers. Furthermore, the accounting and financial teams and intranet. followed an awareness session on corruption risks in In the event of non-compliance with the provisions of the March 2018 during a dedicated seminar. Code of Conduct, appropriate disciplinary measures may be taken against the employee(s) in question.
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Assessment the integrity of third parties Prevention of money laundering and financing The detailed third-party assessment process is still being of terrorism defined, and will be finalised in the 2020 financial year. It will be rolled out gradually in line with the compliance In response to the transposition into French law of monitoring plan, in order to take into account business- and European Directive (EU) No. 2015/849, the actions designed subsidiary-specific factors to prevent money laundering and the financing of terrorism have been reinforced within the Group, in particular for the Network of Risk and Compliance Officers Nexity Property Management business, as well as for Residential Real Estate. A number of IT tools of the Group’s In 2019, the Compliance Department, in close collaboration various business lines are in the process of being with the Enterprise Risk Management Department, overhauled and it is planned that some of these tools will launched a network of Risk and Compliance Officers which be integrated into the system to make them more effective. will be operational in 2020. Its main tasks will be to create In its prevention and vigilance approach, the Compliance awareness among employees about risk management and Department relies on a network of employees designated to control activities, disseminate good practices concerning send reports to TRACFIN. risks and compliance, participate in the design and update of risk mapping and support the roll-out of the control system. General Data Protection Regulation (GDPR)
Corruption and influence peddling prevention The Group has been working for several years on a system system compliant with GDPR, in particular through: • Appointing a Data Protection Officer (DPO) and putting The corruption and influence peddling prevention system in place a network comprised of the officers in each implemented by Nexity is under ongoing improvement. subsidiary/department; All of the Group’s executives, managers and employees are mobilised in order to effectively meet its legal obligations. • Keeping data processing registers; The Internal Audit Department can conduct assignments to • Raising awareness of the Group’s operational teams and verify the effectiveness of the corruption and influence support Services; peddling prevention system. • Putting in place procedures making it possible to ensure the compliance of the Group’s GDPR projects (“privacy Transparency in public life by design” obligation); and • Putting in place procedures responding to the rights of Since 10 July 2018, the Nexity Group is included in the individuals concerning their personal data and the directory of representatives of interests of the High notification of incidents to CNIL (French Data Protection Authority for Transparency of Public Life (Haute Autorité Authority), an integral part of the Group’s Crisis pour la Transparence de la Vie Publique – HATVP) in respect Management Procedure. of lobbying conducted at local or national level concerning In 2019, a Deputy DPO was appointed. He is responsible for new homes, urban and country planning. the operational implementation of the GDPR within the In 2019, the Group updated the procedure applicable to all Group. The Group has acquired a SaaS solution to manage lobbying. its compliance with GDPR for all its entities.
Prevention of risks related to tax evasion Responsible procurement and supplier relations The Nexity Group pays particular attention to ensure an exemplary conduct in matters of taxation in each country in The requirements of Nexity concerning suppliers with which it operates (France, Italy, Poland, Belgium, Portugal regard to social and environmental issues as well as the key and Switzerland). To this end, it complies with its tax actions concerning responsible purchasing are set out in obligations (notably the payment of taxes and duties) Section 3.4.3 “Enhancing ethics and transparency across in which its operational activities are located. the value chain” of this Universal Registration Document. The whistleblowing system implemented at Nexity allows the Group’s employees in France and abroad to report all practices contrary to the Code of Conduct and more particularly those related to compliance with legal or regulatory (tax) obligations.
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2.4 DUTY OF CARE
The mapping of risks related to the duty of care was The methodology used for the assessment of these risks is updated in the fourth quarter of 2019. For the sake of the same as that developed by the Risk Management and continuity, the categories of risk factors established in 2017 Internal Control Team (see Section 2.1.2.2 “Risk management 2 have been maintained. and internal control”). The following risk description table completes the risk In view of the date of publication of this Universal mapping with a view to specifying the mitigation and Registration Document, this section does not include the prevention measures implemented by the Group. management of risks related to a health crisis (such as Covid-19). The risk monitoring will be adjusted in the light of the lessons drawn from the Covid-19 health crisis.
Graphical presentation of the main risks related to the duty of care after taking account of the mitigation and prevention measures
DESIGN AND SUSTAINABLE URBANIZATION Major
ENVIRONMENT, HEALTH AND SAFETY, ENVIRONMENT, HUMAN RIGHTS AT OUR HEALTH AND SAFETY, HUMAN RIGHTS ON
(NET RISK) SUPPLIERS APART FROM CONSTRUCTION SITES CONSTRUCTION SITES
HUMAN RIGHTS AND QUALITY OF HEALTH AND SAFETY DELIVERED OF RESIDENTS PROJECTS
WORKING QUALITY OF RESIDUAL CRITICALITY LEVEL CONDITIONS MANAGED OF EMPLOYEES PROPERTIES Minor
The Group’s businesses are mainly located in France. The other risks identified that are not presented here are The businesses located in Belgium, Italy, Switzerland and also subject to regular monitoring of their assessment and Poland accounted for 2% of its 2018 revenue. control measures. Additional risks not currently known to These countries are highly mature and have extensive Nexity or that the Group currently believes to be immaterial regulations relating to the protection of the environment, may also adversely affect the environment, fundamental fundamental liberties and the health and safety of liberties and the health and safety of individuals. individuals. A detailed overview of the main risks identified by the Group is provided in Section 2.2 “Specific risk factors and their management” of this chapter.
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Description of the risks and the mitigation or prevention measures put in place
DESIGN AND SUSTAINABLE URBANIZATION Risk description Mitigation and prevention measures Nexity is a major player in the residential and commercial To tackle this risk and take into consideration the development and urban regeneration business lines. environmental impacts of projects right from their design, If they are not designed right from the start so as to reduce Nexity has adopted a climate trajectory, which involves, their impact to the maximum, the projects related to these among other things, the increase in low-carbon construction businesses can cause damage to the environment (wood, etc.) and ambitious targets in terms of greenhouse (greenhouse gas emissions, land take, etc.) which can in turn gas emissions relating to its programmes (see Section 3.1.3 impact people’s health and safety (climate change, loss of “Nexity’s CSR commitments”). biodiversity). To achieve these objectives, an in-house system, Carbone Pro, allows operational staff to assess the future emissions of projects and compare variances. The CSR Department is also part of Commitments and Purchasing Committees and, in this respect, is given the report summarising the CSR performance of each project (planted areas, carbon footprint, hours of social inclusion support, etc.) and a Carbone Pro summary. The subsidiary Foncier Conseil, which specialises in the development of subdivisions, is ISO 14001 certified. It has developed an environmental policy which hinges on six pillars: soil, rain water, mobility, landscaping and urban forms, biodiversity, and living well. Lastly, the Group has signed a partnership with the non-profit organisation Humanité & Biodiversité to establish an action plan in 2020 named “Zéro artificialisation nette à horizon 2050” (zero net land take by 2050).
ENVIRONMENT, HEALTH AND SAFETY, HUMAN RIGHTS AT OUR SUPPLIERS APART FROM CONSTRUCTION SITES Risk description Mitigation and prevention measures The supply chain may involve specific risks of damage to the Nexity has put in place a responsible purchasing policy environment (resource harvesting, pollution, etc.), to health aimed at mitigating the risks related to its supply chain. and safety (health and safety of workers, air quality, etc.) and A Supplier Ethics Charter has also been put in place in order to human rights (workers’ rights, rights of local to remind Nexity’s suppliers of the Group’s ethical principles. communities, etc.). In 2019, as part of its partnership with Ecovadis, the Group broadened the supplier assessment campaign, which focused on finishing-work in 2018, to suppliers in the structural work category.
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ENVIRONMENT, HEALTH AND SAFETY, HUMAN RIGHTS ON CONSTRUCTION SITES Risk description Mitigation and prevention measures Construction sites represent major risk areas with potential The measures taken by Nexity cover the three impact levels impacts at three levels: environment (poor management of mentionned before. 2 site waste, sound pollution, etc.), health and safety An Environmentally Responsible Construction Site Charter (accidents) and human rights (illegal work, including has been drawn up to control the impact of construction undeclared labour along with fraud concerning the posting sites. At the level of health-safety, the Safety and Prevention of workers, etc.). Department takes actions upstream, through training sessions on safety, as well as downstream, through site visits. A “serious site incidents” crisis management procedure has also been put in place and is widely disseminated. A standard contract has also been designed to harmonise the scope of work of the Health and Health Protection Coordinator (HHPC). Line managers are made aware of Nexity's obligations concerning the fight against undeclared labour, via materials available on the intranet and dedicated e-learning. In order to ensure that suppliers comply with their obligations, in particular with respect to the fight against illegal employment and abuses related to posted workers, Nexity has signed a contract with a service provider that provides it with an online platform for collecting the required administrative documents. Moreover, posters on the laws pertaining to the rights of posted workers in several languages (including English, Polish, Romanian, Ukrainian, Slovakian and Italian) are provided for construction sites. For real estate development activities, each subsidiary of the Group acting as the project owner and/or the customer ensures that, prior to the signature of contracts, the checks required under the French Labour Code have been done, based on the location of the other contracting party or, where applicable, their sub-contractor(s). In order to reduce site waste, the Group has invested in the circular economy and has set quantitative targets (see Section 3.3.2 “Ensuring the availability of construction materials in view of resource depletion”).
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HUMAN RIGHTS AND HEALTH AND SAFETY OF RESIDENTS Risk description Mitigation and prevention measures The Group operates student residences and senior An ambitious quality initiative has been put in place to independent living residences. Senior citizens are more address these risks. vulnerable to certain risks of violation of their human rights Residents are informed of their rights and awareness is (abuse of weakness, mistreatment), their health and their created via different means such as the Welcome guide. safety. Internal and external quality audits are conducted. At the end of December 2019, 66 Domitys residences were AFNOR certified based on a strict reference framework including commitments such as "habitat et environnement sécurisé" (safe habitat and environment) and “lien social, rencontre et partage" (social interaction, meeting and sharing). Furthermore, feedback on residents’ expectations are forwarded through various bodies. In addition to the Council of residents, which is a legal obligation ("Loi sur l'adapatation de la société au vieillissement" - law on the adaptation of society to population ageing), there are residents’ meetings, entertainment commissions and food commissions. Furthermore, several indicators on satisfaction, the feeling of safety and the feeling of being “at home” of residents are monitored through annual surveys. Mediation is also promoted by Domitys, whether it concerns the settlement of claims or internal mediation (employees, families, residents). Employees are trained on good treatment and an Ethics Observatory was created in the subsidiary in 2019. Its role is to monitor undesirable events, define preventive actions for residents and employees, introduce training and improve professional practices.
QUALITY OF DELIVERED PROJECTS Risk description Mitigation and prevention measures Weaknesses in the quality of the projects delivered can be In order to mitigate the risk related to the quality of the harmful to the health and safety of persons and to their projects delivered, Nexity put in place in 2011 an internal fundamental rights. quality process consisting of systematic and regular controls at different phases of the construction. These tasks are performed by the Production and Delivery Quality Department (DQPL).
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WORKING CONDITIONS OF EMPLOYEES Risk description Mitigation and prevention measures The working conditions of the Group’s employees involve risks The Group is present in countries that have ratified the eight related to their human rights (discrimination, harassment, ILO core conventions. 2 workforce representation), and to their health and safety. The workforce is represented by over 321 members and alternate members across 162 bodies. Several agreements signed in 2019 are evidence of the healthy social dialogue within the Group. The risks of discrimination and harassment are addressed through programmes promoting diversity and gender equality, described in chapter 3. Quantitative targets have been set in this respect. In 2019, a charter known as “Being Inclusive Together” was submitted to the employees for signature, following a survey to which 1,300 of them responded. Issues relating to employees’ health and safety are addressed in Single Documents for the Assessment of Occupational Risks (SDAOR). The Safety and Prevention Department was involved in initiatives aimed at controlling ongoing building-related risks such as supervision of the verification of electrical and fire hazards, and the means of evacuating people from Nexity agencies and/or premises. As regards more specifically the health and safety of employees working at Domitys serviced residences, a sector more exposed to workplace accidents, current measures and those being rolled out are described in Section 3.2.1.2 "Quality of life at work" of this Universal Registration Document. Training sessions on stress management for managers and employees have also been put in place. Nexity also pays particular attention to the work-life balance and, in this regard, puts in place a number of initiatives such as the right to disconnect, parenting support and caregiver support services.
QUALITY OF MANAGED PROPERTIES Risk description Mitigation and prevention measures As an integrated real estate operator, Nexity sometimes The Group implements initiatives in its subsidiaries aimed at manages and operates real estate assets on behalf of third promoting the energy efficiency of buildings. A Green Deal parties. Nexity must give due consideration to environmental has thus been signed with “Plan Bâtiment Durable” issues in the management of these buildings, so as to not (a voluntary commitment entered into with the French cause loss of energy efficiency, which would impact the government) on the energy efficiency renovation of contribution to global warming. condominiums. The Nexity Property Management (NPM) branch has developed a wide range of services aimed at improving the energy efficiency of the commercial buildings that it manages (environmental certifications, energy management, etc.).
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2.4.1 Procedures for assessing the situation at subsidiaries, subcontractors and suppliers
2.4.2.1 Assessment and monitoring of the Group’s subsidiaries Environment non-financial performance”) can show the progresses made The CSR Department has introduced a regular reporting on health and safety issues within the Group (frequency system making it possible to monitor the environmental and severity rate, number of workplace and commuting performance of the Group’s subsidiaries and mitigate the accidents). Lastly, the Safety and Prevention Department main risks of damage to the environment. The achievement of works with Executive Management and operational targets on carbon footprint, low-carbon construction, the management to assess the risks posed by the Group’s circular economy and biodiversity are monitored so as to activity to the health and safety of employees. manage the situation of the subsidiaries impacted by Human rights greenhouse gas emissions, the consumption of non-renewable resources and land take. Depending on the targeted category (employees, residents, other parties working on construction sites) and the risks Health and safety they are exposed to (discrimination, harassment, abuse of In-house work is conducted to regularly assess the risks weakness, mistreatment, illegal work), the Human related to health and safety within the Group. The Single Resources and the Prevention and Safety Departments have Document for the Assessment of Occupational Risks must put in place appropriate assessment procedures as well as be updated at least once a year in each entity. Furthermore, monitoring indicators (e.g. satisfaction rate, percentage of a number of social indicators (see Chapter 3 “Statement of women in top management, site visits, etc.). 2.4.2.2 Assessment and monitoring of suppliers Nexity has developed a responsible purchasing policy This initiative contributes to the continuous improvement consisting in particular in the submission of CSR of the CSR performance of suppliers and of finishing-work questionnaires to an increasing number of its suppliers. products, as and when the referencing is renewed.
2.4.2 Whistleblowing procedure
The whistleblowing procedure provides that any employee The person using the whistleblowing procedure benefits who witnesses a situation of damage to the environment, from the guarantee of confidentiality in doing so and from to the health and safety of persons or to human rights can protection against any discriminatory practice or disciplinary notify his line manager or the Compliance Officer using the measure for having raised an alert in accordance with the address provided for this purpose. The whistleblowing conditions set out in the law. procedure is described in the Code of Conduct and on the In 2018, a Supplier Ethics Charter was also put in place in Group’s intranet. It has been the subject of a number of order to remind Nexity’s suppliers of the Group’s ethical internal communications to employees. principles. Suppliers can also report any violations using the email address provided for this purpose.
2.4.3 Monitoring system for measures implemented
The Group operates in a way which is both decentralised, The recommendations issued following these audits and resulting in operational responsibilities given to the the remediation plans are sent to the Internal Control managers of the operational units, and centralised, with Department, which is responsible for monitoring these responsibilities for monitoring risks and compliance assigned action plans. An overview of the recommendations made to the heads of the Group’s functional departments. and their follow-up is presented to the Group’s Executive The Group also relies on the Internal Audit Department, Management. which ascertains the proper application of the Group’s rules A detailed description of the internal control system is and procedures. This department carries out regular audits in included in the first sections of this chapter. accordance with a work programme based on the The identification of the risks and risk control measures in documentation describing the internal control arrangements place, undertaken within the framework of the duty of care, and on preliminary interviews held with the managers of the has enabled Nexity to identify areas for improvement. Group or the audited entity. The 2018-2020 multi-year internal audit plan provides for verification that the action plans have been implemented effectively.
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2.5 FRAUD PREVENTION SYSTEM
Nexity is exposed to the risk of attempted fraud, scams and In 2019, the Risk Management and Internal Control team embezzlement of funds, whether external or internal. continued its awareness-raising initiatives. This risk mainly affects the Group’s real estate development Following the alerts received, specific communications on 2 and service businesses, which make large numbers of fund various types of fraud (false supplier, change of banking transfers, often for substantial amounts. details, false chairman, etc.) were sent to the employees Regardless of their nature, such attempts can be intended most exposed to the risk of external fraud, such as to cause a direct financial loss for Nexity, by impacting the accountants and finance managers. An awareness-raising Company’s capital base or that of clients managed by video was also produced in partnership with the Nexity. The occurrence of these types of risks can Communication Department and shared with all Group significantly tarnish the Group’s reputation. employees prior to the summer period. The fraud prevention system is based on the identification In order to mitigate the risk of fraud, the Group has also and assessment of the risks of fraud as well as regular taken out an insurance policy covering incidents of a awareness-raising efforts among the Group’s employees. fraudulent nature (combined cyber risk and fraud policy). Proven cases of fraud and attempted fraud are In addition, procedures are applicable to cash and cash flow systematically reported to the Risk Management and management, in order to ensure the security thereof and Control, Internal Audit, Legal, and, where necessary, Human reduce the risks of fraud (signatures with banks, daily Resources Departments. An investigation is conducted by the reconciliation of bank movements with accounting entries, Internal Audit Department and the cases are handled within separation of duties between the Accounting and the Cash the framework of a dedicated crisis management unit. Management teams). A Fraud Prevention Committee, grouping together the main The Group’s overall policy aims to reinforce the prevention heads of the cross-functional departments (Risks, Finance, and control measures against this type of risk. Cash Management, Legal, Human Resources) meets on a In spite of the prevention and awareness-raising initiatives, quarterly basis to discuss cases of fraud encountered by as well as the priority placed on fraud prevention, Nexity Nexity, new methods developed by fraudsters and cannot completely eliminate this risk of fraud. measures to be taken in terms of detection and response.
2.6 LEGAL AND ARBITRATION PROCEEDINGS
The Group endeavours to prevent disputes and litigation by The Group is also involved in a number of litigation putting in place framework agreements, regularly issuing legal proceedings arising in the normal course of its business. information and delivering targeted training to employees Most disputes and litigation are covered by the Group’s appropriate to the business areas in which they work. Similarly, insurance policies and provisioned for at least the amount the Group works with specialist lawyers who regularly work on of any insurance excess. its affairs, thus ensuring that they have detailed knowledge of There are many disputes, but the individual amount of each the Group. Lastly, the Group has put in place an After-Sales one is not very significant at the Group level. These disputes Service team which seeks to amicably settle conflicts often take a long time to resolve, due to their technical (for further details concerning the after-sales service, nature and the time required to seek expert opinions. see Sections 2.1.2.3 “Policy with respect to insurance” and “Main insurance policies” of this chapter). Nexity considers that the provisions it has set aside in respect of litigation represent a reasonable level of cover. The Group’s Legal Department, in conjunction with the Managing Directors and legal heads of the Group’s various There are no other government, legal or arbitration divisions, continuously monitor and report on litigation and proceedings – including any pending or threatened disputes. Summary monitoring reports are produced proceedings of which the Group is aware – which are likely to regularly and no less than once a year. The status of key have, or which have had within the last 12 months, a material ongoing litigation included in these reports that could have impact on the Group’s financial position or profitability. a significant legal and financial impact on the Group is formally presented to the Group’s Executive Management every year.
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2.7 PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF FINANCIAL AND ACCOUNTING INFORMATION
Within the framework of preparing its financial information, Consolidation Department and the Management Control the Group is sensitive to the quality of its reported figures, Department, it is tasked in particular with: correct consolidation as well as the reliability of budget • Drawing up, approving and analysing the Group’s processes. Nexity considers these risks to be moderate, interim and annual consolidated financial statements in view of the processes already in place. and provisional reporting (budget review and multi-year The Group’s Finance Department is responsible for business plan); and producing, analysing and ensuring the reliability of the • Defining and monitoring the accounting principles used Group’s financial disclosures. In coordination with the within the Group.
2.7.1 Procedures for preparing and approving the consolidated financial statements
The Group’s consolidated financial statements are drawn method, but the segment information presented in the up in accordance with International Financial Reporting consolidated financial statements reflects the Group’s Standards (IFRS). The Consolidation Department establishes operational reporting. a timetable and period-end instructions for the preparation The tax computation is checked by the Group’s Tax of the interim and annual financial statements for the Department. Detailed monitoring is carried out covering the divisions’ Finance Departments. following specific areas: provisions for contingencies and The consolidated financial statements are drawn up by the losses, deferred taxes and off-balance sheet commitments. Consolidation Department on the basis of accounting The annual consolidated financial statements are audited information provided by each operating entity’s accounts by the Statutory Auditors, while the interim financial department. statements are subject to a limited review. The Statutory This information is first approved at operating entity level Auditors share their observations regarding the interim under the responsibility of the head of each subsidiary financial statements with the Audit and Accounts before being presented to the Group’s Finance Department, Committee and submit a supplementary report on the accompanied by analysis and comments. annual financial statements to this same Committee, The consolidated financial statements reflect the Group’s before presenting them to Nexity’s Board of Directors. operational reporting and include proportionately The Audit and Accounts Committee makes sure the Group consolidated joint ventures: this method of presentation has allocated appropriate resources to ensure the quality provides a more accurate measure of the Group’s and reliability of the financial statements. Nexity’s Board of performance in terms of revenue, operating profit, working Directors signs off the consolidated financial statements. capital and debt. The Group’s Accounting Department uses equivalent In accordance with IFRS 11 Joint Arrangements, procedures to sign off Nexity’s parent company financial the Consolidation Department then restates joint ventures statements. in the summarised financial statements using the equity 2.7.2 Budget procedures
The budget procedure is the same across all the Group’s Once approved by the Group’s Executive Management, divisions and their subsidiaries. It involves three key the initial budget, established by the Finance Department components each year: the initial budget for year Y+1 in based on the budget proposals put forward by the various November of year Y, followed by two budget reviews, in May divisions, is presented to Nexity’s Board of Directors. and October/November. The initial budget and the reviewed It s then used to set quantitative and qualitative targets for budgets are established using the same process as that the heads of operating entities, which serve as the basis for used to produce the consolidated financial statements. assessing their performance. When the initial budget is established, the Managing Director of each of the Group’s businesses presents his or her strategy, a multi-year business plan and the projected annual budget together with the latest reviewed budget for the current year to Executive Management.
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Financial reporting Communication of financial results The Group’s divisions have management control systems The Annual Financial Report (included in the Universal suited to their businesses. Registration Document) is drawn up jointly by the Finance Performance against budget is tracked via a report submitted Department and the Legal Department and submitted to monthly or quarterly (depending on the business concerned) Executive Management, then to the Audit and Accounts 2 to the senior management of each division, the Finance Committee before being signed off by the Board of Directors. Department and the Group’s Executive Management. Drafts of press releases related to the financial statements The most significant elements within each division are and quarterly sales are drawn up by the Finance subject to specific monitoring. This covers the following: Department and approved by Executive Management before being submitted to the Audit and Accounts • In real estate development, monitoring of the operating Committee and finally signed off by the Board of Directors. margin and project progress, Residential Real Estate sales (number of reservations per week), new orders and promises to buy land in Commercial Real Estate; and Quality of financial disclosures • In Services, the portfolio of units and commercial space The quality of financial disclosures is ensured in large part under management within the property management by the quality of the IT tools used to process this business, the number of affiliated agencies and sales information. The consolidated financial statements are activity for franchise networks, and the occupancy rate prepared using a single software package that for serviced residences. automatically retrieves data from the individual company accounts for the majority of consolidated companies. Based on this information, the Management Control Practical notes setting out management rules, which are Department then prepares a monthly summary for the accessible to all Group employees via the Group’s intranet, Group’s Executive Management. also help ensure that information is thoroughly circulated and accounting processes are kept consistent.
Off-balance sheet commitments Within the Group, the process is mainly based on a total limitation on the authorisations to enter into commitments liable to give rise to an off-balance sheet liability; these commitments are centrally monitored for each division. This approach helps reduce the risk of off-balance sheet liabilities not being identified, promotes appropriate monitoring and ensures that each type of commitment is measured consistently.
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3 STATEMENT OF NON-FINANCIAL PERFORMANCE
3.1 CSR, AN INTEGRAL PART OF NEXITY GROUP’S 3.4 INCREASING THE GROUP’S CONTRIBUTION STRATEGY 112 TO SOCIETY 144 3.1.1 CSR structure and governance 112 3.4.1 Helping to build inclusive cities that support 3.1.2 The Group’s main CSR risks 116 solidarity 144 3.1.3 Nexity’s CSR commitments 117 3.4.2 Offering innovative solutions that meet new uses 146 3.4.3 Enhancing ethics and transparency across the value chain 146 3.2 STRENGTHENING STAFF LOYALTY: BEING RECOGNISED AS A PREFERRED EMPLOYER 120 3.5 NOTES ON METHODOLOGY PERTAINING 3.2.1 Enhancing appeal and employee retention 121 3.2.2 Developing talents and reinforcing employee TO DISCLOSURE OF WORKFORCE, commitment 128 ENVIRONMENTAL AND SOCIETAL 149 3.2.3 Promoting integration and equal opportunities 130 INFORMATION
3.3 IMPROVING THE GROUP’S ENVIRONMENTAL 3.6 REPORT BY THE INDEPENDENT THIRD PARTY PERFORMANCE 134 ON THE STATEMENT OF CONSOLIDATED 3.3.1 Optimising the environmental performance NON-FINANCIAL PERFORMANCE INCLUDED of buildings 134 IN THE MANAGEMENT REPORT 152 3.3.2 Ensuring the availability of construction materials in view of resource depletion 140 3.3.3 Controlling the impact of construction sites 141 3.7 CROSS-REFERENCE TABLE 3.3.4 Integrating nature into the city, preserving WITH THE STATEMENTS OF NON-FINANCIAL biodiversity and protecting soil 142 PERFORMANCE 155
3.8 CROSS-REFERENCE TABLE WITH THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS 156
3.9 SUMMARY TABLE OF CSR INDICATORS 157 3 STATEMENT OF NON-FINANCIAL PERFORMANCE CSR, an integral part of Nexity group’s strategy
3.1 CSR, AN INTEGRAL PART OF NEXITY GROUP’S STRATEGY
3.1.1 CSR structure and governance
Nexity’s CSR (Corporate Social Responsibility) strategy is In order to deliver relevant solutions to the market, the underpinned by the desire to create value and be useful to Group offers innovative products and services, developed society by means of the Group’s business activities. With with the assistance of a very active ecosystem of partners the aim of meeting and exceeding the expectations of its (including incubators, startups and construction stakeholders (employees, clients, shareholders, investors, industrialists). For the sake of consistency and to unite all analysts, local authorities, civil society, etc.), Nexity makes employees, Nexity has put in place a responsible in-house sure that its approach provides concrete responses to major governance system and human resources strategy aligned social and environmental issues: access to housing, climate with the expectations of its stakeholders. change, energy efficiency, renovation works, the digitisation of exchanges and the emergence of the sharing economy.
3.1.1.1 The four pillars of Nexity’s CSR policy
DIALOGUE AND TRANSPARENCY WITH OUR STAKEHOLDERS
HUMAN INNOVATION RESPONSIBLE RESOURCES GOOD STRATEGY REAL ESTATE STRATEGY TO BE GOVERNANCE INTEGRATING STRATEGY A PREFERRED PRACTICES CSR ISSUES EMPLOYER
CSR Department Innovation Human Resources Group Legal Department and and Business lines Committee Department Board of Directors Secretariat
STRATEGY COMMITTEE
BOARD OF DIRECTORS
3.1.1.2 CSR governance The CSR Department, which reports directly to the Group’s The Group’s CSR strategy is reviewed at least once a year by Strategy Committee, is made up of eight people. In Nexity’s Board of Directors. In February 2018, the Board addition, it has officers within the Group’s main business added CSR to the remit of the Remuneration and lines. It has three main duties: establishing a formal CSR Appointments Committee, which has been renamed as the strategy and consolidating performance, supporting the CSR Remuneration, Appointments and CSR Committee. efforts of subsidiaries for responses to consultations and tenders, and lastly the identification, operational management and dissemination within the Group of innovations offering social or environmental added value.
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3.1.1.3 Dialogue with stakeholders Taking account of the expectations of the Group’s Nexity maintains a continuous dialogue with its internal and stakeholders is a prerequisite when defining its CSR external stakeholders via multiple channels. At the end of strategy. Nexity ensures that it is in constant discussion 2018 Nexity set up a Stakeholders Committee comprising with its various stakeholders in order to better understand around 30 people (including experts, opinion leaders and their expectations and to develop adapted solutions and Nexity representatives), with a view to making progress in services that take account of their concerns. this area and continuing to build useful and constructive dialogue with stakeholders. This advisory Committee selects topics to discuss, and aims to meet twice a year to discuss 3 Nexity’s CSR challenges and examine the Group’s positioning in this area. The Remuneration, Appointments and CSR Committee presents the Stakeholder Committee’s work to the Board of Directors on a yearly basis.
COMMUNITIES Expectations: Terms and conditions: - Inclusive cities - Local consultation - Accessible housing - Works with the urbanism - Smart, connected, school of Sciences Po low-carbon cities - Assessment of the local socio-economic impact - Signature of charters (Paris Action Climat, etc.) - Circular economy survey
COMMERCIAL CLIENTS SUPPLIERS Expectations: Terms and conditions: Expectations: Terms and conditions: - Workspaces adapted - Workshops on health (2018) - Balanced long-term - Suppliers convention to new uses - Nexity Lab relationship with Nexity - Supplier ethics charter - Buildings easy to rent, - Environmentally responsible - CSR progress - CSR performance not obsolete tertiary buildings developed questionnaire with and for users - Coworking
INDIVIDUAL CLIENTS SHAREHOLDERS Expectations: Terms and conditions: Expectations: Terms and conditions: - Qualitative and personalised - The online customer account - Reliable and up-to-date - Investor day (2018) customer experience Espace Privé Client, information - Roadshows - Cost savings Configurator - Understanding of strategy - Responses to questionnaires - Opportunity to collaborate, - Awareness of energy and long-term vision of rating agencies co-build around the home renovation - Annual report - Affordable housing Welcome guide - Satisfaction survey on delivery - Offer including co-design of common areas - Wide range of products
EMPLOYEES NON-PROFIT ORGANISATIONS Expectations: Terms and conditions: Expectations: Terms and conditions: - Attractive working conditions Dialogue between employees - Co-construction of social or - Nexity Foundation and pay and management environmental programmes - Skills-based sponsorship - Work in a responsible - CSR training - Recognition of their - Nexity Non Profit company - Code of Conduct challenges - Company travel plan (survey - Financing and awareness) - Business partnerships - Quality of life at work
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Real estate experts • Dominique Alba, CEO of Atelier Parisien d’Urbanisme; Internal 5 Executive Committee members • Jacques Chanut, Chairman of the Fédération Française and 8 employees representing 13 Nexity’s business lines du Bâtiment; • Hubert Rodarie, Deputy CEO of SMA BTP (Insurance Trusted third party company). 2 Investors 2 independent consultants for Arline Gaujal-Kempler, Deputy CEO of Foncière INEA; Des Enjeux et des Hommes • • Sandrine Lafon-Ceyral, Head of Asset Management at Amundi Immobilier.
External Players from the real estate sector, Social housing operators complemented by people from 14 other horizons • Didier Manier, Chairman of Lille Métropole Habitat. In 2015, Nexity carried out its first materiality matrix. Service company This mapping of the CSR issues makes it possible to prioritise them by cross-referencing the stakeholders’ • Marianne Laigneau, Head of International Division of the expectations with the issues that have the most impact on EDF Group. the Group’s activity. The mapping was updated in 2019, by Academics, forecasters, journalists reaching out to the Stakeholder Committee and employees to ascertain their level of expectation for each issue, and Carine Dartiguepeyrou, Forecaster; • also to the Executive Management to ascertain the impact • Denise Pumain, Professor Emeritus of Geography; these issues have on Nexity’s activities. Over 1,500 people • Benoît Raphaël, robot grower; responded to these consultations. The result proves that Nexity’s CSR strategy covers the material issues revealed by • Sharing economy expert (anonymous). the matrix. The nine identified themes are dealt with in this Social and environmental experts document, whether as part of the duty of care or within the Statement of non-financial performance. • Cécile Duflot, Director of Oxfam France; • Jean Jouzel, Climatologist and glaciologist. Regional authorities • Sébastien Maire, Chief Resilience Officer for the City of Paris.
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Materiality matrix Material stakes Appeal and Eco-renovation employee retention
Sustainable operation CRUCIAL PRIORITY 3 Employee skills development Occupants’ health and safety Diversity and equal opportunities
Stakeholders’ expectations Geographical accessibility Dialogue with local players Access to housing Adaptation to climate change Transparency and Eco-designed buildings Environmentally responsible Sustainable urbanization customer relationship and services construction sites MAJOR PRIORITY Biodiversity
Responsible procurement and supplier relations
Employees’ health and safety Functionnal mix Social dialogue Protection of personal data New uses and innovations Business ethics Circular economy Social and generational diversity Social commitment in local areas MODERATE PRIORITY MODERATE
MODERATE IMPACT MAJOR IMPACT CRUCIAL IMPACT Group business impact Sustainable cities and regions Responsible HR practices Partner and client relations
3.1.1.4 Responses to expectations of SRI shareholders and non-financial ratings agencies In the interests of assessing its CSR performance at the Gaia Index request of socially-responsible investors (SRI), in 2019 The Gaïa Index is used to assess the commitment of French Nexity responded to around 10 questionnaires issued by listed companies (small- and midcaps) to CSR commitment. French or international non-financial analysts, including Nexity has been included in the index for the 9th consecutive Gaïa Ratings, CDP, Vigeo, ISS-Oekom and MSCI. year. As a sign of the Group’s proactive stance, its ranking in Carbon Disclosure Project (CDP) the index has continued to rise over the last few years, from 16th position in the overall ranking of 230 assessed Since 2011, Nexity has responded voluntarily to the companies, to 12th position in 2018, and then 4th position in questionnaires produced by CDP, a non-profit international 2019. organisation that encourages private and public sector entities to communicate about their environmental impact. ISS-Oekom In February 2020, the Group distinguished itself for its In 2019, Nexity maintained its score of C obtained from strategy and commitment to fighting climate change, ISS-Oekom in the previous year, putting it in the top quarter obtaining a score of A- in the “Climate change” of companies in its sector. questionnaire, putting it in the top 6% of worldwide scores, in every sector of activity. Bloomberg Gender-Equality Index For the first time Nexity also answered the “CDP Forests” The Group is one of the 325 companies worldwide, questionnaire, to which few companies respond including 12 French companies, selected for the 2020 (543 compared to 8,000 for the climate part) and obtained edition of the Bloomberg Gender-Equality index (GEI) a score of C. in recognition of Nexity’s actions, such as the signature of the “Ensemble pour l'inclusion" charter (Together for inclusion charter) by the Strategy Committee and approved by 400 managers in September 2019, with its founding principles of cultural mixing and diversity.
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3.1.2 The Group’s main CSR risks
Mapping of the Group’s main CSR risks In 2019, Nexity updated the mapping of its CSR risks using The following tables first describe the risks that Nexity the methodology defined by the Risk Management and considers to be material risks. Internal Control Department (see Section 2.1.2.2 “Risk The risks considered to be the most significant are described management and internal control”). in greater detail, and the means implemented to control them are also presented. Major
ENVIRONMENTAL TRANSPARENCY AVAILABILITY OF PERFORMANCE AND CUSTOMER CONSTRUCTION OF BUILDINGS RELATIONS MATERIALS (NET RISK)
APPEAL AND DEVELOPING NEW USES AND EMPLOYEE EMPLOYEE SKILLS ACCESS TO HOUSING INNOVATIONS RETENTION AND COMMITMENT
RESPONSIBLE IMPACT OF PROCUREMENT CONSTRUCTION SITES AND SUPPLIER RESIDUAL CRITICALITY LEVEL RELATIONS Minor
Risk factors and description RESIDUAL LIKELIHOOD OF CRITICALITY PRINCIPAL MAJOR CSR ISSUES RISK TYPE IMPACT OCCURRENCE LEVEL 1. Environmental performance of buildings Loss of opportunity due to low-carbon requirements by external stakeholders Very significant Likely Major (local authorities, non-financial ratings agencies) Poor resistance of buildings Very significant Likely Major to consequences of climate change 2. Transparency and customer relations Client dissatisfaction linked to the quality of the product or service provided Significant Certain Major and to a lack of transparency in the customer relationship 3. Availability of construction materials Increase in construction costs Significant Certain Major Threat to the Group’s business model Very significant Unlikely Major 4. Appeal and employee retention High turnover rate Significant Likely Major 5. Developing employee skills and commitment Mismatch between skills and changes in the Group’s business lines Significant Likely Major 6. Access to housing Offer not compatible with clients’ Significant Likely Major financial means 7. New uses and innovation Real estate products and services Very significant Unlikely Major not suitable for new uses
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3.1.3 Nexity’s CSR commitments
As part of a revision of its strategy for 2020, in 2017 Nexity The Group’s CSR policy includes quantitative targets which launched an overhaul of the focal areas of its CSR efforts in are monitored on a yearly basis, corresponding to the order to take better account of its transition to its role as a creation of social, environmental and economic value for real estate services platform. The CSR risk assessment each of its clients and for society: study conducted in 2018 was carried out again in 2019 in • Local Authority Clients: Designing sustainable, accordance with the Group’s risk mapping methods and responsible cities; taking into account the “material” issues described above. 3 Nexity endeavoured to incorporate the themes deemed • Individual Clients: Delivering better access to housing most significant to its business. As a responsible real estate and higher-quality neighbourhoods; operator aware of its unique positioning across the entire • Commercial Clients: Offering better building practices real estate value chain, Nexity wants to exercise its for a higher-quality of life at work; corporate social responsibility in the upstream and downstream stages of the real estate services platform by: • Internal Clients (Nexity employees): Being recognised as a preferred employer; and • Creating social, environmental and economic value for each of its clients; • Civil society: Upholding the highest standards of corporate governance and business ethics. • Providing its clients with well-being, quality of life and social connections in cities; and The objectives set out for each Client were streamlined in 2019 to only keep those that respond the most effectively to • Jointly creating sustainable and resilient cities in which the significant risks identified in the update of the CRS risk the impacts of climate change are anticipated. mapping. Some of these objectives are adopted for the This responsibility is notably underpinned by the variable remuneration of the Executive Management and the development and launch of best-in-class products and members of the Club 1797 (see Section 4.4 “Remuneration services in the following areas: and benefits of the executive company officers” of this Universal Registration Document) depending on the extent to • Combating climate change; which they meet the Group’s most important challenges. • Energy efficiency; The Group’s CSR commitments are also part and parcel of • Biodiversity and nature in cities; an international framework with: • Well-being and quality of life; • The renewal of its support for the ten principles of the • Social connections/Living together; United Nations Global Compact; Socio-economic impact; and • The signing of a letter of commitment with the Science • Based Targets initiative, arising from a partnership • Alternative and low-carbon mobility. between the United Nations Global Compact, the CDP, the WWF (World Wildlife Fund) and the WRI (World Resources Institute); and • The communication of the Sustainable Development Goals to which it contributes (see Section 3.8 “Cross-reference table with the United Nations’ Sustainable Development Goals”).
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Cross-functional objectives
2018 2019 Objectives Maturity performance performance Progress 30% of developments and services based on a circular economy approach 2025 6.9% 3.6% Behind schedule 30% of purchases including at least one CSR aspects (local sourcing, social inclusion, ESAT [hiring the disabled], environmental certification, etc.) 2020 - - Signature of a partnership with Set an action plan for “Zero net land take by 2050” 2020 - Humanité & In line Biodiversité to define the plan 777 committed Produce 1,000 housing units in family shelters per year 2021 0 housing units In line
Individual Clients
2018 2019 Objectives Maturity performance performance Progress Behind the climate 30% reduction of CO emissions per new home delivered (2015 basis) 2030 -7% -5.2% 2 trajectory Continue to lead the market (> 20% market share) in reduced VAT zones 2020 22%1 18.8% In line and remain the number-one partner of social housing operators Double (increase by 100%) the production of housing in wood and the use 2020 +45% +239% In line of other bio-sourced or low-carbon materials (2015 basis) 17 subsidiaries, 17 subsidiaries, At least one E+C- project launched per subsidiary 2020 Behind schedule or 75% or 75% 100% of classic homes with integrated services (Eugénie) 2024 1% 9% In line 50% of projects delivered with planted areas 2020 16% 68% In line 30 condominiums renovated 2020 12 21 In line 20 Nexity officers for energy efficiency renovation projects 2020 0 10 In line
Commercial Clients
2018 2019 Objectives Maturity performance performance Progress 21% reduction in CO emissions per square metre of office floor space Behind the climate 2 2030 -5.5% -5.6% delivered (2015 basis) trajectory 50% of projects launched bear the E+C- label 2020 - 29% In line 50% of timber-frame projects have obtained the BBCA label (since 2015) 2030 31% 32% Unobservable 33% of office building floor space using wood frame 2030 23% 19% Unobservable 100% of new, renovated/redeveloped commercial projects including 2020 100% 84% In line planted areas Increase in the number of turnkey projects offering cost guarantee 2020 3% 3.4% In line
1 The 2018 data has been modified following an update of the public data used to measure this objective.
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Internal Clients
2018 2019 Objectives Maturity performance performance Progress In line with 35% reduction of CO2 emissions per employee (2014 basis) 2030 -10.3% -15% the climate trajectory 90% of employees have an annual interview with their manager 2020 79% 91% In line At least 15% of the share capital belonging to employees and executives 2020 17% 18% In line 35% women (vs 28% in 2017) within the Nexity Club 1797 2020 31% 34% In line 3 2,000 employees committed to solidarity 2020 509 515 Behind schedule Voluntary turnover rate < 10% 2020 9.3% 9.8% In line Continuous improvement plan (Great Place to Work® survey) 2020 58% -1 In line
Glossary: BBCA: Low carbon building (Bâtiment Bas Carbone). E+C-: Positive energy and low carbon building label. Launched in November 2016 by the French government as part of the law on energy transition, this label prefigures the upcoming 2020 environmental regulation (RE 2020) for new buildings, that will replace the current 2012 Thermal Regulations (RT 2012) and which aims to generalise the production of positive energy and low carbon buildings. A national experiment has been launched to test the levels of ambition of this new label and feasibility issues.
A summary of all CSR indicators is also presented in Section 3.9 “Summary table of CSR indicators” of this chapter. Data related to these indicators and objectives are reported upward through a reporting system able to track how they change over time. This reporting system is being built with respect to the objective “30% of purchases including at least one CSR dimension (local sourcing, social inclusion, ESAT [sheltered employment], environmental certification, etc)”.
1 After a first exercise in 2018, the next survey will be carried out in 2020.
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3.2 STRENGTHENING STAFF LOYALTY: BEING RECOGNISED AS A PREFERRED EMPLOYER
Nexity’s Human Resources Department is responsible for Workforce structure by employee age at 31 December 2019 developing the skills and human capital needed by the Group to meet the short-, medium- and long-term objectives ≥ 55 years 524 731
set by its Executive Management. To guarantee the human > 45 and < 55 years 921 1,308 capital Nexity needs to implement its strategy, one of its key challenges is to retain employees and develop their > 35 and ≤ 45 years 1,429 1,553 employability. > 25 and ≤ 35 years 1,459 1,897 At 31 December 2019, the Nexity group had 11,003 employees, 91.5% of whom under permanent contracts. ≤ 25 years 172 1,009
Number of employees 2019 2018 2017 Management-level Non-management staff Like-for-like 10,780 7,657 7,249 External growth 223* 2,436* 27 TOTAL 11,003 10,093 7,276 The type of employment contracts and the average length of service rates illustrate the Group’s ability to retain its * Employees from integration of Accessite, Bureaux à Partager, Lespace, employees. The Group’s turnover rate1 is 13.3%. Moreover, the Service Personnel and Hiptown at NSE voluntary turnover rate2 is less than 10%. The monitoring and tight management of this turnover rate have become key Number of employees 2019 2018 2017 elements of Nexity’s strategy (see Section 1.5.1 “Employees: Individual Clients 9,554 8,912 6,214 levers of future growth” of this Universal Registration Residential Real Estate 2,428 2,238 1,941 Document). Given the speed with which business lines are Real Estate Services to Individuals 7,126 6,674 4,273 changing and the transformation of companies, talent Commercial Clients 992 786 720 retention and the development of employee skills remained Commercial Real Estate 129 109 88 key priorities in 2019. Real Estate Services to Companies 863 677 632 For this reason, the Group wants its employees to view it as Other activities 457 395 342 a “preferred employer”, with regard to five commitments: TOTAL 11,003 10,093 7,276 1. Respect diversity and social demands by maintaining a lasting and constructive dialogue between employees Women account for 66% of Group employees and men for and management, and ensuring the values of gender 34%. diversity and professional equality are implemented. Indeed, the Nexity group firmly believes in the need for Workforce structure by length of service at 31 December 2019 dialogue between employees and management and the role of employee representative bodies in > 20 years 372 343 supporting and informing employees. To this end, it assumes a socially responsible role by intervening as > 10 ≤ 20 years 726 675 a true social partner with the employee representative
> 5 ≤ 10 years 709 787 bodies; 2. Guarantee fair remuneration for individual and > 3 ≤ 5 years 449 704 collective performance while maintaining solidarity; ≤ 3 years 2,249 3,989 3. Develop talents by offering diversified training and support to enhance employability;
Management-level Non-management staff 4. Promote quality of life at work by offering all employees concrete actions and a full range of measures; and The average length of service of Group employees was 5.4 years (6.4 years for management-level staff and 5. Listen and exchange by creating areas where 4.7 years for non-management level staff). The average age employees with different professions can meet and of employees is 39.5 years (40.9 for management-level share information. staff and 38.6 for non-management level staff). To meet these commitments and strengthen employee loyalty, the Group has identified three major issues detailed below.
1 Number of dismissals, resignations and contractual terminations of permanent employees/average number of permanent employees (excluding Ægide-Domitys). 2 The number of resignations and ends of trial periods at the employee’s initiative out of the average headcount of employees with open-ended contracts – excluding Ægide-Domitys; since 2019, the voluntary turnover rate has been a component of the variable remuneration of members of the Nexity Club 1797. /120 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 STATEMENT OF NON-FINANCIAL PERFORMANCE Strengthening staff loyalty: being recognised as a preferred employer
3.2.1 Enhancing appeal and employee retention
The men and women who make up Nexity’s teams are the Nexity” of this Universal Registration Document). Thus, in Group’s “human capital”. Nexity considers human capital to order to control the retention rate (turnover) and attract be its main resource and the cornerstone of its business and retain talent, the Group has chosen to develop two model and as such, believes its main risk is that of the loss retention factors: remuneration and quality of life at work. of skills (see Section 2.2.1 “Summary of the main risks of 3.2.1.1 Remuneration 3 Remuneration is a prime factor to attract and retain Transparency in relation to employees employees. Nexity thus seeks to recognise and reward Group To improve the legibility and understanding of the different employees for their contributions, taking into account both payment mechanisms, a secure “My remuneration space” individual and collective performance, while guaranteeing application has been developed and is made available to fairness and promoting solidarity. each employee. It lists all the elements of the remuneration At the individual level, performance is recognised and paid out over one year, together with all the individual rewarded through the allocation of salary measures, and for employee benefits and links to the services proposed. executives and sales staff depending on their position, by the allocation of individual variable remuneration according Pay equity to their individual contribution. These measures are decided Nexity is committed to ensuring equal pay for women and during the salary review process. men and to fighting against gender pay gaps and In 2019, the Group’s average gross annual remuneration unjustified treatment. (excluding employer’s social security contributions) In this respect, in accordance with the decree implementing amounted to €43,171, up 2.9%1 compared to 2018. the French Avenir professionel Act (Professional Future Act), Group entities concerned in terms of their workforce have Salary reviews: a structured and uniform measured the indicators defined by the “gender-equality” process based on the recognition of individual index in respect of the 2019 financial year. contributions and performance These entities obtain the following overall scores: Employees’ fixed individual remuneration constitutes the UES Nexity Lamy: 84/100; counterpart of the good performance of their role. Variable • remuneration serves to reward individual contributions to • UES Nexity Promotion Construction: 76/100; the Group’s performance by achieving specific objectives • UES Nexity Saggel: 84/100; over a given period. • Ægide-Domitys: 84/100; Remuneration is reviewed at least once a year through a structured, global process that is applied by all Group • UES Edouard Denis Transaction: 79/100; entities, which ensures that remuneration principles are • iSelection: 88/100; uniformly applied. • Century 21: 91/100; In order to guarantee the fairness of wage measures PERL: 87/100; granted and identical pay levels for equivalent positions • and profiles, the salary review process is underpinned by • Accessite: 83/100; the principle of non-discrimination. This is notably ensured • Lespace: 56/100; and by a two-stage review process of each employee’s situation (carried out by managers on the one hand and by the • Service Personnel: index cannot be calculated. Human Resources Department on the other) which allows The Nexity group entities excluding UES with 50 to for a factual and objective assessment. 250 employees published their overall score on The Group also seeks to safeguard the principle of 1 March 2020. solidarity, with specific attention paid each year to In addition, it should be noted that due to the diversity of employees on the lowest incomes. the Group’s business lines there is a dispersion of As part of the 2019 campaign, 61% of employees eligible remuneration levels depending on the sectors of activity. for salary reviews (employed for over one year) benefited These averages are therefore provided for information from a revaluation measure totalling €8,710 thousand. purposes only. Furthermore, compensation paid to management-level employees may, depending on their specific duties and the corresponding level of responsibility, involve a variable component included in this amount.
1 Including Ægide-Domitys.
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At the collective level, performance is measured on the Group Savings Plan basis of the economic results achieved by the Company Investments in the Group Savings Plan (PEG) may come and/or the Group. from different sources, all of which benefit from employer The efforts made by each Group subsidiary are reflected in matching contributions: compulsory and voluntary the possible payment of incentive and profit-sharing profit-sharing, voluntary contributions by employees, rights bonuses (provided that the entity’s workforce, economic deriving from accrued paid leave and free share awards. maturity and results allow it). Employees are not allowed access to funds invested in the plan for a period of five years, except in cases of early More generally, the Group Savings Plan (PEG) and the Group redemption permitted by law. Collective Retirement Savings Plan (PERCOG), whose annual contribution levels are pegged to Group results, reward The PEG offers a comprehensive and clear range of collective performance. investment funds: five Amundi FCPEs (employee mutual funds) and two dedicated FCPEs, Nexity Actions and Nexity In addition, to foster the involvement of all staff members, Levier 2017, invested only in Nexity shares. the Group has set up a shareholding policy enabling employees to be associated, as shareholders, with the At 31 December 2019, the Nexity Actions FCPE and the Group’s development and growth strategy. 2017 Leverage Fund held 1,528,042 shares, representing 2.7% of Nexity’s share capital. Employee Savings: schemes to reward collective Group Collective Retirement Savings Plan performance To enable Group employees to build up a long-term salary The Nexity employee savings scheme reflects the employees’ savings supplement in preparation for their retirement, contribution to the results of the Group and their specific entity. Nexity set up a Group Collective Retirement Savings Plan This system is based on two savings schemes; employee (PERCOG). profit-sharing, which is specific to each eligible company, and Employee Savings Plans, which are common to all employees As is the case for the PEG, all investment sources for the of the Group. PERCOG benefit from employer matching contributions: compulsory and voluntary profit-sharing, voluntary Employee profit-sharing contributions by employees, unused rest days (RTT) and Employee profit-sharing is specific to each eligible Group rights deriving from accrued paid leave. Employees cannot structure to reflect the specific nature of the different access funds invested in the plan until their retirement, business lines on the one hand, and to reward the collective except in cases of early redemption permitted by law. The contribution of employees to the results of their entity, on PERCOG offers a clear and comprehensive range of the other. Profit-sharing agreements are concluded within investment funds, consisting of five Amundi (“FCPE”) each structure, if their workforce, economic maturity and mutual funds. In addition, the PERCOG offers employees the results permit. possibility of opting for guided investment management. In 2019, the Group paid its employees €5.9 million in Employee Savings Plans are widely used by Group participation bonuses and €9.1 million in profit-sharing in employees, as 62% of them saved in 2019 and benefited respect of the 2018 financial year (gross amount before from the matched contribution totalling around €2 million. CSG/CRDS). Sharing added value: free share allocations In 2019, 95% of employees benefited from a profit-sharing and/or participation bonus. To involve employees as shareholders in the creation and sharing of value, employee shareholding operations are Group employee savings plans regularly proposed to Nexity employees (collective plans for To strengthen its shared foundation for employee relations, the award of free shares and a capital increase reserved for Nexity has implemented a Group-wide employee savings employees in 2017). On 31 May 2018, the Board of system with a view to rewarding the collective contribution Directors, upon the proposal of the Chairman and Chief of all employees to the Group’s results. Executive Officer, decided to award 30 free shares to each This system comprises a Group Savings Plan (PEG) and a Group employee (representing a total of more than Group Collective Retirement Savings Plan (PERCOG) and 200,000 shares granted to 7,000 Group employees). At the was set up in 2015 by unanimous collective bargaining end of the 3-year vesting period (31 May 2021), beneficiary agreements concluded with the trade union and employee employees may either: representative bodies. It constitutes a lever of motivation • Transfer their shares to the Nexity Actions FCPE of the and cohesion as it has the innovative feature of linking the Group Savings Plan and thus benefit from a tax level of matching contribution to the Group’s operating exemption on the sale, subject to their compliance with income. This means that the more the Group’s profits grow, the five-year lock-up period; and the higher the employer contribution, in accordance with Sell their shares as of 31 May 2021. the principle of mutual benefit. • This system changes in 2020, in order to take into account the provisions of the PACTE bill and to further encourage employee shareholding. For this purpose, in January 2020 Nexity paid out a unilateral matching contribution enabling all employees to be shareholders in the Group.
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At 31 December 2019, 70% of the workforce (excluding Ægide-Domitys employees) owned Nexity shares. At 31 December 2019, the Group’s employees held 3.4% of the share capital by means of the FCPE or awards of free shares.
PLANS IN FORCE AT 31 DECEMBER 2019 1 June 2017 1 June 2017 GRANT DATE BY THE BOARD OF DIRECTORS 23 January 2017 25 April 2017 (plan 1) (plan 2) Date of authorisation given by the Shareholders’ Meeting 31 May 2016 31 May 2016 1 June 2017 1 June 2017 Total number of shares in awards initially granted 50,000 5,000 279,600 113,000 Number of shares vested - - - - Number of shares cancelled - - 29,050 - 3 Number of shares in awards granted and not yet vested 50,000 5,000 250,050 113,000 Total number of shares in awards granted to company officers - - - - Total number of shares in awards granted 50,000 5,000 61,350 113,000 to the top ten recipients Number of initial plan recipients 3 1 149 4 Number of initial recipients of the top ten awards granted 3 1 11 4 Vesting period expiry date Board of Directors No vesting period meeting to approve 24 April 2020 31 May 2020 1 June 2020 the 2019 financial statements Vesting period (in years) 3 years 3 years 3 years 3 years Performance and Performance and Performance and Performance and Vesting conditions presence presence presence presence Performance criteria Executive Committee Executive Committee For 51% of the awards Executive Committee Plan. Plan. No shares subject to Plan For 100% of the For 100% of the the achievement of an For 100% of the awards awards objective vest if less awards No shares vest if less No shares vest if less than 80% of the No shares vest if less than 100% of the than 90% of the target is met than 100% of the target is met target is met target is met
Criteria: Criteria: Criteria: Criteria: 25%: cumulative 70%: cumulative 70%: cumulative 25%: cumulative 17-18-19 current 17-18-19 current 17-18-19 current 17-18-19 current operating profit operating profit operating profit operating profit level* level* level* level* 25%: 2020 current 30%: backlog level* 30%: backlog level* 25%: 2020 current operating profit at 31 December at 31 December operating profit level* retained by the 2019 2019 level* retained by the Board of Directors in in line with the in line with the Board of Directors in December 2019, medium-term plan medium-term plan December 2019, excluding external validated by the Board validated by the Board excluding external growth of Directors at its of Directors at its growth 25%: net debt level* meeting of meeting of 25%: net debt level* at 31 December 15 December 2016 15 December 2016 at 31 December 2019, excluding over the duration of over the duration of 2019, excluding exceptional operations the plan the plan exceptional operations 25%: backlog level* Triggered when 90% Triggered when the 25%: backlog level* at 31 December of performance performance criteria at 31 December 2019 criteria are achieved are achieved at 90% 2019 in line with the for 90% of awarded for 90% of shares in in line with the medium-term plan shares awards granted and at medium-term plan validated by the Board 80% for 80% of validated by the Board of Directors at its shares in awards of Directors at its meeting of 15 granted meeting of December 2016 over 15 December 2016 the duration of the over the duration of plan the plan * according to IFRS * according to IFRS * according to IFRS * according to IFRS standards used for the standards used for the standards used for the standards used for the financial statements financial statements financial statements financial statements in 2016 in 2016 in 2016 in 2016 % of shares in awards subject to continued employment 0% 0% 49% 0% condition alone % of shares in awards subject to continued employment 100% 100% 51% 100% and performance conditions Share price on grant date (in euros) €44.90 €45.10 €54.50 €54.50
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PLANS IN FORCE AT 31 DECEMBER 2019 31 May 2018 31 May 2018 GRANT DATE BY THE BOARD OF DIRECTORS 19 December 2017 managers all employees 30 October 2018 Date of authorisation given by the Shareholders’ Meeting 1 June 2017 31 May 2018 31 May 2018 31 May 2018 Total number of shares in awards initially granted 13,500 284,950 209,070 24,000 Number of shares vested - - 120 - Number of shares cancelled 4,500 20,550 56,940 - Number of shares in awards granted and not yet vested 9,000 264,400 152,010 24,000 Total number of shares in awards granted to company officers - - - - Total number of shares in awards granted 13,500 52,000 209,070 24,000 to the top ten recipients Number of initial plan recipients 3 179 6,969 12 Number of initial recipients of the top ten awards granted 3 13 6,969 12 Vesting period expiry date No vesting period 18 December 2020 30 May 2021 30 May 2021 29 October 2021 Vesting period (in years) 3 years 3 years 3 years 3 years Vesting conditions Performance and Performance and Presence Performance and presence presence presence Performance criteria For 100% of the For 51% of the awards For 70% of the awards awards No shares subject to No share allocation for No shares vest if less the achievement of an the Group EBITDA than 100% of the objective vest if less performance objective target is met than 80% of the if less than 80% of the target is met target is met No share allocation for the Ægide EBITDA performance objective if performance achieved is €10 million less than target
Criteria: Criteria: Criteria: 25%: cumulative 70%: cumulative 36%: Group EBITDA 17-18-19 18-19-20 Group level* current operating EBITDA level* 64%: Ægide EBITDA profit level* 30%: minimum level in line with the 25%: 2020 current backlog level* medium-term plan operating profit at 31 December validated by the Board level* retained by the 2020 of Directors at its Board of Directors in in line with the meeting of 19 December 2019, medium-term plan December 2017 over excluding external validated by the Board the duration of the growth of Directors at its plan, in terms of 25%: net debt level* meeting of 19 Group EBITDA at 31 December December 2017 over Triggered when the 2019, excluding the duration of the performance criteria exceptional operations plan are achieved at 90% 25%: backlog level* Triggered when the for 90% of shares in at 31 December performance criteria awards granted and at 2019 are achieved at 90% 80% for 80% of in line with the for 90% of shares in shares in awards medium-term plan awards granted and at granted validated by the Board 80% for 80% of of Directors at its shares in awards meeting of 15 granted December 2016 over the duration of the plan * according to IFRS * according to IFRS * according to IFRS standards used for the standards used for the standards used for the financial statement in financial statements financial statements 2016 in 2018 in 2018 % of shares in awards subject to continued employment condition alone 0% 49% 100% 30% % of shares in awards subject to continued employment 100% 51% 0% 70% and performance conditions Share price on grant date (in euros) €52.00 €49.80 €49.80 €42.10
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PLANS IN FORCE AT 31 DECEMBER 2019 22 May 2019 22 May 2019 24 October 2019 24 October 2019 GRANT DATE BY THE BOARD OF DIRECTORS (plan1) (plan2) (plan1) (plan2) Date of authorisation given by the Shareholders’ Meeting 22 May 2019 22 May 2019 22 May 2019 22 May 2019 Total number of shares in awards initially granted 10,000 212,700 67,700 174,500 Number of shares vested - 4,000 - - Number of shares cancelled - - - - Number of shares in awards granted and not yet vested 10,000 208,700 67,700 174,500 Total number of shares in awards granted to company officers - - - - Total number of shares in awards granted 3 to the top ten recipients 10,000 47,000 67,700 174,500 Number of initial plan recipients 1 175 4 51 Number of initial recipients of the top ten awards granted 1 14 4 51 Vesting period expiry date No vesting period 31 May 2022 31 May 2022 24 October 2022 24 October 2022 Vesting period (in years) 3 years 3 years 3 years 3 years Performance and Performance and Performance and Performance and Vesting conditions presence presence presence presence Performance criteria For 100% of the For 51% of the awards For 100% of the awards No shares subject to awards For 51% of the awards No shares subject to the achievement of an No shares subject to No shares subject to the achievement of an objective vest if less the achievement of an the achievement of an objective vest if less than 85% of the objective vest if less objective vest if less than 85% of the target is met than 85% of the than 85% of the target is met target is met target is met
Criteria: Criteria: Criteria: Criteria: 60%: cumulative 31%: cumulative 60%: cumulative 31%: cumulative 18-19-20-21 Group 18-19-20-21 Group 18-19-20-21 Group 18-19-20-21 Group EBITDA level* EBITDA level* EBITDA level* EBITDA level* 20%: minimum 10%: minimum 20%: minimum 10%: minimum backlog level* backlog level* backlog level* at backlog level* at 31 December at 31 December 31 December 2021 at 31 December 2021 2021 in line with the 2021 in line with the in line with the medium-term plan in line with the medium-term plan medium-term plan validated by the Board medium-term plan validated by the Board validated by the Board of Directors at its validated by the Board of Directors at its of Directors at its meeting of 19 of Directors at its meeting of 19 meeting of 19 December 2018 over meeting of 19 December 2018 over December 2018 over the duration of the December 2018 over the duration of the the duration of the plan the duration of the plan plan 10%: level of plan 10%: level of 5%: level of reduction of carbon 5%: level of reduction of carbon reduction of carbon footprint reduction of carbon footprint footprint 10%: level of footprint 10%: level of 5%: level of equality equality index 2021 5%: level of equality equality index 2021 index 2021 index 2021 * according to IFRS * according to IFRS * according to IFRS * according to IFRS standards used for the standards used for the standards used for the standards used for the financial statements financial statements financial statements financial statements in 2018 in 2018 in 2018 in 2018 % of shares in awards subject to continued employment condition alone 0% 49% 0% 49% % of shares in awards subject to continued employment and performance conditions 100% 51% 100% 51% Share price on grant date (in euros) €40.46 €40.46 €44.96 €44.96
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PLANS HAVING EXPIRED IN 2019 Grant date by the Board of Directors 31 May 2016 Total number of shares in awards initially granted 469,500 Number of shares vested 424,500 Number of shares cancelled 45,000 Total number of shares in awards granted to company officers 21,000 Number of shares in awards granted to the top ten recipients 118,000 Number of initial plan recipients 140 Number of initial recipients of the top ten awards granted 10 Vesting period expiry date 30 May 2019 Length of lock-up period as of transfer of share ownership 3 years Vesting conditions Performance and presence 3 years No award in respect of criteria if < 90% 70%: average 16-17-18 current operating profit level* ≥ €256 m Target achieved: 122% 30%: average 16-17-18 backlog level* ≥ €3,400 m Target achieved: 136% * according to IFRS standards used for the financial statements in 2015 Share price on date of award €48.40
3.2.1.2 Quality of life at work Quality of life in the workplace enhances the attractiveness This approach enhances the Company’s economic of the Company and fosters staff retention since employees performance by providing employees with working conditions want to work in a company that is concerned about their that foster concentration and well-being, on the one hand, health and well-being. and by reducing absenteeism, on the other. Nexity has implemented several actions to promote the The absenteeism rate1 in France was 4.2% in 2019. well-being of its employees, improve their working It remains well below the national absenteeism rate of conditions and facilitate the balance between their 5.10% (according to the 11th 2019 absenteeism barometer personal and professional lives. These actions are designed produced by Ayming). to benefit the greatest number (preventative health The reported number of occupational illness was very low measures, a tele-medicine service for all, parenthood considering the Group’s business (3 cases declared in management, home-working, etc.). 2019). The number of workplace accidents at Nexity is very low as are the severity and frequency rates. This is due to the types of Group activities, as shown in the table below:
2019 FRANCE SCOPE (EXCLUDING NSE ACQUISITIONS) 2019 like-for-like (1) 2018 Workplace accidents 150 52 37 Commuting accidents 45 41 51 Frequency rate (2) 8.3 3.7 2.9 Severity rate (3) 0.6 0.2 0.1
(1) Mainly Ægide-Domitys. (2) Number of lost-time workplace accidents in the year × 1,000,000/number of hours theoretically worked in the financial year. (2) Number of calendar days lost due to a lost-time workplace accident over the year × 1,000/number of hours worked in the financial year. In 2019, 195 work-related accidents resulting in lost time were reported (compared with 88 in 2018), broken down into 150 workplace accidents and 45 commuting accidents. This increase is due to integration of the Ægide-Domitys structures, where the sector of activity is more exposed to workplace accidents.
1 The absenteeism rate is calculated on the basis of calendar days. It corresponds to the number of work days lost by permanent employees due to occupational and non-occupational illnesses or work-related accidents (in the workplace or during their commutes) in proportion to the average permanent headcount multiplied by 365. This rate excludes NSE acquisitions and foreign subsidiaries.
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In Ægide-Domitys, two safety and operational risk officers Promoting a work-life balance support the residences to reduce the risk of accidents. Quality of life in the workplace calls for a better balance Several initiatives are also being rolled out and will be between personal and professional life, which is why the reinforced in 2020: Group has chosen to implement measures to promote this • An online tool will be rolled out across all residences balance, in favour of its employees. and administrative sites. In each residence, it will allow To enable all employees regardless of their profile to the co-manager to record any workplace or commuting benefit from this approach the Group has implemented accident and to prepare an analytical report containing, several measures. These measures include: 3 amongst others, a description of the cause of these The right to disconnect accidents and the possible ways to reduce them; A system relating to the right to disconnect was introduced • An awareness programme will be put in place for in 2017 for all Group employees by way of a collective regional managers; agreement concluded within the UESs as part of the • A training plan will be put in place for the co-managers negotiations on the quality of life in the workplace and in of the residences in order to strengthen their skills and the context of unilateral charters within subsidiaries make them autonomous in developing a root-cause excluding UESs. analysis following each accident giving rise to a time This system consists of incentives and educational lost; and measures to promote the reasonable use of digital tools • Lastly, a safety welcome guide will be distributed to made available to employees: disconnection period each employee. reminders, dissemination of best practices to be adopted, provision of a toolbox to facilitate disconnection, Adopt a recognised approach to improving quality awareness-raising measures. of life at work Parent support policy In line with one of its CSR objectives, in 2018, Nexity Nexity wanted to offer its employees who are parents the launched a continuous improvement initiative aimed at benefit of a number of services relating directly to childcare obtaining Great Place to Work (GPTW) certification. that are provided by recognised professionals in the early In 2018 a survey to measure employee satisfaction on this childhood sector. subject was sent to employees, of whom nearly 50% To deal with difficulties related to the search for childcare responded. Of these, 58% had a favourable opinion about services, Nexity concluded a partnership concerning the the Group. Although this percentage was not sufficient to reservation of places in nurseries and related services. obtain the GPTW label (which requires positive feedback In this context, in 2019, 85 employees were offered a from at least 66% of participants), the information nursery place near their home or workplace. The childcare collected enabled the Group to adapt its human resources network also offers additional services on short notice to action plans, notably to better meet the needs and interested employees, such as occasional childcare or home expectations of employees. assistance. This initiative will be repeated in 2020. Company concierge service Home-working: optimising how work is organised To facilitate the everyday life of its employees, Nexity has Home-working was introduced at the end of 2017, allowing launched a dedicated digital concierge service. The purpose each eligible and willing employee to work from home or at of this service is to delegate certain personal administrative another Nexity location, one day a week. and organisational tasks so that employees can be more relaxed at work. The Group concluded three collective agreements with its Economic and Social Units (UES) (Saggel Services in In 2019, nearly 2,600 employees signed up to benefit from September 2017, Nexity Promotion Construction in this service, with an average of about 950 requests per October 2017 and Nexity Lamy in November 2017), month. within the context of negotiations on quality of life at work. Caregiver support service In addition, mobile working has also been implemented As part of its prevention policy, Nexity has introduced a unilaterally in other Group structures. caregiver support service in 2019 for its employees who are This system continued to be rolled out gradually over the looking after immediate family members (ascendants, course of 2018, and then 2019. An extensive support system descendants, spouses, etc.) or close relatives. was proposed to employees and managers alike so that This service involves assisting employees in all of their everyone could appropriate this new way of working in the procedures, from analysing their needs, through monitoring best way possible. all administrative formalities, to implementing solutions At 31 December 2019, 2,217 Group employees had opted adapted to the loss of autonomy of their relative. to benefit from this system. The objective fixed for 2022 (2,000 employees) has already been achieved.
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During 2019, 30 inquiries were received (to open/follow up This preventive approach involves the provision of services on a case, request information, etc.) and 10 employees such as medical tele-consultation, a confidential listening benefited from support. service, return to work support and daily living assistance. Health and welfare and work-related stress Awareness of work-related stress In order to raise managers’ awareness of stress-related Social protection issues, a training course entitled “Managing one’s stress In 2011, Nexity established a shared foundation in terms of and that of others” is proposed as part of their training, social protection for its employees to demonstrate its the aim being to develop the specific skills needed to commitment to fairness and its desire to create a social manage situations of stress and tension. protection system favourable to all employees. In addition, a training module entitled “Dealing with stress” Against the backdrop of restrictions on healthcare spending is offered to all those wanting to participate. with legislation relating to top-up health insurance, Nexity increased its minimum welfare benefits in 2017 to In 2019, 66 managers and 35 employees participated in include new employee protection. Applicable benefits these training sessions. improved again in 2019. Developed with trade union and employee representative bodies, who unanimously supported the change, the system is based on high quality healthcare and welfare guarantees and gives prominence to preventive healthcare.
3.2.2 Developing talents and reinforcing employee commitment
3.2.2.1 Skills development Induction process A breakdown of training delivered in 2019 by type of The Nexity induction process is based on the three central training is as follows: themes of Discover, Share and Explore, focuses primarily on Other online activities and culminates in the “physical” Group 17.0% induction. It makes use of a range of educational methods and materials, and complements the business line Languages 0.4% induction processes specific to each activity. The day has IT been organised to promote maximum interaction among 11.6% participating executives and employees. These events Business line provide opportunities for everyone to ask questions and Communication 55.3% provide feedback on the presentations. Time is also set 4.0% aside for socialising to promote the creation of an internal Management network. The process covers content and activities designed 11.7% to foster shared work and creativity, and to build the ability to overcome challenges as a team. In 2020 the process will In 2019 the main actions were: change. In particular a digital space will enable employees Strengthening of business line programmes and to access content to facilitate induction as soon as they • business line Academies, by incorporating changes in have signed their contract, before they physically arrive. regulations and technological opportunities made Group training possible by digital; In 2019, Nexity invested €6.1 million to deliver 152,118 • Creation of a new more intuitive learning platform, training hours: making the training offer more accessible and easier to understand; • €5.7 million in ongoing training for its employees; and Creation of a new offer: the learning studio, a video €0.4 million allocated to recurring costs for the Group’s • • shooting space to film experts in order to disseminate e-learning system (equipment, maintenance, licence knowledge; and purchases) and to the creation of business line-specific training modules designed for distance learning to • Extension of reverse mentoring: an initiative in which enrich the range of solutions offered and the support “digital natives” share their knowledge, particularly provided to employees by HR personnel and managers. digital expertise, with more experienced employees. Cross-functional workshops have also been conducted to lay the foundations for the "Cité Nexity", a new entity for developing and show-casing human capital, launched officially at the start of 2020.
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It responds to the ambition conveyed by the Chairman of The interview completion rate in 2019 stands at 91%, up the Board of Directors to make Nexity “a company you join from 2018 (79%). For 2020 the aim is to maintain this to leave your mark on a city, to grow and develop”. interview completion rate. The Cité is for all current and future Nexity employees who Internal mobility want to be active players in their real estate careers. It is a new entity, a new brand of and for the Group. It is a hybrid Mobility is a key challenge for Nexity’s transformation and its body working to develop human and economic ambition of moving towards a services platform. This is why performance within Nexity. It functions thanks to an open mobility is strongly encouraged throughout the Group. collective of experts, an agile mechanism for education, Principles, a policy and a charter have been defined for 3 development and sharing of skills. mobility, to support employees throughout the process. This Finally, the Cité also relies on the success of innovative enables them to keep up-to-date with opportunities, adapt to projects conducted internally, and continues to develop new roles and integrate fully into new working environments. them for the benefit of internal clients and future Mobility has a positive impact on the organisation, as it employees (La Fabrique by Nexity, NEXT programme, encourages employees to learn, train and overcome fresh Learning Studio, highlighting of the Group’s business lines challenges. and expertise to partner schools). In 2019, 284 employees benefited from internal mobility. Performance appraisals The ambition for 2020 is to reinforce the process so as to increase the number of mobilities. Annual performance appraisals provide a valuable opportunity to share information, clarify missions and Talent review meetings objectives and develop the professional capacities of each Talent review meetings are held every year, partly to employee. It enables participants to assess the previous year, overcome the challenge of retaining top talent. The aim of look at the coming year and discuss short/medium-term these Talent reviews is to objectively analyse employee career goals. potential to support their development as best as possible. The purpose of this key exchange between managers and Employees fulfilling a number of specific criteria are employees is both to guide employees’ development so qualified as potential employees for a promotion or broader that they achieve the expected levels of competence and role. They are usually identified as those who have performance in each of their roles, and to support their outperformed their targets and demonstrated their ability careers based on their aspirations, Company requirements, to support and manage a team. resources and available opportunities. The annual For the Talent review meetings campaign in 2019 a new performance appraisal provides managers with a tool which tool was introduced, and therefore a new talent they can use as a driver of team performance and results. It management matrix, making it possible to: also defines the foundations for the employee’s individual development plan. • Classify the types of talents taking into account performance and potential; In 2019 a new annual appraisal interview format was introduced: the Development and Performance Interview. • Constitute pools of talent in the Company; and Employees and managers have worked together on this • Match up the different types of talents with appropriate project to create a new practical managerial process which development plans. meets the needs of all parties. 2019 Talent review meetings have identified employees The Development and Performance Interview comprises: with high potential over the short term (within the next • A more fluid user experience thanks to a new digital year – 111 employees), medium term (1-2 years – tool; 67 employees), and long term (3 years or more – 35 employees). • A new skills framework (6 key priorities for action) shared by both managers and employees, which covers six major The Professional development programme to retain skills that each Nexity employee can incorporate into top talent: Next their daily lives; The Next programme is renewed each year. It is continually • A new appraisal process centred on employee updated and customised to fit the Group’s people and motivation levers, integrated into each employee’s strategy. career, with the aim of continuous improvement; and All employees identified as high-potential join the Nexity • Reinforced feedback practices, encouraging employees Development Centre and follow a specific one-year and managers to give and receive feedback continuously professional development programme. throughout the year, not only at the annual appraisal interview.
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The programme begins with a comprehensive skills For 2019/2020, the programme has identified evaluation, to pick out the participants’ strong points as 32 employees (of which 47% are women) as having well as potential areas for improvement. “short-term” potential to join the Development Centre. Each participant then receives a personalised 12-month This promotion follows the 2019 Talent review meetings. development programme which includes collective support The programme was launched in 2014, celebrating its actions and individual actions in order to support skills 5th anniversary in 2019. Since 2014 it has supported development, notably by putting employees in real-life 144 employees (of which 36% are women). situations.
3.2.2.2 Raising awareness and training in CSR: another way of giving meaning and fostering the loyalty of employees The challenges of sustainable development and the policies • “Bilan Carbone® for real estate projects”, provided since implemented by the Group to this end are the focus of a 2014 to Group employees responsible for independently sustained awareness campaign aimed at its personnel, verifying the carbon footprint of their real estate thanks to many resources such as: projects via a specialised proprietary tool: Carbon Pro Nexity Live; (see Section 3.3.1.2 “Energy-efficient, low-carbon • buildings” of this chapter). This module was updated in • Sustainable Development Week; 2018 to incorporate the new E+C- framework, and to • A web radio station; prepare operatives for the new RE 2020 environmental regulations; and • A series of conferences organised at the Nexity registered office; and • “Rénovation énérgétique”, an e-learning module on energy efficiency renovations, offered to all • The low-carbon forum, an awareness-raising day condominium managers from 2012 onwards to help consisting of thematic workshops where internal and them provide better energy-related advice and support external speakers take the floor. to their clients (enhancing property values through In order to provide employees with functional support in renovation, increasing their purchasing power thanks to this area, the Group also offers a number of collaborative energy savings and improved control over occupancy tools such as practical design guides (covering “BBC” low costs, and improving comfort by choosing the right energy consumption criteria, low-carbon programmes and energy solutions). healthier living spaces), technical information sheets and the following training modules:
3.2.3 Promoting integration and equal opportunities
Nexity aims to ensure that the principle of Nexity has joined the French Association of Diversity non-discrimination is observed, both during the recruitment Managers (Association française des managers de la process and for the full duration of the employment diversité - AFMD) and participated in their various organised contract. events (conferences, workshops and sponsorship Any decision based on non-professional grounds or programmes) to identify best practice and ensure that prohibited subjective criteria therefore is prohibited for continuous improvements are being made. ethical reasons, and to properly manage the image risk In addition, Nexity used a questionnaire to collect all of its arising therefrom. employees’ opinions and expectations about the The Group therefore views integration and equal application of principles of diversity within the Group. More opportunities as a means of progress, and believes that the than 1,300 employees answered. A charter of concrete Company’s performance is enhanced by the diversity of its commitments was drawn up on the basis of the results staff. For this reason, it aims to boost diversity and obtained, called “Ensemblepour l'inclusion" chapter integration measures, sources of rewards and greater (Together for Inclusion chapter). It was signed by the commitment, based on three priority areas: Strategy Committee and approved by all Nexity managers. It was submitted for approval by all the employees and will • Gender equality; be included in the employment contract of new recruits. • Employment of people with disabilities; and • Social and cultural diversity.
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3.2.3.1 Strengthening the Group’s commitments to gender equality Nexity is particularly aware of the need to promote gender • In 2018, a professional sharing network was set up equality. For this purpose, the workforce structure is comprising 25 female employees. Today it has more regularly monitored and analysed. than 60 members, both men and women, working in all 66% of our workforce is female (of which 31.5% is the Group’s business lines. Its purpose is to promote management-level staff and 68.5% non-management gender equality in the workplace, to help to implement staff), and 34% male (of which 61% is management-level practical and innovative actions and to share staff and 39% non-management staff). experiences and best practice. Several events aiming to publicise this network and the Group’s commitments to 3 At management-level 51% is women and 49% men. equality were rolled out in 2019; The Group has implemented an action plan to strengthen • There has been a specific focus on identifying and formalise its commitments to wage equality, based on high-potential employees and candidates for the talent professional equality between the genders and on diversity. development and future executives training programme This plan, launched in 2017, comprises quantitative targets (53% female in 2019), in order to support women in and specific measures. It was validated by the Board of their career progression; Directors and proposed by the Remuneration, Appointments and CSR Committee. • 2019 saw the creation of an assertiveness training course specifically for female employees. The aim of this In this context, negotiations took place in 2018 with trade course is to eliminate any barriers encountered by those union and employee representatives in relation to a wishing to move towards an executive career path. number of actions, which are now being rolled out in order 31 female employees took this course in 2019; and to achieve the four commitments set out by the action plan which continued throughout 2019. • In order to ensure that women are represented when recruiting executives, all new contracts entered into Ensure equal pay for employees with equivalent with recruitment firms include a clause where by the jobs, skills and backgrounds shortlist of candidates must be in proportion to the number of female applications received, and consistent An audit performed at the end of 2017 showed that Nexity with the proportion of qualified women in that had achieved wage equality between men and women. particular business sector. Any wage discrepancies which had slipped through the net were identified and corrected during the salary reviews Diversify recruitment and increase the proportion performed at the start of 2018. of women in certain business lines Moreover, when the 2019 salary reviews were carried out, The gender equality commitments are published on the the relevant managers were reminded of the principle of Nexity recruitment site. non-discriminatory pay by means of a framework memo, stating the principles of Nexity’s remuneration policy, In order to ensure that certain Group business lines, notably with regard to equal pay. generally occupied by men, are accessible and appealing to women, videos will be disseminated both externally and In addition, in accordance with the decree implementing internally recounting the experience of Nexity female the Avenir professionnel Act (Professional Future Act), employees in “field” positions. the Nexity group entities concerned in terms of their workforce have measured the indicators defined by the Raise employees’ awareness about professional “Gender-Equality Index”, presented in Section 3.2.1.1 equality and diversity “Remuneration” of this chapter. In 2019, Nexity published a number of communications on Increase the number of women in governing bodies its social network to raise employees’ awareness about gender equality. Two quantitative targets have been set with the purpose of increasing the number of women in governing bodies by In addition, in 2019 a communication campaign was 2020: deployed aimed at employees, focusing on integration, and comprising a section on gender equality. It took the form of • Target of 35% women in the Club 1797 in 2019 1 regular communication bulletins on the theme of (34% in 2019 , with a 2016 baseline of 23%); and integration. In addition, specific events linked to this topic • Target of 50% women across all high-potential were organised in 2019 (conference on stereotypes, employees (49% in 2019). testimonies from female executives, etc.). In order to achieve these goals, various measures have been Finally, training actions for recruitment staff were also adopted: deployed in 2019.
1 Ex-Club 100, renamed Club 1797 in 2019.
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3.2.3.2 Promoting the employment of workers with disabilities At 31 December 2019, the Group had 192 employees with In addition, testimonies from employees who have disabilities in France. This increase is due to the induction benefited from the Disability Mission were disseminated, to of Ægide-Domitys employees (on a like-for-like basis, share their experience with the entire workforce of the the increase is 10% in one year). Group. Nexity is also committed to the inclusion of people with Employee support disabilities. To this end, partnerships have been forged with: A Disabled Persons Contact was appointed in November 2017 to improve employee support on all • The Elise and Cèdre networks: collection and recycling disability-related matters. He has the following duties: of office waste; • To lead the induction and support of employees with a • Ateliers Denis Cordonnier: scanning services for receipts disability; and expense reports; • To provide guidance to people with disabilities and • The disability-friendly company ATF Gaia: reconditioning assist them with various processes; and of IT hardware; and • To listen to them and ensure that any information • The disability-friendly company ANRH: scanning of shared remains confidential. documents. In 2019, 27 disability status recognition certificates were Nexity’s disability policy makes use of three main areas of issued, and 18 employees benefited from adjustments to action: workstations, a specific assessment or a subsidy enabling Raising awareness among employees them to pay for a significant part or all of the costs. All these actions contribute to improving the daily working In 2019 an awareness-raising action was organised in conditions of persons recognised as having disability status, partnership with Les Échos during the European Disability and to improving their well-being at work. Employment Week. This campaign had two objectives: • To promote recruitment by means of an announcement Recruitment of workers with disabilities published in Les Échos and other media, stating Nexity’s In October 2019 Nexity participated in the Hello Handicap desire to recruit people with disabilities; and virtual recruitment job fair. A second session is already planned for April 2020. • To raise employee's awareness through messages giving information about different types of disability, sent to In 2019 HR employees responsible for recruitment them every day during the European Disability benefited from diversity training. Employment Week.
3.2.3.3 Developing social and cultural diversity In 2018, the Group committed together with the Nexity In addition, actions such as Nexity Master Classes with Foundation to open its doors to interns from grade-9 class, Group executives and open days to discover the real estate primarily coming from QPV priority urban districts. professions with construction site visits were organised As part of this project, during the 2018-2019 school year, with other establishments: University of Créteil, University 300 interns have already visited the Group on various sites of La Sorbonne and University of Marne-La-Vallée. throughout France. Between September and Moreover, in 2019 Nexity sponsored 16 young people from December 2019, the Group welcomed 126 interns. disadvantaged communities as part of its partnership with Institut Télémaque. In 2019 HR employees responsible for recruitment benefited from diversity training.
3.2.3.4 Additional information Compliance with conditions for the use of subcontractors The Group remains particularly vigilant with respect to its social security contributions. The managers of these firms use of subcontracting and its compliance with legal are required to sign a sworn affidavit stating that they do provisions relating to both the working conditions as well not employ any unauthorised workers. as the safety of all personnel. Prior to signing any These requirements are mentioned in the Code of Conduct, agreement with subcontractors, the Group systematically which may be accessed by all Group employees via the verifies that the subcontractors are not in arrears with their Company’s social network.
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Compliance with the organization • At some entities (Nexity Promotion Construction, Nexity and management of working hours Lamy, Nexity Saggel Services and Ægide-Domitys) local Each company or group of companies belonging to an representatives have also been appointed. Their Economic and Social Unit (UES) has its own specific discussions with local management make it possible to arrangements for organising and managing working hours, take account of employees’ issues; and laid down in a collective bargaining agreement, • At Group level, a Group Works Council was introduced in particular by type of business and the terms of any by the collective bargaining agreement of 21 November applicable agreements. They depend upon an employee’s 2008. This body serves as a forum for dialogue intended status and level of responsibility. to ensure the effective exchange of information 3 Compliance with ILO conventions between Group Management and employee representatives. The Group Works Council thus receives Nexity only operates in countries that have ratified the ILO’s information about the Group’s business activities, eight fundamental conventions and complies with the financial position, employment trends and outlook. regulations in force in those countries. Taking into account the importance of induction at all Furthermore, the Group complies with all recommendations Nexity structures, the decision was made in April 2016 to of the ILO and international conventions prohibiting child broaden access to the Group Works Council by introducing labour: Nexity does not have any employees who are observer seats for companies with their own Works council minors, apart from on an ad hoc basis under internship or but no members of the Group Works Council. Executive apprenticeship contracts. Management and the Group Works Council meet more than Compliance with legislation on employee representative three times a year. bodies Each entity in the Group has a Social and Economic Social dialogue Committee (Comité social et économique - SEC) and Trade Minimum welfare benefits Union representatives, depending on the size of its At Group level, a programme of minimum welfare benefits workforce. for all employees, which currently comprises social security These bodies have clearly defined powers and their guarantees, employee savings plans (PEG and PERCOG) and members are consulted and informed on a regular basis the establishment of an employee representative body, about the implementation of projects concerning the the Group Works Council, has been developed in order to situation of employees within the Company. consolidate Nexity’s commitment in terms of fairness, solidarity and promoting collective performance. Overall, Nexity has more than 179 employee representatives (including both the appointed representatives and their Collective bargaining agreements signed in 2019 alternates) spread across 12 organisations, at companies In 2019, collective bargaining agreements negotiated at the where this is justified by the headcount in accordance with level of Group entities mainly concerned the following legal requirements, and 17 trade union representatives: topics: • Employees of the companies are informed and express • Wage negotiations; themselves collectively in particular via Social and • Changes in UES scopes; Economic Committees (SEC). The Nexity group has 12 SECs (UES Nexity Promotion Construction, UES Nexity • Profit-sharing scheme; Saggel, UES Nexity Lamy, PERL, iSelection, Century 21 • Negotiation on quality of life at work; and France, Naxos, Ægide-Domitys, Service Personnel, • Introduction of pre-electoral agreements. Accessite, Moreau Experts and Etoile Property Management). Nexity’s contributions to the Group’s various SECs for social and cultural activities in 2019 totalled €2.2 million. The total operating budget for the various SECs came to €1.3 million; • Three trade union bodies are also represented within the Nexity group; • A Health, Safety and Working Conditions Committee (Commission Santé Sécurité et Conditions de Travail -CSSCT) has been created within four SECs (Nexity Promotion Construction, Nexity Lamy, Nexity Saggel Services and Ægide-Domitys) to discuss these matters. However, these committees are part of the SECs and are not bodies in their own right, as was the case previously for the Committee on hygiene, safety and working conditions (Comité d’hygiène, de sécurité et des conditions de travail - CHSCT);
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3.3 IMPROVING THE GROUP’S ENVIRONMENTAL PERFORMANCE
3.3.1 Optimising the environmental performance of buildings
The construction industry is one of three sectors that • Not meeting clients’ expectations (including Commercial contributes the most to greenhouse gas (GHG) emissions in and Local Authority Clients) as they are increasingly France, due to both the impact of new construction and the looking for buildings with a good environmental use and operation of existing buildings. In this respect, the performance and a more general risk of lost environmental performance of the buildings that fall under opportunities due to the stricter environmental the scope of Nexity’s business, whether this is the requirements dictated by external stakeholders; and development of residential or commercial properties or • A corporate reputation risk, which the Group has their management, constitutes the main environmental decided to see as an opportunity to position itself as a challenge for Nexity. pioneer in low-carbon construction, thereby fully The risks facing Nexity if the environmental performance of exercising its role as a leader, going hand in hand with buildings is not taken into account, are as follows: that of project owner to encourage the dissemination of • Non-compliance with regulations: the RE 2020 low-carbon solutions. environmental regulation, replacing the RT 2012 To this end, Nexity has put in place a targeted set of thermal regulation, will be published in 2020 and will actions, the most significant of which are described below. comprise energy and GHG emissions thresholds for new buildings;
3.3.1.1 Climate trajectory defined for the Group and its business lines The climate trajectory: a long-term target for The chosen sector-based references (HQE™, CSTB, ADEME) Nexity work on the basis of an emission of approximately 1 tonne In the wake of International Conferences about climate, CO2 equivalent per square metre (approx. 1.2 tCO2e. for Nexity developed a climate trajectory that builds on the residential properties and approx. 0.92 tCO2e. for commitments made by France as part of the Paris commercial buildings) taking account of building Agreement. This has led the Group to undertake an initial construction and occupancy phases for a 50-year period. estimate of its material impacts, in addition to the In 2019, for the square metres delivered by Nexity, assessment conducted since 2009 that only included its emissions were: administrative sites. • 869,294 tCO2e. for Residential Real Estate, representing Estimate of the material impacts of activities (French about 80.6% of Nexity’s carbon footprint; "Green growth and energy transition Act, Art. 173) • Approximately 180,056 tCO2e. for Commercial Real Based on sector-based references for greenhouse gas Estate (delivery of 146,363 square metres of concrete emissions caused by real estate development, an estimate and 34,992 square metres of wood), representing of Nexity’s material impacts has been produced, and 16.7% of the Group’s carbon footprint; and constitutes a basis to determine the scale of the Group’s climate challenge. • 28,639 tCO2e. for administrative sites, representing only 2.7% of Nexity’s carbon footprint.
2019 2018 2017 2016 2015 Residential floor spaces sq.m. 738,192 770,112 722,904 649,152 630,336
Total actual emissions in tCO2e. 869,294 886,977 854,890 776,589 780,629
2019 2018 2017 2016 2015 Office floor spaces sq.m. 181,355 126,283 74,691 75,156 175,429
Total actual emissions in tCO2e. 180,056 125,519 75,416 75,594 184,437
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Nexity group targets
Nexity has set itself ambitious targets in terms of reducing • Commercial Real Estate: 21% reduction in tCO2e. per greenhouse gas emissions by 2030: square metre of floor space delivered (2015 basis); and
• Residential Real Estate: 30% reduction in tCO2e. per • Administrative sites: 35% reduction in tCO2e. per home delivered (2015 basis); employee by 2030 (2014 basis).
3.3.1.2 Climate roadmap being rolled out Since 2018, cross-functional working groups assisted by the For the eco-design of residential buildings, Nexity always 3 business lines have very clearly set out the implications of considers the use of renewable energies such as solar panels the climate trajectory for each of the Group’s business lines and connections to urban utility grids with a significant and in particular for Residential Real Estate as it represents proportion of renewable energy (over 60%) to produce 80.6% of Nexity’s carbon footprint. domestic hot water, electricity and so on. In 2019, 15% of In order to offer its Individual and Commercial Clients residential property delivered and 13% of new homes resource-efficient buildings, Nexity is working on improving reviewed by the Acquisition Committee included thermal the intrinsic performance of its buildings (including thermal solar energy or photovoltaic panels. performance, carbon emissions and health-friendliness). Energy efficiency renovation of condominiums is one of the The Group is working in particular on: more effective means of limiting the greenhouse gas • Reducing GHG emissions from its real estate projects emissions attributed to the real estate industry as older (design and operation); condominiums consume large amounts of energy. Through its Real Estate Services to Individuals business, Nexity has • Controlling their energy dependency and the associated been actively committed for some years to the energy costs; and efficiency renovation of condominiums, synonymous for the • Acquiring recognised labels and certifications. client with improved purchasing power, greater comfort, added value to their property. In 2015, Nexity formally Energy-efficient, low-carbon buildings affirmed this commitment by signing the official French In the same way that the Group was able to anticipate the charter promoting energy efficiency renovation of 2012 Thermal Regulation (RT 2012) as early on as 2010, it condominiums, launched in line with the recommendations is already working on the future environmental regulation of the Plan Bâtiment Durable, France’s sustainable building for new construction, expected in 2020, by participating in plan. In 2017, Nexity assigned an energy efficiency the nationwide pilot for the E+C- (Positive Energy, Carbon renovation project manager to support energy efficiency Reduction) Label. Nexity wants to make an active renovation operations and the upskilling of employees in this contribution in the fight against climate change by means area. In 2018, Nexity signed a Green Deal with the “Plan of two main initiatives: Bâtiment Durable” (a voluntary commitment entered into with the French government) that includes a certain number Improvements in the energy efficiency of buildings and • of clear objectives. Nexity also supports national actions in supporting the move towards positive energy buildings; favour of energy efficiency renovation. In 2018 Nexity signed and the better housing commitment charter from ANAH (France’s • Rollout of buildings with a low carbon footprint national housing agency) and in 2019 the “Engagé pour throughout their life cycle, from design to demolition. FAIRE” charter. The Group favours a comprehensive approach Energy to operations that makes it possible to achieve energy Nexity is working on the eco-design of residential and savings of between 30% and 60%, especially with project commercial buildings to make them more energy efficient management assistance allowing for innovative technical and limit their energy consumption. and financial solutions (energy efficiency contract, third-party financing, etc.). In 2019, nine condominium The Group makes use of the full range of engineering properties were renovated, and more than 170 buildings techniques to maximise energy performance: optimising have stated their interest (approximately 17,700 units). building orientation, improving insulation and limiting Of these more than 70 (approximately 9,200 units) thermal bridging, efficient glazing and heating systems, etc. have requested project management assistance or are under All the Group’s new residential projects are therefore renovation. designed to consume only a small amount of energy for heating, cooling, hot water, ventilation and lighting. In Similarly, in the context of its Commercial Real Estate 2019, the share of housing units exceeding the threshold business, Nexity committed very early on to the energy and set by the RT 2012 (with a performance level of RT 2012 environmental performance of its buildings by anticipating -10% or RT 2012 -20%) is 18% for new home delivered and regulations and obtaining labels and certifications: 80% of 28% for those which were submitted to the Acquisition the office development projects delivered in 2019 in the Committee. Paris region (61,725 square metres) are HQE™ certified (Excellent or Exceptional level) and have achieved at least a level of performance of RT 2012 -30%. (see Section 1.3.2.2 “Commercial Real Estate Development” of this Universal Registration Document).
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The environmental performance of commercial buildings • It is a prerequisite for establishing an effective GHG managed by Nexity also constitutes a major challenge for reduction policy in designing residential properties and the Group. With a view to maximising value and extending office buildings. the life of its clients’ assets, certification is central to Abiding by the climate trajectory established in 2018 Nexity’s offer. These procedures ensure better management enables Nexity to report on the GHG emissions generated and usage of commercial buildings, boosting energy and by its Residential and Commercial Real Estate activities. environmental performance. Nexity has considerable expertise in the renovation of office Residential Real Estate (housing development) buildings to improve their longevity and boost their value The Residential Real Estate operational teams have been for investors. Since 2000, a total of around 400,000 square able to calculate the carbon footprint of their real estate metres of office space has undergone major renovation projects independently ever since 2014. In 2018 a works. proprietary tool called Carbone Pro was introduced. It uses In terms of sustainable operation, for the user companies, the E+C- reference framework calculation methodology. Nexity offers a general expenses guarantee that includes an In 2019, 90% of new homes reviewed by the Acquisition energy efficiency guarantee from the moment the building Committee had a carbon profile. is delivered. Lastly, at the end of 2019, 17 subsidiaries in the Group’s Energy and environmental certifications Residential Real Estate business were involved in the E+C- In keeping with its comprehensive, long-term commitment pilot. This represents a total of 25 construction projects to quality, Nexity regularly applies for certifications and with an E+C- profile. labels for its development projects, for the purpose of at The Access Design product is a good illustration of this least obtaining enforceable environmental performance Energy and Carbon commitment. Based on an industrialised labels. construction method that uses both wood and concrete, For Residential Real Estate, a total of 40 projects it is mainly characterised by: (1,787 units) obtained NF Habitat or NF Habitat HQE™ • A thermal insulation allowing to outperform the RT 2012 certification from Cerqual in 2019. The NF Habitat standard standards (Bbio1 30% to 50% below the maximum and is based on 4 commitments: responsible management by Cep2 at least 10% below the requirement); the project owner of its organisation, quality of life, respect for the environment and economic performance. NF Habitat • The use of 100% FSC- or PEFC-certified wood from means that the developer meets management sustainably managed forests, with the aim of favouring requirements regarding continuous improvement, internal French wood; organisation and communication with clients. Certification • A better carbon footprint than a traditional concrete guarantees that the developer will provide the buyer with only building; complete information, in particular about the nature of the • A minimal environmental footprint thanks to dry purchase and the construction time frame. NF Habitat construction and industrialisation, with water and HQE™ certification is an environmental variant and add-on energy savings during the construction phase; and to NF Habitat certification that demonstrates its commitment to sustainable development. It provides • Shorter construction timescales (8-12 months additional benefits in terms of savings, health, comfort and depending on the size of the development), with less the environment. waste produced and fewer disturbances to local residents (in terms of noise, hygiene, traffic and safety) In 2019, all the Nexity Paris Val-de-Seine subsidiary and favouring the use of energy from renewable sources. developments were certified NF Habitat HQE (maturity 3). The subsidiary once more obtained certification of its Between 2015 and 2019, the share of timber-frame housing compliance with the experimental reference framework for units delivered by Nexity increased to reach 4% of deliveries management of indoor air quality issued by Cerqual in 2019. As this construction method is more virtuous than Qualitel, according to the February 2019 reference standard concrete from a carbon point of view, it contributed, framework. together with the overall improvement in the energy performance of the homes delivered, to the decrease in GHG Carbon emissions per home delivered between 2015 and 2018. The volume of GHG emissions is a crucial piece of However, between 2018 and 2019, GHG emissions per information that must be calculated to analyse the carbon housing unit have increased, in particular due to an increase performance of the Company and its property in the proportion of housing units in standard concrete. developments. The purpose of an inventory of greenhouse This material generates significant emissions, particularly gas emissions is threefold: during the manufacture of cement, which is firstly very high • It provides the Company with an evaluation of its in energy consumption, and is secondly based on a chemical exposure to environmental risk (fossil fuel dependence, reaction that releases CO2. The increase in the proportion of use of dwindling natural resources, etc.); gas-heated homes (with a higher carbon footprint than electricity or district heating for example) is the second factor It helps respond more efficiently to changes in • behind this increase in GHG emissions per home delivered. environmental regulations; and
1 Coefficient defining the primary energy consumption of buildings in France. 2 Coefficient defining the impact of bio-climatic design on building energy performance. /136 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 STATEMENT OF NON-FINANCIAL PERFORMANCE Improving the Group’s environmental performance
Monitoring the Nexity climate trajectory (tCO2e./home delivered)
69
66 67 66
64 29 27 27 27 3
35 35 35 35
49
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Residential Real Estate Climate Trajectory Actual emissions (in tCO2e./home delivered)
Commercial Real Estate (office development) In the context of its commercial activities, Nexity provides • A clean building site (waste reduction and re-use); and practical solutions to the issue of cost control and the • An environment conducive to workplace well-being carbon footprint for large and small- or medium-sized (thanks in particular to improved acoustic performance). companies alike, thanks to the innovative, accessible and ecological construction methods used by its subsidiaries At the end of 2019, 13 Nexity Commercial Real Estate Ywood and Térénéo. projects were awarded the BBCA label. st Ywood offices are built using cross-laminated timber (CLT) In addition, in 2019 Nexity took 1 place in the list of prize from sustainably managed European forests (100% winners for French low-carbon real estate developers, PEFC-accredited). This alternative construction method awarded by the BBCA association. offers: GHG emissions per office floor space delivered have • Excellent performance (energy, insulation, greater fire declined since 2015. Between 2018 and 2019, resistance than concrete); the trajectory is stable but remains encouraging with a higher share of surface areas delivered with an energy • An optimized carbon footprint compared with performance level of RT 2012 -30% and RT 2012 -40%. traditional concrete construction;
Monitoring the Nexity climate trajectory (kgCO2e./sq.m. of floor space delivered) 1,052
1,010 29 27 27 27 993 1,006 994
35 35 35 35
814
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Commercial Real Estate Climate Trajectory Actual emissions (in kgCO2e./sq.m. of floor space delivered)
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Sustainable financing Nexity is aiming to align financing of its real estate projects The allocation of funds to the Group’s eligible projects will with its CSR objectives by issuing Green Bonds. be the subject of a specific traceability process and an The proceeds of the issuance will be used to finance and/or annual reporting process that will be audited and reported. refinance the development and construction of residential This issuance was conducted in accordance with the best real estate projects in France that meet several criteria, market practices and with the Green Bond Principles including the alignment with European NZEB published by the International Capital Markets Association ("Nearly Zero-Energy Buildings") standards. (ICMA). See Note 21.1 “Bond issues” to the Consolidated financial statements of this Universal Registration Document.
3.3.1.3 Ensuring buildings resilience in the face of climate change Climate change implies an increase of the frequency and More generally, Nexity’s expertise for integrating nature intensity of climate extreme events. These events naturally into cities also plays an important role in the fight against have an impact on the Group’s business. Mitigation of these urban heat islands. Nexity’s biodiversity strategy is new constraints is reflected in the Group’s projects, making described in Section 3.3.4 “Integrating nature into the city, it a promoter of cities that are resilient to climate change. preserving biodiversity and protecting soil”. This is the case for example in the “Reinventing cities – The increased flooding risk is also taken into account Porte de Montreuil” project awarded to the Group together in projects such as the E sector of the Paris Games athletes’ with Aire Nouvelle, the real estate development subsidiary village. Stormwater management in particular is carried out of the ENGIE group and Crédit Agricole Immobilier group. using a large proportion of open ground areas (25%). Thanks to an ingenious system that could be described as a Retention tanks will be installed on rooftops to allow “low tech urban air-conditioner”, non-potable water is used infiltration of ten-year rain events. This system will also to water vegetation during heat waves, thereby lowering comprise retention areas, swales and infiltration basins. the temperature by roughly 3°C.
3.3.1.4 Environmental footprint of administrative sites Assessment of GHG emissions Environmental management of office sites These assessments help to target the elements that In order to meet and exceed regulatory requirements, produce the most carbon emissions in order to better adapt Nexity has been measuring GHG emissions at all of its the Group’s actions and minimise its environmental impact. administrative sites since 2009, with the help of a In 2019, the emissions from administrative sites total specialist firm. 28,639 tCO2e. compared to 21,979 tCO2e. in 2014. Emissions per employee (full time equivalent) are down, Assessment scope from 3.3 to 2.8 tCO2e. Although emissions are therefore In order to take account of the Group’s growth, the scope of increasing in absolute values, due to the broadening of the the carbon footprint changed in 2019 to include the reporting scope, in reality the Group’s performance is Edouard Denis and Ægide-Domitys administrative sites. improving. Nexity’s GHG emissions are assessed across all Group sites in operation in France as at 1 January of the reporting period (see Section 3.5 “Note on methodology pertaining to disclosures of workforce, environmental and societal information” of this chapter).
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Summary table of GHG emissions in 2019 of administrative sites
Emission source CO2 emissions (tCO2e.) 2019 2014 Direct GHG emissions 3,893 14% 4,914 22% Direct emissions from stationary combustion sources (consumption of natural gas for heating) 5 0% 202 1% Company car fuel consumption 3,860 13% 4,550 21% Direct fugitive emissions (air conditioning refrigerant leakage) 28 0% 1,618 1% Indirect GHG emissions 496 2% 1,011 4% 3 Electricity consumption 328 1% 786 4% Steam consumption 168 1% 225 1% Other indirect emissions, of which: 24,250 85% 16,053 73% Paper and consumable office supplies 1,406 5% 765 3% Recycled waste 514 2% 5 0% Business travel 4,351 15% 805 4% Commuting 8,605 8,751 (0.85/FTE) 30% (1.33/FTE) 40% TOTAL DIRECT AND INDIRECT EMISSIONS 28,639 +30% 21,979 (2.84/FTE) -15% (3.33/FTE) Number of FTE employees 10,097 +53% 6,591
Corporate scope (administrative sites)
Monitoring the Nexity climate trajectory (tCO2e./FTE) 3.33
3.03 2.99
2.84
2.17
2014 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Administrative Sites Climate Trajectory Actual emissions (in tCO2e./FTE)
Lastly, Nexity provides information relating to the following indicators, included in the Group’s reporting each year and taken into account when carrying out its GHG emissions assessment:
Types of consumption taken into account in the GHG emissions assessment 2019 Electricity 10,270,406 kWh Steam 979,444 kWh Gas 27,669 kWh HHV1 Water 40,633 m3
1 HHV: Higher Heating Value
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Reduction measures In 2019, in order to continue to reduced GHG emissions • In 2018 Nexity signed a renewable electricity supply from its administrative sites, Nexity launched a number of contract which today covers most of its administrative actions with respect to the main emissions sources. sites. In 2019 this concerned 4,201.5 MWh, i.e. nearly In particular, Nexity: 41% of its electricity bill. • Encouraged employees to hold videoconferences using According to the terms of the Transition énergétique pour la Skype for Business software made available to the croissance verte Act (energy transition for green growth majority of employees; Act), disposable plastic crockery will be prohibited in • Put in place the “mobility benefits” intended to replace, businesses as from 1 January 2020. The Group’s desire to for those who request it, the company car by a sum to be exemplary is demonstrated by its anticipation of this be used on several types of alternative transport other new “zero plastic in businesses” policy. Since than a private car; This initiative set up in 2017 31 January 2019, the Group registered office has no longer continues to attract more and more employees; received supplies of plastic cups. This operation is being deployed on the Group’s various sites. • Gradually deployed home-working to all Group employees at a rate of one day per week. For this A particular effort has been devoted to the theme of being purpose each employee was given the necessary IT digitally responsible. Adaptation to new uses hardware (see Section 3.2.1 “Enhancing appeal and (home-working, coworking) has led Nexity to renew a large employee retention” of this chapter); proportion of its IT hardware made available to employees in 2019. The Group has made sure that all replaced • Announced a new travel policy, having among its goals hardware is processed responsibly. The migration of data to optimise the carbon footprint generated through centres owned solely by Nexity to the cloud enables business travel, with a focus on means of transport with resources to be pooled with other companies, thereby the smallest carbon footprint, maintaining a balance reducing environmental impact. In addition, the chosen between the comfort and efficiency. For example, flights service provider uses renewable energy sources, generating are only allowed for business travels that would exceed further impact reduction. 3 hours by train and must be economy class; and
Summary of the Nexity carbon footprint
Scope 1 (1) Scope 2 (2) Scope 3 (3)
Tonnes CO2 equivalent 3,893 496 1,073,597 Share in total emissions (%) 0.36% 0.05% 99.59%
(1) Direct emissions from stationary or mobile installations located within the organisational scope (e.g. gas consumption). (2) Indirect emissions associated with production of electricity, heat or steam imported for the Group’s business activities. (3) Other emissions indirectly produced by Group activities which are not accounted for within Scope 2 (not linked to electricity, heat or steam), but which are linked to the complete value chain (e.g. emissions linked to real estate development programmes).
3.3.2 Ensuring the availability of construction materials in view of resource depletion
Having access to sufficient quantities of building materials at More generally, Nexity, like other economic players, is aware affordable prices is a major concern for Nexity. The risk of a that strictly linear modes of production are neither shortage of building materials has a short-term impact in economically nor ecologically sustainable and therefore may sensitive zones, especially those where large urban projects pose a risk to the Company’s business model. are underway (Métropole du Grand Paris, 2024 OG, etc.). Nexity is preparing for, and wants to participate fully in the An increase in construction costs is already being observed in emergence of a circular economy, by reusing and pooling certain territories. In the medium and long term, it is likely more resources. In this respect, the Group’s ambitious that maintaining the consumption rate of resources needed objective to ensure that 30% of its deveopments and services for construction (about 400,000 new homes each year, are underpinned by a Circular Economy approach by 2025 according to Nexity estimates), will affect both their has prompted it to undertake several work and pilot projects availability and price on the whole territory. enabling it to explore solutions within the framework of Current construction methods are putting pressure on Nexity’s business lines. resources such as gypsum (for plaster), limestone (cement and concrete) and sand (concrete and glass).
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3.3.2.1 Participation in reflection on sector-based issues Nexity’s strategic priorities related to the circular economy In addition, Nexity renewed its membership of Circolab, were included in a white paper published by the Association an association relying on the voluntary commitment of Française des Entreprises Privées (AFEP) in February 2017. project owners to promote the Circular Economy. The aim is Throughout 2019, Nexity continued to play an active role in to bring together a community of operators involved in the the AFEP Circular Economy Work Group. The work carried out circular economy within the real estate industry in order to by this group resulted in the publication of a list of proposals encourage synergies, involve the various stakeholders and in October 2017, which contributed to the development of spur changes in regulations. Circolab is supported by the the French government’s Circular Economy Roadmap. Institut de l’Économie Circulaire and the Métropole du Grand 3 In 2019 a progress assessment conducted by members was Paris. Its objectives include defining performance indicators published. This initiative now comprises 125 commitments for reusing or reducing waste sent to landfill. made by 37 companies. Nexity is contributing with four commitments.
3.3.2.2. Implementation of innovative pilot projects and a structured approach Several Nexity subsidiaries have initiated pilot projects In addition, the Grand Paris Nord subsidiary has already related to the reuse, recycling and pooling of resources. adopted a circular economy approach for 100% of its The Group’s primary objective is to optimise projects. In June 2019, it signed a partnership with Cycle up, construction-waste management by the end of 2020, when a professional platform for re-use of construction and real the obligation to recycle 70% of construction-site waste goes estate materials. into force. The aim of the first pilot projects is to support this In the same year this method was put into practice at the ambitious goal by guiding sorting at the source and selecting Carré Mansart project in Gagny (Seine-St-Denis). Wooden the waste management centres. For example, whenever a stairs and shutters were recovered for re-use on another building is demolished, the Group takes care to recycle waste construction site via the platform. Tiles were stored in order and used materials either on site or at nearby sites, to build a terrazzo in the future common area hall. thus limiting transport within the local area. Furthermore, in line with the Group’s objectives to reduce its At La Garenne-Colombes, where a former PSA Group site is GHG emissions, Nexity aims to reduce its energy being deconstructed to house the future Engie eco-campus, consumption and develop renewable energies by end-2025, several deconstruction methods have been implemented to notably by developing energy solidarity at housing-block give a second life to objects and materials originating from 3 scale (energy loop, renewable energy production, CALORIE the buildings. These include 160 m of miscellaneous reuse, etc.). materials and equipment recovered by the RéaVie association, generating 380 social inclusion working hours. At the end of 2019, 3.6% of Nexity’s residential and office Another partner recovered 20,000 square metres of technical projects and services were based on a circular economy false ceiling. approach in the construction phase.
3.3.3 Controlling the impact of construction sites
The construction phase represents a very small proportion This poses a particular risk when it comes to obtaining of a real estate project’s total carbon footprint. future building permits in local authorities affected by poor Nevertheless, the environmental impact of construction construction site management. On the other hand, this risk sites must be exemplary as regards the environment and can be transformed into an opportunity by improving the social acceptability. Indeed, various types of local pollution Group’s image as a responsible player, reducing the risks of (soil, dust production, etc.), as well as visual or noise nuisance caused by its construction sites, and promoting pollution, could impair Nexity’s “right to operate”. social inclusion.
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Environmentally Responsible Construction Site Charter and recycling of construction site waste Of its own volition, in 2014 Nexity drew up an During the works phase, site cleanliness, observance of Environmentally Responsible Construction Site Charter materials and waste storage areas, and waste sorting and available on the Group’s website recovery (with a requirement that at least 20% of waste (https://www.nexity.fr/en/group/csr/responsible-real- must be recovered for new home developments) are estate/pooling-resources) for all new housing construction required. In cases of prior demolition, Nexity always projects. This charter combines current practices used by commissions a demolition waste assessment. The goal of major construction firms, the demands of environmental the assessment is to assess potential opportunities to reuse certification and the Group’s internal best practices. waste on site or, failing that, determine how demolition The Environmentally Responsible Construction Site Charter waste can best be managed. This process of quantifying has the following objectives: waste by category is in keeping with the objectives and is intended to encourage all forms of waste recovery. • Protecting the environment: soil conservation, waste sorting and recycling, and construction site cleanliness; In 2019, Nexity had 38 Residential Real Estate projects (18% of the number of sites validated by the Land • Controlling construction site management costs: water Acquisition Committee) that had integrated the and electricity consumption, waste removal and storage Environmentally Responsible Building-site charter, costs; and and 62 sites validated by the Acquisition Committee • Strengthening the Group’s community integration by (29% of the validated sites) were engaged in a more global further reducing construction-related disturbances, environmental certification process (NF Habitat, HQE™, improving on-site working conditions and creating local Promotelec, Habitat Neuf, etc.) including environmentally jobs. responsible building-site criteria. Overall, in 2019, 27% of the residential real estate construction sites validated by The Environmentally Responsible Construction Site Charter the Acquisition Committee had adopted the is contractual and commits all construction companies to environmentally responsible construction site approach. organising a waste management plan, informing and Nexity aims to have 100% of construction sites committed involving companies in the environmentally responsible to this approach. construction approach and taking account of social inclusion clauses.
Social inclusion Nexity is increasingly asked to include social inclusion In 2019, 11% of the construction sites launched or clauses in contracts with construction firms, particularly for validated by the Land Acquisition Committee were affected developments in areas eligible for reduced-rate VAT. by such clauses and 51,830 hours of social inclusion support had already been provided by the beneficiaries of these clauses.
3.3.4 Integrating nature into the city, preserving biodiversity and protecting soil
As a key player in cities and other areas, today more than The Group has set itself quantified objectives and has ever Nexity has a responsibility to take account of and developed a specific reporting system to systematically protect the living world. This is why the Group has made identify projects and initiatives that favour biodiversity: biodiversity one of the pillars of its CSR strategy. • 50% of Residential Real Estate projects must have First of all, by structuring an ambitious biodiversity policy in planted areas; and 2019, focusing on three themes: • 100% of Commercial Real Estate projects must include • Avoid urban sprawl and soil degradation, one of the planted areas. major causes of biodiversity loss: by signing a Finally, by integrating nature into cities, and biodiversity partnership on 16 December 2019 with the NGO into its business lines. In 2019 Nexity created a working Humanité et Biodiversité to achieve the “zero net land group specifically dedicated to improving the way the take by 2050”; natural environment and biodiversity are taken into account • Produce designs that foster biodiversity: by protecting in all new-build residential projects. existing resources, prioritising local species, and by One of the identified risks is that if preservation of natural multiplying features that foster biodiversity (on façades, and agricultural habitats and protected species is not roofs, etc.); and integrated at the design stage, the authorities can demand • Contribute to greater acceptance and better that the subsidiaries in question put in place measures to understanding of biodiversity: by disseminating avoid, reduce and compensate, thus possibly causing delays educational materials to clients, by setting up an and cost overruns. in-house employee training programme.
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In addition, France has developed tougher regulations But the opportunities arising from including this issue in concerning the preservation of biodiversity over recent Nexity’s business lines are also numerous: 80% of French years. The obligation to make reparation for any ecological people choose where to live as a function of the proximity damage (the 2008 law on environmental responsibility), to green spaces1. Biophilia, the idea that there is an the strengthening of the sequence “Avoid, Reduce, instinctive link between human and nature, is increasingly Compensate” (the 2016 biodiversity recovery act) and the acknowledged as a key factor in the way workplaces are obligation to include biodiversity in the Statement of designed. Planted spaces and the presence of water are Non-Financial Performance (Directive 2014/95/EU), essential means to fight the urban heat island effect by are some examples of this hardening. cooling cities and making them more pleasant. Further 3 Lastly, some “nature in the city and biodiversity” issues can integrating nature into projects is therefore equivalent to involve a corporate image risk for Nexity, including soil improving the quality of life of the occupants. degradation, which is the leading cause of biodiversity loss. Through various initiatives, the Group has acquired unique The construction of individual housing units is 46% expertise and skills that can be promoted among its clients. responsible for this problem. Considering that Nexity’s Thanks to its positioning as a real estate services platform, residential development activity is carried out mainly in Nexity is able to achieve differentiation by offering dense and already degraded areas, the activities concerned innovative solutions from design to the management of by this issue are in the minority and mostly limited to the natural spaces. development of housing estates by the Foncier Conseil Nexity subsidiary (see Section 3.3.4.1 “Long-standing expertise in the planning business lines” of this chapter, highlighting the development subsidiaries’ actions relating to biodiversity).
3.3.4.1 Long-standing expertise in the planning business lines Nexity’s planning subsidiaries have historically been those • Asnières-sur-Seine (Hauts-de-Seine), design of a most involved in the protection of biodiversity. 1.5-hectare urban park for indigenous plants, When designing development programmes, the Site ecologically managed without using any pesticides, development and subdivisions subsidiary (Foncier Conseil) partially delivered in June 2017 (and delivery of the last provides for ecological continuity by systematically taking phase planned for 2020); and into account the existing green and blue corridors: • Montreuil (Seine-Saint-Denis), the ZAC Boissière-Acacia • Maintaining the continuity of green corridors involves converts the brownland sites of former drinking water hedges planted around properties, parks and gardens, reservoirs into a new eco-district: a carless and alternative techniques (swales planted with trees or neighbourhood, crossed by many green corridors. grass, landscaped basins, etc.); and The urbanisation includes management of stormwater • Maintaining the continuity of blue corridors involves, and biodiversity. where possible, alternative rainwater management Water management techniques that allow water to follow its natural course – a key design component. All Nexity development projects take the protection of water resources into account in all project phases. Early in As part of its efforts to secure ISO 14001 certification, the the pre-design phase, remarkable ecosystems such as Subdivisions activity has included biodiversity as one of the watercourses on development sites are identified so that a six priority action themes in its environmental policy, “Water Act” can be initiated. This work stream identifies the incorporated into its Environmental Management System. steps needed to ensure that planned construction activities To meet these objectives, all staff at the subsidiary do not significantly affect a site’s water resources or aquatic responsible for a development project are informed of the environments. When seeking NF Habitat certification for procedures to be followed in respect of biodiversity. new residential developments, Nexity conducts site An initial current state assessment is carried out using a analyses on soil sealing and other practices. The findings of proprietary tool to measure the sensitivity of existing these analyses help identify appropriate solutions to biodiversity at each potential site for future development. encourage water infiltration and thus manage rainwater In its urban regeneration projects, the subsidiary Villes & runoff. Projets also takes steps to protect biodiversity in: In the design phase itself, water management is • Saint-Priest (Rhône), management of habitat restoration addressed by three main axes: management of rainwater, spaces for fauna at the La Fouillousse site (delivery of control of drinking water consumption and production of the last project phase in September 2018); domestic hot water.
1 Source: "Ville en vert, ville en vie: un nouveau modèle de société" study, conducted by Ifop in 2016.
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During the works phase, for new homes developments, site rehabilitation measures. Villes & Projets is working to Nexity sets up regular monitoring of water consumption by optimise industrial site renovation principles to limit the building site by separating out the site accommodation clean-up costs for an adapted urban project. where technically possible. Villes & Projets also helped finalise the decrees to be issued under the ALUR Act on access to housing and new urban Soil and site contamination planning, resulting in smoother processes for transforming Before it acquires any land or buildings, the Group generally and rehabilitating contaminated land in urban projects. commissions third-party experts to carry out an environmental assessment of the quality of the soil and In this way, the innovative decontamination of the ZAC PSA subsoil and the history of the land at the site. When soil site in Asnières-sur-Seine (Hauts-de-Seine) was noteworthy samples indicate the possible presence of pollutants, for the majority of treatments carried on-site to eliminate the Group’s obligation is also conditional upon the main pollutants (heavy metals, chrome, etc.). environmental evaluations and, where necessary, 3.3.4.2 Nature in cities and biodiversity at the heart of projects Beyond the preservation of local biodiversity, a regulatory With more than 3,700 square metres of green areas, the prerequisite for any new site, Nexity’s development planted spaces at the EDEN residence in Annecy cover 60% activities always attempt to reintroduce nature into the city of the total surface area. This project delivered in through urban agriculture projects – allotments, installation September 2019 is an integral part of the first eco-district of wildlife shelters – and vegetation that favours in the town of Annecy, and includes landscaped areas biodiversity. planted with trees. The planted roof comprises a terrace, The HEMERA project inaugurated in 2018 in a semi-intensive roof and a shared vegetable greenhouse. Fontaine-sur-Saône, was designed with the naturalist The planted spaces within the Eden project help to save Vincent Gaget. Trees have been protected, nests and resources, thanks to a system for collecting rainwater and shelters have been installed within the project area to give the possibility for residents to compost their waste. animals and particularly birds a natural habitat. Committed to urban agriculture pilot schemes, Nexity is In 2018, Nexity introduced allotments as part of the also a member of the Scientific Committee of the Résidence Cœur Duranne project in Aix-en-Provence, thanks Romainville market gardening tower (Seine-Saint-Denis). to the participation of two associations, Les Jardins de With 84% of commercial operations delivered with planted l’Espérance and Fédération Nationale des Jardins familiaux spaces at the end of 2019, Nexity has achieved a et collectifs. Residents can use common plots or cultivate performance in line with its 2020 objective of achieving their own plot. The associations have drawn up internal 100%. rules and regulations for the allotments, and informed For residential operations, the objective is to reach 50% of gardeners about the plants to cultivate. projects with planted spaces (façades, roofs, terraces and/or outdoor areas) by the end of 2020. The performance in 2019 exceeded this objective, reaching almost 68%.
3.4 INCREASING THE GROUP’S CONTRIBUTION TO SOCIETY
3.4.1 Helping to build inclusive cities that support solidarity
Nexity can draw on two effective levers to help build more Via its Foundation, Nexity intervenes directly at the heart of inclusive cities demonstrating greater solidarity. Nexity’s the urban community to promote integration and solidarity business lines enable it to propose affordable housing and in the city. solutions designed to facilitate home ownership. 3.4.1.1 Proposing accessible housing and solutions designed to promote home ownership for all Demographic trends and the change in the size of which is set to increase in the years to come. There is households require construction of a minimum of around therefore a risk of market inadequacy if Nexity is unable to 400,000 new homes per year until 2040, compared with provide a sufficient amount of housing solutions at 337,000 produced on average between 2012 and 2019. affordable prices. Concerned with this issue, Nexity has Small households (single person or couples without been committed to affordable housing (social or children) account for 62% of households, a proportion intermediate housing) for many years.
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True to its values and its ambition, Nexity sees an For more details, see Section 1.2.2.2 “Access to housing” opportunity in maintaining its long-standing commitment of this Universal Registration Document. to providing various forms of housing. Nexity Non-Profit As a real estate player, Nexity is mindful of its role to facilitate access to housing for all. The Group has In 2018, Nexity launched its Nexity Non-Profit activity, demonstrated its commitment to social home ownership which aims to provide housing solutions for those most in notably by way of its strong presence in urban regeneration need. This structure is developing three types of offer with zones, the development of social housing programmes and its national partners (Fondation Abbé Pierre, Habitat & the launch of a product line dedicated to cost-efficient Humanisme, Groupe SOS, Aurore, Emmaüs Solidarités, Cités 3 housing. At the same time, Nexity continues to examine du Secours Catholique and the federations: FAS, UNAFO, economic solutions that may be put in place to facilitate FAPIL, SOLIHA, etc.): and assist access to housing for low-income and even • Supportive family housing solutions, in partnership with excluded populations. a social landlord and a non-profit organisation in charge of property rental management. Nexity has undertaken Promote access to housing to create 1,000 housing units in family shelters per year Nexity assists local authorities with development projects over the next three years, at a steady rate, which is for neighbourhoods that had been targeted for urban equivalent to half of the French State’s commitment in regeneration by the French National Urban Regeneration this domain. These supportive family housing initiatives Agency (Agence nationale de la rénovation urbaine – ANRU) will not generate any profit for Nexity. In 2019, a first and their immediate vicinity. The application of family shelter was delivered in La Ciotat. It comprises reduced-rate VAT supports these projects by making it 18 studio flats with fitted kitchen and individual easier for homeowners to move house and increasing the bathroom in a residence of first-time buyers’ homes and solvency of lower-income households. Since VAT was a child minders’ house. This configuration is faithful to reduced in ANRU urban regeneration zones and extended to Nexity’s intention to promote social diversity in its priority urban neighbourhoods in January 2015, Nexity has projects. 10 building permits for 253 units were filed at been the leading player in the private urban renewal sector the end of 2019 and 777 housing units passed the with 4,189 housing units sold in ANRU zones and QPV Commitments Committee stage; priority urban planning districts, representing 19.2% of the • Management of vacant housing units via the Group’s new home reservations. It remains a leader in the implementation of solidarity leases; and in 2019, reduced VAT zones with 18.8% market share. 36 solidarity leases were signed permitting As a developer of social housing programmes, Nexity is accommodation for just over 100 people; and currently the leading partner of social landlords in France. • Emergency housing: several temporary solutions will be In 2019, 23% of the housing projects developed by Nexity set up in 2020. were reserved by social landlords. More generally, through its offering of homes at controlled prices, the Group facilitates access to home ownership for first-time buyers, who accounted for 17% of its clients in 2019. This type of marketing requires specific expertise in the area of sales but also legal matters, which is a speciality of Nexity’s teams.
3.4.1.2 Expand the role of the Nexity Foundation Created in 2017, the Nexity Foundation embodies the In 2019, 515 employees participated in the skills Group’s civic and societal commitment. Its mission is to sponsorship days organised by the Nexity Foundation; promote and organise collective solidarity programmes in 54 missions were carried out with 33 non-profit city centres for people at risk, by backing projects that serve organisations, which is four times as many employees as in a social purpose. 2016 (year of the 1st skills sponsorship experiment). The projects supported by the Nexity Foundation focus on In total, 1,394 employees participated in the skills social inclusion through housing, employment, training and sponsorship days, throughout France. education. Nexity works hand in hand with local non-profit In 2019, the Foundation also involved Nexity employees in organisations to co-construct social innovation projects; two major collection actions: an approach that enables Nexity to keep in touch with beneficiaries’ needs. • A clothes collection in September 2019: 2,385kg of clothes were collected at 13 Nexity sites; for the benefit Employee volunteers can also participate in these actions of several partner non-profit organisations; and by way of skills-sponsorship programmes. Employee involvement is an essential lever in carrying out projects. Over the last four years, Nexity has enabled its employees to dedicate one working day to a skills sponsorship mission.
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• A collection of foodstuffs and hygiene products was partnership with the Montpellier BGE. The aim here is to organised in November 2019 in 13 towns where the promote entrepreneurship among women in urban Group is present. A total of 1,550kg of products were areas and notably in QPV priority urban planning collected. districts; and In addition, three emblematic social innovation projects • Induction of 55 youngsters taking the STI2D course were launched by the Nexity Foundation in 2019: (Science and Technologies in Industry and Sustainable • Induction of 300 grade-9 interns during the 2018-2019 Development) from Lycée Picasso-Aragon in Givors, school year, 42% from QPV priority urban planning near Lyon for a day to discover real estate and districts, 142 in 2019, in partnership with the Nexity sustainable development professions. Highlights of the Human Resources Department (see Section 3.2.3.3 day were a game to explore the new Berlier St-Priest “Developing social and cultural diversity” of this district near Lyon, and meetings with professionals. chapter); More information is available on the Nexity Foundation • The Nexity Foundation “Entrepreneuses dans la Ville” website (https://www.fondationnexity.org/). (“Women entrepreneurs in the City”) prize, awarded in
Balance sheet of contributions made 2019 2018 2017 Monetary contribution €610,000 €513,000 €549,500 Skills-based sponsorship (in €) €117,600 €98,500 €68,400 Skills-based sponsorship (number of employees involved) 515 509 283
3.4.2 Offering innovative solutions that meet new uses
Trends in occupant and user demand show that consumer In addition, local authority and consumer demand for cities preference is moving towards services and multiple uses and territories that promote social cohesion, and which are underpinned by the supply of housing and offices. Failure to carbon-neutral, have good air quality, and generate little develop these types of attractive and innovative offers waste have prompted Nexity to design solutions that meet could significantly erode Nexity’s competitiveness and the new uses in sustainable cities. In this way, Nexity has market share. placed CSR at the heart of its sustainable city services With a view of offering its clients innovative solutions platform. Nexity also provides pooled and carbon-free tailored to meet their needs, Nexity had adopted an mobility services via partnerships forged with bike sharing, innovation strategy developed around three main thrusts: car-sharing and shared parking operators. Similarly, the dissemination and stimulation of innovation at all in buildings with planted areas, such as vegetable gardens levels of the Group, the incubation of new trades in the real or shared gardens, social-bonding workshops can be estate sector and investment as a strategic tool. (see in this organised for occupants and residents (as for the Studéa document paragraph 1.6.2 “Innovation”). Digital services and Ægide-Domitys housing units). play an important role in this offer transformation with At the end of 2019, 814 housing units had been equipped services such as the Eugénie application that connects with Eugénie, of which 782 had been delivered, 11 sites occupants to their home, building and neighbourhood; benefited from the Week’in offer, and more than the online administrative procedures tool; or the Week’in 130 sites/establishments located in 15 urban areas and Service Personnel, in-person and digital concierge benefited from the Service Personnel offer. Two residences services for office buildings. offer car-sharing services, and four student residences and an office building were equipped with pooled parking solutions.
3.4.3 Enhancing ethics and transparency across the value chain
3.4.3.1 Improving transparency and client relationships On the basis of the findings of its client satisfaction survey, • End-product satisfaction. This includes: Nexity has identified two areas of short- and medium-term • The technical dimension of quality and for which a risk: centralised and standardised control process has been set up for the Group,
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• Delivery time, which can be an important source of committee and also distributed to the subsidiaries’ General disappointment felt by clients (between 6 and Management and members of the Quality Officers Club in 12 months on average) who need to be accompanied which all the subsidiaries are represented (one officer per throughout the process, and subsidiary). • Client satisfaction is related more to the human Nexity’s goal is to have less than three reservations relationship experience and emotions felt during the (for private and common areas). This goal was achieved commercial relationship with Nexity. It is about making between 2017 and 2019. this experience more human, more communicative and In 2019, to reinforce synergy between the development and more active. services business lines, Nexity started to deploy on a 3 At the end of 2018, Nexity created an Individual Clients national level an initiative that began in the PACA region in Satisfaction Department. 2016, the IR/SIP challenge. Quality of finished products This is a result of the search for leverage to improve the rate of renewal of condominium management mandates For many years now, Nexity has delivered high-quality after the first year. It was concluded that this objective products, thanks to the implementation in 2011 of a could be achieved through better coordination between the systematic and regular internal quality process. development teams and the Real Estate Services to This process, named “L-4/L+4”, covers all transactions Individuals teams. carried out by all Nexity Residential Real Estate subsidiaries throughout France. Deployment of the challenge according to rules and regulations filed with a bailiff is controlled by the DQPL Production and delivery control are carried out by the with the support of the regional delegates. Production and Delivery Quality Department (DQPL). The DQPL is an independent and autonomous entity, which Independent teams consisting of three people travels throughout France and visits sites three times: (condominium manager, project manager and after-sales service manager) are given the objective of renewing the Four months before delivery (L-4): to confirm that the • condominium management mandate at the end of the first state of progress is consistent with the envisaged year. They are allocated a specific budget to achieve this delivery date; objective. If they succeed, the team members are rewarded • One and a half months before delivery (L-1.5): to control with a prize. The emulation generated by this challenge the completion of the project before going on to the naturally contributes to client satisfaction. “pre-deliveries” phase with clients; and In 2019, this initiative concerned five subsidiaries. National • Delivery day: a third visit is made on D-Day to ensure deployment will continue in 2020. that the procedures relating to delivery and key Today, thanks to its maturity, Nexity’s quality process is handover to clients are respected. presented to local authorities and individual clients as proof The DQPL now produces a quality report four months after of its guarantees and reliability, making it possible to bring delivery (“Quality report at L+4”) that is reviewed with the full satisfaction to buyers and also contributing to the project team. This report notably covers the number of Group’s reputation. reservations remaining after delivery, the state of progress of transferring the files to the after-sales department, the Client experience completeness of the documents to be transmitted to the In 2019, Nexity created a single Client Satisfaction co-ownership trustee and any other elements of feedback Department for all the Individual Clients business lines. to be shared. This new organisation to develop the single brand is During these visits, the DQPL validates the quality of both organised around four centres: the private and communal areas of the residence. This • Measures and studies centre, in charge of deploying a ensures the best delivery conditions and satisfies client client listening programme throughout the journeys and expectations. the self-care (help centre, EPC, etc.); Nexity’s Quality motto “Assurer, Livrer et Lever” (“Ensure, • Client relations centre, in charge of CRC, of reception of Deliver and Lift”) corresponds to the three key stages of the client inquiries on the single number, but also works on internal “L-4/L+4”: pre-delivery; during delivery and calling satisfied client; post-delivery. • Client experience management centre which introduces, The number of reservations remaining after delivery is a key trains and manages employees to a client-centric performance indicator that measures the quality of the posture, in particular with the back-up of the Client projects delivered and is a guarantee of client satisfaction Experience officers from each subsidiary; and after delivery. • Complaints and loyalty centre, in charge of managing of For this reason, a Quality Dashboard (TBQ) listing the complaints and the flow generated by social media, average number of project reservations of each subsidiary is develops and manages the brand Ambassadors. drawn up each month. The TBQ presents the state of the This new organisation involves all of the Executive past month projects as well as a cumulative overview since Managements and Regional Managements of the the beginning of the year. It is shared with the Management subsidiaries and agencies.
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Each business line responsible for improving client For this project, the Group is partnering with France satisfaction now has tools, reporting and management Médiation, a network of social mediation practitioners. methods designed for this purpose: This association founded in 2008 runs a community of • Client Experience reference frameworks consisting of an more than 70 members, who employ roughly 2,000 social e-learning module and a reference framework of mediators working in different fields (access to rights and business practices co-designed with the business lines; services, resident participation, etc.). and In the pilot phase of the project, two social mediators have A client relationship best practices guide. started providing individual assistance to households on • two sites. Claims and complaints management tools have been implemented to enable the centralised tracking of client This programme has three main objectives: claims and complaints across the Group. This interface • Comfort: to maximise comfortable living conditions in makes it possible to track, record and steer all the demands the unit (air quality, heating, comfort during the from client in order to give them faster and more effective summer, etc.); solutions every time. In 2019, this tool measured a 71.6% • Finance: indicate the actions that can potentially reduce satisfaction rate among the responding clients. expenditure on water and energy (“energy and fluids” is Domitys residences nurture a quality culture, which is a the largest item of expenditure in housing costs); and source of wellbeing for the residents. The Quality and • The environment: encourage environmental best Personal Services Department is responsible, in partnership practice (sorting, reduction of consumption, use of with all other departments (operation, etc.) for putting in environment-friendly products, etc.). place specific procedures. Residence managers are closely involved in their application. A number of measures have A guide to environment-friendly actions given to clients. been taken in this respect: information provided to Starting in September 2019, Nexity gives its clients an residents about their rights, various forums to provide eco-guide when handing over the keys. The eco-guide is a feedback on their expectations, training of employees on fun and educational but fun manual that explains a series good treatment, a residence certification process based on of beneficial environmental actions for the home. strict standards. They are described in more details in Innovative services for well-being and health of Studéa Section 2.4 “Duty of care” in this Universal Registration residents. Document. In 2019, the resident satisfaction survey The Studéa residences have set up innovative partnerships conducted by an independent firm showed an overall to help the students they house with their well-being and satisfaction rate of 94% and of 95% for the satisfaction health. rate on the feeling of safety. A partnership with MACIF led to the organisation of 10 Client awareness-raising about prevention workshops on budget management, mobility the environment, health and well-being. and nutrition. A pilot support project in ANRU urban regeneration A partnership with the Apsytude association was launched zones. in 2018 and continued in 2019. It offers psychological Nexity is conducting an experiment starting in support to tenants in 13 pilot sites. More than 220 January 2020 on two pilot sites located in ANRU urban consultations were provided on subjects to do with stress, regeneration zones, in order to help occupants make the anxiety and self-confidence. best use of their home.
3.4.3.2 Strengthen responsible purchasing and supplier relationships Purchases involve several types of risks for a real estate • Risk related to the bad reputation (in terms of CSR) of player like Nexity: one of Nexity’s suppliers, which could harm the Group’s • Risk related to the poor quality/performance image. This risk is heightened by the fact that the Nexity (environmental, health, etc.) of products delivered and group is made up of a large number of subsidiaries, installed by suppliers on buildings sold by the Group. each of which can call on the services of different This risk can be turned into an advantage for the suppliers. Company, by choosing products bearing a good To limit these risks, since 2016 Nexity has implemented a “CSR performance” label. This can bring real added Suppliers’ Ethical Charter and a responsible purchasing value to the finished product, in terms of energy policy and imposes strict requirements on its suppliers in performance, low carbon footprint, air quality, etc.; and terms of CSR. The Group has also set up an “incetives” approach designed to gradually encourage its suppliers to improve their CSR performance. See Section 2.4 “Duty of care” of this Universal Registration Document for more details about the risks relating to responsible purchasing and supplier relationships.
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Responsible purchasing policy Supplier relations In 2016, Nexity introduced a responsible purchasing policy in Nexity’s demands on its suppliers in terms of social and order to identify best practices and assess the CSR risks environmental requirements are formulated by each of its within the supply chain concerning building fixtures subsidiaries in accordance with Group policy, and cover referenced for Residential Real Estate. An internal reference primarily: framework for the social and environmental assessment of • The fight against all forms of undeclared labour for all companies and products was developed and implemented subsidiaries, with the implementation of a Suppliers for each product category. A questionnaire is sent out to all Ethical Charter; suppliers before any products are supplied and this 3 information is added to the CSR assessment of suppliers and • Continued integration of health criteria into tendering their products. In 2019, the referencing exercise covered specifications for referencing purposes in Residential Real 27% of purchases relative to Residential Real Estate Estate: material labels, ecolabels, absence of substances construction work. deemed controversial by the Procurement and Services unit in the Group’s Production and Cost Control In 2019, Nexity also started a pilot phase with Ecovadis, a Department; platform that assesses suppliers’ CSR performance. This took the concrete form of a questionnaire sent to • Communication of the Environmentally Responsible suppliers of different types of building fixtures and main Construction Site Charter to all residential real estate structures. This initiative will continue in 2020. project works contractors. This charter sets out requirements concerning management of consumption Going further, Nexity has set up internal work groups to of water, energy, and construction site waste enhance all the finishing-product categories proposed to management; and Individuals on the basis of five criteria: indoor air quality, low carbon (bio-based, renewable), circular economy • The requirements of the ISO 14001 environmental (recyclability), economy of resources and local nature of standard for the subdivisions business of the Site products. In 2019, these discussions resulted in the creation development and subdivisions subsidiary involve an of a minimum group of environmentally responsible ongoing review of the choice of service providers used. products considered to be the “mandatory basis” in housing See Section 2.4 “Duty of care” of this Universal Registration units. Document for more details about the risks relating to suppliers.
3.5 NOTES ON METHODOLOGY PERTAINING TO DISCLOSURE OF WORKFORCE, ENVIRONMENTAL AND SOCIETAL INFORMATION
Workforce, environmental and societal information is drawn Scope up on the basis of contributions from several Departments, notably the Corporate Social Responsibility (CSR) and The indicators are presented for all fully consolidated Group Human Resources Departments. companies. Different indicators have been defined, taking into account Given the low proportion of business generated outside the specific nature of the Group’s businesses, in order to France, information for indicators related to the relevantly measure the main impacts related to Nexity’s environment and certain societal information was only environmental, social and societal responsibility. collected for business carried out in France. Nexity is committed to a continual improvement process Given its activities, the Group does not consider reporting and has been progressively adding to the list of its on the following indicators as relevant: indicators to take regulatory and Group developments into account. • The fight against food waste; • The fight against food poverty; and Period covered • Respect for animal well-being and responsible, fair and sustainable nutrition. The indicators presented under workforce, environmental and societal information in the 2019 Universal Registration Document relate to the 2019 financial year. The reporting period used is the calendar year (from 1 January to 31 December) except when stated otherwise in the text.
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Indicator definition and collection procedures Environmental and societal indicators Environmental and societal data is consolidated by the CSR Workforce/HR, societal and environmental reporting Department based on information provided by the different indicators are drawn from several information systems departments according to the collection methods and the within the Group. They are produced under the main assumptions presented below: responsibility of each department where the information is produced. • The number of homes sold by the Group in ANRU urban regeneration zones is determined by the CSR Workforce/HR indicators Department using internal databases; • The market share in reduced VAT zones is an indicator Workforce/HR indicators are produced by the Group’s based on retail sales. It is calculated as follows: sales to Human Resources Department. Information for these homebuyers under reduced VAT/market for homebuyers indicators mainly comes from the centralised personnel under reduced VAT (excluding bulk sales and serviced management system, which covers 71% of the workforce. residences), according to FPI data; The remaining 29% come from a consolidation carried out on the basis of information provided by the companies • “Classic" homes in the sense of the objective “100% of managed in their own system, i.e. the international classic homes with integrated services” refers to subsidiaries as well as the Edouard Denis group, housing units delivered in 2019, with the exception of Ægide-Domitys and the companies Accessite, Bureaux à Edouard Denis, Ægide-Domitys, PERL, intermediate Partager, and Lespace. Unless otherwise specified at the housing and social housing; level of the indicator, the workforce is assessed based on • The percentage of wooden homes delivered (Residential the number of employees registered at 31 December 2019. Real Estate) is calculated on the basis of the homes The workforce count does not include company officers or delivered in 2019; interns. • The percentage of wood frame office building floor The indicators on turnover and absenteeism do not include spaces (Commercial Real Estate) is calculated on the the data from Ægide-Domitys. The indicator on basis of the offices delivered in 2019; home-working only covers the scopes for which the system • The number of renovated condominiums and is in place and subject to a collective bargaining agreement. renovation officers trained is understood to be the Ægide-Domitys group, Edouard Denis group and the recent cumulative number since 2018; acquisitions (Accessite, Bureaux à Partager, Lespace, Service Personnel and Hiptown) are excluded from the scope of • Greenhouse gas emissions assessments for new reporting. housing developments are studied by the Residential Real Estate division and the CSR Department, using a The indicators on absenteeism do not include the data from special-purpose tool. Those indicators are reported in Bureaux à Partager and Lespace. the Group’s real estate development management The average number of training hours per employee is platform (GPI) to facilitate centralised, consolidated calculated based on the ratio of the number of training management for improved reporting quality; hours/number of persons trained. • NF HQE™ Bâtiments Tertiaires-certified new-build The definition of workplace accidents varies depending on commercial developments in the Paris region exclude the country. The Group uses the definition of workplace wood-frame developments (Ywood, Térénéo), most of accidents as limited to those involving lost time in France. which are in the rest of France; In the event of a workplace accident-related leave that • Developments recognised as coming under a circular overlaps two financial years, the workplace accident is economy approach are listed amongst the projects recognised for the financial year during which the leave of launched by the Residential Real Estate (IR) or absence began. In accordance with regulatory Commercial Real Estate (IE) departments, that have requirements, the workplace accident frequency rate for a passed before the Acquisition Committee during 2019. financial year is equal to the number of accidents resulting An approach is considered to come under the circular in lost time, multiplied by one million and divided by the economy if it corresponds to one of the categories below: number of hours theoretically worked over the course of the financial year. • Resources diagnostic (for reuse/recycling/material recovery), For the age breakdown, Nexity uses the following age brackets: ≤ 25, > 25 and ≤ 35, > 35 and ≤ 45, > 45 and < 55, • Recycling of materials from deconstruction, ≥ 55. The breakdown is based on hundredths. The turnover • Reuse of products or furniture, rate is calculated by the Group as the total number of • Recovery of energy by-products (data centre, grey resignations, dismissals and mutually agreed terminations of water, etc.), and permanent contracts during the period under review • Cradle to Cradle (C2C) Label; (from 31/12/Y-1 to 30/12/Y) divided by the average permanent contract workforce for the same period. This indicator expressed as a percentage is measured as a pro rata of the share that each branch (IR and IE) represents in the Group’s revenue; and
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• Greenhouse gas emissions generated by the Group’s For data on office supplies provided by the Digital administrative sites in France open at 1 January are Innovation Department, only the Group’s supplier is assessed by the CSR Department using the Bilan included; agencies may order from other suppliers. ® Carbone methodology and Ademe emission factors. To As the issue of food waste is not directly relevant for the calculate its greenhouse gas emissions, the Group has ® Group, given the nature of its business activities, no specific used the Bilan Carbone spreadsheet (version 8.2 – commitments have been undertaken in this area. 2019) and called on the services of an external consulting firm specialising in Bilan Carbone® Lastly, as Nexity’s activities are located primarily in France, assessments. the Group is not concerned by water supply problems. 3 Data relating to the franchised agencies are not included in the scope for calculating greenhouse gas Controls emissions. This is because Nexity either leases these spaces, or does not include the employees in its Internal control headcount. ® The CSR department and the Human Resources Department All emission sources included in the Bilan Carbone in charge of collecting data are responsible for the carbon footprint tool were taken into account in carrying indicators provided. Verification takes place during out the GHG footprint analysis, with the exception of a consolidation (review of variations, cross-entity few Scope 3 sources deemed not material for Nexity’s comparison, etc.). business activities and for which data relating to the 2019 financial year were unavailable, namely office furniture (under the “Fixed assets” heading), business External control travel by visitors (under the “Business travel” heading) The Group has appointed one of its Statutory Auditors as an and meals served at the company restaurant (under the independent third party to verify the non-financial “Inputs” and “Waste” headings). disclosures published in its management report. The type of For certain indicators, the extrapolation principle was work carried out and the resulting findings are presented in not used since the data collected was not sufficiently Section 3.6 “Report by the independent third party on the representative. This is notably the case for GHG Statement of consolidated non-financial performance emissions related to natural gas consumption, steam included in the management report” in this chapter. consumption, fuel oil consumption and recycled paper/cardboard waste. No exhaustive information was collected on what sites use natural gas and fuel oil. The lack of fuel oil consumption at the sites included in the analysis does not mean that no fuel oil is used by the Group.
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 151 3 STATEMENT OF NON-FINANCIAL PERFORMANCE Report by the independent third party on the statement of consolidated non-financial performance included in the management report
3.6 REPORT BY THE INDEPENDENT THIRD PARTY ON THE STATEMENT OF CONSOLIDATED NON-FINANCIAL PERFORMANCE INCLUDED IN THE MANAGEMENT REPORT
This is a free translation into English of the Statutory Auditors' report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France. Year ended 31 December 2019
To the Shareholders, In our capacity as independent third party, member of the Mazars network, Nexity Statutory Auditor, certified by COFRAC number 3-1058 (scope available at www.cofrac.fr), we hereby report to you on the non-financial statement for the year ended 31 December 2019 (hereinafter the “Statement”), included in the management report pursuant to the legal and regulatory requirements of Articles L. 225 102-1, R. 225-105 and R. 225-105-1 of the French Commercial Code (Code de commerce).
The entity's responsibility Pursuant to legal and regulatory requirements, the Board of Directors is responsible for preparing the Statement, including a presentation of the business model, a description of the principal non-financial risks, a presentation of the policies implemented considering those risks and the outcomes of said policies, including key performance indicators. The Statement has been prepared in accordance with the entity’s procedures (hereinafter the “Guidelines”), the main elements of which are presented in the Statement and available on request from the entity’s head office.
Independence and quality control Our independence is defined by the requirements of Article L. 822-11-3 of the French Commercial Code and the French Code of Ethics (Code de déontologie) of our profession. In addition, we have implemented a system of quality control including documented policies and procedures regarding compliance with the ethical requirements, French professional guidance and applicable legal and regulatory requirements.
Responsibility of the independent third party On the basis of our work, our responsibility is to provide a report expressing a limited assurance conclusion on: • the compliance of the Statement with the requirements of Article R. 225-105 of the French Commercial Code; • the fairness of the information provided in accordance with Article R. 225-105 I, 3° and II of the French Commercial Code, i.e., the outcomes, including key performance indicators, and the measures implemented considering the principal risks (hereinafter the “Information”). However, it is not within our scope of work to comment on the company's compliance with other applicable legal and regulatory requirements, in particular the French duty of care law and anti-corruption and tax evasion legislation, or on the compliance of products and services with the applicable regulations.
Nature and scope of our work Our work as described below was conducted in accordance with the provisions of Articles A. 225-1 et seq. of the French Commercial Code, the professional standards issued by the French national institute of statutory auditors (CNCC) relating to this engagement and the international standard ISAE 30001 : • We acquainted ourselves with the activity of all consolidated entities and the principal risk exposures; • We assessed the suitability of the criteria of the Guidelines with respect to their relevance, completeness, reliability, neutrality and understandability, with due consideration of industry best practices, where appropriate; • We verified that the Statement includes each category of social and environmental information set out in Article L. 225-102-1 III as well as information regarding compliance with human rights and anti- corruption and tax evasion legislation;
1 ISAE 3000 - Assurance engagements other than audits or reviews of historical financial information.
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• We verified that the Statement provides the information set out in Article R. 225-105 II where it is relevant with regard to the principal risks and that it includes, where necessary, an explanation for the absence of the information required under Article L. 225-102-1 III, 2 of the French Commercial Code; • We verified that the Statement presents the business model and a description of the principal risks associated with all the consolidated entities’ activities, including where relevant and proportionate, the risks associated with their business relationships, their products or services, as well as their policies, measures and the outcomes thereof, including key performance indicators; • We referred to documentary sources and conducted interviews to: 3 • Assess the process used to identify and confirm the principal risks and the consistency of the outcomes and the key performance indicators used with respect to the principal risks and the policies presented; and • Corroborate the qualitative information (measures and outcomes) that we considered to be the most important, provided in Annex 1; For most of the risks, our work was conducted on the consolidating entity. For the risk of "Loss of opportunity due to low-carbon requirements by external stakeholders", work was conducted on the consolidating entity and on a selection of entities1; • We verified that the Statement covers the scope of consolidation, i.e. all the consolidated entities in accordance with Article L. 233-16 of the French Commercial Code within the limitations set out in the Statement; • We acquainted ourselves with the internal control and risk management procedures put in place by the entity and assessed the data collection process implemented by the entity to ensure the completeness and fairness of the Information; • For the key performance indicators and other quantitative outcomes that we considered to be the most important, provided in Annex 1, we implemented: • analytical procedures to verify the proper consolidation of the data collected and the consistency of any changes in those data; • tests of details, using sampling techniques, in order to verify the proper application of the definitions and procedures and reconcile the data with the supporting documents. This work was carried out on a selection of contributing entities1 and covers between 30% and 100% of the consolidated data selected for these tests; • We assessed the overall consistency of the Statement with our knowledge of all the consolidated entities. We believe that the work carried out, based on our professional judgement, is sufficient to provide a basis for our limited assurance conclusion; a higher level of assurance would have required us to carry out more extensive procedures.
Means and resources Our work was carried out by a team of four people between December 2019 and March 2020 and took a total of five weeks. We conducted a dozen interviews with the people responsible for preparing the Statement, representing in particular the following departments: CSR, Human resources, Quality, Digital innovations and solutions, Production and delivery, Cité, Customer satisfaction, Accounting.
Conclusion Based on the procedures performed, nothing has come to our attention that causes us to believe that the non-financial statement is not presented in accordance with the applicable regulatory requirements and that the Information, taken as a whole, is not presented fairly in accordance with the Guidelines, in all material respect.
Paris La Défense, 6 April 2020 The independent third party Mazars SAS Edwige REY CSR & Sustainable Development Partner
1 Nexity Lamy sites and registered office of Studéa for energy consumption and Greenhouse gas emissions. Departments met for the other verifications: CSR, Human Resources, Quality and SAP, Digital Solutions and Innovation, Customer Satisfaction, Cité.
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Appendix 1: Information considered to be the most important
Qualitative information (measures and outcomes) on the principal risks • Climate strategy roadmap • New uses and innovations roadmap • Human resource policy and Mobility charter • Circular logistics specifications
Quantitative indicators, including key performance indicators • Total workforce (number and FTE) • Turnover (outgoing open-ended contracts) • Voluntary turnover (outgoing open-ended contracts) • Number of employees involved in nomadic work • Average number of hours of training per employee • Percentage of projects based on a circular economy approach • Percentage of wooden homes delivered compared with 2015 (Residential Real Estate) • Share of wood in the floor area delivered (Residential Real Estate) • Greenhouse gas emissions by FTE compared with 2014 - travel • Greenhouse gas emissions by FTE compared with 2014 - energy consumption • Percentage of homes sold in reduced VAT areas • Market share in reduced VAT areas • Conventional housing delivered with integrated services (Eugénie solution) • Satisfaction rate of Domitys residents • Results of customer satisfaction questionnaire following interactions on LOOP
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3.7 CROSS-REFERENCE TABLE WITH THE STATEMENTS OF NON-FINANCIAL PERFORMANCE
Statement of Non-financial performance themes Section Business model Nexity in brief
Non-financial risks related to the Policies implemented to identify and Results of the policies implemented Group’s activities attenuate these risks and performance indicators 3
Appeal and employee retention Enhance appeal and employee retention Remuneration 3.2.1.1 Quality of life at work 3.2.1.2 Developing employee skills and commitment Developing talents and reinforcing Skills development 3.2.2.1 employee commitment Raising awareness and training in CSR 3.2.2.2 Integration and equal opportunities 3.2.3 Social dialogue 3.2.3.4 Environmental performance of buildings Optimising the environmental Climate trajectory 3.3.1.1 performance of buildings Labels and certifications 3.3.1.2 Energy efficiency renovation 3.3.1.2 Resilience to climate change 3.3.1.3 Nature in cities and biodiversity 3.3.4 Availability of construction materials Ensuring the availability of construction materials in view of resource depletion Circular economy 3.3.2.1 Access to housing Proposing accessible housing offers Social housing 3.4.1.1 and solutions designed to promote First-time buyers 5.1.2 home ownership Housing in boarding houses 3.4.1.1 Solidarity leases 3.4.1.1 Emergency housing 3.4.1.1 New uses and innovations Offering innovative solutions that meet Sites benefiting from the Week’in new uses offering 3.4.2 Pooled car parks 3.4.2 Car sharing services 3.4.2 Eugénie (mobile application for connected homes) 3.4.2 Transparency and client relationship Improving transparency and client Improving the client relationship relationships transparency policy 3.4.3
Fight against corruption Prevention of corruption Sapin 2 Act – Fight against corruption 2.3
Fight against tax evasion Prevention of risks related Fight against tax evasion to tax evasion 2.3
Human Rights Prevention of violations of human rights and fundamental freedoms as part of the duty of care 2.4 United Nations Global Compact 3.1.3 Actions to promote human rights Compliance with ILO Conventions 3.2.3.4
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3.8 CROSS-REFERENCE TABLE WITH THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
SDG URD theme Section Client awareness-raising about the environment, 3.4.3.1 SDG no. 3 Good health and well-being health and well-being Quality of life at work 3.2.1.2
Developing talents and reinforcing employee SDG no. 4 Quality education 3.2.2 commitment
Strengthening the Group’s commitments to gender 3.2.3.1 SDG no. 5 Gender equality equality
SDG no. 7 Affordable and clean energy Environmental performance of buildings 3.3.1
SDG no. 8 Decent work and economic growth Value creation for the local community Nexity in brief (supported jobs), 3.2.1
SDG no. 9 Industry, innovation and infrastructure Offering innovative solutions that meet new uses 3.4.2
Proposing accessible housing offers and solutions 3.4.1.1 SDG no. 11 Sustainable cities and communities designed to promote home ownership
SDG no. 12 Responsible consumption Ensuring the availability of construction materials 3.3.2 and production in view of resource depletion
Climate trajectory defined for the Group and its 3.3.1.1 SDG no. 13 Measures combating climate change business lines
SDG. no. 15 Life on land Integrating nature into the city, preserving biodiversity and protecting soil 3.3.4
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3.9 SUMMARY TABLE OF CSR INDICATORS
Unless otherwise specified, the indicators presented below are based on Group scope data.
1/ Employee data 2019 2018 a) Employment Section 3.2 Definition of the workforce: number of employees present as at 31 December, excluding interns and corporate officers. Breakdown of employees by gender 3 Number of women 7,288 66% 6,661 Management-level 2,279 2,010 Non-management level 5,009 4,651 Number of men 3,715 34% 3,432 Management-level 2,226 2,082 Non-management level 1,489 1,350 TOTAL 11,003 10,093
Breakdown of workforce by type of contract Permanent contracts 10,065 9,255 Fixed-term contracts and work-linked training 938 838 TOTAL 11,003 10,093
Breakdown of employees by age Management-level 4,505 employees 4,092 172 ≤ 25 years 88 1,459 > 25 and ≤ 35 1,128 1,429 > 35 and ≤ 45 1,314 921 > 45 and < 55 1,011 524 ≥ 55 551 Non-management level 6,498 employees 6,001 1,009 ≤ 25 years 799 1,897 > 25 and ≤ 35 1,614 1,553 > 35 and ≤ 45 1,502 1,308 > 45 and < 55 1,359 731 ≥ 55 727 TOTAL 11,003 10,093
Breakdown of employees by length of service Management-level 4,505 employees 4,092 2,249 ≤ 3 years 1,726 449 > 3 and ≤ 5 463 709 > 5 and ≤ 10 711 726 > 10 and < 20 785 372 ≥ 20 407 Non-management level 6,498 employees 6,001 3,989 ≤ 3 years 3,344 704 > 3 and ≤ 5 696 787 > 5 and ≤ 10 779 675 > 10 and < 20 805 343 ≥ 20 377 TOTAL 11,003 10,093
Breakdown by economic and social unit UES Nexity Promotion Construction 2,473 22.5% 2,357 UES Nexity Saggel Services 599 5.4% 525 UES Nexity Lamy 3,565 32.4% 3,574 UES Ægide-Domitys 2,900 26.4% 2,407 UES Edouard Denis (info on the UES creation brought to our knowledge in 2020) 439 4.0% - Non-UES companies 1,027 9.3% 1,230 TOTAL 11,003 10,093
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1/ Employee data 2019 2018
Breakdown of employees by geographical area France/Other countries 11,003 10,093 France 10,806 98% 9,919 Poland 119 112 Belgium 44 40 Italy 20 17 Switzerland 5 4 Portugal 9 1 Europe (excluding France) 197 2% 174
In France 10,806 9,919 Paris Region 3,992 38% 3,818 Lyon and Grand Lyon 816 8% 782 Lille 514 5% 482 Bordeaux 382 4% 382 Marseille 366 3% 319 Strasbourg 174 2% 168 Toulouse 259 2% 204 Besançon 123 1% 131 Nantes 221 2% 166 Other cities 3,959 35% 3,467
Hires (excluding Ægide-Domitys) 2,565 2,542 Open-ended contracts 1,547 of which 57% 1,380 of management-level Fixed-term contracts 1,018 of which 7% 1,162 of management-level Transfers (excluding Ægide-Domitys) 101 150 To another business division 32 35 Within the same division or in another Company 69 115
Integration of youth (excluding Ægide-Domitys) 585 689 Work-linked training students 321 326 Interns 289 363
External contractors (France excluding Ægide-Domitys) 20.2 FTE 17.5 Leavers (excluding Ægide-Domitys) 1,237 1,029 including layoffs 162 177 ends of trial periods 296 284 ends of fixed-term contracts 839 894
Turnover rate (excluding Ægide-Domitys) Turnover rate 13.30% 13.30% Voluntary turnover rate 9.8% 9.30%
Remuneration and changes in remuneration Section 3.2.1.1 Total (excluding Ægide-Domitys) €48,808 €46,530 TOTAL €43,171 €41,946
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1/ Employee data 2019 2018 b) Organisation of work Organisation of working time Section 3.2.3.4 Number of full-time employees 9,900 9,145 10% of the total Number of part-time employees 1,103 workforce 948 Absenteeism Section 3.2.1.2 Definition of absenteeism: number of open-ended contract calendar days/sum of calendar days of period x average workforce under open-ended contracts Absenteeism rate (excluding Ægide-Domitys) 3.60% 3.50% 3 c) Employee relations (excluding Ægide-Domitys) Organisation of dialogue between employees and management, including in particular procedures for informing, consulting and negotiating with staff Section 3.2.3.4 Official employee representative and alternates 196 321 Status of collective bargaining agreements concluded in 2019 Section 3.2.3.4 • Group employee savings plans (PEG and PERCOG) • Adaptation of the Group’s welfare protection scheme (health and welfare costs) • Wage negotiations • Changes in UES scopes • Profit-sharing scheme d) Health and safety (excluding Ægide-Domitys) Workplace health and safety conditions Section 3.2.3.4 Overview of agreements signed with labour organisations or employee representatives with regard to workplace health and safety Section 3.2.3.4
Occupational injuries, including in particular their frequency and severity, and occupational illnesses Section 3.2.1.2 Number of work-related accidents 150 37 Number of commuting accidents 45 51 Frequency rate 8.3 2.9 Severity rate 0.6 0.1 Number of occupational illnesses 3 2 e) Training Policies implemented with respect to training Section 3.2.2.1 Excluding Ægide-Domitys Total hours of training 101,147 105,643 Average number of hours of training per employee 18.9 h 19 h Including Ægide-Domitys Total hours of training 152,118 Average number of hours of training per employee 19.7 h f) Diversity and equal opportunity/Equal treatment Measures adopted in favour of gender equality Section 3.2.3.1 Measures adopted in favour of the employment and inclusion of workers with disabilities Number of disabled workers (excluding Ægide-Domitys) 121 110 Anti-discrimination policy Section 3.2.3.1 g) Promotion of and compliance with fundamental ILO conventions on Upholding the freedom of association and the right to collective bargaining Section 3.2.3.4 Eliminating discrimination in respect of employment and occupation Section 3.2.3.4 Eliminating forced or compulsory labour Section 3.2.3.4 Effective abolition of child labour Section 3.2.3.4
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2/ Social and environmental data Clients 2019 2018 a) Environmental performance of buildings and Nexity Section 3.3.1 Number of Nexity contacts for energy efficiency renovation Individual 10 0 Share of office building floor spaces delivered in wood frame Commercial 19% 23% Increase in the production of wooden homes compared to 2015 Individual +239% +45% Share of turnkey user projects offering occupancy cost guarantees Commercial 3.4% 3% Change in GHG emissions per home delivered compared to 2015 Individual -5.2% -7% Change in GHG emissions per square metre of office floor space delivered compared to 2015 Commercial -5.6% 5.5% Change in GHG emission per employee compared to 2014 Internal -15% -10.3%
Share of homes passing before the Acquisition Committee (CA) including thermal solar energy or solar panel systems Individual 13% 15% Share of homes delivered including thermal solar energy or solar panel systems Individual 15% 31%
Energy and water consumption: • Electricity (kWh) Internal 10,270,406 10,851,482 • Steam (kWh) Internal 974,444 1,138,300 • Natural gas (kWhHHV) Internal 27,669 348,302 • Water (m3) Internal 40,633 45,064
Nature in cities and biodiversity Section 3.3.4.2 Share of residential developments including planted areas Individual 68% 16%
Share of commercial developments including planted areas Commercial 84% 100%
b) Impact of construction sites Section 3.3.3 Share of construction sites validated in Acquisition Committee including Nexity environmentally responsible construction site charters Individual 18% 21% Share of construction sites validated in Acquisition Committee committed to a certification process including environmentally responsible construction site criteria (NF Habitat, HQE™, Promotelec Habitat Neuf, etc.) Individual 27% 43%
Social inclusion: Individual + Commercial + Local • Number of social inclusion hours Authority 51,830 102,214 Individual • Share of construction projects including social inclusion hours + Commercial + Local (launched or validated in Acquisition Committee) Authority 11% 11%
c) Availability of construction materials Section 3.3.2.2 Individual Share of projects and services based on a circular economy approach + Commercial + Local Authority 3.6% 6.9% d) Access to housing Social housing: % of total new home reservations (incl. PERL) Individual 27% 27% Section 5.1.2 Share of first-time buyers in new home reservations (excluding landlords and investors) Individual 17% 18% Section 3.4.1.1 Number of housing units approved by the Commitments Committee Individual 777 NA
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2/ Social and environmental data Clients 2019 2018 e) New uses and innovations Section 3.4.2 Individual + Commercial + Local Sites benefiting from the Week’in offering Authority 11 4 Individual + Commercial + Local Residences or offices with pooled car parks Authority 5 2 Residences offering car sharing services Individual 2 2 Share of conventional homes delivered equipped with Eugénie Individual 9% 1% 3 f) Transparency and client relationship Section 3.4.3.1 Satisfaction of Residential Real Estate clients as measured using the LOOP tool Individual 71.6% Overall satisfaction of residents in Ægide-Domitys senior residences Individual 94% 95% g) Responsible procurement and supplier relations Section 3.4.3.2 Share of Residential Real Estate construction work including a referencing contract Individual + Local with CSR questionnaire Authority 27% 27% h) Social commitment Section 3.4.1.2 Number of employees engaged in a skill-based sponsorship mission Company 515 509 Number of missions proposed Company 54 44 Number of beneficiary associations Company 33 30
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/162 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 4 CORPORATE GOVERNANCE REPORT
4 CORPORATE GOVERNANCE REPORT
4.1 ADMINISTRATIVE AND EXECUTIVE 4.7 INTERESTS OF THE EXECUTIVE COMPANY MANAGEMENT BODIES 164 OFFICERS AND MEMBERS OF THE BOARD 4.1.1 Board of Directors 165 OF DIRECTORS IN THE COMPANY’S SHARE 226 4.1.2 Members of the Board of Directors during CAPITAL the financial year ended 31 December 2019 167 4.1.3 Non-voting Board members 176 4.1.4 Nexity’s Executive Management and other 4.8 TRANSACTIONS IN SECURITIES 227 management bodies 176 4.1.5 Disclosures relating to the Board of Directors and senior management 182 4.9 STOCK OPTIONS AND FREE SHARES AWARDED 4.1.6 Conflicts of interest involving administrative TO THE EXECUTIVE COMPANY OFFICERS 227 and management bodies 182 4.9.1 Share subscription and share purchase option plans (stock options) 227 4.2 PREPARATION AND ORGANISATION 4.9.2 Issues of free shares 227 OF THE BOARD OF DIRECTORS’ WORK 183 4.2.1 Organisation of the Board of Directors’ work 183 4.10 MAJOR SHAREHOLDERS 228 4.2.2 Executive Management approach 185 4.10.1 Breakdown of share capital at 31 December 2019 228 4.2.3 Vice-Chairman and Senior Independent Director 185 4.10.2 Changes in ownership over the past three years 229 4.2.4 Gender balance and diversity of the Board 4.10.3 Notifications of crossing of ownership thresholds of Directors, the Strategy Committee, under Article L.233-7 of the French Commercial the Operational Management Committee Code and Article L.223-14 of the General Regulation and the Club 1797 186 of the French Financial Markets Authority 4.2.5 Changes in the composition of the Board, (Autorité des Marchés Financiers – AMF) 229 Committees and Executive Management occurring 4.10.4 Shareholders’ agreements 229 during the course of the financial year 186 4.10.5 Control of the Company 229 4.2.6 Independent directors 186 4.10.6 Agreements potentially entailing changes in control 4.2.7 Specialised committees of the Board of Directors 188 of the Company 230 4.2.8 Non-voting Board members 191 4.2.9 Assessment of the Board’s operating procedures 191 230 4.2.10 Compliance with the Afep-Medef Code 192 4.11 INFORMATION ON THE SHARE CAPITAL 4.11.1 Share capital 230 4.3 RELATED-PARTY TRANSACTIONS 193 4.11.2 Securities not representing capital 230 4.11.3 Treasury shares 230 4.3.1 Statutory Auditors’ special report on regulated 4.11.4 Schedule of authorisations granted agreements 193 at the Company’s Shareholders’ Meetings 232 4.11.5 Other securities giving access to the share capital 235 4.11.6 Potential impact of securities giving access to share EMUNERATION AND BENEFITS 4.4 R capital 235 FOR THE EXECUTIVE COMPANY OFFICERS 197 4.11.7 Shares given as collateral 235 4.4.1 Remuneration of Nexity’s company officers 4.11.8 Conditional or unconditional options or agreements in respect of the 2019 financial year 197 over the capital of any Group member 236 4.4.2 Remuneration policy applicable to Nexity’s 4.11.9 Changes in the Company’s share capital over company officers for the 2020 financial year 213 the past three financial years 236
4.5 REMUNERATION AND BENEFITS OF THE OTHER 4.12 REQUIREMENTS UNDER THE ARTICLES OF ASSOCIATION 237 EXECUTIVES (NON-COMPANY OFFICERS) 222 4.12.1 Corporate purpose 237 4.5.1 Remuneration of the other executives in respect 4.12.2 Financial year 237 of the 2019 financial year 222 4.12.3 Distribution of profits 237 4.5.2 Remuneration of the other executives for the 2020 4.12.4 Changes in capital and voting rights 237 financial year 224 4.12.5 Shareholders’ Meetings 238 4.12.6 Shareholder reporting requirements for crossing 4.6 PENSIONS AND OTHER BENEFITS 225 of thresholds 239 4.12.7 Composition of the Board of Directors (Articles 11 to 14 of the Articles of Association) 240 4.12.8 Duties and powers of the Board of Directors (Article 15 of the Articles of Association) 241 4 CORPORATE GOVERNANCE REPORT
Pursuant to Article L.225-37 of the French Commercial Code, regulations. These reiterate that directors are required to the Board of Directors must present to the shareholders at maintain discretion and confidentiality and that, for all the Shareholders’ Meeting a corporate governance report, transactions in securities, they must comply with the Insider appended to the management report, containing information Trading Prevention Guide adopted by the Company. The about governance, remuneration and factors likely to have an internal rules and regulations and the Insider Trading impact in the event of a takeover bid. Prevention Guide are available on the Company’s website. This report has been presented to the Remuneration, The Board's internal rules and regulations were last Appointments and CSR Committee. updated on 26 March 2020. In 2019, the main This report is drawn up with reference to the Afep-Medef amendments concerned the implementation, on 22 May Corporate Governance Code for listed companies 2019, of governance following the decision to separate the (Afep-Medef Code), with which the Company has declared functions of Chairman of the Board of Directors and Chief that it complies. Executive Officer. The duties of the Chairman of the Board of Directors, in particular, have been clarified, and the This report describes the work of the Board of Directors, Investment Committee has been renamed Strategy and which is also governed by the Board’s internal rules and Investment Committee with a redefined remit.
4.1 ADMINISTRATIVE AND EXECUTIVE MANAGEMENT BODIES
ASIDE FROM THE CLASSIC FUNCTIONS, NEXITY’S GOVERNANCE Open and responsible FRAMEWORK INCORPORATES MULTIPLE, COMPLEMENTARY BODIES. THEY MONITOR INTERNAL AND EXTERNAL PRIORITIES, AND THEIR GOVERNANCE CONTRIBUTIONS ENRICH THE GROUP’S STRATEGIC THINKING.
EXECUTE STRATEGY FORMULATE STRATEGY QUESTION STRATEGY
share strategy BOARD OF DIRECTORS
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o MANAGEMENT COMMITTEE
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4.1.1 Board of Directors
A brief description of the main provisions of the Company’s Articles of Association and the Board’s internal rules and regulations can be found in Sections 4.2 et seq. of this chapter. The directors can be reached at the Company’s registered office: 19, rue de Vienne – TSA 50029 – 75801 Paris Cedex 08 – France. The tables below include a summary of the composition of the Board of Directors and of its committees at 31 December 2019.
Alain Dinin Luce Gendry Pascal Oddo Chairman Vice-Chairman Non-voting Board member Senior Independent Director 4 P Independent Jean-Pierre Denis P Bruno Catelin Director Director representing the employees
Soumia Belaidi- Malinbaum Jérôme Grivet Independent 10 Director director MEMBERS* 44% WOMEN**
Jacques Veyrat Magali Smets Director Independent Agnès Nahum Charles-Henri director Independent Filippi director Independent Audit and Accounts Committee director Remuneration, Appointments and CSR Committee P * Excluding non-voting Board member Strategy and Investment Committee ** Exluding non-voting Board member P Committee Chairman and director representing the employees
Board of Directors' Committees
Remuneration, Audit and Accounts Appointments Strategy and Committee and CSR Committee Investment Committee
4 meetings 5 meetings 1 meeting 67% independent members 67% independent members 33% independent members 88% attendance rate 90% attendance rate 100% attendance rate
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KEY FIGURES OF THE BOARD OF DIRECTORS
DIVERSITY REMUNERATION
44% women in accordance with Article L 225-18-1 of the French Commercial Code €280k in total** Unchanged since 2005 Average age: 59 Fees based uniquely on attendance at meetings at most for 1/3 of directors Statutory age limit: 70 of the Board and its Committees, without any allowance and 72 for the Chairman for absences
INDEPENDENCE STAGGERED TERMS (strict application for the classification*) 67% 67% Duration: 4 years*** 56% 1 33%
4 3 2 1 Board of Strategy and Remuneration, Audit and Directors Investment Appointments Accounts 2020 2021 2022 2023 Committee and CSR Committee Director representing the employees Non-voting Director Committee Board member
* In accordance with the Afep/Medef Code, except for the director representing the employees on the Committees and the Board of Directors ** No cumulative remuneration with other Group remuneration *** For Directors and 3 years for the non-voting Board member
The table below lists the main areas of expertise declared by the directors and illustrates the broad range of expertise of the Board of Directors.
THE BOARD OF DIRECTORS' AREAS OF EXPERTISE
Finance 10
Strategy and investment 10
Governance 7
Real estate and real estate financing 6
IT and Digital system 5
Financial services (banking and insurance) 7
CSR - Energy and Environment 6
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4.1.2 Members of the Board of Directors during the financial year ended 31 December 2019
The tables below show the members of the Company’s Board of Directors during the financial year ended 31 December 2019, as well as each member’s main positions in the Company, their main outside activities, where material, as well as their other offices and positions held over the preceding five years. This composition is expected to change in 2020 to comply with the legal requirements to appoint two additional Directors representing employees, including one representing employee shareholders.
4
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ALAIN DININ Chairman of the Board of Directors
> Chairman of the Board of Directors Date first appointed > Chairman of the Strategy and Investment 28/09/2004 Committee Nationality: French Date of term expiry Age: 69 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Real estate and real estate statements for the financial year ended financing, Information systems and digital. 31/12/2022. Number of shares at 31 December 2019 1,075,974 held directly and 119,900 via related persons
Biography Chairman of the Board of Directors since 22 May 2019, previously being Chairman and Chief Executive Officer from 2004, Alain Dinin began at the George V group (Groupe Arnault) in 1979 as a management controller and subsequently held various other positions before becoming Chief Executive in 1985. He served as CEO of CGIS (Vivendi group) from 1995 to 2000, then Vice-Chairman, Chairman of the Management Board. He is a graduate of École Supérieure de Commerce de Lille (now called SKEMA Business School).
Current appointments > Outside the Group • Chairman and Member of the Supervisory Board of New Port SAS > Within the Group in France • Director of Nexity Immobilier d’Entreprise, Edouard Denis Développement, Ægide • Permanent representative of Nexim 1 on the Board of Directors of Ufiam • Permanent representative of Nexity Logement on the Board of Directors of Féréal • Liquidator of Clichy Europe 4 > Within the Group outside France • Chairman of the Supervisory Board of Nexity Polska 303 Spolka Akcyjna (Poland) and NP 7 Spolka Akcyjna (Poland) • Permanent representative of SIG 30 Participations on the Board of Directors of City Garden Real Estate (Belgium) • Representative of Nexity SA on the Boards of Directors of Nexibel 2, Nexibel 3, and Nexibel 5 Expired appointments • Chairman of the Board of Directors and director of Crédit Financier Lillois SA (until 29/04/2019) • Legal representative of Nexity, Vice-Chairman, CEO and director of Éco-Campus à Châtillon, itself Chairman of Mercedes (until 22/05/2019) • Chairman and member of the Supervisory Board of Oralia Partenaires SAS (until 01/12/2017) • Legal representative of Nexity, Chairman of Nexity Franchises and Lilas Paul Meurice (until 22/05/2019) • Director of Weroom (until 11/03/2019), PERL (until 28/06/2019), Nexity Logement (until 09/11/2017), Oralia Investissements (until 15/12/2017), Isodev, Club Méditerranée (until 23/02/2015), DS Participations (until 31/12/2014), Nexibel 6 (Belgium) (until 10/12/2015) • Member of the Executive Committee of FPI (Fédération des Promoteurs Immobiliers) (until 05/10/2017) • Vice-Chairman and member of the Supervisory Board of Saggel Holding SA (expired on 14/03/2016) • Permanent representative of Saggel Holding SA on the Board of Directors of LFP Nexity Services Immobiliers (until 20/04/2016) • Chairman of the Board of Directors of Nexity Immobilier d’Entreprise (until 20/06/2014), of Sesto Edison 1 and Sesto Edison 2 (Italy) (until 10/07/2015) • Member of the Strategic Advisory Board of SKEMA Business School • Permanent representative of Nexity on the Boards of Directors of Nexibel 1 (Belgium) (until 10/12/2015) and Nexity IG (Belgium) (until 10/12/2015) • Permanent representative of George V Gestion SAS on the Board of Directors of Chantiers Navals de l’Esterel SA (until 24/09/2018) • Permanent representative of Nexim 1 SAS on the Board of Directors of Ressources et Valorisation SA (until 14/06/2018)
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LUCE GENDRY Vice-Chairman Senior Independent Director
> Chairman of the Audit and Accounts Date first appointed Committee. 21/02/2012 > Member of the Strategy and Investment Committee Nationality: French Date of term expiry Age: 70 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Financial services (banking and statements for the financial year ended 4 insurance), CSR – energy and environment. 31/12/2019. Reappointment is proposed.
Number of shares at 31 December 2019 200 held directly and 1,405 via a controlled company
Biography Luce Gendry began her career in the Générale Occidentale group as Company Secretary and then Chief Financial Officer. She later joined the Bolloré group as Deputy Managing Director before moving to Banque Rothschild, where she was a managing partner until mid-2011. She is now Senior Advisor at Rothschild et Compagnie, member of the Supervisory Board of Rothschild Martin Maurel; Chairman of the Supervisory Board of IDI, director of FFP (Peugeot family group), director of Sucres et Denrées (Sucden) and Chairman of Cavamont Holdings Ltd.
Current appointments • Chairman of the Supervisory Board of IDI1 and Chairman of the Finance and Audit Committee • Director of FFP1, member of the Governance, Appointments and Remunerations Committee and Chairman of the Finance and Audit Committee • Member of the Supervisory Board of Sucres et Denrées (Sucden) and Chairman of the Audit Committee • Member of the Supervisory Board of Rothschild Martin Maurel > Outside France • Chairman of Cavamont Holdings Ltd. Expired appointments • Director of SFR Group1 and Chairman of the Finance and Audit Committee (until November 2016)
1 Listed company.
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BRUNO CATELIN Director representing the employees
> Member of the Remuneration, Appointments Date first appointed and CSR Committee. 01/01/2017 Nationality: French Date of term expiry Age: 54 31/12/2020 Expertise: Information systems and digital, Real estate and real estate financing. Number of shares at 31 December 2019 283 held directly
Biography Bruno Catelin is the director representing the Group’s employees. He has been an employee of Nexity group since March 1991. He has been in charge of management tools training within the Residential Real Estate division since 1 September 2018.
Expired appointments at the end of 2016 • Deputy treasurer of the Works Council • Employee representative
JEAN-PIERRE DENIS Director
> Member of the Audit and Accounts Date first appointed Committee 23/07/2015 > Member of the Strategy and Investment Committee Nationality: French Date of term expiry Age: 59 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Real estate and real estate statements for the financial year ended financing, Financial services (banking 31/12/2019. and insurance), Information systems and digital. Reappointment is proposed. Number of shares at 31 December 2019 500 held directly and 2,000 via a controlled company
Biography Jean-Pierre Denis is Chairman of Crédit Mutuel Arkéa. He began his career as an inspector of finance and subsequently served in various civil servant positions, including deputy secretary-general of French President of Republic. He then held various executive management positions at Dalkia, Veolia and OSEO (now BPI France).
Current appointments • Chairman of Crédit Mutuel Arkéa; Fédération du Crédit Mutuel de Bretagne; SAS Château Calon Ségur • Director of Caisse de Crédit Mutuel du Cap Sizun, Kering1; Paprec Holding, Avril Gestion, JLPP Invest SAS • Non-voting Board member of Altrad Investment Authority • Non-voting Board member of the Supervisory Board of Tikehau Capital1 Expired appointments • Director of Soprol (until 20/03/2015) • Director of Altrad Investment Authority (until 25/07/2018) • Member of the Supervisory Board of Tikehau Capital1 (until 25/05/2018) • Chairman of the Supervisory Board of New Port (from 09/01/2015 to 30/06/2015) • Director and treasurer of Ligue de Football Professionnel (until 27/05/2016) • Acting Chairman of Ligue de Football Professionnel (from 27/05/2016 to 11/11/2016)
1 Listed company.
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CHARLES-HENRI FILIPPI Independent director
> Chairman of the Remuneration, Date first appointed Appointments and CSR Committee. 15/12/2016 Nationality: French Date of term expiry Age: 67 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Real estate and real estate statements for the financial year ended financing, Financial services (banking and 31/12/2022. insurance), CSR – Energy and environment. Number of shares at 31 December 2019 3,000 held directly 4 Biography Charles-Henri Filippi is Managing Partner of Banque Lazard and was appointed Co-Chairman France in October 2019. He was previously Chairman of Citigroup France with effect from 1 January 2011. After holding several positions in French government agencies and ministerial departments, he joined CCF in 1987 and became its Chief Executive Officer in 1998. In 2001, he was appointed to HSBC’s Executive Committee, with responsibility for major client activities across the entire group. He was named Chairman and Chief Executive Officer of HSBC France in March 2004, then non-executive Chairman from August 2007, a position he held until 31 December 2008. He was also Senior Advisor at CVC Capital Partners France until 31 December 2010, Partner at Weinberg Capital Partners until 31 December 2011, and founded the asset management companies Octagones and Alfina, serving as Chairman of both from 2008 to 2012. Charles-Henri Filippi is also a director of Orange.
Current appointments • Director of Orange1 Piasa, Fonds de dotation Adie (non-profit organisation), Fondation des Treilles (non-profit organisation), Fondation Bettencourt-Scheller (non-profit organisation), • Member of the Governance Committee and the Social and Environmental Responsibility Committee of Orange1 Expired appointments • Director of L’Oréal1 (until 02/2018) • Member of the Supervisory Board of Femu Qui (until 2015) • Chairman of Association des Amis de l’Opéra Comique (until 2015) • Member of the International Advisory Board of Abertis (until 2018)
1 Listed company.
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JÉRÔME GRIVET Director
> Member of the Audit and Accounts Date first appointed Committee 23/07/2015 > Member of the Strategy and Investment Committee Nationality: French Date of term expiry Age: 58 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Real estate and real estate statements for the financial year ended financing, Financial services (banking and 31/12/2019. insurance). Reappointment is proposed. Number of shares at 31 December 2019 200 held directly
Biography Jérôme Grivet is Deputy Managing Director of Crédit Agricole SA in charge of Finance for the Crédit Agricole group. He began his career as an inspector of finance, then served as a member of several French ministries before holding a number of positions at Crédit Lyonnais and the Crédit Agricole group.
Current appointments • Deputy Managing Director in charge of Group Finance – Member of the Executive Committee of Crédit Agricole SA1 • Director of Crédit Agricole Assurances, Caceis, Caceis Bank France and Korian1 • Member of the Supervisory Board of Fonds de Garantie des Dépôts • Permanent representative of Prédica on the Board of Directors of Covivio1 Expired appointments • Chairman of CA Life Greece, Fonds Stratégique des Participations, permanent representative of Prédica • CEO of Crédit Agricole Assurances • Director of CAAGIS • Non-voting Board member of Crédit Agricole Immobilier, La Médicale de France, Groupe ADP (formerly Aéroports de Paris)1 • Vice-Chairman of Crédit Agricole Vita SPA • Director and Chairman of the Board of Directors of Spirica and Dolcea Vie • Permanent representative of Prédica on the Supervisory Board of CA Grands Crus and CAPE • Director of Pacifica, CA Indosuez Private Banking, Union des Banques Arabes et Françaises, LCL Obligation Euro, CA Cheuvreux and Cedicam • Permanent representative of Crédit Agricole Assurances on the Board of Directors of CACI • Officer of the Executive Committee of FFSA • Member of the Board of Directors, Vice-Chairman of FFSAM and Crédit Agricole Assurances Italia Holding SpA • President of Groupement Français des Bancassureurs • Permanent representative of Prédica, which serves as a non-voting Board member of Siparex Associés • Member of the Supervisory Board of Korian1 • Vice-Chairman of Bes Vida • Deputy CEO and member of the Executive Committee of Crédit Agricole CIB • Managing Director of CLSA BV and Stichting CLSA Foundation • Permanent representative of Crédit Agricole CIB on the Board of Directors of Fletirec • Chairman and CEO of Mescas • Director and Vice-Chairman of Newedge Group
1 Listed company.
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SOUMIA BELAIDI-MALINBAUM Independent director
> Member of the Audit and Accounts Date first appointed Committee 24/03/2015 > Member of the Remuneration, Appointments and CSR Committee. Nationality: French Date of term expiry Age: 58 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Information systems and digital, CSR statements for the financial year ended – Energy and environment. 31/12/2020. 4 Number of shares at 31 December 2019 300 held directly
Biography Soumia Belaidi-Malinbaum has been Business Development Director at Keyrus since 2018. Between 1991 and 2006 she was founder, Chairman and Chief Executive Officer of Specimen, Sales Director France for Hommes et Techniques de l’Informatique (HTI) and Account Manager in financing and leasing at International Brokerage Leasing (IBL).
Current appointments • Director of the Lagardère SCA Group1 and member of the Appointments Committee Expired appointments • Director and Chairman of the Audit Committee of France Média Monde
AGNÈS NAHUM Independent director
> Member of the Audit and Accounts Date first appointed Committee 19/05/2015 > Member of the Strategy and Investment Committee Nationality: French Date of term expiry Age: 59 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Financial services (banking and statements for the financial year ended insurance), CSR – energy and environment. 31/12/2022. Number of shares at 31 December 2019 200 held directly
Biography Agnès Nahum has been, since December 1998, co-founder and Chairman of the Management Board of investment company Access Capital Partners, which specialises in managing European private equity, infrastructure and private debt funds. Previously she was Senior Vice-President of Business Development at BNP Paribas Private Equity, Business Development Director at Financière Saint Dominique and Head of Investment and Development at MAAF.
Current appointments • Chairman of the Management Board of Access Capital Partners SA > Outside France • Director of Access Capital Partners Group SA (Belgium), Access Capital Partners II (Guernsey) Ltd, Access Co-Investment Partners Limited (Guernsey) Ltd, Elyseum Holding SA (Belgium), Access Capital Partners Finland Oy, Access Capital Advisors Finland Oy, ACP Yksi Oy (Finland), SMF I Rahasto Oy (Finland), SPEF I Oy (Finland), SPEF Kaksi Oy (Finland), ACL Sarl (Luxembourg), ACL 2 Sarl (Luxembourg), Castle SA (Luxembourg), ACF II SICAV-SIF (Luxembourg), Mondriaan (Luxembourg)
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MAGALI SMETS Independent director
> Member of the Audit and Accounts Date first appointed Committee 31/05/2016 Nationality: French Date of term expiry Age: 46 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, CSR – Energy and environment. statements for the financial year ended 31/12/2019. Reappointment is proposed.
Number of shares at 31 December 2019 200 held directly
Biography Magali Smets is Chief Executive Officer of France Chimie (professional organisation). She began her career in 1999 as a consultant at McKinsey & Company. In 2001, she joined the Strategy Department of Alstom Transmission & Distribution, later becoming Chief Strategy Officer of Areva Transmission & Distribution. In 2007, she represented AREVA at the European Union. In January 2013, she became director, reporting to the Chairman, and Executive Secretary of AREVA’s Management Board, before she became Areva’s Chief Strategy Officer in 2015. She actively contributed to the work of MEDEF, France Industrie and the French National Council of Industry (Conseil national de l’industrie).
Current appointments • Vice-Chairman of Groupement des Industries Chimiques pour les Études et la Recherche (GICPER) (since 11/04/2017) • Chairman of Syndicat des Activités et PROduits divers en relation avec la CHIMie et la parachimie (APROCHIM) (since 25/07/2017) • Statutory manager of SCI Immochim (since 19/12/2017) • Director of CP Chimie Promotion (since 17/05/2017), Director of Universcience Partenaires (since 07/06/2017) Expired appointments • Chairman of Areva Énergies Renouvelables (from 21/12/2015 to 01/06/2016) • Chairman of the Board of Directors and Chief Executive Officer of Cedec (from 14/02/2013 to 01/06/2016) and Director of Areva TA (until 01/06/2016) • Permanent representative of Cedec on the Board of Directors of Areva TA (until 01/06/2016) • Permanent representative of Areva on the Board of Directors of Areva TA (until 29/09/2015)
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JACQUES VEYRAT Director
> Member of the Remuneration, Appointments Date first appointed and CSR Committee. 23/05/2013 > Member of the Strategy and Investment Committee Nationality: French Date of term expiry Age: 57 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Governance, Information systems and digital, statements for the financial year ended CSR – Energy and environment. 31/12/2020. 4 Number of shares at 31 December 2019 250 held directly
Biography Jacques Veyrat began his career with the French Ministry of Finance (Treasury Department), where he served from 1989 to 1993, and then went on to work with the Ministry for Infrastructure from 1993 until 1995. He was next appointed Chief Executive Officer of Louis Dreyfus Armateurs. In 1998, he founded Louis Dreyfus Communications, which would become Neuf Cegetel. He was Chairman of Groupe Louis Dreyfus from 2008 to 2011. In 2011, he created Impala, a holding company and principal shareholder of some twenty companies mostly active in the energy sector, including Direct Énergie and Neoen.
Current appointments • Chairman of Impala SAS and FNAC Darty1 • Director of HSBC France • Non-voting Board member of Louis Dreyfus Armateurs, ID Logistics Expired appointments • Director of Imerys1, Direct Énergie and Sucres et Denrées • Member of the Supervisory Board of Eurazeo1 • Chairman of Louis Dreyfus Holding and Louis Dreyfus SAS
1 Listed company.
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4.1.3 Non-voting Board members
Since 31 May 2018, the Company has only one non-voting Board member: Mr Pascal Oddo.
PASCAL ODDO Non-voting Board member
Nationality: French Date of term expiry Age: 68 At the end of the Company’s Shareholders’ Expertise: Finance, Strategy and investment, Meeting called to approve the financial Real estate and real estate financing, Financial statements for the financial year ended services (banking and insurance), Information 31/12/2021. systems and digital. Number of shares at 31 December 2019 1,000 held directly
Biography Pascal Oddo holds a master’s degree in management from Paris-Dauphine University (Paris IX). Before working as a partner at LBO France from 1997 to 2017, Pascal Oddo spent more than 20 years developing Oddo & Cie. He was also a founding member of Euronext and the Conseil des Bourses de Valeurs. Pascal Oddo is currently Chairman of Vasgos SAS, which he founded in 1997.
Positions held outside the Company • Chairman of Vasgos SAS and SIP • Permanent representative of Vasgos SAS, Geoxia, Financière Jumbo and Boxer Holding • Chairman of the Supervisory Board of New Port SAS • Director of Brindilles Expired appointments • Member of the Supervisory Board of LBO France Gestion SAS; of Consolis Holding; of Gravotech Holding • Director of MMC (Maison Michel Chapoutier)
4.1.4 Nexity’s Executive Management and other management bodies
4.1.4.1 Executive Management The Executive Management, Nexity’s management and Women represented 25% of the Committee at decision-making body, consists of Mr Jean-Philippe Ruggieri, 31 December 2019. Chief Executive Officer, Mr Julien Carmona, Deputy CEO and Executive Management is supported on a daily basis by company officer in charge of Internal Clients, several executive management bodies described in Finance, Strategy and International Development; Sections 4.1.4.2 and 4.1.4.3 below. Mrs Véronique Bédague-Hamilius, Deputy CEO in charge of Commercial and Local Authority Clients, and Executive Management meets, if needed, as a Strategy Mr Frédéric Verdavaine, Deputy CEO in charge of Individual Committee, including the members of Executive Clients and Real Estate Services to Individuals. Management and Mr Alain Dinin, Chairman of the Strategy and Investment Committee, as described in Section 4.2.7 Among members holding the title of Deputy CEO, only below. He participates, either following delegation from the Mr Julien Carmona is a company officer. His appointment Strategy and Investment Committee, or to refer matters to was renewed on 22 May 2019 by the Board of Directors, the latter, in order to authorise transactions, subject to which met following the Company’s Shareholders’ Meeting increasingly stringent rules, exceeding the investment of the same day. amounts described in the internal rules and regulations of The Strategy Committee meets once a week. the Board of Directors. The tables below present the biographies of each member of Executive Management.
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JEAN-PHILIPPE RUGGIERI Chief Executive Officer
> Chief Executive Officer Date first appointed > Deputy CEO in charge of Individual 22/05/2019 Clients > Chairman and CEO Nexity Immobilier Résidentiel > Co-Chairman of the Individual Clients Committee > Member of Executive Management Nationality: French Date of term expiry 4 Age: 51 At the end of the Company’s Shareholders’ Meeting called to approve the financial statements for the financial year ended 31/12/2022.
Number of shares at 31 December 2019 43,900 held directly and 19,756 via related persons
Biography Chief Executive Officer since 22 May 2019. He has been Deputy CEO in charge of Individual Clients and Residential Real Estate activities since January 2017 and company officer since 31 May 2018. He previously served as Managing Director of the Residential Real Estate division starting in 2014, after having been its Deputy CEO since 2006. He also served as Managing Director of Nexity Consulting and Nexity Patrimoine. From 1994 to 2001, he was Sales Director and then Managing Director of Ruggieri Immobilier Toulouse. He began his career as an operations manager at Sogeprom in 1992. He is a graduate of the École Supérieure de Commerce de Toulouse.
Current appointments > Outside the Group • Manager of SARL La Colline des Sciences > Within the Group in France • Director of Bien’ici, Perl, Ægide • Co-Manager of George V Consultel • Chairman, CEO and director of Les Terrains du Midi • Chairman of Nexity Logement • Legal representative of Nexity, Chairman of Nexity Franchises SAS and Lilas Paul Meurice SAS • Permanent representative of George V Gestion on the Board of Directors of Féréal • Permanent representative of Nexity Régions III on the Board of Directors of Prado Gestion • Legal representative of Nexity Logement and Managing Director of George V Gestion • Permanent representative of Nexity Logement on the Board of Directors of Crédit Financier Lillois (from 06/03/2018) > Within the Group outside France • Member of the Board of Directors of Nexity Belgium Expired appointments • Deputy CEO and Board member of Nexity Consulting (until 02/12/2019) • Deputy CEO of Féréal (until 20/11/2019) • Manager of Balma Le Cyprie Village (until 15/10/2018) • Permanent representative of Nexity Solutions on the Board of Directors of Century 21 France (until 27/06/2019) • Permanent representative of George V Gestion, member of the Boards of Directors of SAD SA (Société technique des acajous débités) and C.F.F.I (Compagnie foncière financière et immobilière) (until 14/11/2018) • Permanent representative of Nexity Régions III on the Boards of Directors, and Co-Manager of SCI Servon Marne and SNC Servon République Domaines • Legal representative of Nexity Consulting, Manager of Nexity Patrimoine (until 20/11/2019) • Legal representative of SAS Nexity Logement and Chairman of the Board of Directors of Berri Investissements (until 01/03/2018) • Legal representative of Nexity Régions I, Chairman of Apollonia (until 22/03/2018), Les Allées de l’Europe (until 22/03/2018), Evry Le Bras de Fer (until 22/03/2018), Nexity IR Programmes Apollonia (until 22/03/2018) • Representative of Nexity Regions I, CEO of Seeri (until 22/03/2018), George V Alpes (until 22/03/2018), George V Rhône-Loire-Auvergne (until 22/03/2018), CALI (until 22/03/2018), Nexity IR Programmes Rhône-Loire-Auvergne (from 12/03/2018 until 22/03/2018); Nexity IR Programmes Alpes (until 22/03/2018), Nexity IR Programmes Paris Val-de-Seine (until 22/03/2018) • Manager of Nexity Régions I (from 12/03/2018 until 22/03/2018) Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 177 4 CORPORATE GOVERNANCE REPORT Administrative and Executive Management bodies
JULIEN CARMONA Deputy CEO – Company officer
> Deputy CEO and company officer Date first appointed > Deputy CEO in charge of Internal Clients 31/05/2018 > Chairman of the Internal Clients Committee > Member of Executive Management Nationality: French Date of term expiry Age: 49 At the end of the Company’s Shareholders’ Meeting called to approve the financial statements for the financial year ended 31/12/2022.
Number of shares at 31 December 2019 34,250 held directly
Biography Deputy CEO in charge of Internal Clients (which includes the main functional departments of the Nexity group, such as Finance, General Secretariat, Legal Affairs, Human Resources, Internal Communications, Digital and Information Systems) as well as of Strategy and International Development since January 2017. After starting his career with the French Ministry for the Economy and Finance, then with BNP Paribas, he successively served as Economics Advisor to the President of the French Republic (2004-2007), member of the Management Board and Chief Financial Officer of Caisse Nationale des Caisses d’Épargne (CNCE) which became BPCE (2007-2009), then Chief Operating Officer and member of the Executive Committee at SCOR SE (2009-2012). He joined Nexity in January 2014. He is a State Finance Inspector (Inspecteur des finances) and a graduate of École Normale Supérieure in Paris and of École Nationale d’Administration (ENA).
Current appointments > Outside the Group • Member of the Supervisory Board of New Port SAS > Within the Group in France • Chairman of SIG 30 Participations, Neximmo 39, Sari Investissements, Nexim 4, Neximmo 12 and Neximmo 19 • Manager of Nemoa • Director and Chairman of the Board of Directors of Crédit Financier Lillois SA • Member of the Supervisory Board of Bureaux à Partager • Legal representative of SIG 30 Participations on the Boards of Directors of Century 21 France, Ægide and Éco-Campus à Châtillon • Permanent representative of Nexity Logement on the Board of Directors of Nexity Consulting • Director of PERL, Nexity Immobilier d’Entreprise, Edouard Denis Développement • Legal representative of SIG 30 Participations, Chairman of Neximmo 38, Neximmo 41, Neximmo 42, Neximmo 44, Neximmo 48, Neximmo 49, Neximmo 50, Neximmo 51, Neximmo 53, Neximmo 54, Neximmo 59, Neximmo 60, Neximmo 63, Neximmo 65, Neximmo 68, Neximmo 71, Neximmo 72, Neximmo 73, Neximmo 75, Neximmo 77, Neximmo 80, Neximmo 81, Neximmo 82, Neximmo 85, Neximmo 86, Neximmo 87, Neximmo 88, Neximmo 90, Neximmo 91, Neximmo 96, Neximmo 97, Neximmo 99, Neximmo 100, Neximmo 101, Neximmo 102, Neximmo 103, Neximmo 104, Neximmo 105, Nexiville 1, Nexiville 2, Nexiville 4, Nexiville 5, Nexiville 6, Pontault Louvetiere, Canton 7, Neximmo 106, Neximmo 107, Neximmo 108, Neximmo 109, Neximmo 110, Nexprom, Neximmo 111, Neximmo 112, Neximmo 113, Neximmo 114, Nexity Résidences gérées, Nexiville 8, Nexiville 9, Terrae Novae 1, Terrae Novae 2, Terrae Novae 3, Terrae Novae 4, Neximmo 116, Neximmo 117, Neximmo 118, Neximmo 119, Neximmo 120, Garenne Aménagement, Nexiville 11, Nexiville 13, Nexiville 14, Neximmo 121, Neximmo 122, Neximmo 123, Neximmo 124, Neximmo 125, Neximmo 126, Neximmo 127, Neximmo 128, Pick a brick, Axioparc, Nexiville 15, Nexiville 16, Nexiville 17 • Legal representative of SIG 30 PARTICIPATIONS, CEO of Aqueduc, SAS Bagneux Briand, SAS Bagneux Victor-Hugo • Legal representative of SIG 30 Participations, Manager of Terrae Novae, SCCV Toulouse Bow • Legal representative of SARI Investissements, Liquidator de Neximmo 5
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JULIEN CARMONA Deputy CEO – Company officer Current appointments • Legal representative of Sari Investissements, Manager of SNC Nexitim, SNC Parc de Sénart, SNC Le Bourget Parc de l’espace, SNC Coudray Actilogis, SNC du pic de Belledonne, SNC Urban East Color East, SNC du Chemin de Paris, SNC Urban East Voiries, SNC Florides 1, SNC des Terrasses des Bruyères, SCI Saint-Laurent Logistique, SNC Sari – Société d’aménagement régional industriel, SNC Opteam East, SNC Urban East Chaplin 1, SNC Urban East Guy Blache 3 • Furthermore, as the legal representative of SIG 30 PARTICIPATIONS, Julien Carmona is also the legal representative of various non-trading companies and partnerships. Furthermore, as the legal representative of SARI INVESTISSEMENTS, Julien Carmona is also the legal representative of various non-trading companies and partnerships. > Within the Group outside France 4 • Director and Chairman of the Board of Directors of City Garden Real Estate • Director of Nexibel 3, Nexibel 5, Nexity Belgium, G&G Immo SA (Belgium), IPERL, Neexae Bel CSE • Legal representative of SIG 30 Participations, director of Nexibel 2, Nexibel 3, Nexibel 5 • Sole Director of Domus Sorolla • Director and Chief Executive Officer of Agenxity SRL of Nexity Holding Italia SRL • Sole Director of Nexity Milano Piranesi SRL, Nexity Milano Olgiati SRL, Nexity Milano Porta Volta SRL, Livraghi 18 SRL, Nexity Rescaldina SRL, Nexity Milano Faravelli SRL, Nexity Trentatre SRL, Nexity Trentaquatro SRL, Nexity Trentacinque SERL, Nexity Trentasei SRL, Nexity Trenta Due SRL • Manager of Nexity Polska Sp.Z.o.o, NP 8 Sp.Z.o.o, NP 9 Sp Z.o.o, NP 10 Sp Z.o.o, NP 11 Sp Z.o.o, NP 12 Sp Z.o.o, NP 14 Sp Z.o.o, NP 18 Sp Z.o.o, NP 19 Sp Z.o.o, NP 20 Sp Z.o.o, NP 21 Sp Z.o.o, NP 23 Sp Z.o.o, Nexity Portugal LDA, Nexity P1 LDA, Nexity Portugal NP1 LDA, Nexity Portugal NP2 LDA, Nexity Portugal NP3 LDA • Member of the Supervisory Board of Nexity Polska 303 Spolka Akcyjna, P 7 Spolka Akcyjna Expired appointments • Deputy CEO of Crédit Financier Lillois SA (until 29/04/2019) • Permanent representative of Nexity Logement, Director of Développement Boulogne Seguin • Director of Guy Hoquet l’Immobilier (until 21/05/2019), Weroom (until 11/03/2019) • Legal representative of SIG 30 Participations, Chairman of Bagneux Victor Hugo (until 25/06/2018), Bagneux Briand (until 25/06/2019), Neximmo 33 (until 02/01/2019), Neximmo 36 (until 02/01/2019), Neximmo 46 (until 02/01/2019), Neximmo 52 (until 02/01/2019), Neximmo 62 (until 02/01/2019), Neximmo 67 (until 02/01/2019), Neximmo 84 (until 02/01/2019), Neximmo 89 (until 14/06/2019), Neximmo 98 (until 14/06/2019), NS Saint Jean de La Ruelle (until 24/04/2019) • Legal representative of SARI Investissements, Liquidator of Paris Berthelot (until 15/01/2019) • Legal representative of SARI Investissements, Chairman of Neximmo 5 (until 25/10/2019) • Legal representative of Sari Investissements, Manager of SNC Actilogis Fos Distriport (until 02/01/2019), SNC Mesnil-en-Thelle Logistique (until 26/12/2019), SNC Urban East Jean Zay (until 11/12/2019), SNC Urban East Eden (until 10/12/2019), SNC Urban East Services 1 (until 09/12/2019), SNC Urban East Services 2 (until 09/12/2019), SNC Urban East Guy Blache 2 (until 10/12/2019), SNC du Parc des Chesnes 3 (until 02/01/2019), SNC Urban East Guy Blache 1 (until 10/12/2019), SNC Bègles Fraîcheur (until 09/12/2019), SNC Florides 3 (until 09/12/2019) • Legal representative of SARI Investissements, Co-manager of SCI Parc de Gerland Ilôt N°3 (until 31/12/2018) • Chairman of the Board of Directors and Managing Director: Chantiers Navals de l’Esterel (until 24/09/2018) • Permanent representative of Nexity on the Board of Directors of Ægide SA (until 25/01/2018) • Permanent representative of George V Gestion on the Board of Directors of Ressources et Valorisation (until 14/06/2018) • Legal representative of Nexim 4, Chairman of Canton 1 (until 15/10/2018) • Legal representative of Sari Investissements, Co-manager of SCI Paris-Berthelot (until 29/10/2018) • Director of Weroom Limited (until 20/02/2018) • Sole Director of Nexity Moncalieri Garis SRL, Nexity Torino Tazzoli SRL, Nexity Trentuno SRL (until 31/12/2018)
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Deputy CEO in charge of Commercial VÉRONIQUE BÉDAGUE-HAMILIUS and Local Authority Clients Biography Deputy CEO in charge of Commercial and Local Authority Clients, and Chairman and Chief Executive Officer of Nexity Immobilier d’Entreprise since February 2018. She was previously Company Secretary of Nexity as of April 2017. Véronique Bédague-Hamilius was co-opted to the Board of Directors of EDF in December 2019. She started her career at the Ministry of Finance in 1990. She held various positions at the Budget Department then at the office of the Minister of Economy and Finance. From 1994 to 1997, she worked as an economist for the International Monetary Fund in Washington. She joined the City of Paris as Finance Director in 2002, before being named its Director-General of Services in 2008. She was chief of staff for the French Prime Minister from 2014 to 2016. A graduate of École Nationale d’Administration (ENA), she also holds degrees from Sciences Po Paris and the ESSEC business school.
FRÉDÉRIC VERDAVAINE Deputy CEO in charge of Individual Clients Biography Deputy CEO in charge of Individual Clients and Real Estate Services to Individuals. He began his career in 1993 in the realm of strategy and organisation, first as a consultant in the Quaternaire Group, then as Assistant Director of Human Resources at La Redoute. Before becoming Chairman of Real Estate Services to Individuals and co-Chairman of the Individual Clients Committee, in January 2017, he was a Deputy CEO of Nexity. From 2002 to 2007, he worked for Johnson Diversey, where he served as Deputy CEO with responsibility for France and Vice-President of Human Resources with responsibility for Southern Europe. After a first experience in the real estate sector as Managing Director of GHI, from 2007 to 2011, he served as Managing Director of Nord de France Immobilier (NDFI), operator of the Nord Pas-de-Calais region’s leading real estate agency network. A graduate of the Institut de Haute Finance Internationale, he also holds an undergraduate degree in economics, a master’s in human resource development and an MBA from the advanced business studies centre (CPA) at HEC Paris.
4.1.4.2 Operational Management Committee The Operational Management Committee was created in 2019. This Committee is made up of 24 executives from the Group’s main operational and functional departments, as well as the heads of its main subsidiaries:
EXECUTIVE MANAGEMENT Jean-Philippe Ruggieri Chief Executive Officer Julien Carmona Deputy CEO Véronique Bédague-Hamilius Deputy CEO in charge of Commercial and Local Authority Clients Frédéric Verdavaine Deputy CEO in charge of Individual Clients
FUNCTIONAL DEPARTMENT Fabrice Aubert Group Company Secretary Sophie Audebert Group Human Resource Director Blandine Castarede Communications and Brand Director Eric Lalechère Group CFO Stéphanie Le Coq de Kerland Group Operational Legal Director Alexandra Lenormand Purchasing and Real Estate Director - Risk Management and Control Director Yann Ludmann Digital Innovations and Solutions Director Valérie de Robillard Corporate Social Responsibility Director
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OPERATIONAL DEPARTMENT Jean-Claude Bassien Deputy CEO NSE Edouard Denis Chairman of Edouard Denis group Julien Drouot-Lhermine Chairman of iSelection Cyril Ferrette Vice-Chairman Residential Real Estate Jean-Marie Fournet Chairman and CEO of Groupe Ægide group Christian Dubois Chairman of Nexity Non Profit Regional delegate of the PACA region - Representative of regional delegates Jean-Luc Porcedo Chairman of Villes & Projets Pierre-Henry Pouchelon Company Secretary of Nexity SIP Helen Romano Deputy CEO Residential Real Estate Thierry Smadja Deputy CEO Nexity SIP 4 Benjamin Tancrede Commercial and Marketing Director Residential Real Estate Marie Zaiter Al Houayek Deputy CEO NPM
The purpose of this Committee is to translate the Group’s strategic priorities and monitor major issues and cross-functional projects. It is tasked with supporting organisational changes and facilitating the mobilisation of management and employees, by promoting good practices and the adaptation of systems and procedures to the needs of the various teams. The percentage of women on this Committee is 33.3%.
4.1.4.3 Other governance bodies In addition to the Operational Management Committee, The Club 1797 is made up of Nexity’s main operational and Executive Management is supported in its strategic thinking functional executives. It meets at least twice a year. It is by different committees. informed of changes to the Group and is involved in The Client Committees are comprised of the main defining strategy. executives responsible for the different Group clients. These Nexity has been developing a proactive policy of improving Committees ensure proper coordination, the dissemination women’s access to the governing bodies, and has decided of information within the Group, and roll out the to adopt an indicator relating to the proportion of women in operational implementation of the client-specific strategy. the Club 1797. In 2019, the Club 1797 replaced the previous Club 100.
4.1.4.4 The main advisory bodies The Stakeholder Committee, comprising around 30 people, Lastly, the Curiosity Committee consists of 20 members, all both internal and external stakeholders, meets around key under the age of 40, representing the diversity of the events twice a year. The goal of this Committee is to Group’s business lines, functions and geographical provide input to the Group’s strategic directions and action locations. Its composition is gender-balanced. The role of plans around three areas: the employees on this Committee is to: • Get a good understanding of debates and controversies • Challenge Executive Management’s strategy; concerning the real-estate business with a view to • Bring their vision and experience of today’s society and economic, social and environmental responsibility; the changes taking place, particularly as regards the • Provide information on changes in usage and digital revolution; expectations of operators and users; and • Put forward their own ideas, which may create future • Anticipate underlying trends taking place in society. opportunities for the Group; and The meetings of this Committee have an operational • Promote dialogue and discussions with Group purpose, over and above their contribution to the management. prospective and strategic thinking of the Group’s executives.
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4.1.5 Disclosures relating to the Board of Directors and senior management
To the Company’s knowledge there are no family ties (iv) Have been banned from acting as a member of an linking any members of the Board of Directors to one administrative, management or supervisory body of a another or to main executives. listed company or from being involved in the To the Company’s knowledge, over the last five years, no management or running of a listed company. members of the Board of Directors or current top executives Mr Miguel Sieler, who presented his resignation to the of the Company: Board of Directors on 12 December 2016, was charged with (i) Have been convicted of fraud; misuse of company assets by the Nanterre correctional court on 22 November 2016 for deeds with no direct or (ii) Have been involved in a bankruptcy, sequestration or indirect link to the Company. This judgement has been compulsory liquidation; confirmed in appeal. (iii) Have been charged or been the object of an official public sanction by a statutory or regulatory authority (including designated professional organisations); or
4.1.6 Conflicts of interest involving administrative and management bodies
To the Company’s knowledge, there are no potential The Senior Independent Director reviews all conflicts of conflicts between the private interests of the members of interest, whether discovered independently or having been the Board of Directors and their duties toward the brought to his or her attention by the Board member(s) Company. involved, and reports on them to the Board of Directors. This understanding is based, first of all, on the Company’s Thirdly, at the proposal of the Remuneration, Appointments consistent practice of asking directors once a year to and CSR Committee, the Board of Directors conducts an declare any potential or actual conflicts of interest. If no annual review, on a case-by-case basis, of each director’s such conflicts are identified, they are asked to expressly status with regard to the independence criteria set out in declare that there are no potential conflicts between their the Afep-Medef Code. private interests and their duties to the Company and the Lastly, the Board of Directors has adopted a charter relating members of the Board of Directors. This practice is to the procedure for entering into related-party agreements formalised in the internal rules and regulations. as provided for by Articles L.225-38 et seq. of the French Secondly, in accordance with the internal rules and Commercial Code. This charter was updated on regulations adopted by the Board of Directors, each director 26 March 2020 (see Section 4.3 “Related Party has an obligation to notify the Board of Directors of any Transactions” in this chapter). It is also available on the conflict of interest situation, either potential or future, in Company’s website. which he or she is likely to find himself or herself and must abstain from participating in any discussions or vote on related matters.
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4.2 PREPARATION AND ORGANISATION OF THE BOARD OF DIRECTORS’ WORK
4.2.1 Organisation of the Board of Directors’ work
The Company is a French public limited company (société The internal rules and regulations stipulate that, apart from anonyme) with a Board of Directors. the specific duties attributed to the Board of Directors by At 31 December 2019, the Board of Directors had ten legal and regulatory provisions (the “law”) and the members, including a director representing the employees Company’s Articles of Association, the Board reviews and (pursuant to Article L.225-27-1 of the French Commercial gives prior approval for any significant actions to be Code). undertaken by the Company, and in particular: Directors are appointed for 4-year terms, with the expiry of • The Company’s strategic direction and any actions that 4 terms organised to allow for staggered renewals: fall outside the strategy announced by the Company; and • The terms of office of four directors expire at the end of the Annual Shareholders’ Meeting of 19 May 2020 • Acquisitions or disposals of equity interests or assets in called to approve the financial statements for the material amounts liable to alter the Company’s balance financial year ended 31 December 2019: Mrs Luce sheet structure, including any acquisition or disposal of Gendry, Mrs Magali Smets, Mr Jérôme Grivet and Mr equity interests or assets of an amount greater than or Jean-Pierre Denis. The reappointment of these directors equal to €100 million. will be proposed at the next Shareholders’ Meeting; The Company is also committed to promote creation of • The terms of office of two directors expire at the end of value over the long term while considering the social and the 2021 Annual Shareholders’ Meeting called to environmental implications of its activities. approve the financial statements for the financial year Directors receive all relevant information and documents ending 31 December 2020: Mr Jacques Veyrat and Mrs needed to perform their duties and prepare for Board Soumia Belaidi-Malinbaum; meetings. This transmission takes place via a secure digital • The terms of office of three directors expire at the end platform. The Board of Directors also undertakes controls of the 2023 Annual Shareholders’ Meeting called to and checks as it sees fit, and may obtain copies of any approve the financial statements for the financial year document it deems useful in fulfilling its role. In connection ending 31 December 2022: Mr Alain Dinin, Mrs Agnès with the strategy it outlines, the Board of Directors regularly Nahum and Mr Charles-Henri Filippi; and examines the opportunities and risks such as financial, legal, operational, social or environmental risks, as well as the • Mr Bruno Catelin was appointed, with effect from actions taken as a consequence. For this purpose, it receives 1 January 2017, as the director representing the all the information necessary to carry out its mission. employees by the Works Council of UES Nexity In addition, prior to any meeting, Board members may Promotion Construction for a 4-year term from this request any additional documents that they deem useful. date. Furthermore, each director may, if he or she so wishes, A single Works Council representative participates in Board receive additional training in the particular characteristics meetings, in accordance with the provisions of of the Company and its business lines. Article L.2323-65 of the French Labour Code. Mr Emmanuel Brie was appointed in this capacity on 9 July 2019, Information sessions can be arranged for new directors to replacing Mr Benoît Chuquet, for a period expiring upon the help them gain an understanding of the Nexity group as election of employee representatives in the course of 2023. quickly as possible. This programme includes a review of the Group’s strategy and main businesses; key challenges in Furthermore, the Company’s Articles of Association allow terms of growth, competitiveness and innovation; and also for the Board of Directors to receive assistance from up to finance, research and development, human resource three non-voting Board members. As business leaders with management, legal aspects, compliance and the general recognised expertise, the Board’s non-voting members organisation of operations. It also includes site visits. share their insights and latest thinking on a number of All directors can take part in this programme if they so wish, issues with its voting members. They fulfil an advisory role in accordance with the relevant provisions of the Board’s and their opinions are not binding for the Board of internal rules and regulations. The Board of Directors met Directors. The presence of these non-voting Board members seven times during the financial year ended therefore helps the Board strike a balance between the 31 December 2019. Attendance at Board meetings is number of directors and the diverse range of experiences considered highly satisfactory. that enriches its operations. To date, the only non-voting Board member is Mr Pascal Oddo, whose term of office, renewed at the Annual Shareholders’ Meeting of 22 May 2019, will expire at the end of the Annual Shareholders’ Meeting called to approve the financial statements for the financial year ending 31 December 2021.
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The individual attendance rates at the meetings of the Board of Directors and its various committees are detailed below:
Overall attendance Attendance rate/body/person rate/person Audit and Remuneration, Board of Accounts Appointments and CSR Strategy and Investment Directors Committee Committee Committee (7 meetings) (4 meetings) (5 meetings) (1 meeting) Alain Dinin 100% 100% 100% Luce Gendry 100% 100% 100% 100% Jean-Pierre Denis 100% 100% 100% 100% Charles-Henri Filippi 100% 100% 100% Jérôme Grivet 100% 75% 100% 94% Soumia Belaidi-Malinbaum 100% 100% 100% 100% Agnès Nahum 100% 50% 100% 83% Magali Smets 100% 100% 100% Jacques Veyrat 86% 60% 100% 77% Bruno Catelin 100% 100% 100% TOTAL 99% 88% 90% 100% 95%
In particular, over the course of the financial year, the Board • Decided to undertake a “Green Bond” issue in the form of Directors: of a Euro PP, and to subdelegate to the Chief Executive • Approved the financial statements for the financial year Officer powers to carry out said issue, determine the ended 31 December 2018, the 2019 interim financial terms thereof, and sign any documentation pertaining statements and revenue for the first and third quarters thereto; of 2019; • Decided to adjust the rights of holders of convertible • Amended Nexity’s governance by separating the bonds and sub-delegate to the Chief Executive Officer functions of Chairman of the Board of Directors and the authority to determine the new ratios, to inform the Chief Executive Officer, by appointing a Chairman of the holders of 2016 OCEANE bonds and 2018 ORNANE Board of Directors and a Chief Executive Officer, and by bonds; reappointing the Deputy CEO company officer; • Discussed key plans involving partnerships; • Approved the agenda and convened the Combined • Approved the remuneration of the Chairman of the Shareholders’ Meeting for the purpose of approving the Board of Directors, the Chief Executive Officer and the financial statements for the financial year ended Deputy CEO and apportioned directors’ fees among the 31 December 2018, and reappointing three directors and members of the Board of Directors; one non-voting Board member; • Authorised the signature of regulated agreements; • Assigned new duties to the Chairman of the Board of Authorised the issuance of guarantees; Directors and to the Investment Committee, now the • Strategy and Investment Committee; • Made a decision on free share plans; • Had the opportunity to discuss reports from the • Decided to implement a new share buyback Remunerations, Appointments and CSR Committee on programme; and the Group’s CSR strategy; • Updated the internal rules and regulations and • Discussed gender equality within the Group; discussed the assessment of the Board of Directors’ work. • Reviewed and approved the Group’s 2020 budget in December 2019; Moreover, the Board of Directors is kept informed, using all possible means, of the Company’s financial position and • Regularly reviewed the Group’s financial position and commitments as well as any significant events and changes in its debt, discussed appropriate financing activities concerning the Company. arrangements or the extension and adaptation of existing financing arrangements and reviewed and approved management forecasts;
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4.2.2 Executive Management approach
The choice of approach to Executive Management is The Chairman of the Board of Directors must be under discussed every year as part of the Board of Directors’ 72 years of age. If the Chairman of the Board of Directors annual review. reaches this age limit while in office, he or she will be In order to be better able to meet the Company’s future deemed to have resigned at the end of the next Annual development needs and to allow a better distribution of roles, Ordinary Shareholders’ Meeting. The Board of Directors in 2019 the Board of Directors decided to propose a new determines the Chairman’s remuneration. It may also approach to Executive Management, namely to separate the dismiss the Chairman at any time. functions of the Chairman of the Board of Directors from The Chairman organises and directs the Board’s activities those of the Chief Executive Officer. This change was and reports on them at Shareholders’ Meetings. implemented by the Board of Directors following the The Chairman oversees the proper functioning of the 4 approval by the Shareholders’ Meeting of 22 May 2019 of Company’s corporate bodies and specifically ensures that Mr Alain Dinin as director. the directors are in a position to fulfil their duties. The powers and duties of the Chairman of the Board of The Chief Executive Officer must be under 70 years of age. Directors have been reinforced following the separation of If the Chief Executive Officer reaches this age limit while in the functions of Chairman and Chief Executive Officer. office, he or she will be deemed to have resigned at the end At the same occasion, the Investment Committee was of the next Annual Ordinary Shareholders’ Meeting. The CEO renamed as the Strategy and Investment Committee. is vested with the broadest possible powers to act in all The Chairman is elected by the Board of Directors from circumstances on behalf of the Company. He exercises his amongst its individual members for a duration not powers within the confines of the corporate purpose and exceeding the electee’s term of office. subject to any powers expressly assigned by law to the shareholders or the Board of Directors. He represents the Company in its dealings with third parties. On 22 May 2019, the Board of Directors also reappointed the Deputy Chief Executive Officer as company officer.
4.2.3 Vice-Chairman and Senior Independent Director
The Board of Directors may also, as the case may be, Vice-Chairmen. The Vice-Chairman or Vice-Chairmen report appoint one or more Vice-Chairmen chosen from among on such meetings at the following Board meeting. the independent directors, for a term of office that may not The Board of Directors may appoint a Vice-Chairman as exceed that of their appointment as director. Senior Independent Director for the duration of his or her Mrs Luce Gendry has served in this position since term of office as Vice-Chairman. The Senior Independent 17 February 2015. Director must be independent per the criteria laid down in The Vice-Chairman or Vice-Chairmen may convene Board of the Board’s internal rules and regulations. The duties, Directors meetings should the Chairman be unable to do so. responsibilities, resources and prerogatives of the Senior Independent Director are described in the internal rules and The Vice-Chairman or Vice-Chairmen may request that the regulations of the Board of Directors. In this capacity, he or Chairman convene a meeting of the Board of Directors. she coordinates meetings of independent directors, The Vice-Chairman or Vice-Chairmen may submit a draft supervises the formal assessment of the work of the Board agenda for amendment and/or approval by the Chairman, of Directors and is the point of contact for Board members as the case may be. in the event of a conflict of interest. In the absence of the Chairman of the Board of Directors, On 19 February 2019, the internal rules and regulations the Vice-Chairman or Vice-Chairmen may also chair Board were amended to allow the Vice-Chairman (Vice-Chairmen) meetings. or, as the case may be, the Senior Independent Director to Similarly, the Vice-Chairman or Vice-Chairmen may respond to requests of shareholders who want a direct convene executive sessions. This means the Vice-Chairman dialogue with members of the Board. No such request has or Vice-Chairmen may, at their discretion, convene some or been received during 2019. all of the directors to meetings not attended by executives Independent directors may meet at the initiative of any one or executive company officers. The Vice-Chairman or of them, with such meetings chaired by the Senior Vice-Chairmen must convene at least one such meeting Independent Director. He or she is responsible for gathering each year. The agenda and attendees at such meetings are and passing on to the Board of Directors the opinions and determined at the discretion of the Vice-Chairman or positions of the independent directors.
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4.2.4 Gender balance and diversity of the Board of Directors, the Strategy Committee, the Operational Management Committee and the Club 1797
4.2.4.1 Board of Directors At 31 December 2019, the Board of Directors was The Board of Directors also has a majority of independent composed of four women and six men. Women therefore directors since 2015. The same year, the Company made up 44% of the Board at that date. In accordance with organised a staggering schedule of director terms to allow the Afep-Medef Code, the director representing the for progressive replacement of the Board of Directors. employees is not included when calculating this Following the assessment carried out on 25 February 2020, it percentage. This percentage of directors complies with the has been deemed that the diverse range of professional legal provisions and recommendations of the Afep-Medef experience of the members of the Board of Directors ensures Code since it entered into force. Taking into account the fact that they have the necessary expertise to seize opportunities that the Company’s activity is located primarily in France, and address the risks to which Nexity is exposed. the criteria of nationality was not deemed relevant.
4.2.4.2 Executive Management The Executive Management (previously called the Executive Committee) consists of four members, including one woman, i.e. a 25% rate.
4.2.4.3 Operational Management Committee The Operational Management Committee, created in 2019, Committee. Hence it was deemed appropriate to calculate is made up of 24 members representing the Group’s main the Group’s percentage of women in management positions operational and functional departments. The members of of the Group at this level. The rate was 33.3% at Executive Management are automatically members of this 31 December 2019, with an objective of 40% by 2024.
4.2.4.4 The Club 1797 The Club 1797 (previously the Club 100) is the standard for The percentage of women in the Club 1797 has risen from governing bodies at Nexity and includes those positions 23% in 2016 to 28% in 2017, to 31% in 2018, and then to with the most responsibility referred to in 34% at 31 December 2019. Article L.225-37-4 of the French Commercial Code. In 2020, the gender balance in the Group will be assessed Increasing the number of women in the Club 1797 is one of at the level of the Operational Management Committee. the four goals of the Group’s “Gender Equality and Diversity” policy, with a target rate of 35% by the end of 2020.
4.2.5 Changes in the composition of the Board, Committees and Executive Management occurring during the course of the financial year
Since the separation of the functions of Chairman of the Board of Directors and Chief Executive Officer, and the changes to the remit of the Strategy and Investment Committee (previously the Investment Committee), no change has taken place.
4.2.6 Independent directors
Generally speaking, a director is considered independent 1. Be an employee or executive company officer of the when he or she has no relationship with the Company, Company or any company consolidated by the the Group or management (other than a non-significant Company, or an employee or executive company officer shareholding) that could compromise his or her freedom of of a parent company, i.e. any company that has sole or judgement. The criteria for directors’ independence laid joint control over the Company, or any company down in the Board of Directors’ internal rules and consolidated by such a parent company, and may not regulations are aligned with the following criteria set out in have been such at any time during the previous five the Afep-Medef Code, under which an independent director years; may not:
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2. Be an executive company officer of an entity in which reviews the business relationship taking into account (i) a the Company holds a directorship, whether directly or quantitative criterion of the extent of the relationship and indirectly, or in which an employee designated as such (ii) qualitative criteria such as whether the relationship is or an executive company officer of the Company one of economic dependence, the role played by the (in office at any time during the last five years) serves director in question in the business relationship as a director; (e.g. whether the director has executive responsibilities; 3. Be a client, supplier, commercial banker, advisor, a whether he or she personally receives financial banker with significant investment in the Company or compensation, and if so, how much; whether he or she has one for which the Company represents a significant decision-making powers over the contract(s) on which the part of its business; business relationship is based; whether he or she is involved in managing the relationship on a day-to-day 4. Be a close relative of a company officer; basis), as well as the duration and current length of the 5. Have been an auditor of the Company at any time business relationship (in particular whether the business 4 during the last five years; or relationship predated the appointment of the director in question). 6. Have been a member of the Company’s Board of Directors for more than twelve years at the start of his Moreover, the Board may consider that, although a director or her current term of office. A director is no longer meets the above independence criteria, he or she cannot be considered independent after twelve years. qualified as independent in view of his or her particular situation or that of the Company, considering his or her When a business relationship exists, the Board of Directors shareholding (in particular if said director or his or her assesses on a case-by-case basis whether or not the group owns 5% or more of the Company’s share capital) relationship between the director in question and the or for any other reason. Company or Group is significant. The Board of Directors The following table presents an overview of each director’s position with regard to the independence criteria numbered from 1 to 6 above.
Independence criterion number 1 2 3 4 5 6 Alain Dinin •••• Luce Gendry •••••• Jean-Pierre Denis •• ••• Charles-Henri Filippi •••••• Jérôme Grivet •• ••• Soumia Belaidi-Malinbaum •••••• Agnès Nahum •••••• Magali Smets •••••• Jacques Veyrat •• ••• Bruno Catelin •••••
The Board of Directors assesses directors’ independence The Board of Directors further concluded that the following annually after consulting the Remuneration, Appointments five directors could be considered independent: and CSR Committee. Mrs Luce Gendry, Mrs Soumia Belaidi-Malinbaum, At its meeting held on 13 February 2020, the Mrs Agnès Nahum, Mrs Magali Smets and Mr Charles-Henri Filippi. The percentage of independent Remuneration, Appointments and CSR Committee 1 discussed the criteria for independence of the members of directors on the Board of Directors is thus 56% . On the the Board of Directors. The Committee analysed each basis of the criteria presented above, the Board of Directors director’s circumstances in light of these criteria, noted that none of the independent directors had any particularly the materiality of any business relationships material business relationships with the Company or the that they may have with the Company. Group. Furthermore, all of the above directors declared that they had not identified any conflicts of interest between their activities and their duties to the Company and/or any of its other directors.
1 Percentage determined in accordance with the Afep-Medef Code, which stipulates that directors representing the employees should not be included in the calculation.
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4.2.7 Specialised committees of the Board of Directors
The internal rules and regulations of the Board allow it to The Committees are responsible for studying matters that set up one or more permanent or temporary committees to the Board of Directors or its Chairman may submit to them, facilitate the Board’s work and contribute effectively to its analysing and preparing the Board of Directors’ work decision-making process. concerning these matters, and reporting their findings to The Board of Directors has formed three Committees: the Board of Directors in the form of summaries, proposals, the Audit and Accounts Committee; the Strategy and information or recommendations. Investment Committee (called Investment Committee until The Committees may commission external technical 22 May 2019); and the Remuneration, Appointments and reviews on matters falling within their respective remits, at CSR Committee. the Company’s expense, after informing the Chairman of the Board of Directors or the Board of Directors itself and subject to reporting progress to the Board. The Committees have a strictly advisory role.
Audit and Accounts Committee At 31 December 2019, the Audit and Accounts Committee • To review the scope of consolidation and, as the case consisted of six directors appointed by the Board of may be, the reasons for which companies may fall Directors, none of whom is an executive company officer. outside it; In 2019, membership was as follows: Mrs Luce Gendry To review all financial and accounting matters; and (Chairman), Mrs Magali Smets, Mrs Agnès Nahum, • Mrs Soumia Belaidi-Malinbaum, Mr Jérôme Grivet and • To present to the Board of Directors any finance- or Mr Jean-Pierre Denis. accounting-related observations it considers worthwhile. The Audit and Accounts Committee performs the Audit Committee functions described under Article L.823-19 of Concerning external audits the French Commercial Code. The Committee’s duty in • To submit recommendations to the Board of Directors terms of managing risks consists particularly in ensuring on the selection of the Statutory Auditors (audit firms that there is an established system to prevent and detect and networks); corruption and influence peddling. The Committee may call on external experts if it so wishes. The Statutory Auditors • To analyse and give an opinion on the nature of their are invited to all the Committee’s meetings. Its main duties duties, fees, scope and timetable of activities, in accordance with or addition to those established by law recommendations and action taken; are as follows: • To approve, in accordance with the provisions of Article L.822-11-2 of the French Commercial Code, the Concerning the parent company and consolidated services provided by the Statutory Auditors or their financial statements and internal control networks other than the auditing of financial • To review the interim and annual parent company and statements and other mandatory duties of the Statutory consolidated financial statements, including notes, Auditors pursuant to applicable regulations to ensure as well as the management report where applicable, that these do not include any prohibited services, and, and to render an opinion; as part of this duty, delegate authority to the executive • To ensure that the regulatory accounting practices used company officers each year to order and approve the in preparing the parent company and consolidated budget, assignments authorised by the Committee as financial statements are appropriate and properly part of the services provided by the Statutory Auditors applied; or their network; and • To verify the accounting treatment of significant • To review all finance- and accounting-related matters transactions; submitted by the Chairman of the Board of Directors, as well as any matters concerning independence or • To review significant off balance sheet commitments; conflicts of interest that might be brought to its • To ensure that the Group has in place internal attention. procedures for collecting and controlling financial and accounting information that ensure the quality and reliability of the Group’s accounts, internal and external audits, and management’s responses;
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Concerning financial disclosures • To review draft financial press releases (interim and The Committee regularly monitored : annual financial statements, quarterly updates on • The progress of the work conducted by the Enterprise revenue and business activity). Risk Management Department; At its meeting of 25 February 2020, the Board of Directors • The deployment of internal control procedures within noted that all of the Committee’s members had expertise the Group and the state of progress of action plans in finance or accounting and that Mrs Luce Gendry, concerning compliance and ethics (fight against money Mrs Soumia Belaidi-Malinbaum, Mrs Agnès Nahum and laundering and financing of terrorism, Sapin 2, duty of Mrs Magali Smets meet the criteria for independence set care); out in the Afep-Medef Code. As such, two-thirds of the Committee’s members are independent directors. • The conclusions of various internal audits completed during the financial year as well as follow-up to 4 Biographies of the Committee members are presented in recommendations; Section 4.1.2 of this chapter. • A specific report was prepared on the fees and duties of The Committee may request any and all accounting or the Statutory Auditors within the framework of the financial documents it deems necessary to carry out its delegation given to the company officers; and duties. • The update of the risk map, changes to IFRS standards, The Audit and Accounts Committee met four times in 2019 the arrangement of new financing, the update of the in the presence of the Deputy Chief Executive Officer in establishment of procedures related to application of charge of Internal Clients, the Group Chief Financial Officer, the General Data Protection Regulation (GDPR) were the Head of Budget and Consolidation, the Head of Risk also specific issues addressed. The Committee also met Management and Control, and the Head of Internal Audit. once with the Statutory Auditors with executive The Statutory Auditors attended all of the meetings. management not in attendance. The Audit and Accounts Committee notably reviewed the parent company financial statements for the year ended 31 December 2018, the interim financial statements to 30 June 2019, and revenue for the first and third quarters of 2019.
Remuneration, Appointments and CSR Committee The Remuneration, Appointments and CSR Committee • Propose to the Board of Directors the total amount of consists of four members appointed by the Board of directors’ fees to be put to the vote at the Company’s Directors. Its members are Mr Charles-Henri Filippi Shareholders’ Meeting; (Chairman), Mr Jacques Veyrat, Mr Bruno Catelin and • Propose to the Board of Directors rules for allocating Mrs Soumia Belaidi-Malinbaum. The majority of the directors’ fees and the corresponding individual Committee’s members are therefore independent directors. amounts to be paid to the directors, taking into account The Remuneration, Appointments and CSR Committee has directors’ attendance at Board and Committee as its task to: meetings; As the Remunerations Committee • Offer the Board of Directors its opinion on the general policy for awarding share subscription and/or purchase • Review and submit proposals on remuneration paid to options and/or free shares, as well as any share option company officers and members of the Executive or free share award plans put forward by the Group’s Management non-company officers, in the presence of Executive Management in light of applicable rules and the Chairman of the Board, particularly as regards recommendations; inform the Board of Directors of its (i) variable remuneration, by proposing rules to the proposals regarding share purchase or subscription Board of Directors on the determination of variable options or free share awards, including the reasons for remuneration based on company officers’ performance and consequences of this proposal; and during the financial year under review, and the Company’s and Group’s medium-term strategy, and • Review all matters submitted to it by the Chairman of monitoring compliance with those rules; and the Board of Directors pertaining to the above matters (ii) benefits in kind, share subscription and purchase or to increases in the share capital reserved for options and free share awards received from all Group employees. companies, as well as provisions for retirement and any other benefits;
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As the Appointments Committee • Selection of new directors: the Committee is tasked the reappointment of the Deputy CEO, the remuneration of with making proposals to the Board of Directors after company officers, establishment of free share award plans, reviewing in particular the Board’s membership in light and the vesting period for such shares, as well as directors’ of the composition of and changes in share ownership fees and reappointment of the non-voting Board member. as well as gender equality, finding and evaluating The Committee also examined the Group’s strategy and potential candidates, and assessing the appropriateness CSR report, the structure of remuneration of the Group’s top of reappointments; and managers, the main provisions of the PACTE bill, changes in • Succession planning for executive company officers: the Afep-Medef Code and their potential impact on under the Company’s risk prevention policy, the governance, as well as the Group’s gender equity policy. Committee must prepare a succession plan to ensure The Remuneration, Appointments and CSR Committee that it is in a position to propose succession options to presented to the Board of Directors, which approved them, the Board of Directors in the event of an unforeseen the remuneration principles for Nexity’s executive company vacancy. This plan is described in the internal rules and officers: allocation to the Chairman of the Board of regulations of the Board of Directors. This plan was Directors, as from the above separation of functions, a fixed reviewed again in 2019 and was amended to take into remuneration; allocation to the Chief Executive Officer and account the change in the Company’s governance to the Deputy CEO, a fixed remuneration and an annual following the separation of the functions of Chairman of variable remuneration entirely based on the achievement of the Board of Directors and Chief Executive Officer. One common quantitative targets in terms of EBITDA and CSR, of the changes made was to provide for the presence of as well as individual quantitative and qualitative targets, as the Chairman of the Board of Directors in the procedure. well as a deferred variable remuneration based on the When acting in its capacity as Appointments Committee, achievement of a multi-year current operating profit, an the Chairman of the Board of Directors is involved in its annual current operating profit and backlog and debt work. targets. The Remuneration, Appointments and CSR Committee also As the CSR Committee examined the plan to update the internal rules and • Review the Group’s CSR strategy at least once a year; regulations, the report on gender equality and the inclusion and charter. • Provide the Board of Directors with an opinion on In more general terms, the Committee reviewed the non-financial CSR-related matters to be included in the composition of the Board of Directors, that of its various management report, as provided for in committees, and the appointment of these committees’ Article L.225-102-1 of the French Commercial Code. members, and made its recommendations to the Board of The Remuneration, Appointments and CSR Committee met Directors. five times in 2019, and considered the independence of Detail of the remuneration and benefits paid to the directors, the separation of the functions of Chairman of the executive company officers is shown in Section 4.4 Board of Directors and Chief Executive Officer, the “Remuneration and benefits for the executive company appointment of the Chairman and of the CEO, officers” of this chapter.
Strategy and Investment Committee Since 22 May 2019, the Investment Committee, renamed These members are: Mr Alain Dinin (Chairman), Strategy and Investment Committee, has been given new Mrs Luce Gendry, Mrs Agnès Nahum, Mr Jean-Pierre Denis, powers and duties following the adoption of the Company’s Mr Jérôme Grivet, Mr Jacques Veyrat. new governance due to the separation of the functions of The Strategy and Investment Committee is tasked with Chairman of the Board of Directors and that of Chief giving an opinion on the essential components of the Executive Officer. At 31 December 2019, it consisted of six Company’s and the Group’s strategy, in particular the members appointed by the Board of Directors, including the medium-term plan and the image and communication Chairman of the Board. The CEO and Deputy CEO company policy directions. It can also examine and give its opinion officer also attend meetings of the Committee. on the market conditions and outlook and the annual budget and its updates.
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It can also look into all transactions consisting in (i) an The Chairman and the Committee must be consulted acquisition or investment or a disposal of shares in all types regarding the appointment and remuneration of the of companies involving more than €10 million of executive company officers of the main subsidiaries of the investment or divestment or (ii) a real estate transaction or Company and of persons holding key functions during a a real estate project of more than €10 million in property or financial year, in the Company or the Group. asset value. The Strategy and Investment Committee meets as many The Committee delegates to its Chairman the approval of times as it deems necessary prior to any commitment by the investment and transaction proposals referred to in the Company requiring the opinion of the Committee. (i) and (ii) above, which are of a value of €10 million to The Strategy Committee meets on an exceptional basis for €70 million. The investments or transactions referred to in the review of the medium-term strategic directions and, (i) and (ii) above of a value of more than €100 million for this purpose, its composition may be extended to require a meeting to be called and a formal include other directors. 4 recommendation from the Committee for authorisation by The Strategy and Investment Committee met on the Board. 18 December 2019. The meeting concerned the review of Any banking or bond financing of an amount in excess of the extension of a bond and an acquisition opportunity. €200 million must be submitted to the Committee.
4.2.8 Non-voting Board members
The Board of Directors is assisted in its work by a who are under no obligation to heed their opinions or non-voting Board member, Mr Pascal Oddo. recommendations. Non-voting Board members are bound Non-voting Board members may be either natural or legal by the same confidentiality obligations as voting directors persons and need not be shareholders. Non-voting Board and may be dismissed at any time by vote at an Ordinary members attend Board meetings but cannot vote in Shareholders’ Meeting. decisions. They serve as general advisors to the directors, 4.2.9 Assessment of the Board’s operating procedures
The Board of Directors’ internal rules and regulations an independent role. The Board oversees the Company’s stipulate that once a year the Board shall devote an item on financial performance and strategy, as well as the the agenda to a discussion of its operating procedures, with related risks, effectively. The Board ensures that the the aim of making them more efficient. As such, the Board remuneration of executive company officers is of Directors undergoes an annual self-assessment exercise consistent and in line with the Company’s performance; under the supervision of the Senior Independent Director. • On the structure and composition of the Board of The internal rules and regulations also require that a formal Directors: the size and composition of the Board is assessment be conducted once every three years, where deemed adequate, in particular the number of applicable with the assistance of an outside consultant. independent directors. The directors believe they have The last assessment by such as an external consultant was the necessary experience and skills to carry out their carried out in 2018 in respect of the 2017 financial year. duties. They state that they are satisfied with the The assessment for 2019 was carried out, as in the previous process for selecting new members that they propose to year, through a questionnaire during the month of enhance. Directors believe that the meeting agendas January 2020. prepared by the Chairman of the Board are consistent with the Company's strategy and relate to issues that During the meeting of 6 April 2020, the Senior Independent are crucial to the Company. Directors are satisfied with Director presented the assessment report on the Board’s the discussions and believe that they have free rein to work, after having reviewed it in executive session the same express their views and to participate in day. The result was an overall positive appreciation, notably decision-making; on the following points: • On Committees of the Board of Directors: the • On the role and duties of the Board of Directors: composition of the different committees takes into directors have a complete understanding of their role account the expertise of each director. Their role on and responsibilities and believe that the Board has each of the Committees is well balanced with that of established an effective policy for resolving any the Board. Thus, the Committees perform their conflicts of interest. They believe that the Board plays respective duties efficiently;
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• On the operation of the Board of Directors: challenges facing the Company’s business. Directors the frequency and the duration of meetings are deemed also believe that the Board has done good work on satisfactory. Directors encourage a strategic seminar issues relating to governance and in particular has meeting at least once annually. Directors believe they effectively led a review on the remuneration of are sufficiently informed about the trends in the sector executive company officers. The adoption of the and the dynamics of the market and are able to decide Company’s new governance (separation of the positions on all questions relating to the Group's strategy and of Chairman of the Board of Directors and that of Chief challenges. Directors believe that issues pertaining to its Executive Officer) was conducted smoothly and the social and environmental responsibility are in line with Board was able to focus on the development of the the Company's development and strategy. Directors Group's strategy. The Board also oversees the particularly appreciate that the Chairman of the Board implementation of a non-discrimination policy within of Directors draws on the expertise and experience of the Company. Directors are satisfied with the Board's the Board. This way of working by the Board enables treatment of issues relating to risk management and each director to make an effective contribution and prevention, ethics and compliance, and have proposed properly distribute the Board's duties within the Board some changes in this regard. itself and within the different Board committees; • Changes: Directors have noted the need to • On the dynamics of the Board of Directors: systematically take into account CSR issues and risk the directors believe there is a positive dynamic within management and prevention, particularly compliance. the Board. They believe they are free to discuss all They have also noted the need in 2020 to continue to challenges and the actions to be taken, and to have free discuss issues relating to value creation. They expressed rein to express their opinion and implement projects their wish to work on a new process for 2020 to identify adequately. Cooperation with the Board, the Chairman and select new Directors. The Remuneration, and the management team is deemed satisfactory; Appointments and CSR Committee will work on this, so • On the commitment of the Board and value creation that the Board of Directors can focus on developing over the long term: directors believe it is essential for talent and identifying future executives within the the Board to demonstrate effectiveness in managing all Group. Finally, Directors stated that they wished to be skills, particularly in regard to strategy, performance, informed of the outcome of any Stakeholder Committee and consideration for the societal and environmental discussions. 4.2.10 Compliance with the Afep-Medef Code
During the financial year ended 31 December 2019, • The CEO and the Deputy CEO will not benefit from exceptions, already mentioned in the 2018 Registration severance benefits. Document, were identified. Moreover, the remuneration of Mr Alain Dinin in respect of Following the appointments of Mr Jean-Philippe Ruggieri as the 2019 financial year is exclusively comprised of a Chief Executive Officer and Mr Julien Carmona as Deputy flat-rate fixed portion to take into account of the absence of CEO, the Company had decided to simply suspend the work executive functions from 22 May 2019. This principle may contract of Mr Jean-Philippe Ruggieri, which is not in be considered as non-compliant with the Afep-Medef Code. compliance with the Afep-Medef Code, for the following However, it was considered difficult to find relevant reasons: elements on which to base part of his remuneration from • The appointments of the CEO and the Deputy CEO are 1 January 2019 to 22 May 2019 in the annual objectives. part of the gradual implementation of a succession plan, which is not definitively approved to date; and
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4.3 RELATED-PARTY TRANSACTIONS
The reports relating to the 2017, 2018 and 2019 financial Regulated agreements are presented in Section 4.3.1 years are incorporated by reference. "Statutory Auditors’ special report on regulated Note 35 in Section 5.3 “Consolidated financial statements agreements" of this chapter. at 31 December 2019” of this Universal Registration There is no other significant transaction with related parties. Document details related party information.
4.3.1 Statutory Auditors’ special report on regulated agreements
This is a free translation into English of the Statutory Auditors' report issued in French and is provided solely for the 4 convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France. Shareholders’ Meeting held to approve the Financial Statements for the year ended 31 December 2019 To the shareholders of Nexity, As Statutory Auditors of your Company, we hereby present our report on regulated agreements. It is our responsibility to inform you, on the basis of the information provided to us, of the terms and conditions, the purpose and benefits to the Company of the agreements and commitments brought to our attention or which we encountered during our engagement. It is not our role to determine whether they are beneficial or appropriate or to ascertain whether any other agreements and commitments exist. It is your responsibility, under the terms of Article R. 225-31 of the French Commercial Code, to assess the merit of these agreements with a view to approving them. It is also our responsibility to provide you, where appropriate, with the information required by Article R. 225-31 of the French Commercial Code relating to the execution, during the financial year ended, of the agreements already approved at the Shareholders’ Meeting. We conducted the work we deemed necessary in accordance with the professional standards issued by the French national institute of statutory auditors (CNCC) relating to this engagement. Our work entailed verifying that the information provided was consistent with the documents from which it was derived.
1 AGREEMENTS SUBMITTED FOR APPROVAL AT THE ANNUAL GENERAL MEETING Pursuant to Article L.225-40 of the French Commercial Code, we have been informed of the following agreements entered into during the financial year ended, which were previously approved by the Board of Directors: 1.1 Tax consolidation agreement Persons concerned:
COMPANY Alain Dinin Jean-Philippe Ruggieri Julien Carmona In his capacity as: In his capacity as: In his capacity as: Nexity Chairman and Chief Executive Officer Managing Director Deputy CEO Deputy CEO Chairman of the Board of Directors (until 29/04/2019) Crédit Financier Lillois Director and Director (until 29/04/2019) Director and Chairman of the Board of Directors
Terms and conditions: At its meeting on 25 April 2019, the Board of Directors approved a tax consolidation agreement with Crédit Financier Lillois (C.F.L). This agreement includes a clause specifying that if a subsidiary leaves the tax consolidation group, for any reason whatsoever, there can be no claim on the parent company. 1.2 Service and brand licensing agreements Persons concerned:
COMPANY Alain Dinin Jean-Philippe Ruggieri Julien Carmona In his capacity as: In his capacity as: In his capacity as: Nexity Chairman of the Board of Directors Managing Director Deputy CEO Ægide Director Director Director Bureaux à partager Member of the Supervisory Board Chairman and member New Port Member of the Supervisory Board of the Supervisory Board
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Terms and conditions: At its meeting on 23 July 2019, the Board of Directors approved a service agreement for the administrative and financial management of New Port, the investment vehicle bringing together the main managers of Nexity, its subsidiaries, and financial investors, and which holds a 8.06% stake in Nexity. The amount due for this service at 31 December 2019 was €20k excluding tax. The payment due for the following years will be set at the start of each year in a contract rider. At its meeting on 18 December 2019, the Board of Directors approved the continuation in 2020 of the service agreements with the companies: (i) Ægide: the amount due will increase from €260k to €300k, excluding tax. (ii) Bureaux à partager: the amount due will be €150k, excluding tax. (iii) New Port: the amount due is unchanged at €20k, excluding tax.
2. AGREEMENTS ALREADY APPROVED AT THE SHAREHOLDERS’ MEETING We hereby inform you that we have not been advised of any agreement already approved at the Shareholders' Meeting which continued during the financial year.
Paris-La Défense, 6 April 2020 The Statutory Auditors
KPMG Audit IS MAZARS Francois Plat Olivier Thireau Michel Barbet-Massin Partner Partner Partner
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4.3.2 Internal charter of Nexity Group on regulated and non-regulated agreements
On 26 March 2020, the Board of Directors also updated the setting out the procedure to review the said agreements. charter on regulated agreements, changing the name to This charter is also available on the Company’s website. “Charter on regulated and non-regulated agreements” and INTRODUCTION This charter (the “Charter”), adopted on 17 February 2015, The purpose of the Charter is to specify the application of was updated by the Company's Board of Directors at its the principles applicable to regulated and non-regulated meeting of 26 March 2020. It was prepared pursuant to agreements, for the Company and for the Group. Thus, AMF recommendation 2012-05 of 2 July 2012 amended on the main companies concerned in the Group are: French 5 October 2018 (the “AMF Recommendation”), the study by public limited companies (sociétés anonymes) (Articles 4 the French national institute of statutory auditors (CNCC) of L 225-38 et seq. and L 225-86 et seq. of the French February 2014 on “Regulated and non-regulated Commercial Code), simplified joint stock companies agreements” (the “CNCC study”) and Law No 2019-486 of (SAS - sociétés par actions simplifiée) (Article L.227-10 et 22 May 2019 on the growth and transformation of seq. of the French Commercial Code), and limited liability companies, and Order 2019-1234 of 27 November 2019 on companies (SARL - sociétés à responsabilité limitée) the remuneration of company officers of listed companies. (Article L 223-19 et seq. of the French Commercial Code). The Charter may be updated, if necessary, to take into account any amendments to legislation or regulations.
A - Unrestricted agreements Not all agreements are subject to the rules governing regulated agreements. 1 Current transactions carried out 2 Intragroup agreements considered under normal terms and conditions as unrestricted in Nexity Group 1.1. Current transactions Based on the above principles, the following agreements Current transactions are those usually carried out by a are considered as non-regulated and entered into under company as part of its activities: normal terms and conditions within Nexity Group. This is not however an exhaustive list. • Relating to its ordinary course of business; • Or subject to contracts comparable to those entered 2.1. Usual business transactions into by any other operator in the same situation. These agreements relate to the Group's activity in the real To assess whether transactions are of a current nature in estate and services sector. the Group and whether their terms and conditions are Their subject matter relates to the construction of buildings normal, the Group relies on case law and on the CNCC (CPI, VEFA, etc.) or all other ancillary agreements which are Study. It can nevertheless adopt a more stringent position usual for this type of transaction. based on the opinion of the Finance Department and the Legal Department. 2.2. Other current transactions in a group of companies 1.2. Carried out under normal terms The purposes of these agreements are: and conditions Current financial transactions: shareholder current To determine whether these terms and conditions are • account advance agreements, cash management normal, consideration is given to the terms and conditions agreements; under which the relevant agreements are usually entered into in the relevant activity sector. According to a reply from • Bank financing agreements entered into with bank the Minister for Justice, transactions carried out under consortiums, of which only some would have common normal terms and conditions are those carried out by a executives or shareholding ties with the Company; company “under the same terms and conditions as those it • Agreements for services rendered by one company to usually applies in its dealings with third parties”. other companies as part of the provision of premises or The current nature and normal terms and conditions of staff; and transactions are considered as a whole and are not • Agreements for the provision and maintenance of office mutually exclusive. Otherwise, the agreement must be equipment and software. considered as subject to the regulated agreement procedure.
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These agreements set out balanced considerations for the 3 Agreements between a parent company contracting companies. Their terms and conditions are and a wholly-owned subsidiary therefore presumed to be normal. Failing that, they will be The main change brought about by Order 2014-863 of submitted to the Board of Directors of Nexity or of the 31 July 2014, as regards regulated agreements, consisted in relevant entity for approval and/or submitted for the excluding from the scope of the regulated agreement approval of shareholders in accordance with the procedure procedure, those agreements entered into between a set out in C below. French public limited company or a partnership limited by The Board of Directors ensures through regular reporting shares and one of its subsidiaries, of which it holds directly that these points are reviewed by all Commitment or indirectly 100% of voting rights. Committees of the Group. To take account of the need to have more than one partner The Legal and Finance Departments ensure that these in certain corporate forms, the regulations take into account agreements comply with the established frameworks so the fact that a number of units or shares must be held by a that they maintain their non-regulated nature. They also third-party other than the parent company. review the normal terms and conditions of these This condition is interpreted restrictively. As things stand, agreements. If these agreements are not of a current nature this exemption does not apply to either a SASU (French and their terms and conditions are not normal, they must simplified joint-stock company with sole shareholder) or an be submitted to the Board of Directors for prior EURL (French single-member private limited liability authorisation. company). The agreement will therefore be deemed to be unrestricted for a SA (French public limited company) but regulated for a SASU or an EURL.
B - Agreement subject to a special authorisation procedure Certain agreements are also not subject to the regulated • Mergers and related transactions (demergers and agreement procedure because they are subject to specific contributions of assets subject to the regime applicable procedures that aim to protect the interests of to demergers); shareholders. • Purchase of an asset belonging to a shareholder; These are primarily agreements concerning the following • Directors’ fees and remunerations in respect of their transactions: terms of office as Chairman of the Board of Directors, Chief Executive Officer and Deputy CEOs which fall under the specific competence of the Board of Directors.
C - Agreements which are “regulated” 1 Notion of regulated agreement 2.2. Agreements entered into between a company Any agreement that does not meet the criteria set out and a firm having common executives above and entered into, directly or indirectly or through an Agreements entered into by a Company and another firm if intermediary, between the Company and one of the persons the CEO, one of the Deputy CEOs or one of the Directors of mentioned in 2. hereinafter is “regulated”. the Company is the owner, partner with unlimited liability, manager, director, member of the Supervisory Board or, 2 Persons concerned generally, an executive of the contracting company or firm. This covers the following agreements entered into between the Company and the following persons: 2.3. The notion of indirectly interested person Article L 225-38 of the French Commercial Code applicable 2.1. Agreements entered into between the to public limited companies refer to agreements between Company and an executive or a shareholder: the Company and a third party of which the executive or These executives or shareholders are: shareholder is not personally a party but is an indirectly interested person. • In a French public limited company (société anonyme): Directors, (individuals, legal entities or their On this point, the Company refers to the definition used in representatives), members of the Management Board the AMF Recommendation (proposal No 22 in AMF and the Supervisory Board, the Managing Director, recommendation 2012-05): “A person not party to an Deputy CEOs, a shareholder, individual or legal entity, agreement is considered to be indirectly interested in that holding more than 10% of voting rights; agreement if, by virtue of his or her links to the parties and of his or her powers to influence their conduct, he or she • In a private limited company (SARL): the manager(s) or derives a benefit from it”. partner(s); and • In a simplified joint stock company (SAS): the Chairperson, Managing Director, Deputy CEO or the other executives.
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3 Procedure • Be covered by a Statutory Auditors' report; A so-called regulated agreement must: • Be subject, in compliance with the applicable legal • Obtain the prior authorisation of the Board of Directors conditions, to the approval of partners or shareholders or the Supervisory Board and the authorisation must be at the same time as the Statutory Auditors’ report. The justified for a listed company (justification of the benefit partners or shareholders concerned must refrain from to the Company of the agreement). The Director(s) voting; and concerned do not then take part in the vote or the • Be subject of publicity measures stipulated by the discussions of the Board; regulations.
4.4 REMUNERATION AND BENEFITS FOR THE EXECUTIVE COMPANY OFFICERS 4 In determining and presenting the remuneration of Nexity’s 19 May 2020 will also be asked to approve the fixed, executive company officers, the Company applies the variable and exceptional components of the total Afep-Medef Code (available on the web site www.medef.fr). remuneration and benefits of any kind paid in the 2019 Any decision regarding the remuneration of the executive financial year or awarded in respect of the same financial company officers in respect of their appointments must year to the Chairman of the Board of Directors, the Chief comply with the say on pay procedure of the Sapin 2 Act, as Executive Officer and the Deputy CEO. amended by Order No. 2019-1234 of 27 November 2019. Pursuant to Article L.225-37-2 of the French Commercial Pursuant to Article L.225-37-3 I of the French Commercial Code, the remuneration policy applicable to the company Code, a certain number of disclosures relating to the officers for the 2020 financial year, determined by the remuneration of the company officers are presented in Board of Directors and approved at its meeting of Section 4.4.1 of this Universal Registration Document. 6 April 2020 is presented in Section 4.4.2 of this Universal In accordance with Article L.225-100 II of the French Registration Document. The remuneration policies Commercial Code, the Shareholders’ Meeting of applicable, respectively, to the members of the Board of 19 May 2020 will be asked to approve, under the ex post Directors, the Chairman of the Board of Directors, the Chief “say on pay”, a draft resolution on the disclosures thus Executive Officer and the Deputy CEO for the 2020 financial presented, mentioned in Article L.225-37-3 I of the same year will be subject to the approval of the Shareholders’ code. Under the ex post “say on pay” principle, and in Meeting of 19 May 2020 in accordance with accordance with Article L.225-100 III of the French Article L.225-37-2 II of the French Commercial Code under Commercial Code, the Shareholders’ Meeting of the ex ante “say on pay”. 4.4.1 Remuneration of Nexity’s company officers in respect of the 2019 financial year
4.4.1.1 Remuneration paid or to be paid to Mr Alain Dinin, Chairman of the Board of Directors Mr Alain Dinin’s remuneration in respect of the 2019 Resolution 10 of the Shareholders’ Meeting of 22 May 2019 financial year was made up exclusively of a flat-rate fixed on the components of remuneration payable or awarded in portion taking into account the absence of executive respect of the 2018 financial year to Mr Alain Dinin, functions from 22 May 2019 onward, in accordance with Chairman and Chief Executive Officer in that financial year, the decision of the Board of Directors, following the was approved by 98.03%. However, Resolution 11 of the proposal of the Remuneration, Appointments and CSR Shareholders’ Meeting of 22 May 2019 on the principles Committee. It has in fact been deemed difficult to find and criteria used to determine, apportion and award the relevant factors to base a component of his remuneration fixed, variable and exceptional components of the total from 1 January 2019 to 22 May 2019 on annual targets. remuneration and benefits of any kind attributable to Mr Alain Dinin has indicated that he waives all specific Mr Alain Dinin for the 2019 financial year (ex ante vote) end-of-service benefits should his term as a company was approved by 79.31%, a percentage falling short of the officer come to an end. minimum required by certain proxy advisers. The Board of Directors, following a proposal of the Remuneration, These items are set out in the summary tables below. Appointments and CSR Committee, took account of this when determining the remuneration principles for the 2020 financial year (see Section 4.4.2.2 “Remuneration policy applicable to the Chairman of the Board of Directors”).
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Mr Alain Dinin – Chairman of the Board of Directors – Fixed, variable and exceptional components of the total remuneration and benefits of any kind awarded for or paid in the financial year
Amount or accounting Mr Alain DININ – Ex post vote valuation for the 2019 Description financial year Fixed remuneration €2,000,000 Comprehensive, flat-rate amount awarded in financial year 2019 and paid in full during financial year 2019
Annual variable remuneration None No annual variable remuneration
Deferred variable remuneration None No deferred variable remuneration
Multi-year variable remuneration None No multi-year variable remuneration
Exceptional remuneration None No exceptional remuneration
Stock options, performance shares or other None Waiver since 2006 long-term components of remuneration
Remuneration as a Director None Waiver since 2013
Valuation of benefits of any kind €1,363/month Company car
Supplementary pension scheme None Absence of supplementary pension plan
Non-competition indemnity and severance None Waiver from 2019 benefits
The breakdown of the remuneration awarded to Mr Alain Dinin in respect of the 2018 and 2019 financial years, or paid in those financial years, is as follows:
Financial year 2019 (1) Financial year 2018 (1) Mr Alain DININ (in euros) Amount awarded (2) Amount paid (3) Amount awarded (2) Amount paid (3) Remuneration for company officer duties Fixed remuneration 2,000,000 2,000,000 650,000 650,000 Annual variable remuneration None 1,397,500 1,397,500 1,384,500 Multi-year variable remuneration None 2,218,287 2,218,287 None Total remuneration 2,000,000 5,615,787 4,265,787 2,034,500 Remuneration as a Director Nexity None None None None Other controlled companies None None None None Total remuneration as a Director 0 0 0 0 Other remuneration Benefits in kind (vehicle, accommodation, etc.) 16,356 16,356 None None Value of options awarded during the financial year None None None None Value of free shares awarded during the financial year None None None None TOTAL 2,016,356 5,632,143 4,265,787 2,034,500
(1) Amounts due or paid by Nexity or the companies it controls as per Article L.233-16 of the French Commercial Code. (2) Remuneration awarded during the financial year to the executive company officer in respect of his or her duties, regardless of the date of payment. (3) Total remuneration actually paid during the financial year to the executive company officer in respect of his or her duties.
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4.4.1.2 Remuneration of Mr Jean-Philippe Ruggieri, Chief Executive Officer The remuneration of Mr Jean-Philippe Ruggieri, in respect of French Commercial Code at the Shareholders’ Meeting of the 2019 financial year was determined by the Board of 22 May 2019. Such a vote could not therefore be taken into Directors, following a proposal of the Remuneration, account in the financial year ended 31 December 2019. Appointments and CSR Committee, taking into account in The decision to maintain his work contract up to that date particular his termination of office as Deputy Chief is consistent with the recommendation of the Afep-Medef Executive Officer as from 22 May 2019 and his Code, according to which the work contract of an employee appointment, on that date, as the Company’s CEO. who becomes an executive company officer must end. This Mr Jean-Philippe Ruggieri’s work contract was suspended applies only to the Chairman, the Chairman and Chief with effect on 22 May 2019. In this regard, Executive Officer, and the Chief Executive Officer. Therefore, Mr Jean-Philippe Ruggieri’s remuneration was not subject it does not apply to the Deputy CEO (item 21.2 of the to an ex post vote pursuant to Article L.225-100 II of the Afep-Medef Code revised in June 2018). 4
Mr Jean-Philippe RUGGIERI – Chief Executive Officer – Fixed, variable and exceptional components of the total remuneration and benefits of any kind awarded for or paid in financial year 2019
Amounts awarded Amounts paid or to be paid Mr Jean-Philippe for financial year (ex-post vote) RUGGIERI – 2019 (Fixed for 2019 Description for financial year Ex post vote or variable paid 2019 or accounting in 2019 for 2018) value FIXED €500,000 €500,000 Work contract maintained up to 22 May 2019. REMUNERATION Work contract suspended and remuneration as company officer from 22 May 2019.
ANNUAL VARIABLE €250,000 €238,750 Annual variable remuneration 2019 (ex post REMUNERATION vote): €238,750 (or 47.75% of his fixed remuneration for the same financial year) out of a maximum of €250,000.
Breakdown by targets
Common 45% maximum quantitative 100% if EBITDA ≥ €570m targets: • 95% if EBITDA ≥ €560m and < €570m 2019 EBITDA: • €112,500 • 90% if EBITDA ≥ €550m and < €560m • 80% if EBITDA ≥ €540m and < €550m • 70% if EBITDA ≥ €524m and < €540m • 0% if EBITDA < €524m 2019 EBITDA = €572.9m or target achieved
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Amounts awarded Amounts paid or to be paid Mr Jean-Philippe for financial year (ex-post vote) RUGGIERI – 2019 (Fixed for 2019 Description for financial year Ex post vote or variable paid 2019 or accounting in 2019 for 2018) value ANNUAL VARIABLE Common 10% maximum in respect of CSR criteria REMUNERATION quantitative measuring employee commitment1 and targets: progress in Nexity’s diversity policy CSR: €43,750 • 5% according to voluntary turnover rate2 at end 2019: • Achieved if voluntary turnover rate2 ≤ 10% • Not achieved if voluntary turnover rate2 >10% ≤ 10% or target achieved • 5% according to the percentage of women in Nexity’s governing bodies3 at end 2019: • Achieved if percentage ≥ 33% • Not achieved if percentage < 33% > 33% or target achieved
10% maximum in respect of CSR criteria measuring Nexity’s performance on sustainable development and social impact1 • 5% according to progress in 2019 by Nexity to reduce its carbon footprint compared to 2018; 3 scopes: • New homes development • Offices development • Employees 100% if 3 scopes out of 3 50% if 2 scopes out of 3 0% if 0 or 1 scope out of 3 2 scopes out of 3, or a target 50%-achieved • 5% if achievement of quantified CSR goals* 100% if 3 goals out of 3 50% if 2 goals out of 3 0% if 0 or 1 goal out of 3 * CSR goals: • Carbon reporting rate and decisions to adopt a low-carbon approach in real estate developments • Energy efficiency renovation projects • Development of Nexity Non Profit 3 goals out of 3, or target 100%-achieved
1 Scope of companies acquired before 01/01/2018. 2 Voluntary turnover rate: number of resignations and end of trial periods at the employees' initiative out of the average headcount of employees with permanent contracts over the period. 3 Governing bodies: defined as the Group's Club 100.
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Amounts awarded Amounts paid or to be paid Mr Jean-Philippe for financial year (ex-post vote) RUGGIERI – 2019 (Fixed for 2019 Description for financial year Ex post vote or variable paid 2019 or accounting in 2019 for 2018) value ANNUAL VARIABLE Individual 25% maximum REMUNERATION quantitative • 15% maximum in respect of new home targets: reservations in 2019 on a scale from 0% to €57,500 100% according to the number of reservations achieved in 2019 4 100% of target achieved • 10% maximum in respect of EBITDA for Residential Real Estate on a scale from 0% to 100% according to the EBITDA for Residential Real Estate business lines (Individual Clients) 80% of target achieved
Individual 10% maximum qualitative targets: • Development of the Individual Clients €25,000 services platform • Actions on construction costs 100% of target achieved
DEFERRED VARIABLE None None No deferred variable remuneration REMUNERATION
MULTI-YEAR €700,000 140% of his fixed remuneration in respect of VARIABLE financial year 2019 REMUNERATION Amount calculated and broken down as follows: • €300,000 based on a 2017-2018-2019 cumulative COP* target; • €100,000 in respect of a 2019 Backlog* target; • €200,000 in respect of the COP* level indicated in the budget approved by the Board of Directors for 2020 • €100,000 in respect of the Group net debt* at 31/12/2019.
* Definitions below: All these indicators are to be understood as under the accounting and segment standards of 2016 and exclusive of external growth or extraordinary transactions, as defined by the Board of Directors (Ægide).
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Amounts awarded Amounts paid or to be paid Mr Jean-Philippe for financial year (ex-post vote) RUGGIERI – 2019 (Fixed for 2019 Description for financial year Ex post vote or variable paid 2019 or accounting in 2019 for 2018) value MULTI-YEAR Breakdown by targets VARIABLE REMUNERATION €300,000 2017-2018-2019 Cumulative COP1 > €980m: • €300,000 if cumulative COP1 > €980m; • €200,000 if cumulative COP1 > €960m and ≤ €980m; • €150,000 if cumulative COP1 > €940m and ≤ €960m; and • €0 if cumulative COP1 ≤ €940m. Cumulative COP1 (excluding external growth) = €1,064m or target achieved at 100%.
€100,000 2019 backlog 100% if backlog ≥ €4,800m Definition of backlog = Nexity Group backlog extracted from the operational reporting and calculated based on the same methods as those used for the 2016 financial statements 2019 backlog (excluding external growth) = €4,923m or a target 100% achieved
€200,000 Group COP1 indicated in the budget approved by the Board of Directors for 2020; Confidential data
€100,000 Group’s net debt at 31/12/2019 100% if net debt less than or equal to €900m Definition of Net Debt = consolidated net financial debt for Nexity Group, extracted from the operational reporting and calculated based on IFRS, as used for the 2016 financial statements Net debt (excluding external growth) = €702m or a target 100% achieved
EXCEPTIONAL None None No exceptional remuneration REMUNERATION
STOCK OPTIONS, None None None PERFORMANCE SHARES OR OTHER LONG-TERM COMPONENTS OF REMUNERATION
1 Current operating profit calculated based on the accounting standards applied to the 2016 financial statements (without IFRS 15 or IFRS 16 and including the CVAE levy).
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Amounts awarded Amounts paid or to be paid Mr Jean-Philippe for financial year (ex-post vote) RUGGIERI – 2019 (Fixed for 2019 Description for financial year Ex post vote or variable paid 2019 or accounting in 2019 for 2018) value REMUNERATION AS A None None None DIRECTOR
VALUATION OF ANY None N/A Absence of benefits in kind BENEFITS 4 SUPPLEMENTARY None Absence of supplementary pension scheme PENSION SCHEME
NON-COMPETITION None In the event of the end of Mr Jean-Philippe INDEMNITY AND Ruggieri’s functions as Company officer, his SEVERANCE BENEFITS suspended work contract will come into effect again: benefit equal to one year of remuneration based on the last three years of remuneration.
In summary, the breakdown of the remuneration awarded to Mr Jean-Philippe Ruggieri in respect of the 2018 and 2019 financial years, or paid in those financial years, is as follows:
Financial year 2019 (1) Financial year 2018 (1) Mr Jean-Philippe RUGGIERI Amounts Amounts (in euros) awarded (2) Amounts paid (3) awarded (2) Amounts paid (3) Remuneration for company officer duties Fixed remuneration 500,000 500,000 500,000 500,000 Annual variable remuneration 238,750 250,000 250,000 250,000 Multi-year variable remuneration 700.000 None None None Total remuneration 1,438,750 750,000 750,000 750,000 Remuneration as a Director Nexity None None None None Other controlled companies None None None None Total remuneration as a Director 0 0 0 0 Other remuneration Benefits in kind (vehicle, accommodations,…) None None None None Value of options awarded during the financial year None None None None Value of free shares awarded during the financial year None None 949 None TOTAL 1,438,750 750,000 750,949 750,000
(1) Amounts due or paid by Nexity or the companies it controls as per Article L.233-16 of the French Commercial Code. (2) Remuneration awarded during the financial year to the executive company officer in respect of his duties, regardless of the date of payment. (3) Total remuneration actually paid during the financial year to the executive company officer in respect of his duties. Mr Jean-Philippe Ruggieri receives no remuneration from other Group companies for his duties at Nexity.
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Other information on Mr Jean-Philippe RUGGIERI Performance shares awarded to Mr Jean-Philippe RUGGIERI Valuation according to the method Number of shares selected for the Vesting Availability Performance Plan awarded during the consolidated date date conditions 2019 financial year financial statements (€) Maximum number of shares: 20,000 Executive Committee Plan. 2019 2019 100% of the awards are performance-based. 23/01/2017 N/A 38.64 balance sheet balance sheet No shares vests if any of the objectives is achieved at date date less than 100% (cumulative COP, planned COP in the 2020 budget (PMT), Backlog and Net debt, all as defined in Section 3.2.1.1) Maximum number of shares: 40,000 Executive Committee Plan. 100% of the awards are performance-based 01/06/2017 N/A 38.57 01/06/2020 01/06/2020 No shares vests if any of the objectives is achieved at less than 100% (cumulative COP, planned COP in the 2020 budget (PMT), Backlog and Net debt, all as defined in Section 3.2.1.1). Maximum number of shares: 30 31/05/2018 N/A 31.64 31/05/2021 31/05/2021 None (general plan as defined in Section 3.2.1.1)
Performance shares that became available during the financial year for Mr Jean-Philippe RUGGIERI Number of shares that Performance Plan Vesting date became available during conditions the 2019 financial year For 100% of shares Minimum average COP 2016-2017-2018: €256m 31/05/2016 31/05/2019 18,000 Target exceeded at 122% Minimum average Backlog 2016-2017-2018: €3,400m Target exceeded at 136%
4.4.1.3 Remuneration of Mr Julien Carmona, Deputy Chief Executive Officer Julien Carmona, was appointed Deputy Chief Executive French Commercial Code at the Shareholders’ Meeting of Officer and company officer of Nexity by a decision of the 22 May 2019. Such a vote could not therefore be taken into Board of Directors on 31 May 2018, which met following the account in the financial year ended 31 December 2019. Shareholders’ Meeting on the same day. The remuneration The decision to maintain his work contract up to that date of Mr Julien Carmona, in respect of the 2019 financial year is consistent with the recommendation of the Afep-Medef was determined by the Board of Directors, following a Code, according to which the work contract of an employee proposal of the Remuneration, Appointments and CSR who becomes an executive company officer must end. This Committee. It is to be recalled that Mr Julien Carmona’s applies only to the Chairman, the Chairman and Chief work contract was suspended as from 22 May 2019. In this Executive Officer, and the Chief Executive Officer. Therefore, regard, Mr Julien Carmona’s remuneration was not subject it does not apply to the Deputy CEO (item 21.2 of the to an ex post vote pursuant to Article L.225-100 II of the Afep-Medef Code revised in June 2018).
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Mr Julien CARMONA – Deputy CEO – Fixed, variable and exceptional components of the total remuneration and benefits of any kind awarded for or paid in financial year 2019
Amounts paid Amounts awarded for financial year or to be paid Mr Julien CARMONA – 2019 (Fixed (ex-post vote) Description Ex post vote for 2019 for financial year or variable paid 2019 or accounting in 2019 for 2018) value FIXED REMUNERATION €500,000 €500,000 Work contract maintained up to 22 May 2019 Work contract suspended and remuneration as Company officer from 22 May 2019 4
ANNUAL VARIABLE €250,000 €238,750 Annual variable remuneration 2019 (ex post REMUNERATION vote): €238,750 (or 47.75% of his fixed remuneration for the same financial year) out of a maximum of €250,000.
Breakdown by targets
Common 45% maximum quantitative 100% if EBITDA ≥ €570m targets: • 95% if EBITDA ≥ €560m and < €570m 2019 EBITDA: • €112,500 • 90% if EBITDA ≥ €550m and < €560m • 80% if EBITDA ≥ €540m and < €550m • 70% if EBITDA ≥ €524m and < €540m • 0% if EBITDA < €524m 2019 EBITDA = €572.9m or target achieved
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Amounts paid Amounts awarded for financial year or to be paid Mr Julien CARMONA – 2019 (Fixed (ex-post vote) Description Ex post vote for 2019 for financial year or variable paid 2019 or accounting in 2019 for 2018) value ANNUAL VARIABLE Common 10% maximum in respect of CSR criteria REMUNERATION quantitative measuring employee commitment1 and targets: progress in Nexity’s diversity policy CSR : €43,750 10% maximum • 5% according to voluntary turnover rate2 at end 2019: • Achieved if voluntary turnover rate2 ≤ 10% • Not achieved if voluntary turnover rate2 >10% ≤ 10% or target achieved • 5% according to the percentage of women in Nexity’s governing3 bodies at end 2019: • Achieved if percentage ≥ 33% • Not achieved if percentage < 33% > 33% or target achieved
10% maximum in respect of CSR criteria measuring Nexity's performance on sustainable development and social impact1 • 5% according to progress in 2019 by Nexity to reduce its carbon footprint compared to 2018 3 scopes: • New homes development • Offices development • Employees 100% if 3 scopes out of 3 50% if 2 scopes out of 3 0% if 0 or 1 scope out of 3 2 scopes out of 3, or a goal 50%-achieved • 5% if achievement of quantified CSR goals* 100% if 3 goals out of 3 50% if 2 goals out of 3 0% if 0 or 1 goal out of 3 * CSR goals: • Carbon reporting rate and decisions to adopt a low-carbon approach in real estate developments • Energy efficiency renovation projects • Development of Nexity Non Profit 3 goals out of 3, or target 100%-achieved
1 Scope of companies acquired before 01/01/2018. 2 Voluntary turnover rate: number of resignations and end of trial periods at the employees' initiative out of the average headcount of employees with permanent contracts over the period. 3 Governing bodies: defined as the Group’s Club 100.
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Amounts paid Amounts awarded for financial year or to be paid Mr Julien CARMONA – 2019 (Fixed (ex-post vote) Description Ex post vote for 2019 for financial year or variable paid 2019 or accounting in 2019 for 2018) value ANNUAL VARIABLE Individual 25% maximum REMUNERATION quantitative • 15% maximum in respect of new home targets: reservations in 2019 on a scale from 0% to €57,000 100% according to the number of reservations achieved in 2019 4 100% of target achieved • 10% maximum in respect of EBITDA for Residential Real Estate on a scale from 0% to 100% according to the EBITDA for Residential Real Estate business lines (Individual Clients) 80% of target achieved
Individual 10% maximum qualitative targets: • Quality and security of Nexity's IT systems; €25,000 no progress in IT projects • Implementation of a first real estate investment fund 100% of target achieved
DEFERRED VARIABLE None None No deferred variable remuneration REMUNERATION
MULTI-YEAR VARIABLE €700,000 140% of his fixed remuneration in respect of REMUNERATION financial year 2019 Amount calculated and broken down as follows: • €300,000 based on a 2017-2018-2019 cumulative COP* target; • €100,000 in respect of a 2019 Backlog* target; • €200,000 in respect of a COP* level indicated in the budget approved by the Board of Directors for 2020; • €100,000 in respect of the Group's net debt* at 31/12/2019.
* Definitions below: All these indicators are to be understood as under the accounting and segment standards of 2016 and exclusive of external growth or extraordinary transactions, as defined by the Board of Directors (Ægide).
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Amounts paid Amounts awarded for financial year or to be paid Mr Julien CARMONA – 2019 (Fixed (ex-post vote) Description Ex post vote for 2019 for financial year or variable paid 2019 or accounting in 2019 for 2018) value MULTI-YEAR VARIABLE Breakdown by targets REMUNERATION €300,000 2017-2018-2019 Cumulative COP1 > €980m: • €300,000 if cumulative COP1 > €980m; • €200,000 if cumulative COP1 > €960m and ≤ €980m; • €150,000 if cumulative COP1 > €940m and ≤ €960m; and • €0 if cumulative COP1 ≤ €940m. Cumulative ROC1 (excluding external growth) = €1,082m or a target 100% achieved
€100,000 2019 backlog 100% if backlog ≥ €4,800m Definition of backlog = Nexity Group backlog extracted from the operational reporting and calculated based on the same methods as those used for the 2016 financial statements 2019 backlog (excluding external growth) = €4,923m or a target 100% achieved
€200,000 Group COP1 indicated in the budget approved by the Board of Directors for 2020; Confidential data
€100,000 Group's net debt at 31/12/2019 100% if net debt less than or equal to €900m Definition of Net Debt = consolidated net financial debt for Nexity Group, extracted from the operational reporting and calculated based on IFRS, as used for the 2016 financial statements Net debt (excluding external growth) = €702m or a target 100% achieved
EXCEPTIONAL None None No exceptional remuneration REMUNERATION
STOCK OPTIONS, None None None PERFORMANCE SHARES OR OTHER LONG-TERM COMPONENTS OF REMUNERATION
1 Current operating profit calculated based on the accounting standards applied to the 2016 financial statements (without IFRS 15 or IFRS 16 and including the CVAE levy)
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Amounts paid Amounts awarded for financial year or to be paid Mr Julien CARMONA – 2019 (Fixed (ex-post vote) Description Ex post vote for 2019 for financial year or variable paid 2019 or accounting in 2019 for 2018) value REMUNERATION None None None AS A DIRECTOR
VALUATION None N/A Absence of benefits in kind OF ANY BENEFITS 4 SUPPLEMENTARY None Absence of supplementary pension plan PENSION SCHEME
NON-COMPETITION None In the event of the end of Mr Julien Carmona's INDEMNITY AND functions as Company officer, his suspended work SEVERANCE BENEFITS contract will come into effect again: non-competition obligation for a 6-month period for which the Company must pay a monthly indemnity equal to 50% of the average gross remuneration received over the last 12 months of presence
In summary, the breakdown of the remuneration awarded to Mr Julien Carmona in respect of the 2018 and 2019 financial years, or paid in those financial years, is as follows:
Financial year 2019 (1) Financial year 2018 (1) Mr Julien CARMONA Amounts Amounts (in euros) awarded (2) Amount paid (3) awarded (2) Amount paid (3) Remuneration for company officer duties Fixed remuneration 500,000 500,000 500,000 500,000 Annual variable remuneration 238,750 250,000 250,000 250,000 Multi-year variable remuneration 700,000 None None None Total remuneration 1,438,750 750,000 750,000 750,000 Remuneration as a Director Nexity None None None None Other controlled companies None None None None Total remuneration as a Director 0 0 0 0 Other remuneration Benefits in kind (vehicle, accommodations,…) None None None None Value of options awarded during the financial year None None None None Value of free shares awarded during the financial year None None 942 None TOTAL 1,438,750 750,000 750,942 750,000
(1) Amounts due or paid by Nexity or the companies it controls as per Article L.233-16 of the French Commercial Code. (2) Remuneration awarded during the financial year to the executive company officer in respect of his duties, regardless of the date of payment. (3) Total remuneration actually paid during the financial year to the executive company officer in respect of his duties. Mr Julien Carmona receives no remuneration from other Group companies for his duties at Nexity.
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Other information on Mr Julien CARMONA Performance shares awarded to Mr Julien CARMONA Valuation according to the method Number of shares selected for the Vesting Date Performance Plan awarded during the consolidated date available conditions 2019 financial year financial statements (€) Maximum number of shares:20,000 Executive Committee Plan. 2019 2019 100% of the awards are performance-based. 23/01/2017 N/A 38.64 balance sheet balance sheet No share vests if any of the objectives is achieved at date date less than 100% (cumulative COP, planned COP in the 2020 budget (PMT), Backlog and Net debt, all as defined in 3.2.1.1). Maximum number of shares: 40,000 Executive Committee Plan. 100% of the awards. No share vests if any of the objectives is achieved at less 01/06/2017 N/A 38.57 01/06/2020 01/06/2020 than 100% (cumulative COP, planned COP in the 2020 budget (PMT), Backlog and Net debt, all as defined in 3.2.1.1). Maximum number of shares: 30 31/05/2018 N/A 31.64 31/05/2021 31/05/2021 None (general plan (as defined in Section 3.2.1.1)
Performance shares that became available during the financial year for Mr Julien CARMONA Number of shares that Plan Vesting date became available during Performance conditions the 2019 financial year For 100% of shares Minimum average COP 2016-2017-2018: €256m 31/05/2016 31/05/2019 13,000 Target exceeded at 122% Minimum average Backlog 2016-2017-2018: €3,400m Target exceeded at 136%
4.4.1.4 Examination of the remuneration of the executive company officers with regard to the Company’s performance and the average and median remunerations of the Company’s employees In accordance with Article L.225-37-3 (6) and (7) of the French Commercial Code in its version resulting from Order No. 2019-1234 of 27 November 2019, the table below shows, for each executive company officer of Nexity, the ratios of his remuneration level to, firstly, the average remuneration on the basis of the full-time equivalent of employees other than company officers and, secondly, the median remuneration on the basis of the full-time equivalent of employees other than company officers; and the annual change in remuneration of each executive company officer, the Company’s performance, the average remuneration on the basis of the full-time equivalent of employees other than executives, and the above-mentioned ratios, over the five most recent financial years.
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CHANGE IN EQUITY RATIOS BETWEEN 2015 AND 2019 2015 2016 2017 2018 2019 2015 - 2019 Consolidated net profit attributable to equity holders of the parent company before non-recurring items (Company’s performance) (in €k) 123,500 139,100 178,700 197,700 162,700 (Change compared to the prior financial year - in %) 12.6% 28.5% 10.6% -17.7% 31.7% Average remuneration of employees (in €k) (1) (2) 46.9 49.3 53.6 54.7 56.0 (Change compared to the prior financial year - in %) 5.2% 8.7% 1.9% 2.4% 19.4% Median remuneration of employees (in €k) (1) (2) 36.7 38.2 39.4 40.7 42.1 (Change compared to the prior financial year - in %) 4.2% 3.2% 3.2% 3.4% 14.8% Remuneration paid to Mr Alain Dinin (in €k) (3) (4) 1,950 2,774 2,774 2,790 2,016 (Change compared to the prior financial year - in %) 42.3% 0% 0.6% -27.7% 3.4% Ratio to the average remuneration of employees 42 56 52 51 36 4 (Change compared to the prior financial year - in %) 35.2% -8% -1.3% -29.4% -13.4% Ratio to the median remuneration of employees 53 73 70 69 48 (Change compared to the prior financial year - in %) 36.5% -3.1% -2.5% -30.1% -10.0% Remuneration paid to Mr Jean-Philippe Ruggieri (in €) (3) (5) 2,053 1,918 (Change compared to the prior financial year - in %) -6.6% Ratio to the average remuneration of employees 38 34 (Change compared to the prior financial year - in %) -8.8% Ratio to the median remuneration of employees 50 46 (Change compared to the prior financial year - in %) -9.7% Remuneration paid to Mr Julien Carmona (in €) (3) (6) 1,998 1,890 (Change compared to the prior financial year - in %) -4.9% Ratio to the average remuneration of employees 36 34 (Change compared to the prior financial year - in %) -7.2% Ratio to the median remuneration of employees 49 45 (Change compared to the prior financial year - in %) -8.1%
(1) To be representative, the employees used for the calculation of the median and average remuneration are those present on 31 December of each financial year considered, who hold a permanent work contract and have been present in the financial year under consideration for at least 364 days under a permanent contract. This method neutralises the effects of employees joining or leaving that can impact the interpretation of the annual remuneration, in accordance with Afep’s recommendations. The scope considered is that of the HR reporting managed in the Company’s HRIS Payroll system over all the financial years considered. This approach makes it possible to cover more than 80% of the Group’s workforce. (2) The following components of remuneration have been used for employees: fixed remuneration (including 13th month and long-service benefits in FTE paid in the financial year); variable remuneration paid in the financial year; benefits in kind; components of multi-year variable remuneration (inclusion of amount awarded in N and valued in N/N+1/N+2); free shares awarded (shares awarded measured at IFRS fair value before turnover and pro-rated for each financial year based on the plan’s term); and the employee saving scheme (gross amount of the share of employee profit-sharing, excluding employer matching contributions and monetisation of leave credit/work time savings account). (3) The following components of remuneration have been used for the executive company officers: fixed remuneration (including 13th month bonus and conventional long-service bonus in FTEQ paid during the financial year); variable remuneration paid in the year; benefits in kind; components of multi-year variable remuneration (consideration of amount allocated in YR 1 and valued in YR1/YR2/YR3; free shares awarded (free shares awarded have been measured at IFRS fair value before turnover and prorated over each financial year based on the term of the plan). (4) Mr Alain Dinin held the position of Chairman and Chief Executive Officer of the Company for the full financial years 2015 to 2018, and until 22 May 2019, since when Alain Dinin holds the position of Chairman of the Board of Directors, following the separation of the functions of Chairman of the Board of Directors and Chief Executive Officer. The following are taken into account for each financial year considered: all fixed, variable and exceptional components of the total remuneration paid, performance shares awarded, benefits of any kind in respect of Alain Dinin’s term of office (5) Mr Jean-Philippe Ruggieri held the position of Deputy Chief Executive Officer of the Company from 31 May 2018 to 22 May 2019, the date he became CEO of the Company. For the period covering 1 January 2018 to 22 May 2019, the remuneration components considered are the components paid to Jean-Philippe Ruggieri in respect of his work contract, based on the principles set out above (note (2)). As from 22 May 2019, all fixed, variable and exceptional components of the total remuneration paid, performance shares awarded, benefits of any kind in respect of his term of office were taken into account. (6) Mr Julien Carmona holds the position of Deputy Chief Executive Officer of the Company since his appointment on 31 May 2018. For the period covering 1 January 2018 to 22 May 2019, the remuneration components considered are the components paid to Julien Carmona in respect of his work contract, based on the principles set out above (note (2)). As from 22 May 2019, all fixed, variable and exceptional components of the total remuneration paid, performance shares awarded, benefits of any kind in respect of his term of office were taken into account.
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4.4.1.5 Remuneration of the members of the Board of Directors, other than the Chairman of the Board of Directors The members of the Board of Directors have earned, during • €1,200 per meeting of each other Committee, and twice and in respect of the 2019 financial year from the Company that amount for each Committee Chairman; and and companies of the Group, no remuneration other than • €8,000 per year for the Vice-Chairman and Senior the amount allocated to them as directors’ fees, except for Independent Director. the Board member representing employees who does not earn remuneration other than his salary, and the Chairman The balance from the total amount of €280,000 is then of the Board of Directors, whose remuneration during and in allocated, as applicable, among the Board members and respect of the 2019 financial year is described in the non-voting Board member pro rata to the actual Section 4.4.1.1. The fixed annual amount thus allocated to number of meetings attended by each member. Board members was set by the May 2005 Shareholders’ In respect of the 2019 financial year, the payment of this Meeting at €280,000 and has not changed since that date. remuneration was or will be made, based on the total In respect of the 2019 financial year, the rules for allocating amount of €280,000 and according to the number of this amount were set at the Board of Directors’ meeting of meetings held and effective attendance, as follows: 19 February 2019 after consulting the Remuneration, • Payment of a provisional amount in July 2019; and Appointments and CSR Committee. These rules are the same as those set by the Board of Directors for the 2018 • Regularisation at the end of the year with the payment financial year at its meeting of 20 February 2018. The fixed of the balance in February 2020. annual amount is allocated among the Board members and In accordance with the allocation rules described above, the the non-voting Board member according to their total amount allocated to all members of the Board of appointment(s) on the various committees and take into Directors, in consideration of their terms of office within the account the work done by each Committee. Company in respect of the 2019 financial year, came to The allocation is firstly based on the actual attendance at €280,000, of which €119,200 was paid during the 2019 Board of Directors meetings and meetings of the financial year and the balance (i.e. €160,800) paid in committees on which they serve (with no allowance for February 2020. absences) as follows: The table below shows the amount awarded or paid to each • €2,400 per Board of Directors meeting for each director, Board member and non-voting Board member during or in and €1,200 for the non-voting Board member; respect of the 2018 and 2019 financial years. It is to be noted that in respect of the 2018 financial year, the total • €2,000 per meeting of the Audit and Accounts amount allocated to all members of the Board of Directors Committee, and twice that amount for the Committee’s in consideration of their terms of office within the Company Chairman; amounted to €280,0001.
Financial year 2019 Financial year 2018 (in euros) Amount due Amount paid Amount due Amount paid Remuneration of non-employee directors Mrs Luce Gendry 58,566 49,968 49,968 45,706 Mr Jean-Pierre Denis 36,255 31,961 31,961 29,235 Mr Charles-Henri Filippi 40,159 32,412 32,412 40,129 Mr Jérôme Grivet NA* 15,060 29,260 27,177 Mrs Soumia Belaidi-Malinbaum 42,948 38,714 38,714 36,647 Mrs Agnès Nahum 30,677 31,961 31,961 24,294 Mrs Magali Smets 34,582 29,261 29,261 29,235 Mr Jacques Veyrat 26,773 18,907 18,907 26,577 Mr Pascal Oddo 10,040 12,154 12,154 11,118 Mr Gérard Bayol (until 31 May 2018) None 1,802 5,402 8,082 Subtotal 280,000 262,199 280,000 278,200 Remuneration of the director representing the employees with respect his employment contract Mr Bruno Catelin 66,690 66,690 65,325 65,325 Subtotal 66,690 66,690 65,325 65,325 TOTAL 346,690 328,889 345,325 343,525
* In accordance with Crédit Agricole Group policy, Mr Jérôme Grivet does not receive remuneration for his office as a director.
1 The table below does not show the remuneration awarded in respect of the 2019 financial year, or paid in the same financial year, to the Chairman of the Board of Directors. This is covered in Section [4.4.1.1] of this Universal Registration Document
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4.4.2 Remuneration policy applicable to Nexity’s company officers for the 2020 financial year
Pursuant to Article L.225-37-2 II of the French Commercial Code, the Annual Shareholders’ Meeting called to approve the financial statements for the financial year ended 31 December 2019 will be asked to approve the remuneration policy applicable to the company officers for the 2020 financial year.
4.4.2.1 Principles common to all company officers The remuneration policy applicable to the company officers In the event of reappointment of company officers, of Nexity is determined by the Board of Directors following and assuming that the remuneration policy applicable in the recommendation of the Remuneration, Appointments respect of the reappointment has not been approved by the 4 and CSR Committee, and is then subject to the approval of Shareholders’ Meeting, the remuneration for these the Shareholders’ Meeting called to approve the annual company officers is based on the last approved financial statements. The remuneration policy is revised on remuneration policy applicable to them. If the company an annual basis by the Remuneration, Appointments and officers are newly appointed and no applicable CSR Committee, and by the Board of Directors. remuneration policy has been approved by the The Remuneration, Appointments and CSR Committee also Shareholders’ Meeting, the Board of Directors applies, monitors this remuneration policy on an annual basis. after consulting the Remuneration, Appointments and CSR The composition of this committee complies with the Committee, the provisions of the last approved recommendations of the AFEP-MEDEF Code. Furthermore, remuneration policy applicable to a company officer the policy was determined by the Board of Directors in holding the same office or an office of the same nature, compliance with the AFEP-MEDEF Code, in the absence of and, where necessary, adapts it so as to take account of the the concerned individuals. The policy is determined taking specific responsibilities of the concerned company officer. into account the remuneration and employment conditions Despite the change in governance applied on 22 May 2019 of the Company’s employees. In particular, the Company with the decision to separate the functions of Chairman of complies with the recommendation of the Afep-Medef the Board of Directors and Chief Executive Officer, Code, based on which the membership of the 2019 remuneration for the Chief Executive Officer (former Remuneration, Appointments and CSR Committee includes Deputy CEO) and for the Deputy CEO remains unchanged, as an employee Board member. The Board of Directors and the approved by the Shareholders’ Meeting of 22 May 2019. Remuneration, Appointments and CSR Committee also take The Board's initial intention was to propose an increase in into account, as part of the preparatory work to determine remuneration for 2020. However, given the emergence of the remuneration policy, the ratios established pursuant to the Covid-19 epidemic, the Board of Directors deemed it Article L.225-37-3 I (6) of the French Commercial Code. necessary to put any considerable increase in remuneration In particular, the Board of Directors ensures that the level of on hold for 2020. these ratios is in line with the level of ratios published by comparable listed companies in the same industry, Therefore, the remuneration policy for 2020 is based on the for executives exercising comparable functions (it being following principles: specified that, given the scarcity of available data since this • Retaining the status quo for virtually all fixed requirement is a recent addition to the law, the Board of remuneration, with the main change being to separate Directors did not base itself on such comparisons to the remuneration of the CEO from that of the Deputy establish the remuneration policy for the 2020 financial CEO and Company Officer; year). • Annual variable remuneration with procedures and This policy is adopted by the Board of Directors once it has criteria which are adapted to fit the specific context of ensured, firstly, that it is in the Company’s interest and, 2020. While it is set to remain the same in relation to secondly, that it such as to contribute to the sustainability 2019, it may be adapted to link up to 25% of variable of the Company. By way of example, the performance remuneration to the successful management of the conditions applicable to the Company’s executive company Covid-19 crisis; officers (Chief Executive Officer and Deputy CEO) are broken No plans to implement multi-year variable down into financial and non-financial criteria (in particular • remuneration for 2020 to replace the scheme which CSR criteria). expired in 2019; and The remuneration policy systematically provides that, Performance share awards based on stringent criteria, for the executive company officers, the variable • including a stock market performance criterion. remuneration and the share-based payment are subject to a certain number of performance criteria. The Board of Directors annually assesses these performance criteria following a preliminary review by the Remuneration, Appointments and CSR Committee.
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4.4.2.2 Remuneration policy applicable to the Chairman of the Board of Directors The remuneration policy applicable to the Chairman of the falling short of the minimum required by certain proxy Board of Directors includes specific components which are advisers. The Board of Directors, following a proposal of the detailed below. Remuneration, Appointments and CSR Committee, The Chairman of the Board of Directors is appointed for a took account of this when determining the remuneration 4-year term. Since the 2019 financial year, when it was policy applicable to the Chairman of the Board of Directors decided to separate the functions of Chairman of the Board for the 2020 financial year. At the Board of Directors’ of Directors and Chief Executive Officer, the remuneration of meeting of 26 March 2020, it was therefore decided to set the Chairman of the Board of Directors is mainly comprised the flat-rate fixed amount allocated annually to the of a flat-rate fixed portion to take into account the absence Chairman of the Board of Directors at €1,500,000. of executive functions from 22 May 2019. In addition to this flat-rate fixed amount, the Chairman of Resolution 11 of the Shareholders’ Meeting of 22 May 2019 the Board of Directors is entitled to benefits in kind in the on the principles and criteria used to determine, apportion form of a company car. This benefit in kind is valued at and award the fixed, variable and exceptional components €1,363 per month. of the total remuneration and benefits of any kind The remuneration policy applicable to the Chairman of the attributable to Mr Alain Dinin for the 2019 financial year Board of Directors for 2020 does not provide for any other (ex ante vote) was approved by 79.31%, a percentage component of remuneration of any kind whatsoever.
Mr Alain DININ - Chairman of the Board of Directors – Remuneration policy for the 2020 financial year (ex ante vote)
Amount or accounting Elements of the remuneration policy Description valuation FIXED REMUNERATION €1,500,000 Comprehensive, flat-rate amount.
ANNUAL VARIABLE REMUNERATION None No annual variable remuneration
DEFERRED VARIABLE REMUNERATION None No deferred variable remuneration
MULTI-YEAR VARIABLE REMUNERATION None No multi-year variable remuneration
EXCEPTIONAL REMUNERATION None No exceptional remuneration
STOCK OPTIONS, PERFORMANCE SHARES None Waiver since 2006 OR OTHER LONG-TERM COMPONENTS OF REMUNERATION
REMUNERATION AS A DIRECTOR None No remuneration as a director
VALUATION OF BENEFITS OF ANY KIND €1,363/month Company car
SUPPLEMENTARY PENSION SCHEME None No remuneration as a director
NON-COMPETITION INDEMNITY None No non-competition indemnity or severance benefits AND SEVERANCE BENEFITS
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4.4.2.3 Remuneration policy applicable to the Chief Executive Officer The remuneration policy applicable to the Chief Executive Mr Jean-Philippe Ruggieri, Deputy Chief Executive Officer up Officer includes, firstly, components common to all to 22 May 2019 and CEO from that date, was approved by company officers presented in Section 4.4.2.1, 98.92%. This very high percentage under the ex ante “say and secondly, specific components which are detailed on pay” was taken into account by the Board of Directors for below. determining the remuneration policy applicable to the Chief At its meeting of 6 April 2020, the Board of Directors Executive Officer for 2020, which remained equivalent to decided, after consulting the Remuneration, Appointments the principles and criteria approved for the 2019 financial and CSR Committee, to approve the remuneration policy year. applicable to the Chief Executive Officer, the specific Fixed remuneration did not change in 2019 following the components of which are described in the table below. appointment of Mr Jean-Philippe Ruggieri as Chief Subject to their approval by the Shareholders’ Meeting to be Executive Officer. We propose a slight increase in fixed 4 held on 19 May 2020, this remuneration policy would apply remuneration to differentiate his salary from that of the to any successor of the current Chief Executive Officer, Deputy CEO and Company Officer. Variable remuneration until a new decision by the Shareholders’ Meeting. for 2020 remains the same as for 2019. However, Resolution 12 of the Shareholders’ Meeting of the criteria have been adapted to fit the context. For 22 May 2019, on the principles and criteria to determine, example, the Board has proposed a potential additional apportion and award the fixed, variable and exceptional package of 25% of annual variable remuneration (€62,500) components of the total remuneration and benefits for the successful management of the Covid-19 crisis. of any kind attributable in respect of 2019 to
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Mr Jean-Philippe RUGGIERI – Chief Executive Officer - Remuneration policy for the 2020 financial year (ex ante vote)
Components Description of the remuneration policy FIXED REMUNERATION €550,000 (10% increase in relation to 2019, to take into account new duties since May 2019. No increase in 2019)
ANNUAL VARIABLE REMUNERATION €250,000 (or 45% of the annual fixed remuneration). Target amount unchanged in relation to 2019 The award, level and payment are subject to the achievement of the performance objectives set, with achievement assessed by the Board of Directors, after consulting the Remuneration, Appointments and CSR Committee. A package representing 25% of annual variable remuneration has been linked to the qualitative criteria for managing the Covid-19 crisis, and may enable the Board of Directors to adapt remuneration based on the Chief Executive Officer's performance in this context. In the event that he outperforms the criteria, the annual variable remuneration may be extended to up to 125% of the target amount. Payment to the Chief Executive Officer following a favourable ex post vote at the Shareholders’ Meeting called to approve the financial statements for the financial year ended 31 December 2020. (L.225-100-II of the French Commercial Code)
Common quantitative target (75% maximum): • 45% maximum in respect of 2020 EBITDA or a target amount of €112,500, based on a scale not provided for reasons of confidentiality • 10% maximum in respect of the 2020 Backlog (or a target amount of €25,000) based on a scale not provided for reasons of confidentiality • 20% maximum in respect of HR and CSR criteria (or a target amount of €50,000) • 10% measuring progress made by Nexity in 2020 on reducing the carbon footprint compared with 2019 in three scopes (New homes development, Offices development, Employees) - 100% if scopes out of 3 - 50% if 2 scopes out of 3 - 0% if 0 or 1 scope out of 3 • 5% in respect of progress in the Group's diversity policy - 0% if the percentage of women in governing bodies1 <35% - 100% if the percentage of women in governing bodies1 ≥ 35% • 5% for very low-income housing based on a scale not provided for reasons of confidentiality
Individual quantitative targets (25% maximum) • 15% maximum for new home reservations to outperform the Malone market indicator (i.e. a target amount of €37,500) based on a scale not provided for reasons of confidentiality • 10% maximum for Group net debt2 (or a target amount of €25,000) based on a scale not provided for reasons of confidentiality
1 Club 1797. 2 Control of the Group’s net debt based on IFRS financial statements (excluding IFRS 16 and external growth not included in the PMT).
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Components Description of the remuneration policy ANNUAL VARIABLE REMUNERATION Qualitative targets (25% maximum) i.e. a target amount of €62,500 • Assessment of response to developments in the Covid-19 crisis EXCEPTIONAL REMUNERATION No exceptional remuneration
STOCK OPTIONS, PERFORMANCE Issues of free shares (60,000 shares) based on the authorisation submitted for the SHARES OR OTHER LONG-TERM approval of the Shareholders' Meeting of 19 May 2020 COMPONENTS OF REMUNERATION • Vesting in H1 2023 (3-year vesting period) subject to performance criteria and conditions for all shares 4 • Conditions are based on a number of indicators which measure the Group's financial and stock market performance, and its CSR policy: • 50% of shares awarded based on increase of the current operating profit (over 3 years) • 15% of shares awarded based on net debt control in relation to the Group's EBITDA • 10% of shares awarded according to CSR/HR criteria (reducing the carbon footprint, gender equality index) • 5% of shares awarded according to a criterion which measures client satisfaction • 20% of shares awarded based on Nexity share developments on the SBF 120 stock market index Details of amounts and thresholds are not provided for reasons of confidentiality. These amounts and thresholds will be specified in the Universal Registration Document for the financial year in which the shares are vested.
REMUNERATION AS A DIRECTOR None
VALUATION OF ANY BENEFITS Absence of benefits in kind
SUPPLEMENTARY PENSION SCHEME Absence of supplementary pension plan
SEVERANCE BENEFITS AND End-of-service benefits NON-COMPETITION INDEMNITY Indemnity (other than indemnity under the non-competition clause) equals to: • 1.5 x average gross annual remuneration of any kind (fixed and annual variable component) paid by the Company during the last two years preceding the effective departure date; and • Capped, by adding it to the non-competition indemnity, at 2 times the average gross annual remuneration of any kind (fixed and annual variable component) in accordance with the Afep-Medef Code. Non-competition clause of one year: • Indemnity equals to half of the average gross annual remuneration of any kind (fixed and annual variable component) paid by the Company during the two years preceding his effective departure date; • The Board of Directors reserves the right, at the time of the departure, to not request the application of this non-competition clause, and therefore not to pay the corresponding indemnity.
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4.4.2.4 Remuneration policy applicable to the Deputy Chief Executive Officer The remuneration policy applicable to the Deputy Chief Resolution 13 of the Shareholders’ Meeting of 22 May Executive Officer includes, firstly, components common to 2019, on the principles and criteria to determine, apportion all company officers presented in Section 4.4.2.1, and and award the fixed, variable and exceptional components secondly, specific components which are detailed below. of the total remuneration and benefits of any kind At its meeting of 6 April 2020, the Board of Directors attributable in respect of 2019 to Mr Julien Carmona, decided, after consulting the Remuneration, Appointments Deputy Chief Executive Officer, was approved by 99.40%. and CSR Committee, to approve the remuneration policy This very high percentage under the ex ante “say on pay” applicable to the Company’s Deputy Chief Executive Officer, was taken into account by the Board of Directors for the specific components of which are described in the table determining the remuneration policy applicable to the below. Subject to their approval by the Shareholders’ Deputy Chief Executive Officer for 2020, which remained Meeting to be held on 19 May 2020, this remuneration equivalent to the principles and criteria approved for the policy would apply to any successor of the current Deputy 2019 financial year. Chief Executive Officer, until a new decision by the Variable remuneration for 2020 remains the same as for Shareholders’ Meeting. 2019. However, the criteria have been adapted to fit the context. For example, the Board has proposed a potential additional package of 25% of annual variable remuneration (€62,500) for the successful management of the Covid-19 crisis.
Mr Julien CARMONA – Deputy CEO – Remuneration policy for the 2020 financial year (ex ante vote)
Components Description of the compensation policy FIXED REMUNERATION €500,000 unchanged in relation to 2019
ANNUAL VARIABLE REMUNERATION €250,000 (or 50% of the annual fixed remuneration). Target amount unchanged in relation to 2019 The award, level and payment are subject to the achievement of the performance objectives set, with achievement assessed by the Board of Directors, after consulting the Remuneration, Appointments and CSR Committee A package representing 25% of annual variable remuneration has been linked to the qualitative criteria for managing the Covid-19 crisis, and may enable the Board of Directors to adapt remuneration based on the Deputy Chief Executive Officer's performance in this context. In the event that he outperforms the criteria, the annual variable remuneration may be extended to up to 125% of the target amount. Payment to the Deputy Chief Executive Officer following a favourable ex post vote at the Shareholders’ Meeting called to approve the financial statements for the financial year ended 31 December 2020. (L.225-100 II of the French Commercial Code)
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Components Description of the compensation policy ANNUAL VARIABLE REMUNERATION Common quantitative targets: (maximum of 75%): • 45% maximum in respect of 2020 EBITDA or a target amount of €112,500, based on a scale not provided for reasons of confidentiality; • 10% maximum in respect of the 2020 Backlog (or a target amount of €25,000) based on a scale not provided for reasons of confidentiality; • 20% maximum in respect of HR and CSR criteria (or a target amount of €50,000); • 10% measuring progress made by Nexity in 2020 on reducing the carbon footprint compared with 2019 in three scopes (New homes development, 4 Offices development, Employees) 100% if 3 scopes out of 3 50% if 2 scopes out of 3 0% if 0 or 1 scope out of 3 • 5% in respect of progress in the Group's diversity policy • 0% if the percentage of women in governing bodies1 < 35% • 100% if the percentage of women in governing bodies1 ≥ 35% • 5% for very low-income housing based on a scale not provided for reasons of confidentiality
Individual quantitative targets (25% maximum) • 10% maximum for the contribution and consolidation of the German subsidiary recently acquired (Pantera) (i.e. a target amount of €25,000) • 15% maximum for Group net debt2 (or a target amount of €37,500) based on a scale not provided for reasons of confidentiality
Qualitative targets (25% maximum) i.e. a target amount of €62,500 • Assessment of response to developments in the Covid-19 crisis
1 Club 1797. 2 Control of the Group’s net debt based on IFRS financial statements (excluding IFRS 16 and external growth not included in the PMT).
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Components Description of the compensation policy EXCEPTIONAL REMUNERATION No exceptional remuneration
STOCK OPTIONS, PERFORMANCE Issues of free shares (60,000 shares) based on the authorisation submitted for the SHARES OR OTHER LONG-TERM approval of the Shareholders' Meeting of 19 May 2020 COMPONENTS OF REMUNERATION • Vesting in H1 2023 (3-year vesting period) subject to performance criteria and conditions for all shares • Conditions are based on a number of indicators which measure the Group's financial and stock market performance, and its CSR policy: • 50% of shares awarded based on increase of the current operating profit (over 3 years) • 15% of shares awarded based on net debt control in relation to the Group's EBITDA • 10% of shares awarded according to CSR/HR criteria (reducing the carbon footprint, gender equality index) • 5% of shares awarded according to a criterion which measures client satisfaction • 20% of shares awarded based on Nexity share developments on the SBF 120 stock market index Details of amounts and thresholds are not provided for reasons of confidentiality. These amounts and thresholds will be specified in the Universal Registration Document for the financial year in which the shares are vested
REMUNERATION AS A DIRECTOR None
VALUATION OF ANY BENEFITS Absence of benefits in kind
SUPPLEMENTARY PENSION SCHEME Absence of supplementary pension plan
SEVERANCE BENEFITS End-of-service benefits AND NON-COMPETITION INDEMNITY Indemnity (other than indemnity under the non-competition clause) equal to: • 1.5 x average gross annual remuneration of any kind (fixed and annual variable component) paid by the Company during the last two years preceding the effective departure date; and • Capped, by adding it to the non-competition indemnity, at 2 times the average gross annual remuneration of any kind (fixed and annual variable component) in accordance with the Afep-Medef Code. Non-competition clause of one year: • Indemnity equal to half of the average gross annual remuneration of any kind (fixed and annual variable component) paid by the Company during the two years preceding his effective departure date; • The Board of Directors reserves the right, at the time of the departure, to not request the application of this non-competition clause, and therefore not to pay the corresponding indemnity.
/220 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 CORPORATE GOVERNANCE REPORT Remuneration and benefits for the executive company officers
4.4.2.5 Remuneration policy applicable to the members of the Board of Directors excluding the Chairman of the Board of Directors The remuneration policy applicable to the Board members • €2,400 per Board of Directors meeting for each director, includes, firstly, components common to all company and €1,200 for the non-voting Board member; officers presented in Section 4.4.2.1, and secondly, specific • €2,000 per meeting of the Audit and Accounts components which are detailed below. These specific Committee, and twice that amount for the Committee’s components are not applicable to the Chairman of the Chairman; Board of Directors, whose remuneration policy is detailed in Section 4.4.2.2, nor to the Board members representing • €1,200 per meeting of each other Committee, and twice employees or to the Board members representing that amount for each Committee Chairman; and shareholder employees, who are remunerated in • €8,000 per year for the Deputy Chairman and Senior accordance with the provisions of the work contract Independent Director. 4 between them and the Company. The balance from the budget amount of €280,000 is then Board members are appointed for 4-year terms and their allocated, as applicable, among the Board members and remuneration is exclusively comprised of a flat-rate fixed the non-voting Board member on a pro-rata basis to the amount allocated to them by the Shareholders’ Meeting. actual number of meetings attended by the members The flat-rate fixed amount thus allocated to the Board concerned. members was set by the Shareholders’ Meeting of Regarding the 2020 financial year, the payment of this May 2005 at €280,000 and has not changed since that amount will be made, on the basis of the €280,000 date. budgeted amount and according to the number of meetings In respect of the remuneration policy applicable for the held and effective attendance, as follows: 2020 financial year, the rules for allocating this amount Payment of a provisional amount in July 2020; and were set at the Board of Directors’ meeting of • 26 March 2019 after consulting the Remuneration, • Regularisation at the end of the year with the payment Appointments and CSR Committee. These rules are the of the balance in February 2021. same as those set by the Board of Directors for the 2019 It is recalled that the payment of the amount allocated to financial year at its meeting of 19 February 2019. The fixed the Board members by way of remuneration for their work annual amount is allocated among Board members and the can be suspended, pursuant to the law, (i) under non-voting Board member according to their Article L.225-45-2 of the French Commercial Code, where appointment(s) on the various committees and take into the Board of Directors is not composed in accordance with account the work done by each Committee. Article L.225-18-1-1 of the same Code, and (ii) under the The allocation is firstly based on the actual attendance at conditions of Article L.225-100 II of the French Commercial Board of Directors meetings and meetings of the Code, where the Shareholders’ Meeting does not approve committees on which they serve (with no allowance for the draft resolution on the disclosures mentioned in absences) as follows: Article L.225-37-3 I of the French Commercial Code.
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 221 4 CORPORATE GOVERNANCE REPORT Remuneration and benefits of the other executives (non-company officers)
4.5 REMUNERATION AND BENEFITS OF THE OTHER EXECUTIVES (NON-COMPANY OFFICERS)
4.5.1 Remuneration of the other executives in respect of the 2019 financial year
The components of remuneration received in 2019 or to be received in respect of 2019, such as provided for in their work contract, are presented in the tables below.
4.5.1.1 Remuneration paid or to be paid to Mrs Véronique BÉDAGUE-HAMILIUS
Remuneration Amount paid in 2019 Description FIXED REMUNERATION Amount paid in 2019: €400,000
ANNUAL VARIABLE PART €141,750
DEFERRED VARIABLE None No deferred variable remuneration REMUNERATION
MULTI-YEAR VARIABLE None REMUNERATION
STOCK OPTIONS, PERFORMANCE Free performance shares: The Company’s free share plans are SHARES OR ANY OTHER LONG-TERM • Plan of 25/04/2017: described in Section 3.2.1.1 of this COMPONENT OF REMUNERATION 5,000 shares; Universal Registration Document. • Plan of 01/06/2017: 3,000 shares; • Plan of 19/12/2017: 4,500 shares; • Plan of 31/05/2018: 30 shares; and • Plan of 22/05/2019: 10,000 shares
VALUATION OF BENEFITS €161/month Company car OF ANY KIND
Mrs Véronique Bédague-Hamilius receives no remuneration from other Group companies for her duties at Nexity.
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4.5.1.2 Remuneration paid or to be paid to Mr Frédéric VERDAVAINE
Remuneration Amount paid in 2019 Description FIXED REMUNERATION Amount paid in 2019: €400,000
ANNUAL VARIABLE PART €238,750
DEFERRED VARIABLE None No deferred variable remuneration REMUNERATION
MULTI-YEAR VARIABLE €400,000 Payable in 2020 subject to REMUNERATION performance conditions for the 2017-2018-2019 financial years 4
STOCK OPTIONS, PERFORMANCE Free performance shares: The Company’s free share plans are SHARES OR ANY OTHER LONG-TERM • Plan of 23/01/2017: described in Section 3.2.1.1 of this COMPONENT OF REMUNERATION 10,000 shares; Universal Registration Document. • Plan of 01/06/2017: 30,000 shares; • Plan of 19/12/2017: 4,500 shares; and • Plan of 31/05/2018: 30 shares FREE SHARES RECEIVED IN 2019 7,000 shares (€39.24/share) Free shares awarded in 2016, received in 2019
VALUATION OF BENEFITS OF ANY €498/month Company car KIND €553/month Housing allowance
Mr Frédéric Verdavaine receives no remuneration from other Group companies for his duties at Nexity.
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4.5.2 Remuneration of the other executives for the 2020 financial year
The components of remuneration to be received in respect of 2020, such as provided for in their work contract, are presented in the tables below.
4.5.2.1. Remuneration paid or to be paid to Véronique Mrs BÉDAGUE-HAMILIUS
Amount to be received in respect Remuneration Description of 2020 FIXED REMUNERATION Amount to be paid in 2020: €400,000
ANNUAL VARIABLE PART €250,000
DEFERRED VARIABLE None No deferred variable remuneration REMUNERATION
STOCK OPTIONS, PERFORMANCE Free performance shares: The Company’s free share plans are SHARES OR ANY OTHER LONG-TERM • Plan of 25/04/2017: described in Section 3.2.1.1 of this COMPONENT OF REMUNERATION 5,000 shares; Universal Registration Document. • Plan of 01/06/2017: 3,000 shares; • Plan of 19/12/2017: 4,500 shares; • Plan of 31/05/2018: 30 shares; and • Plan of 22/05/2019: 10,000 shares Planned free share award (24,000 shares) based on the authorisation submitted for the approval of the Shareholders' Meeting of 19 May 2020 (conditions and criteria described in Sections 4.4.2.3 and 4.4.2.4 above).
VALUATION OF BENEFITS OF ANY €161/month Company car KIND
Mrs Véronique Bédague-Hamilius receives no remuneration from other Group companies for her duties at Nexity.
/224 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 CORPORATE GOVERNANCE REPORT Pensions and other benefits
4.5.2.2 Remuneration paid or to be paid to Mr Frédéric VERDAVAINE
Amount to be received in respect Remuneration Description of 2020 FIXED REMUNERATION Amount to be paid in 2020: €400,000
ANNUAL VARIABLE PART €250,000
DEFERRED VARIABLE None No deferred variable remuneration REMUNERATION STOCK OPTIONS, PERFORMANCE Free performance shares: The Company’s free share plans are 4 SHARES OR ANY OTHER LONG-TERM • Plan of 23/01/2017: described in Section 3.2.1.1 of this COMPONENT OF REMUNERATION 10,000 shares; Universal Registration Document. • Plan of 01/06/2017: 30,000 shares; • Plan of 19/12/2017: 4,500 shares; and • Plan of 31/05/2018: 30 shares. Planned free share award (24,000 shares) based on the authorisation submitted for the approval of the Shareholders' Meeting of 19 May 2020 (conditions and criteria described in Sections 4.4.2.3 and 4.4.2.4 above).
VALUATION OF BENEFITS OF ANY €498/month Company car KIND €553/month Housing allowance
Mr Frédéric Verdavaine receives no remuneration from other Group companies for his duties at Nexity.
4.6 PENSIONS AND OTHER BENEFITS
At 31 December 2019, there were no contractual agreements (apart from those, as the case may be, recognised in employee benefit obligations) in connection with pensions or related benefits for the members of the Board of Directors, the Chief Executive Officer or the Deputy CEO company officer.
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4.7 INTERESTS OF THE EXECUTIVE COMPANY OFFICERS AND MEMBERS OF THE BOARD OF DIRECTORS IN THE COMPANY’S SHARE CAPITAL
The directors and the executive company officers are required to hold all the shares they own in registered form. At 31 December 2019, members of the Board of Directors directly held shares as shown in the table below:
Members of the Board of Directors Number of shares (1) Percentage of capital Mr Alain Dinin (2) 1,195,874 2.13% Mrs Luce Gendry (3) 1,605 NS Mr Jean-Pierre Denis (4) 2,500 NS Mr Charles-Henri Filippi 3,000 NS Mr Jérôme Grivet 200 NS Mrs Soumia Belaidi-Malinbaum 300 NS Mrs Agnès Nahum 200 NS Mrs Magali Smets 200 NS Mr Jacques Veyrat 250 NS Mr Bruno Catelin 283 NS Mr Pascal Oddo 1,000 NS TOTAL 1,205,412 NS
(1) According to statements made to the AMF and/or the Company. (2) And related persons, excluding indirect shareholding via New Port. (3) Of which 1,405 shares held via a controlled company. (4) Of which 2,000 additional shares held via Keriodo. With regard to Mr Alain Dinin, the number of shares he At 31 December 2019, Mr Alain Dinin owned 10.1% of New holds represents several years’ worth of remuneration; Port, which held 8.1% of the Group’s shares. Mr Alain Dinin it did therefore not appear necessary to the Board of therefore indirectly owns 0.8% of Nexity, in addition to his Directors to set a minimum shareholding threshold. shareholding mentioned above. The concert group between Crédit Mutuel Arkéa, New Port At 31 December 2019, the Chief Executive Officer, and other directors was created in January 2015 and brings Mr Jean-Philippe Ruggieri, and the Deputy CEO company together Group executives around Alain Dinin, Chairman of officer, Mr Julien Carmona, held the shares stated below: the Board of Directors. They held 19.95% of the Company’s share capital at 31 December 2019.
Company officers and non-members of the Board of Directors (1) Number of shares (2) Percentage of capital Mr Jean-Philippe Ruggieri 63,656 0.11% Mr Julien Carmona 34,250 0.06%
(1) And related persons. (2) According to statements made to the AMF and/or the Company.
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4.8 TRANSACTIONS IN SECURITIES
4.8.1 Transactions in securities by members of the Board of Directors and the main executives
Nature of the Description of the Number of Average unit price Surname/Name Capacity operation financial instrument shares (in euros) Mr Alain Dinin (and related persons Disposal 48,446 46.08 Chairman Acquisition Shares 26,000 40.18 excluding New Port) Mr Jean-Philippe Ruggieri Chief Executive Officer Disposal Shares 5,000 46.22 (and related persons) Acquisition 29,756 41.20 4 Free share acquisition Shares 18,000 39.24 Mr Julien Carmona Deputy CEO - company officer Acquisition Shares 5,250 46.22 Free share acquisition Shares 13,000 39.24 Free share Mrs Helen Romano Deputy CEO IR acquisition Shares 10,000 39.24 Free share Mr Frédéric Verdavaine Deputy CEO acquisition Shares 7,500 39.24 Source: statements made to the AMF and/or the Company.
4.8.2 Transactions in securities by shareholders holding more than 5% of the share capital
Nature of the Description of the Number of Unit price Average Surname/Name Capacity operation financial instrument shares (in euros) New Port SAS Shareholder Acquisition Shares 258,930 42.48 Pledge Shares 264,681 N/A Source: statements made to the AMF and/or the Company
4.9 STOCK OPTIONS AND FREE SHARES AWARDED TO THE EXECUTIVE COMPANY OFFICERS
4.9.1 Share subscription and share purchase option plans (stock options)
No share subscription or purchase option plans are in force for the executive company officers.
4.9.2 Issues of free shares
Mr Alain Dinin, Chairman and Chief Executive Officer of Mr Jean-Philippe Ruggieri and Mr Julien Carmona have free Nexity until 22 May 2019 and Chairman of the Board of share award plans detailed in Sections 4.4.1.2 and 4.4.1.3 Directors from that date, does not receive free shares. above, as well as in Chapter 3 “Statement of non-financial He has waived his right since 2006. performance” of this Universal Registration Document, which were awarded to them prior to their appointment as Company Officers. The remuneration policy applicable to them for 2020 provides for the award of shares mentioned in Sections 4.4.2.3 and 4.4.2.4 above.
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4.10 MAJOR SHAREHOLDERS
4.10.1 Breakdown of share capital at 31 December 2019
The following table shows the number of shares and the percentage of share capital and voting rights held by the Company’s shareholders at 31 December 2019, as reported to the AMF and/or to the Company at that date:
Shareholders (at 31 December 2019) Number of shares % of capital % of voting rights Mr Alain Dinin (1) 1,195,874 2.1% 2.1% New Port concert group and Other executives (2) 7,001,866 12.5% 12.6% Other employees 263,613 0.4% 0.4% FCPE Nexity Actions and Nexity Levier 2017 1,528,042 2.7% 2.8% Free float 38,964,987 69.4% 70.2% CAA Predica + Spirica 3,594,472 6.4% 6.5% CM Arkéa + Suravenir 2,999,451 5.4% 5.4% Treasury shares 606,419 1.1% 0.0% TOTAL 56,129,724 100% 100%
(1) And related persons, excluding indirect shareholding via New Port. (2) Of which New Port at 8.1%.
Concert group A. Dinin, New Port(2) and 19.9% other Nexity’s managers Crédit Mutuel Arkéa belonging to the concert 5.3% group 14.6% FCPE and other employees(3) 3.2% Crédit Agricole 56,129,724 Assurances shares(1) 6.4%
Free float 69.4%
(1) o/w treasury shares: 606,419 shares (1.1%) (2) New Port: 8.1% (3) o/w FCPE (Nexity Actions and Nexity Levier 2017): 2.7%
It is recalled that, in January 2015, around 230 Nexity executives, as well as Crédit Mutuel Arkéa and its subsidiary Suravenir, formed a group around Alain Dinin. Together, they held 19.9% of the Company’s share capital at 31 December 2019 (see Section 4.7 “Interests of the executive company officers and members of the Board of Directors in the Company’s share capital” of this chapter).
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4.10.2 Changes in ownership over the past three years
The following table shows a breakdown of the Company’s share capital at the dates indicated:
2019 2018 2017 % of % of % of Number of % of voting Number of % of voting Number of % of voting SHAREHOLDING STRUCTURE shares capital rights shares capital rights shares capital rights Mr Alain Dinin (1) 1,195,874 2.1% 2.1% 1,223,420 2.2% 2.2% 1,110,868 2.0% 2.0% New Port concert group and other executives 7,001,866 12.5% 12.6% 6,469,861 11.5% 11.6% 5,848,499 10.4% 10.4% Other Employees 238,613 0.4% 0.4% 263,759 0.5% 0.5% 2,443,469 0.8% 0.8% FCPE Nexity Actions and Nexity Levier 2017 1,528,042 2.7% 2.8% 1,540,419 2.7% 2.8% 1,553,113 2.8% 2.8% 4 Free float 38,964,987 69.4% 70.2% 39,483,587 70.3% 71.0% 40,486,852 72.2% 72.2% CAA Predica + Spirica 3,594,472 6.4% 6.5% 3,594,472 6.4% 6.5% 3,594,472 6.4% 6.4% CM Arkéa + Suravenir 2,999,451 5.4% 5.4% 2,999,451 5.4% 5.4% 2,999,451 5.4% 5.4% Treasury shares (2) 606,419 1.1% 0.0% 555,025 1.0% 0.0% 0 0.0% 0.0% TOTAL 56,129,724 100% 100% 56,129,724 100% 100% 56,036,724 100% 100%
(1) And related persons, excluding indirect shareholding via New Port. (2) Including shares purchased as part of the liquidity contract and various share buyback programme.
4.10.3 Notifications of crossing of ownership thresholds under Article L.233-7 of the French Commercial Code and Article L.223-14 of the General Regulation of the French Financial Markets Authority (Autorité des Marchés Financiers – AMF)
During financial year 2019 In a letter received by the Company on 12 July 2019, In a letter received by the Company on 5 November 2019, New Port reported that it had crossed the statutory the Group acting in concert around the Chairman of the threshold of 8% of the Company’s share capital and voting Board of Directors, formed by Crédit Mutuel Arkéa, rights. Suravenir, New Port and some of the Company’s executive employee shareholders, reported that they had crossed the statutory threshold of 20% of the Company’s share capital and voting rights.
4.10.4 Shareholders’ agreements
At the date of this Universal Registration Document, the Company was not aware of any shareholders’ agreements.
4.10.5 Control of the Company
At 31 December 2019, Nexity was not a controlled company within the meaning of Article L.233-3-II of the French Commercial Code.
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4.10.6 Agreements potentially entailing changes in control of the Company
At the date of this Universal Registration Document, Furthermore, some of the borrowings mentioned in note 20 the Company was not aware of any agreements between to the consolidated financial statements at shareholders that might entail a change in control of the 31 December 2019 included in Chapter 5 of this Universal Company. Registration Document contain change of control clauses. There is no change of control clause in the employment contracts of members of the Executive Committee and other key executives of the Company.
4.11 INFORMATION ON THE SHARE CAPITAL
4.11.1 Share capital
At 31 December 2019, the Company’s share capital totalled €280,648,620, divided into 56,129,724 fully paid-up shares with a nominal value of €5 each.
4.11.2 Securities not representing capital
At the date at which this Universal Registration Document was filed, there were no securities that did not represent the Company’s capital.
4.11.3 Treasury shares
At the Shareholders’ Meeting of 22 May 2019, This authorisation is intended to enable the Company to: the shareholders voted to adopt a resolution authorising • Enhance liquidity in the Company’s shares and increase the Board of Directors, for a period of 18 months, to arrange the regularity with which the share price is listed or for the Company to buy its own shares under the provisions avoid price discrepancies not supported by market of Articles L.225-209 et seq. of the French Commercial Code trends, under the terms of a liquidity contract entered and in compliance with the conditions laid down in into with an investment services provider acting Articles 241-1 to 241-7 of the General Regulations of the independently in compliance with market practices AMF and in the Commission Implementing Directive on accepted by the AMF; regulation (EU) No. 596/2014 of the European Parliament and the Council of 16 April 2014. • Allot the shares to company officers or employees of the Company and/or companies belonging to its group, Under the terms of this authorisation, shares in the under the terms and conditions laid down in applicable Company may be purchased, sold, transferred or legislation and regulations, under (i) programmes exchanged, in compliance with applicable legislation and intended to share the benefits of the Company’s growth, regulations, using any means or procedures, at any time, (ii) the rules governing stock options laid down in on one or more occasions, including by trading blocks of Articles L.225-179 et seq. of the French Commercial shares or carrying out over-the-counter trades (which may Code, (iii) the rules governing the issue of free shares account for the entirety of the associated programme), laid down in Articles L.225-197-1 to L.225-197-3 of the using financial contracts, warrants or securities conferring French Commercial Code and (iv) an employee savings rights to shares in the Company, or by putting in place scheme, as well as to enter into transactions intended option-based strategies (provided that such approaches do to provide for such activities, under the conditions laid not materially increase the volatility of the Company’s down by market authorities and at times considered shares), or by issuing securities which, by way of their appropriate by the Board of Directors or persons acting conversion, exchange, redemption, the exercise of a warrant under its authority; or by any other method confer rights to shares in the Company held by the latter, up to a maximum of 10% of • Deliver the shares upon the exercise of rights attached the share capital. Where applicable, this threshold may be to securities giving an immediate or future right to the adjusted to reflect transactions affecting the Company’s allotment of shares in the Company via redemption, share capital after the Shareholders’ Meeting of conversion, exchange, presentation of a warrant or any 22 May 2019. other method, and to enter into any transactions to provide for the issuance of such securities, under the conditions laid down by market authorities and at times considered appropriate by the Board of Directors or persons acting under its authority;
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• Retire some or all of the shares by reducing the The shares bought back by the Company in 2019 were: Company’s share capital (in particular with a view to • Under the liquidity contract entered into on optimising cash management, return on equity or 1 October 2015 with Oddo BHF acting as investment earnings per share), subject to the approval of services provider. The total amount allocated to this Resolution 13 presented below at this Shareholders’ contract in order to implement this agreement was Meeting; and €5.7 million. During financial year 2019, the Company • Trade in its own shares for any other purpose already bought back 652,406 shares totalling €27.5 million, authorised or that should become authorised by and sold 691,835 shares totalling €29.5 million; applicable legislation and regulations or recognised by • As part of the mandates signed with Oddo BHF, the the AMF as an accepted market practice. In such cases, Company proceeded to buy back 518,273 shares the Company would notify its shareholders via a press totalling €20,751 thousand, through the following release. transactions: 4 On 22 May 2019, on the basis of an authorisation given by • 206,129 shares between 14 January and the shareholders at the Shareholders’ Meeting held on that 15 February 2019 (mandate signed on date, the Company launched a share buyback programme 11 January 2019); aimed primarily at enhancing liquidity in the Company’s shares and increasing the regularity with which the share • 81,974 shares between 16 and 21 May 2019 price is listed or avoiding price discrepancies which are not (mandate signed on 16 May 2019); and supported by market trends, under the terms of a liquidity • 230,170 shares between 23 May and 14 June 2019 contract entered into with an investment services provider (mandate signed on 22 May 2019). acting independently in compliance with market practices Moreover, a total of 424,620 free shares were awarded accepted by the AMF. during the financial year as part of the vesting process for This programme followed the one launched on free shares. 31 May 2018, based on the authorisation by the Shareholders’ Meeting of the same day with an identical primary goal.
TREASURY SHARES o/w liquidity o/w to cover free Total held at (in number of shares) Authorisations contract share plans transaction date Position at 31 December 2018 5,612,972 100,948 450,000 550,948 Purchase, sale and transfer of shares • via the liquidity contract coordinated by an investment services provider (39,429) (39,429) • as part of the buyback programme of treasury shares destined to be awarded under the free share plans 518,273 518,273 • transfers during the financial year to cover free shares vested (424,620) (424,620) 10% of the adjusted capital Implementation of the programme authorised by the Shareholders’ Meeting according to its of 22 May 2019 change POSITION AT 31 DECEMBER 2019 5,612,972 61,519 543,653 605,172
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4.11.4 Schedule of authorisations granted at the Company’s Shareholders’ Meetings
The outstanding authorisations to the Board of Directors granted at the Company’s Shareholders’ Meetings were as follows at 26 March 2020:
Maximum nominal Purpose of the Amount used Date and duration of the authorisation amount of the authorisation and decision of use capital increase (1) Issues of shares
1. Issues with preemptive Shareholders’ Meeting of 31 May 2018 25% of the share Not used subscription rights (Resolution 12) capital or €600m (2) Capital increase, with 26 months, to 30 July 2020 in debt securities preemptive subscription rights, through the issue of shares or other securities providing access to the share capital
2. Public issues without Shareholders’ Meeting of 31 May 2018 With priority rights: Not used preemptive subscription (Resolution 13) 25% of the share rights 26 months, to 30 July 2020 capital or €600m in debt Capital increase through (2) (3) (4) the issuance of shares or securities other securities providing Without priority access to the share capital rights: 10% of the share capital or €300m in debt securities (2) (3) (4)
3. Private placement, Shareholders’ Meeting of 31 May 2018 10% of the share Not used without preemptive (Resolution 14) capital or €300m subscription rights, open 26 months, to 30 July 2020 in debt to qualified investors securities (2) (3) (4) (as described in Paragraph II of Article L.412-2 of the French Monetary and Financial Code) Capital increase through the issuance of shares or other securities providing access to the share capital
4. Overallotment option Shareholders’ Meeting of 31 May 2018 Up to the limit of Not used (Resolution 15) 15% of the initial 26 months, to 30 July 2020 issue described in 1 and 2 of this table and at the same price (2) (3) (4)
5. Capital increase by Shareholders’ Meeting of 31 May 2018 25% of the share Not used capitalisation of reserves, (Resolution 16) capital (5) earnings, premiums 26 months, to 30 July 2020 or other accounts
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Maximum nominal Purpose of the Amount used Date and duration of the authorisation amount of the authorisation and decision of use capital increase (1) 6. Issue in exchange Shareholders’ Meeting of 31 May 2018 10% of the share Not used (2) (3) (4) for contributions of (Resolution 17) capital equity securities or other securities providing 26 months, to 30 July 2020 access to share capital through a public exchange offer initiated by the Company 4 7. Issue of shares Shareholders’ Meeting of 31 May 2018 10% of the share Not used or other securities (Resolution 18) capital at date in exchange for authorisation contributions in kind 26 months, to 30 July 2020 used (2) (3) (4) granted to the Company comprising equity securities or securities conferring access to the share capital
8. Restrictions on Shareholders’ Meeting of 31 May 2018 See the Not used the authorisation to use (Resolution 11) authorisations the authorisations 26 months, to 30 July 2020 described in Points described in Points 1, 2, 1 to 7 above 4, 5, 6 and 7 during a public takeover bid
Issues reserved for eligible employees or company officers
9. Free awards of new Shareholders’ Meeting of 22 May 2019 1% of the share Award of 222,700 free or existing shares (Resolution 16) capital at the date shares granted by the 14 months, to 21 July 2020 on which the grant Board of Directors at its is decided by the meeting of 22 May 2019, Board of and 235,500 at its meeting Directors (5) of 24 October 2019
10. Issues reserved for Shareholders’ Meeting of 31 May 2018 1% of diluted share Not used participants in Group (Resolution 19) capital at 31 May (5) company savings plans 26 months, to 31 July 2020 2018
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Maximum nominal Purpose of the Amount used Date and duration of the authorisation amount of the authorisation and decision of use capital increase (1) Share repurchase and reduction in share capital
11. Repurchase by the Shareholders’ Meeting of 22 May 2019 10% of the share See Section 4.11.3 above Company of its own (Resolution 14) capital, adjusted to for the liquidity contract shares 18 months, to 21 November 2020 reflect transactions and authorisation to affecting the share purchase shares given capital after to Oddo BHF. 22 May 2019
12. Reduction in share Shareholders’ Meeting of 22 May 2019 10% of the share Not used capital via the retirement (Resolution 15) capital per of treasury shares 18 months, to 21 November 2020 24-month period
(1) In the event of a capital increase, the limit is expressed as a percentage of the number of shares composing the share capital at the date of the Shareholders’ Meeting. Where debt instruments are issued, the maximum limit is stated in euros. (2) Where debt instruments are issued, the amount of debt issued may result in a capital increase equal to the designated percentage (25% or 10%). (3) This amount is counted against the maximum percentage of 25% or €600 million for issues with preemptive subscription rights. (4) Where shares or debt securities are issued without preemptive subscription rights or priority rights, the amount of the issue without priority rights is counted against the amount of the issue with priority rights and against the amount of the issues with preemptive subscription rights. (5) Limit separate from the limits for the delegations of authority set at the Shareholders’ Meeting of 31 May 2018.
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4.11.5 Other securities giving access to the share capital
On 10 May 2016, the Company completed a private On 27 February 2018, the Company completed a private placement (as provided for in paragraph II of Article L.411-2 placement (as provided for in Paragraph II of Article L.411-2 of the French Monetary and Financial Code) of 4,199,066 of the French Monetary and Financial Code) of 2,902,336 convertible or exchangeable bonds. The total amount of bonds with the option of redemption in cash and/or new bonds issued was €269,999,943.80 (the 2016 OCEANE and/or existing shares (the 2018 ORNANE bonds). The total bonds). amount issued was €199,999,973.76. The 2016 OCEANE bonds were admitted for trading on the The 2018 ORNANE bonds were admitted for trading on the Marché Libre of Euronext Paris on 13 May 2016. Marché Libre of Euronext Paris on 2 March 2018. Bondholders may request to have their securities converted The initial conversion ratio was adjusted to 1.121 shares as into or exchanged for newly issued or existing shares at any of 28 May 2019 following the distribution approved at the 4 time. The initial conversion ratio was adjusted to Shareholders’ Meeting of 22 May 2019. 1,206 shares as of 28 May 2019 following the distribution Bondholders may ask to have their bonds converted into or approved at the Shareholders’ Meeting of 22 May 2019. exchanged for new or existing shares with effect from Except in cases of early redemption, exchange or 23 April 2022, as laid down in the terms and conditions. conversion of bonds, under the terms set out in the Unless redeemed early, exchanged or converted as laid Prospectus, the bonds must be redeemed in full at par on down in the terms and conditions, the 2018 ORNANE bonds 1 January 2023. must be redeemed in full on 2 March 2025.
4.11.6 Potential impact of securities giving access to share capital
At 31 December 2019 Number of shares outstanding 56,129,724 Number of free shares awarded, not cancelled and not vested (less the number of treasury shares allocated to free share plans) 778,007 Number of shares issued as part of the conversion of 100% of the 2016 OCEANE bonds 5,064,074 Number of shares issued as part of the conversion of 100% of the 2018 ORNANE bonds 3,254,640 TOTAL NUMBER OF SHARES AFTER THE ISSUANCE OF SHARES GIVING ACCESS TO SHARE CAPITAL 65,226,444
On the basis of the number of shares making up the share capital as at 31 December 2019, the issuance of all free share awards granted (less allocated treasury shares) and the conversion of 2016 OCEANE and 2018 ORNANE bonds would result in maximum potential dilution of 13.9%.
4.11.7 Shares given as collateral
At the date when this Universal Registration Document was filed, the Company had not given any shares as collateral.
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4.11.8 Conditional or unconditional options or agreements over the capital of any Group member
Nexity holds a 55% stake in Edouard Denis Développement, In June 2019, Nexity exercised the call option to now hold the parent company of the Edouard Denis real estate 100% of PERL's share capital. development group. Under certain conditions, Nexity has At 31 December 2019, Nexity held a 91.66% stake in mechanisms at its disposal enabling it to acquire the Térénéo, following the acquisition during the year of 8.34% company in full. of the shares held by minority interests. Under certain Nexity has a 65% stake in Prado Gestion (Primosud). Under conditions, Nexity has mechanisms at its disposal under certain conditions, Nexity has mechanisms at its disposal which it has the option of ultimately acquiring the company enabling it to acquire the company in full. in full. Nexity holds a 63.16% stake in Ægide SA, the parent At 31 December 2019, Nexity held a 57.70% stake in company of the Ægide-Domitys Group. Under certain Bureaux à Partager (Morning Coworking), following the conditions, Nexity has mechanisms at its disposal enabling acquisition during the financial year of 3.7% of the shares it to acquire the company in full. held by minority interests. Under certain conditions, Nexity At 30 January 2019, Nexity acquired 71.30% stake in has mechanisms at its disposal under which it has the Accessite. Under certain conditions, Nexity has mechanisms option of ultimately acquiring the company in full. at its disposal enabling it to acquire the company in full. Given the relative size of the businesses concerned, these commitments pose no risk to the Group’s financial structure.
4.11.9 Changes in the Company’s share capital over the past three financial years
At 31 December 2019, the share capital of the parent company comprised 56,129,724 shares with a nominal value of €5 per share.
Number of Nominal amount Total amount of shares Nominal of the share issue, Date of the issued/ value of increase/decrease contribution or Total share Total number decision Transaction cancelled shares in capital merger premium capital of shares Capital increase on 21/02/2017 by partial capitalisation of the “Share issue 21/02/2017 496,000* €5 €2,480,000 €(2,480,000) €276,525,220 55,305,044 premium” and “Merger premium” accounts Capital increase on 28/07/2017 reserved 550,000 €5 €2,7500,000 €19,998,000 €279,275,220 55,855,044 28/07/2017 for employees (Axion 2017) Capital increase on 18/12/2017 by 18/12/2017 partial capitalisation of the “Share issue 181,680* €5 €908,400 €(908,400) €280,183,620 56,036,724 premium” account Capital increase on 20/02/2018 by 20/02/2018 partial capitalisation of the “Merger 93,000* €5 €465,000 €(465,000) €280,648,620 56,129,724 premium” account
* Shares created following the vesting of free shares.
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4.12 REQUIREMENTS UNDER THE ARTICLES OF ASSOCIATION
In order to conform the Company's Articles of Association with the law, an update will be proposed at the next Combined Shareholders' Meeting.
4.12.1 Corporate purpose
Pursuant to Article 2 of its Articles of Association, • To participate in the management or administration of the Company’s purpose, in France and abroad, is as follows: a company or investment fund whose purpose is to • To develop and market new and pre-owned residential acquire interests, through any means and in any form and commercial property, in France and abroad, whatsoever, in any company, business or undertaking – 4 including the improvement, subdivision and renovation by acquiring a company, creating a new company or of real property of any kind, the provision of property contributing assets, or through a merger, alliance, joint development, marketing and advisory services to venture or economic interest group – and to administer, individuals and companies and any other activities manage and control such interests, and to provide related to or associated with these activities; property development, marketing and advisory services to individuals and companies and direct or indirect • To acquire interests, through any means and in any technical or administrative assistance to subsidiaries of form whatsoever, in any French or foreign commercial, the Company; industrial, financial, property or asset management company – by acquiring a company, creating a new • To invest in real property or other assets, manage real company or contributing assets, or through a merger, property and other assets, and conduct analysis and alliance, joint venture or economic interest group – and research of a financial or non-financial nature; and to administer, manage and control such interests; • In general, to engage in financial, commercial or industrial activities involving real property or other assets that are directly or indirectly related to the above purpose or to any similar or related purpose that is liable to further the development of the Company’s purpose.
4.12.2 Financial year
The Company’s financial year runs from 1 January to 31 December.
4.12.3 Distribution of profits
Each share entitles its owner to a share of profits in Any remaining profits, plus retained earnings, constitute proportion to the amount of share capital the share distributable profits. represents. Dividends shall be paid within nine months of the end of From those profits, after deducting any prior year losses, the financial year, unless this period is extended by decision shall be appropriated (i) at least five percent to constitute of the courts. The Board of Directors may, subject to legal or the legal reserve, until such time as the legal reserve regulatory requirements, distribute one or more interim represents at least one-tenth of the share capital and dividends before the financial statements for the year are resuming if and when the legal reserve falls below this approved. level for whatever reason, and (ii) after this appropriation is made any other appropriations to reserves required by the law shall be made.
4.12.4 Changes in capital and voting rights
Any change in the share capital or voting rights attached to the securities making up the share capital shall comply with applicable laws and regulations. The Articles of Association make no specific provision in this regard.
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4.12.5 Shareholders’ Meetings
Notice of meeting Shareholders’ Meetings shall be convened, and conduct request as specified in the preliminary notice and in the business as laid down in law. The Company may fulfil the notice of meeting, in accordance with applicable laws and required formalities prior to Shareholders’ Meetings using regulations. Shareholders may send in and revoke their electronic communication methods, pursuant to proxy forms electronically. Pursuant to the Board of Article R.225-63 of the French Commercial Code. Directors’ decision indicated in the preliminary notice and Shareholders’ Meetings shall be held at the Company’s the notice of meeting, the electronic signature of this form registered office or at any other location indicated in the may be either (i) a secure electronic signature as defined in notice of meeting. Decree no. 2001-272 of 30 March 2001 adopted pursuant to Article 1316-4 of the French Civil Code concerning Shareholders may vote on resolutions at Ordinary, electronic signatures, or (ii) provided using some other Extraordinary, Special or Combined Shareholders’ Meetings, reliable identification process that meets the requirements according to the type of resolution to be voted on. of the first sentence of the second paragraph of the aforementioned Article 1316-4. A shareholder’s attendance Attendance at a Shareholders’ Meeting shall invalidate any vote made by post, electronically or by proxy. In the event of a conflict Under Article 19 of the Articles of Association, shareholders between a proxy vote and a postal vote, the proxy vote will may attend and vote at any Shareholders’ Meeting, shall have priority, regardless of when the votes were cast. in person or by proxy, pursuant to Article L.225-106 of the Voting forms sent in by post shall not count towards the French Commercial Code. quorum unless they are duly completed and received by the Shareholders are entitled to attend Shareholders’ Meetings Company at least three (3) calendar days before the date of insofar as the shares they own are fully accounted for, as the Shareholders’ Meeting. Voting instructions granting follows, by the regulatory deadline (Article R.225-85 of the proxy or power of attorney that are sent in electronically as French Commercial Code): laid down in law and as determined by the Board of Directors shall be executed if received by the Company by • Owners of registered shares (actions nominatives) must 3:00 p.m. (Paris time) the day before the Shareholders’ have their shares registered in the Company’s accounts Meeting. by the deadline; and • Owners of bearer shares (actions au porteur) must have Voting rights their shares recorded in the accounts of their authorised intermediary by the deadline. The holding of bearer Voting rights attached to shares are proportional to the shares with an authorised intermediary is evidenced by portion of share capital those shares represent, with each an ownership certificate issued by that intermediary. share entitling its holder to one vote. No double voting In accordance with the provisions of Article R.225-85 of the rights have been granted pursuant to the last paragraph of French Commercial Code, as amended by Decree Article L.225-123 of the French Commercial Code. no. 2014-1466 of 8 December 2014, shares must be fully accounted for no later than 00:00 hours (Paris time) on the Form of shares and identification of shareholders second business day preceding the meeting. Fully paid-up shares may be held in registered or bearer Shareholders may be represented by another shareholder, form at the shareholder’s option, subject to the legal and their spouse, their civil partner or any other natural or legal regulatory requirements and the Company’s Articles of person of their choice. Shareholders may also vote by post, Association. Shares must be held in registered form until or electronically if applicable and subject to prior consent fully paid up. by the Board of Directors, using a form sent to them at their
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4.12.6 Shareholder reporting requirements for crossing of thresholds
Any natural or legal person, acting alone or in concert, that At the request of one or more shareholders holding at least comes to hold a number of shares representing over 5%, 3% of the Company’s share capital or voting rights and duly 10%, 15%, 20%, 25%, 30%, 331/3%, 50%, 662/3%, 90% or recorded in the minutes of a Shareholders’ Meeting, failure 95% of the Company’s share capital or voting rights shall by a shareholder to observe these provisions may be inform the Company and the French Financial Markets sanctioned by the revocation of that shareholder’s right to Authority of the total number of shares or voting rights held exercise the voting rights attached to the excess shares within four trading days after crossing above any of these over and above the reporting threshold at any Shareholders’ ownership thresholds. This reporting requirement also Meeting for a period of two years after the date on which applies when a shareholder crosses below any of these the reporting requirement is met. thresholds, in terms of share capital or voting rights. Subject to the exceptions laid down in legal provisions, any 4 Unless properly reported, any shares over and above the person who holds, either individually or in concert, in threshold that should have been reported in accordance respect of one or more temporary sales of those shares or with the aforementioned legal requirements will have no any transaction conferring the right or giving rise to the voting rights at any Shareholders’ Meeting for a period of obligation to resell those shares or return them to the two years after the reporting requirement is met. seller, a number of shares representing more than 0.5% of Furthermore, pursuant to the Company’s Articles of total voting rights, shall notify both the Company and the Association, any natural or legal person, acting alone or in French Financial Markets Authority (AMF) of the total concert, who comes to hold, either directly or indirectly, number of shares temporarily held no later than 00:00 according to the same calculation methods and conditions hours (Paris time) three business days before the date of as those laid down in Articles L.233-7 et seq. of the French the Shareholders’ Meeting, provided that the agreement Commercial Code and in the AMF’s General Regulation, arranging that transaction remains in force at that date. a number of shares representing over 3% of the Company’s As well as the number of shares acquired under the terms share capital and/or voting rights, and subsequently to this of one of the aforementioned transactions, the notification each additional 1% of the Company’s share capital and/or must include the identity of the seller, the date and voting rights including beyond the 5% threshold and all maturity of the agreement governing the transactions and, legal and regulatory reporting thresholds, shall notify the where applicable, the voting agreement. The Company shall Company by registered post with acknowledgement of publish this information under the terms and conditions receipt within four trading days of the date on which the laid down in the AMF’s General Regulation. aforementioned threshold is exceeded, indicating the Unless properly reported, any shares purchased under one percentage of share capital and voting rights held and any of the aforementioned transactions will be stripped of securities that give or may in the future give the voting rights for the Shareholders’ Meeting in question and shareholder access to equity and the associated potential for any other Shareholders’ Meeting that might be held voting rights. This information is also reported, subject to until such time as those shares are resold or returned. the same requirements, whenever the percentage of the share capital or voting rights held falls below one of these thresholds.
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4.12.7 Composition of the Board of Directors (Articles 11 to 14 of the Articles of Association)
Information on the start and end dates of directors’ terms The Chairman organises and directs the Board’s activities of office is set out in Section 4.1.2 “Members of the Board and reports on them at Shareholders’ Meetings. of Directors during the financial year ended The Chairman oversees the proper functioning of the 31 December 2019” of this chapter. Company’s corporate bodies and specifically ensures that The Board of Directors has no fewer than three and no more the directors are in a position to fulfil their duties. than eighteen members. Board members are appointed at the Ordinary Vice-Chairman and Senior Independent Director Shareholders’ Meeting for four-year terms expiring at the If deemed necessary, the Board of Directors may also end of the Ordinary Shareholders’ Meeting held during the appoint one or more Vice-Chairmen chosen from among financial year in which their terms of office expire to the independent directors, for a term of office that may not approve the financial statements for the preceding financial exceed that of their appointment as director. year. The Board of Directors also includes one director who represents the Group’s employees (Article L.225-27-1 of the Luce Gendry has served in this position since 17 February French Commercial Code). This director is elected by the 2015. Works Council of UES Nexity Promotion Construction for a The Vice-Chairman may convene Board meetings should four-year term. When the number of directors appointed at the Chairman be unable to do so. a Shareholders’ Meeting is greater than twelve, a second In the absence of the Chairman of the Board of Directors, director representing the employees is elected under the the Vice-Chairman may also chair Board meetings. same conditions. The Vice-Chairman is also the Senior Independent Director. With the exception of the director representing the His or her duties, responsibilities, resources and employees, according to the Articles of Association each prerogatives as such are described in the internal rules and member of the Board of Directors must own at least regulations of the Board of Directors. In this capacity, he or 200 shares and keep them in registered form for the she coordinates meetings of independent directors, entirety of his or her term of office. The number of shares supervises the formal assessment of the work of the Board held by serving directors is set out in Section 4.8 “Interests of Directors and is the point of contact for Board members of the executive company officers and members of the in the event of a conflict of interest. Board of Directors in the Company’s share capital” of this chapter. Non-voting Board members Directors are always eligible for reappointment. No more than one third of the Board members may be aged 70 or The Company’s Articles of Association stipulate that the over. If a director or permanent representative reaches the Board of Directors may be assisted in its duties by up to age of 70 when one third of the Board members have three non-voting Board members appointed by the already reached that age, the oldest director or permanent Shareholders’ Meeting for a term of three years. representative will be deemed to have resigned as at the The non-voting Board members may be either natural or next Ordinary Shareholders’ Meeting. Where a director is a legal persons and need not be shareholders. The non-voting legal entity, these age limits apply to that entity’s Board members attend Board meetings but cannot vote in permanent representative. decisions. They serve as general advisors to the directors, who are under no obligation to heed their opinions or Chairman of the Board of Directors recommendations. The non-voting Board members are bound by the same confidentiality obligations as voting The Board of Directors elects one of its individual members directors and may be dismissed at any time by vote at an as Chairman for a duration not exceeding the electee’s term Ordinary Shareholders’ Meeting. of office as director. The Chairman must be under 72 years of age. If the Chairman of the Board of Directors reaches Works Council representative this age limit while in office, he or she will be deemed to have resigned at the end of the next Annual Ordinary Following the appointment of a director representing the Shareholders’ Meeting. The Board of Directors determines employees by the Works Council of UES Nexity Promotion the Chairman’s remuneration. It may also dismiss the Construction, in accordance with the provisions of Chairman at any time. Article L.2323-65 of the French Labour Code, a single representative of this Works Council attends Board meetings.
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4.12.8 Duties and powers of the Board of Directors (Article 15 of the Articles of Association)
The Board of Directors sets the Company’s business objectives and oversees their implementation. Except for certain powers expressly allocated to Shareholders’ Meetings, and insofar as the scope of business allows, the Board of Directors addresses all issues pertaining to the running of the Company and votes on how to resolve matters concerning it. The Board of Directors undertakes any controls and checks it deems appropriate.
4
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5 FINANCIAL REPORT
5.1 OPERATING AND FINANCIAL REVIEW 244 5.3 CONSOLIDATED FINANCIAL STATEMENTS 262 5.1.1 Significant developments 244 AT 31 DECEMBER 2019 5.1.2 Business activity 245 5.3.1 Condensed financial statements 263 5.1.3 Consolidated results and balance sheet items 5.3.2 Notes to the consolidated financial statements 267 in compliance with IFRS as applied 5.3.3 Statutory Auditors’ report on the consolidated at 31 December 2019 248 financial statements 307 5.1.4 Consolidated results based on operational reporting 251 5.1.5 Breakdown into development and services 255 5.1.6 Balance sheet items based on operational reporting 256 5.4 PARENT COMPANY FINANCIAL STATEMENTS 5.1.7 Economic uncertainties 259 AT 31 DECEMBER 2019 311 5.4.1 Condensed financial statements 312 5.2 TRENDS 260 5.4.2 Notes to the parent company financial statements 316 5.4.3 Statutory Auditors’ report on the parent company 5.2.1 Backlog and business potential financial statements 334 at 31 December 2019 260 5.2.2 Recent developments 260 5.2.3 Outlook 261 5.5 ADDITIONAL ITEMS 338 5.5.1 Information on invoice payment terms 338 5.5.2 Non-deductible expenses 338 5.5.3 Dividend policy 338 5.5.4 Proposal for the allocation and distribution of 2019 earnings 339 5.5.5 Statutory limitation period 339 5.5.6 Table of Nexity’s results over the past five financial years 340 5 FINANCIAL REPORT Operating and financial review
5.1 OPERATING AND FINANCIAL REVIEW
The Group’s consolidated financial statements are prepared Very brisk business activity in accordance with International Financial Reporting 1 Standards (IFRSs) and IFRS Interpretations Committee • New home reservations in France : 21,837 units (IFRS IC) interpretations as adopted within the European worth €4,362 million (up 11% by volume and by Union. value), with an increased market share estimated at 13.4% (up 1.4 points relative to 2018); IFRS 11 Joint arrangements, the application of which became mandatory on 1 January 2014, states that joint ventures • 21 openings in serviced residences; must be accounted for using the equity method (whereas • Commercial Real Estate order intake: €521 million; before they could be proportionately consolidated). Nexity’s joint ventures are mainly co-development vehicles in • Development backlog: €5.1 billion (up 14%); Residential and Commercial Real Estate. For operational • Nexity wins many high-profile calls for proposals, reporting and management purposes, Nexity continues to including the athletes’ village in Saint-Ouen apply proportionate consolidation to its joint ventures, which (Seine-Saint-Denis); in its view provides a more accurate reflection of the Group’s • Nexity ranked as France’s number-one low-carbon performance and risks as measured by revenue, operating developer by BBCA in 2019. profit, working capital requirement and debt. The segment information presented in this Registration Financial results2 ahead of targets Document reflects Nexity’s operational reporting methods and the new IFRS 15 and IFRS 16 accounting standards, • Revenue: €4,499 million (up 9%); applied by the Group since 1 January 2018. • EBITDA: €573 million (up 10%), equating to an The financial data and indicators presented below are based EBITDA margin of 12.7%; on Nexity’s operational reporting, with joint ventures • Group share of net profit before non-recurring proportionately consolidated. Section 5.1.3 “Consolidated items3: €163 million (down 18%); results and balance sheet items in compliance with IFRS as 4 applied at 31 December 2019” of this chapter includes • Net financial debt (before lease liabilities) : 5 comments on the consolidated financial statements under €918 million (i.e. 2.3x EBITDA) . IFRS.
5.1.1 Significant developments
In addition to the items presented above, 2019 was marked by the following significant developments: Change in scope In January 2019, the Group acquired 71.3% of the capital of The sale of Nexity Conseil et Transaction to its Accessite, a French company specialising in advice and management was finalised early in the year. Nexity has management for commercial property assets, and in retained a minority stake of 13.31%. October 2019 it acquired 100% of the shares in Etoile Nexity sold Guy Hoquet l’Immobilier in May 2019. Property Management for an amount of €4.1 million.
1 Like-for-like figures are indicated in the current chapter. 2 The financial data and indicators used in this press release – including forward-looking information – are based on Nexity’s operational reporting, with joint ventures proportionately consolidated, and take into account the impact of two new reporting standards, IFRS 15 and IFRS 16, which the Group has applied from 1 January 2018. 3 Non-recurring items were negative for €2 million, giving Group share of net profit of €161 million. 4 Net debt totalled €1,826 million, including €908 million in lease liabilities (IFRS 16) EBITDA after leases. 5 EBITDA after leases.
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Change in governance At is meeting held on 22 May 2019 following the The income from this Green Bond issue will be allocated to Shareholders’ Meeting, Nexity’s Board of Directors financing and/or refinancing of development and reappointed Alain Dinin as Chairman and decided to construction of Residential Real Estate projects in France separate the roles of Chairman and Chief Executive Officer. which meet several criteria including in particular the Jean-Philippe Ruggieri was appointed Chief Executive European NZEB standards (“Nearly Zero-Energy Buildings”). Officer. Julien Carmona was reappointed as Deputy CEO and The allocation of the funds to projects will be the subject of a company officer. They make up the Strategy Committee specific traceability process and an annual reporting process together with Deputy CEOs Véronique Bédague-Hamilius which will be audited and published on the Group’s website. and Frédéric Verdavaine. Implementation of a NEU CP programme To this same end, Alain Dinin serves in a strengthened In the fourth quarter of 2019, Nexity implemented a position as Chairman of Nexity’s Board of Directors, vested short-term negotiable debt securities programme with extensive powers relating to investment and strategy, (Negotiable European Commercial Paper – NEU CP) for a and actively supports the new management team. maximum amount of €300 million. Financing The programme enables Nexity to seize market 5 Euro PP Green bond issue opportunities to optimise financing costs, while remaining extremely flexible. The programme amount is covered by Nexity completed a Green Bond issue in December 2019. The the Group’s available cash and banking credit approvals inaugural issue of this Green Bond complies with the Group’s which the Group has not yet used. Green Bond eligibility criteria (the Green Bond Framework). 5.1.2 Business activity
Individual Clients – Residential Real Estate The French market for new homes is expected to total With double-digit growth in its reservations, Nexity once 162,700 reservations in 2019 (down around 1% again substantially outperformed the market. The Group’s year-on-year)1. Growth was mainly held back by a one-off market share2 is expected to increase by 1.4 points to supply issue linked to the approaching spring 2020 local 13.4% (compared with 12.0% at end-2018). For full-year elections in France, which should subside thereafter. 2020, Nexity expects the market to pick up again starting in Financial conditions in the residential mortgage market2 – the second half, and anticipates that the Group will where interest rates were historically low (averaging 1.13% continue to gain market share. in December 2019) – fuelled very strong demand. Nexity’s strong outperformance relative to the French In addition, sales price growth offset the inflationary trend in market reflected the success of its multi-product, construction costs, which should ease in 2020. multi-service and multi-brand strategy; its geographical positioning, which is concentrated in Greater Paris and major cities, where underlying demand is very buoyant; and its unrivalled offering of products and services, which enables the Group to meet demand throughout the entire country.
Reservations (units and million of euros) 2019 2018 % Change New homes (France) 21,837 19,609 +11.4% o/w Ægide (excluding co-developments with Nexity)* 642 549 - Subdivisions 2,088 2,063 +1.2% International 641 365 x1.8 TOTAL RESERVATIONS (NUMBER OF UNITS) 24,566 22,037 +11.5% New homes (France) 4,362 3,915 +11.4% o/w Ægide (excluding co-developments with Nexity)* 330 116 - Subdivisions 177 169 +4.8% International 100 32 x3.1 TOTAL RESERVATIONS (million of euros incl. VAT) 4,639 4,116 +12.7%
* Development projects undertaken without Nexity’s involvement. Co-development projects undertaken with Nexity are included in the Group’s “Residential Real Estate” reporting.
1 MALONE (MArché du LOgement NEuf): New home market in France, calculated by adding together the number of retail sales (source: French Commissioner-General for Sustainable Development – CGDD) and bulk sales (source: French Federation of Real Estate Developers – FPI). 2 Source: Observatoire Crédit Logement, December 2019.
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At end-2019, net new home reservations in France totalled country, up 14% in the Paris region and up 10% elsewhere 21,837 units for €4,362 million including VAT, up 11% by in France, and 86% of reservations were generated in volume and by value with respect to 2018. Excluding supply-constrained areas. changes in scope (acquisition of a controlling stake in the In the fourth quarter of 2019 alone, net new home Ægide-Domitys group in June 2018), they totalled at reservations in France were up 18% by volume and 15% by end-December 2019, 21,195 units for €4,231 million value at 7,794 units, corresponding to €1,529 million, including VAT, up 8% by volume and by value relative to reflecting very brisk business activity in the last few months 2018. This growth was well balanced across the entire of the financial year.
Breakdown of new home reservations by client – France 2019 2018 Homebuyers 4,248 19% 4,312 22% o/w: – First-time buyers 3,654 17% 3,492 18% Other homebuyers 594 3% 820 4% Individual investors 9,719 45% 8,191 42% Professional landlords 7,870 36% 7,106 36% o/w: – Institutional investors 2,833 2,500 Social housing operators 5,037 4,606 TOTAL 21,837 100% 19,609 100%
This increase in reservations was mainly concentrated The supply of homes for sale dropped back 2% from its among individual investors (up 19% relative to 2018) and end-2018 level to stand at 8,859 units at end-2019, due to professional landlords (up 11% relative to 2018), driven in a particularly swift absorption rate of 4.9 months particular by strong growth in reservations in serviced (compared with 5.5 months in 2018). Unsold completed residences (up 53%), which made up 29% of total stock (104 units) as a proportion of the total supply for sale reservations. Reservations by homebuyers remained nearly remained very low. stable in volume even though their percentage as a At end-2019, the business potential for new homes rose proportion of the total decreased. 3% from end-2018 to 55,354 units, i.e. 2.5 years of The average price including VAT of new homes reserved by development operations. This represented potential Nexity’s Individual Clients at end-December 2019 totalled revenue of €10.6 billion excluding VAT. This high potential, €231 thousand, up 3% compared with 2018. Nexity, whose which ensures that future supply will be replenished, strategy is to offer affordable housing, does not rely on was accompanied by a high level of vigilance with regard to assumed steady inflation in selling prices. land prices amidst an inflationary trend in construction The average level of pre-selling booked at the start of costs. construction work remained high at 73% at end-2019, At end-2019, including subdivisions (2,088 plots) and compared with 69% at end-2018. international sales (641 reservations, 1.8 times higher than in 2018), Residential Real Estate’s business activity (24,566 units reserved, for €4,639 million including VAT) was up 11% by volume and 13% by value (on a like-for-like basis: up 9% by volume and 10% by value).
Individual Clients – Real Estate Services to Individuals
Property Management for Individuals – Portfolio of units under management December 2019 December 2018 Chnage Condominium management 709,000 721,000 -1.7% Rental management 175,000 175,000 +0.4% Franchise networks – Century 21 Number of agencies 898 867 +3.6% Serviced residences – Students – Studéa Number of residences in operation 124 122 +2 Rolling 12-month occupancy rate 94.7% 92.9% +1.8 pts Serviced residences – Seniors – Domitys Total number of residences in operation 100 83 +17 o/w: Number of residences opened more than 2 years ago (France) 58 51 +7 Rolling 12-month occupancy rate 84.2% 82.5% +1.7 pts Distribution activities – iSelection and PERL December 2019 December 2018 % Change Total reservations 4,670 4,293 +8.8% Reservations on behalf of third parties 2,528 2,301 +9.9%
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Property Management for Individuals Business potential in Commercial Real Estate2 totalled In Property Management for Individuals, excluding nearly €3 billion at end-2019 (up 6% relative to end-2018). Franchises (condominium management, rental A purchase contract subject to conditions precedent was management, lettings and brokerage), the portfolio of units signed with Swiss Life Asset Managers in the fourth quarter under management totalled over 880,000 units at of 2019 for the eco business park in La Garenne-Colombes 31 December 2019, down 1.4% at current scope1. In a (Hauts-de-Seine), developed in partnership with Engie brokerage market that hit record highs (with more than one (135,000 square metres). In 2020, subject to planning million sales of existing homes), Nexity’s brokerage permissions, the VEFA off-plan agreement to be signed for business and the Century 21 franchise network delivered a the project (Nexity’s share of which is just under €1 billion) very strong performance. will have a significant impact on the Group’s revenue. Serviced residences Real Estate Services to Companies Nexity Studéa had 124 student residences under Floor area under management – after including management at 31 December 2019, totalling more than 1 million square metres in respect of Accessite, a retail 15,000 units. The rolling 12-month occupancy rate space management firm acquired in January 2019 – increased to 94.7% at end-2019 (versus 92.9% at totalled 19 million square metres at end-2019, and are 5 end-2018). down 0.3% on a like-for-like basis compared to December The Domitys-branded senior independent living facilities 2018. business posted strong growth. 17 new residences have Morning Coworking – a leading player in the Paris been opened since the beginning of the year, increasing its coworking space market – continued to grow and at portfolio of serviced residences to 100, corresponding to end-2019 operated 22 coworking spaces totalling more over 10,000 residential units. At end-2019, the 58 than 60,000 square metres (up 35% from residences that were opened more than two years ago had end-December 2018) and corresponding to around 6,700 an average occupancy rate of 95%. workstations. Distribution activities Local Authority Clients iSelection and PERL recorded 4,670 reservations in 2019 (up 9% compared with 2018). This reflects the continuing With its broad range of expertise, Nexity is able to win strong appeal of buy-to-let investment products among complex calls for proposals with strong commitments to clients as well as the very good commercial performance of social and environmental responsibility: Nexity’s networks. Around half of these reservations were “Inventer Bruneseau”, as part of a consortium, for a homes distributed on behalf of third-party developers or • development linking Ivry-sur-Seine (Val-de-Marne) with through the division of ownership of existing property, central Paris; with the rest made up of homes produced by the Group. • “Dessine-moi Toulouse”, as a member of two different Commercial Clients consortia, for the Jolimont and Halle Amouroux projects; • Transforming the Porte de Montreuil district of central Commercial Real Estate1 Paris as part of a consortium; winner of a competition In a French commercial real estate investment market that held by the C40 (a network of the world’s biggest cities); remained buoyant (with nearly €36 billion invested in and 2019, higher than in 2018), the Group recorded • Building part of the athletes’ village in Saint-Ouen €521 million excluding VAT in order intake for 2019, versus (Seine-Saint-Denis) as part of a consortium. €349 million in 2018, which broke down as follows: • €305 million in orders in the Paris region (59% of total new orders), including the Évidence development in Saint-Ouen (Seine-Saint-Denis), the Deloitte business park in Bailly-Romainvilliers (Seine-et-Marne), and three turnkey development contracts (CPI) in central Paris; and • €216 million in orders outside the Paris region (41% of total new orders), including the Lyon Vaise development (Rhône) and the 45ème Parallèle development at Bordeaux Mérignac (Gironde).
1 Source of market data: CBRE MarketView: France Investment and Paris region Offices – Q4 2019 2 Business potential: The total volume of potential business at any given moment, expressed as revenue excluding VAT, within future projects in Residential Real Estate (New homes, Subdivisions and International) as well as Commercial Real Estate, validated by the Group’s Committee, in all structuring phases, including the programmes of the Group’s urban regeneration business (Villes & Projets); this business potential includes the Group’s current supply for sale, its future supply corresponding to project phases not yet marketed on purchased land, and projects not yet launched associated with land secured under options.
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CSR Nexity’s most valuable asset is its people. The Group has Nexity issued a green bond in December 2019. become one of the 325 companies around the world The issuance of this green bond complies with the (including 12 in France) that have been selected for the eligibility criteria set out in the Group’s Green Bond 2020 Bloomberg Gender-Equality Index (GEI), recognising Framework. The proceeds of the issuance will be used to Nexity’s initiatives in this area, such as its “Being Inclusive finance and/or refinance the development and construction Together” Charter, signed by the Strategy Committee and of residential real estate projects in France that meet approved by 400 managers in September 2019, based on several criteria, including the alignment with European the fundamental principles of gender equality and diversity. NZEB (“Nearly Zero-Energy Buildings”) standards. Nexity is a pioneer in timber-frame developments, with The allocation of funds to projects will be subject to a 120,000 square metres delivered since 2011 and 19% of specific traceability process and annual reporting that will commercial space delivered in 2019 featuring a be audited and published on the Group’s website. timber-frame design, and was ranked the number-one low-carbon developer by BBCA in 2019.
5.1.3 Consolidated results and balance sheet items in compliance with IFRS as applied at 31 December 2019
Consolidated income statement – 31 December 2019
31/12/2019 31/12/2018 (in millions of euros) IFRS IFRS Revenue 4,200.7 3,939.6 Operating expenses (3,665.4) (3,442.8) Dividends received from equity-accounted investments 19.9 11.8 EBITDA 555.3 508.6 Restatement of leases (166.4) 103.3 Depreciation, amortisation and impairment of non-current assets (45.2) (31.6) Net change in provisions 8.0 6.7 Share-based payments (16.1) (14.3) Borrowing costs directly attributable to property developments, transferred from inventory - (6.5) Dividends received from equity-accounted investments (19.9) (11.8) Current operating profit 315.8 347.8 Remeasurement of equity-accounted investments following acquisition of control - 79.2 Operating profit 315.8 427.0 Share of net profit from equity-accounted investments 25.0 17.9 Operating profit after share of net profit from equity-accounted investments 340.8 444.9 Cost of net financial debt (64.6) (54.3) Other financial income/(expenses) (9.8) 5.0 Net financial income/(expense) (74.4) (49.4) Pre-tax recurring profit 266.4 395.5 Income tax (97.0) (108.4) Share of profit/(loss) from other equity-accounted investments 0.0 (4.7) Consolidated net profit 169.4 282.4 Attributable to non-controlling interests 8.7 5.5 ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY (in euros) 160.7 276.9 Net earnings per share 2.90 4.95
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In IFRS terms, revenue to end-December 2019 totalled Current operating profit at 31 December 2019 totalled €4,201 million, up 7% relative 2018. On a like-for-like €316 million, down 9% relative to 31 December 2018 basis, revenue totalled €3,981 million, up 1% from 2018. (€348 million). This figure excludes revenue from joint ventures, Net financial expense at 31 December 2019 totalled in accordance with IFRS 11, which requires joint ventures – -€74 million, relative to -€49 million at 31 December 2018. proportionately consolidated in the Group’s operational Consolidated revenue to 31 December 2019 totalled reporting – to be accounted for using the equity method. €169 million, down 40% relative to consolidated revenue EBITDA at 31 December 2019 totalled €555 million, up 9% for the year ended 31 December 2018 (€282 million). relative to 31 December 2018 (€509 million). New segmentation impacts are presented under section 5.1.4 “Consolidated results based on operational reporting” of this chapter.
Simplified consolidated balance sheet at 31 December 2019
ASSETS 5 31/12/2019 31/12/2018 (in millions of euros) IFRS IFRS Goodwill 1,598.0 1,579.1 Other non-current assets 1,114.3 1,015.8 Equity-accounted investments 39.9 35.3 Total non-current assets 2,752.3 2,630.2 Net WCR 842.8 799.9 TOTAL ASSETS 3,595.0 3,430.1
LIABILITIES AND EQUITY 31/12/2019 31/12/2018 (in millions of euros) IFRS IFRS Share capital and reserves 1,586.0 1,478.0 Net profit for the period 160.7 276.9 Equity attributable to equity holders of the parent company 1,746.7 1,754.9 Non-controlling interests 10.6 8.9 Total equity 1,757.3 1,763.8 Net debt 1,700.4 1,511.0 Provisions 100.0 110.1 Net deferred tax 37.3 45.2 TOTAL LIABILITIES AND EQUITY 3,595.0 3,430.1
Consolidated net debt at 31 December 2019
31/12/2019 31/12/2018 (in millions of euros) IFRS IFRS Bond issues (incl. accrued interest and arrangement fees) 1,017.8 770.2 Loans and borrowings 941.5 713.7 Loans and borrowings 1,959.3 1,483.9 Other financial receivables and payables (120.4) (80.3) Cash and cash equivalents (1,116.7) (720.8) Bank overdraft facilities 70.4 18.1 Net cash and cash equivalents (1,046.3) (702.7) TOTAL NET FINANCIAL DEBT BEFORE LEASE LIABILITIES 792.5 700.9 Lease liabilities 907.9 810.2 TOTAL NET DEBT 1,700.4 1,511.0
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Non-current assets at 31 December 2019 totalled At 31 December 2019, provisions had decreased relative to €2,752 million, up €122 million relative to 31 December 2018 to €100 million. 31 December 2018 (€2,630 million). Consolidated net debt at 31 December 2019 totalled Net Working Capital Requirement (WCR) at €1,700 million, up €189 million relative to 31 December 2019 totalled €843 million, up 5% relative to 31 December 2018 (€1,511 million). 31 December 2018 (€800 million). A more detailed analysis of the year-on-year changes is Consolidated equity to 31 December 2019 totalled presented in section 5.1.6 “Balance sheet items based on €1,757 million, down €7 million relative to consolidated operational reporting” of this chapter. equity for the year ended 31 December 2018 (€1,764 million).
Simplified cash flow statement at 31 December 2019
31/12/2019 31/12/2018 (in millions of euros) IFRS IFRS Consolidated net profit 169.4 282.4 Elimination of non-cash income and expenses 182.2 48.5 Cash flow from operating activities after interest and tax expenses 351.5 330.9 Elimination of net interest expense/(income) 64.6 54.3 Elimination of tax expense, including deferred tax 94.8 97.8 Cash flow from operating activities before interest and tax expenses 510.9 483.1 Change in operating working capital (34.8) (79.0) Dividends received from equity-accounted investments 19.9 11.8 Interest paid (23.2) (24.6) Tax paid (124.6) (109.0) NET CASH FROM/(USED IN) OPERATING ACTIVITIES 348.3 282.2 Net cash from/(used in) net operating investments (59.6) (47.8) Free cash flow 288.7 234.4 Acquisitions of subsidiaries and other changes in scope 14.9 (71.3) Other net financial investments (9.5) (5.5) NET CASH FROM/(USED IN) INVESTING ACTIVITIES 5.3 (76.8) Dividends paid to equity holders of the parent company (138.2) (140.3) Other payments to/(from) minority shareholders (33.6) (35.4) Net disposal/(acquisition) of treasury shares (19.1) (19.8) Repayment of lease liabilities (169.9) (103.9) Change in financial receivables and payables (net) 410.1 78.4 NET CASH FROM/(USED IN) FINANCING ACTIVITIES 49.3 (221.0) Impact of changes in foreign currency exchange rates 0.2 (0.1) CHANGE IN CASH AND CASH EQUIVALENTS 343.6 (63.5)
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5.1.4 Consolidated results based on operational reporting
The financial data and indicators below correspond to Nexity’s operational reporting, with joint ventures proportionately consolidated and their reconciliation with the income statement at 31 December 2018.
Simplified consolidated income statement at 31 December 2019
31/12/2019 31/12/2018 Restatement Operational Operational Restatement 31/12/2019 of reporting before reporting before 31/12/2019 of joint Operational non-recurring non-recurring non-recurring (in millions of euros) IFRS ventures reporting items items items Revenue 4,200.7 298.1 4,498.8 - 4,498.8 4,135.0 Operating expenses (3,665.4) (260.6) (3,926.0) - (3,926.0) (3,612.0) Dividends received from equity-accounted investments 19.9 (19.9) - - - - 5 EBITDA 555.3 17.6 572.9 - 572.9 523.0 Leases* (169.9) - (169.9) - (169.9) (105.2) EBITDA after leases 385.4 17.6 402.9 402.9 417.8 Restatement of leases* 169.9 - 169.9 - 169.9 105.2 Depreciation of right-of-use assets (166.4) - (166.4) - (166.4) (103.3) Depreciation, amortisation and impairment of non-current assets (45.2) - (45.2) - (45.2) (31.6) Net change in provisions 8.0 (0.1) 8.0 - 8.0 5.4 Share-based payments (16.1) - (16.1) - (16.1) (14.3) Borrowing costs directly attributable to property developments, transferred from inventory - - - - - (6.5) Dividends received from equity-accounted investments (19.9) 19.9 - - - Current operating profit 315.8 37.4 353.2 - 353.2 372.7 Remeasurement of equity-accounted investments following acquisition of control - - - - - Operating profit 315.8 37.4 353.2 - 353.2 372.7 Share of net profit from equity-accounted investments 25.0 (25.0) - - Operating profit after share of net profit from equity-accounted investments 340.8 12.4 353.2 - 353.2 372.7 Cost of net financial debt (39.7) (1.9) (41.6) - (41.6) (39.6) Other financial income/(expenses) (9.8) (3.9) (13.7) 2.0 (11.7) 3.6 Interest expense on lease liabilities (24.9) - (24.9) - (24.9) (15.6) Net financial income/(expense) (74.4) (5.8) (80.2) 2.0 (78.2) (51.7) Pre-tax recurring profit 266.4 6.6 272.9 2.0 274.9 321.1 Income tax (97.0) (6.6) (103.6) - (103.6) (113.1) Share of profit/(loss) from other equity-accounted investments 0.0 - 0.0 - 0.0 (4.7) Consolidated net profit 169.4 0.0 169.4 2.0 171.4 203.2 Attributable to non-controlling interests 8.7 0.0 8.7 - 8.7 5.5 Attributable to equity holders of the parent company (in euros) 160.7 0.0 160.7 2.0 162.7 197.7 Net earnings per share 2.90 2.90 2.93 3.53 * Rent before application of standard on leases
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Revenue Nexity posted revenue of €4,499 million for 2019, a half-year period). Revenue growth in Residential Real Estate €364 million increase, up 9% at current scope relative to (up €323 million) substantially exceeded the decrease in end-2018, and up 4% on a like-for-like basis, including a revenue for Commercial Real Estate (down €128 million), €220 million scope effect (due in particular to the in line with the Group’s forecasts. consolidation of Ægide-Domitys over an additional
2019 2019 2018 % Change % Change (in millions of euros) Actual LFL Reported Actual LFL(2) Individual Clients 4,014.2 3,837.1 3,550.1 +13.1% +8.4% Residential Real Estate(1) 3,049.0 2,971.7 2,648.4 +15.1% +12.2% Real Estate Services to Individuals 965.2 865.4 901.6 +7.1% -3.0% Property Management for Individuals (including franchises) 358.8 358.8 359.8 -0.3% +2.5% Serviced residences 316.3 216.4 182.8 +73.0% +18.4% Distribution activities 290.1 290.1 359.0 -19.2% -19.2% Commercial Clients 483.7 440.9 580.7 -16.7% -21.6% Commercial Real Estate(1) 384.4 384.4 512.0 -24.9% -24.9% Real Estate Services to Companies 99.3 56.4 68.7 +44.6% +12.2% Other activities 0.9 0.8 4.3 -79.7% -80.3% REVENUE 4,498.8 4,278.8 4,135.0 +8.8% +4.2%
(1) Revenue generated by Residential Real Estate and Commercial Real Estate 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. (2) See glossary on page 25. 2018 data used to calculate the like-for-like (LFL) change in revenue have been adjusted to reflect the disposal of Guy Hoquet l’Immobilier at 31 March 2019, in the amount of €9.6 million (in the “Property Management for Individuals (including franchises)” segment), and the disposal of Nexity Conseil et Transaction at 1 January 2019, in the amount of €18.3 million (in the “Real Estate Services to Companies” segment). Revenue growth in Residential Real Estate – which for the Revenue from Real Estate Services to Companies first time ever recorded over €3 billion euros in revenue increased €31 million due to external growth (primarily (€3,049 million, up 15.1%) – reflected the increase in the Morning Coworking and Accessite) and its own organic backlog observed over previous quarters, buoyant business growth over the year (€6 million). at Edouard Denis, and the consolidation of Ægide’s development business over an additional half-year period. Revenue by business line Revenue growth in Real Estate Services to Individuals To offer an additional tool for analysing its operational (€965 million, up 7%) was made up of several elements: performance, the Group also provides a breakdown of its revenue by business line, separating its Real Estate • Revenue growth on a like-for-like basis in the Property Development activities from its Services businesses. Management for Individuals and franchises business; In 2019, both business lines saw revenue growth: 9% for • Robust growth in the contribution of the Domitys development activities and 10% for services with respect to serviced residence business (up €130 million) due to its 2018. consolidation over an additional half-year period (€100 million) and organic growth over the year The main financial aggregates under this segmentation are (€30 million); presented in section 5.1.5 "Breakdown into development and services” of this chapter (revenue, EBITDA, current • Revenue growth in the Studéa serviced residence operating profit and capital employed). business; and Revenue arising from integrated solutions between the • A marked (but largely one-off) decline in revenue from development and services business lines came to distribution activities (with fewer notarial deeds of sale €725 million in 2019 (€680 million for the serviced signed). residence business and €45 million for Property The decrease in revenue in Commercial Real Estate (down Management for Individuals and sales activities directly 25%) arose, as expected, from a low backlog at generated by development), representing 16% of the 31 December 2018, the inherent volatility of this business Group’s total revenue. This revenue should continue to grow arising from the phasing of developments, and lastly a given the increasing level of collaboration across business major project (regional council premises located in lines, and make an even greater contribution to the Group’s Saint-Ouen) that was very close to delivery at end-2019 and revenue growth. should be completed in 2020, as an exception to Nexity’s standard development model.
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Revenue under IFRS EBITDA1 In IFRS terms, revenue in 2019 totalled €4,201 million, up Nexity generated EBITDA of €573 million in the period to 7% relative to 2018. On a like-for-like basis, revenue end-December 2019 (compared with €523 million in totalled €3,981 million, up 1% from 2018. This figure 2018), representing growth of 10% and an EBITDA margin excludes revenue from joint ventures, in accordance with of 12.7% (up 0.1 points from 2018). Like-for-like EBITDA IFRS 11, which requires joint ventures – proportionately came in at €525 million, giving an EBITDA margin of consolidated in the Group’s operational reporting – to be 12.3%. This increase reflected robust growth in EBITDA accounted for using the equity method. from Individual Clients (up 13%), while EBITDA from Commercial Clients fell 14%.
2019 2018 Margin rate Margin rate (in millions of euros) EBITDA (in% of revenue) EBITDA (in% of revenue) Individual Clients 539.7 13.4% 477.4 13.4% Residential Real Estate 303.6 10.0% 283.6 10.7% 5 Real Estate Services to Individuals 236.1 24.5% 193.8 21.5% Property Management for Individuals (incl. franchises) 84.8 23.6% 67.4 18.7% Serviced residences 119.9 37.9% 70.0 38.3% Distribution activities 31.4 10.8% 56.3 15.7% Commercial Clients 61.8 12.8% 71.7 12.3% Commercial Real Estate 42.8 11.1% 64.8 12.7% Real Estate Services to Companies 18.9 19.1% 6.9 10.0% Other activities (28.6) na (26.0) na TOTAL GROUP 572.9 12.7% 523.0 12.6%
The increase in EBITDA for Residential Real Estate EBITDA from Commercial Real Estate was down (up €20 million) reflected tight control over operating €22 million due to lower revenue and a slightly lower budgets despite pressure on construction costs, explaining margin (11.1%). As expected, this margin gradually the relative drop in the margin (down 0.7 points in 2019 approached its normal margin of 9% to 10%. This change compared to 2018), which nevertheless, at 10%, notably reflected higher construction costs. outperformed the market. EBITDA from Real Estate Services to Companies rose EBITDA growth in Real Estate Services to Individuals €12 million, including a €9 million scope effect (Accessite, (up €42 million) was driven by the serviced residence Morning Coworking). business (up €50 million, €34 million of which was due to a More generally, the increase in Real Estate Services scope effect), offset by a €25 million decrease in EBITDA confirmed these businesses’ potential for growth and from distribution activities, caused by a temporarily lower profitability, generating 45% of the Group’s EBITDA in number of notarial deeds of sale. Growth in EBITDA from 2019. Property Management for Individuals included the capital gains on the disposal of the Guy Hoquet l’Immobilier franchise network.
1 EBITDA: Defined by Nexity as equal to current operating profit before depreciation, amortisation 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 amortisation includes 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;
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Operating profit Current operating profit came to €353 million at The change in current operating profit (down €20 million 31 December 2019, compared with €373 million at compared with 2018) contrasted with the growth in EBITDA 31 December 2018 (down 5%). On a like-for-like basis, in 2019, and mainly reflected: current operating profit was €360 million, equating to a • The temporarily negative contribution made by Domitys margin of 8.4%. in the amount of €8 million, attributable to losses The difference between EBITDA and current operating profit reported by residences opened less than two years ago; (a negative impact of €220 million) mainly resulted from and the depreciation of right-of-use assets (under IFRS 16) in • The amortisation of the client relationship (PPA), and the amount of €154 million (compared with €94 million in the smoothing of a portion of development margins 2018), which increased to a greater extent than EBITDA. over the term of leases (leasebacks under IFRS 16) for €16 million. Ægide-Domitys – which has a similar business model to Studéa – is expected to generate a medium-term operating margin of around 7%.
Other income statement items
Change (in million of (in millions of euros) 2019 2018 euros) Consolidated revenue 4,498.8 4,135.0 363.8 EBITDA 572.9 523.0 49.8 % of revenue 12.7% 12.6% Current operating profit 353.2 372.7 (19.5) Remeasurement of Ægide-Domitys following acquisition of control - 79.2 (79.2) Operating profit 353.2 451.9 (98.8) Net financial income/(expense) (80.2) (51.7) (28.6) Income tax (103.6) (113.1) 9.6 Share of profit/(loss) from equity-accounted investments - (4.7) 4.7 Net profit 169.4 282.4 (113.0) Non-controlling interests (8.7) (5.5) (3.1) Net profit/(loss) attributable to equity holders of the parent company 160.7 276.9 (116.2) NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY BEFORE NON-RECURRING ITEMS (in euros) 162.7 197.7 (35.0) Net earnings per share 2.90 4.95 (2.05) NET EARNINGS PER SHARE BEFORE NON-RECURRING ITEMS 2.92 3.53 (0.61)
The net financial expense was €80 million, versus • A €2 million expense in respect of the change in fair €52 million in 2018; it included interest expenses on lease value of the ORNANE bond issue. liabilities under IFRS 16 for €25 million in 2019 The effective corporate income tax rate (excluding the (versus €16 million in 2018). Restated for this item, the CVAE) was 33.7% in 2019, compared with 31.7% in 2018. €19 million decline in net financial expense with respect to The tax expense (including the CVAE), which was 2018 arose from: €104 million at 31 December 2019 (versus €113 million in • A moderate increase in net financial debt 2018), reflected a lower tax base. (up €2 million) resulting from the increase in average Restated to exclude non-recurring items (change in fair net debt, partly offset by a lower average cost of value of the ORNANE bond issue), the Group share of net borrowing (2.3% compared with 2.6% in 2018); profit before non-recurring items was €163 million, • An increase in “Other financial income/(expenses)” compared with €198 million at end-2018 (down 18%). including in particular a discount expense on This change mainly resulted from the decrease in operating non-current trade payables for €7 million and profit and the increase in “Other financial non-inventoriable borrowing costs for €6 million income/(expenses)”, which were significantly higher than in (IFRS IC regarding IAS 23); and 2018, as well as a higher effective tax rate and an increase in non-controlling interests.
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5.1.5 Breakdown into development and services
To offer an additional tool for analysing its operational Estate) from its Services businesses (Proprerty performance, the Group also provides a breakdown of its management for individuals including franchises, serviced revenue by business line, separating its Real Estate residences, distribution activities and Real Estate Services Development activities (Residential and Commercial Real to Companies), detailed below.
Revenue
(in millions of euros) 2019 2018 % Change Development* 3,433.4 3,160.4 +8.6% Residential Real Estate 3,049.0 2,648.4 +15.1% Commercial Real Estate 384.4 512.0 -24.9% Services 1,064.5 970.3 +9.7% Property Management for Individuals, Franchises, Commercial Property Management 426.4 428.5 -0.5% 5 Serviced Residences, Shared Office Space 348.0 182.8 +90.4% Distribution 290.1 359.0 -19.2% Other activities 0.9 4.3 -79.1% TOTAL GROUP 4,498.8 4,135.0 +8.8%
* Revenue generated by Residential Real Estate and Commercial Real Estate 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.
EBITDA
2019 2018 Margin rate Margin rate (in millions of euros) EBITDA (in% of revenue) EBITDA (in% of revenue) Development 346.4 10.1% 348.4 11.0% Residential Real Estate 303.6 10.0% 283.6 10.7% Commercial Real Estate 42.8 11.1% 64.8 12.7% Services 255.0 24.0% 200.7 20.7% Property Management for Individuals, Franchises, Commercial Property Management 91.8 21.5% 74.3 17.3% Serviced Residences, Shared Office Space 131.8 37.9% 70.0 38.3% Distribution 31.4 10.8% 56.3 15.7% Other activities (28.6) na (26.0) na TOTAL GROUP 572.9 12.7% 523.0 12.6%
Current operating profit
2019 2018 Current Current operating operating (in millions of euros) profit % of revenue profit % of revenue Development 305.1 8.9% 309.3 9.8% Residential Real Estate 264.6 8.7% 246.4 9.3% Commercial Real Estate 40.5 10.5% 62.9 12.3% Services 94.8 8.9% 108.1 11.1% Property Management for Individuals, Franchises, Commercial Property Management 56.6 13.3% 4.,8 1.,7% Serviced Residences, Shared Office Space 3.4 1.0% 8.9 4.8% Distribution 34.8 12.0% 53.4 14.% Other activities (46.7) na (44.7) na CURRENT OPERATING PROFIT 353.2 7.9% 372.7 9.0%
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Capital employed
2019 Non-current Right-of-use (in millions of euros) Total assets assets WCR Goodwill Developement 1,071 34 45 992 - Services 949 183 748 19 - Other activities and not attributable 1,714 71 36 9 1,598 GROUP TOTAL 3,734 288 828 1,019 1,598
2018 Non-current Right-of-use (in millions of euros) Total assets assets WCR Goodwill Developement 973 39 43 891 - Services 855 174 665 16 - Other activities and not attributable 1.666 48 49 (10) 1,579 GROUP TOTAL 3,494 261 757 896 1,579
5.1.6 Balance sheet items based on operational reporting
The financial data and indicators presented below correspond to Nexity’s operational reporting, with joint ventures proportionately consolidated and reconciled with the new IFRSs as applied at 31 December 2019. 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 requirement and debt.
Simplified consolidated balance sheet at 31 December 2019
ASSETS 31/12/2019 31/12/2018 31/12/2019 Restatement of Operational Operational (in millions of euros) IFRS joint ventures reporting reporting Goodwill 1,598.0 - 1,598.0 1,579.1 Other non-current assets 1,114.3 0.3 1,114.6 1,016.1 Equity-accounted investments 39.9 (38.4) 1.5 2.0 Total non-current assets 2,752.3 (38.1) 2,714.2 2,597.2 Net WCR 842.8 176.6 1,019.4 896.4 TOTAL ASSETS 3,595.0 138.6 3,733.6 3,493.6
LIABILITIES AND EQUITY 31/12/2019 31/12/2018 31/12/2019 Restatement of Operational Operational (in millions of euros) IFRS joint ventures reporting reporting Share capital and reserves 1,586.0 0.0 1,586.0 1,478.0 Net profit for the period 160.7 0.0 160.7 276.9 Equity attributable to equity holders of the parent company 1,746.7 0.0 1,746.7 1,754.9 Non-controlling interests 10.6 (0.0) 10.6 8.9 Total equity 1,757.3 0.0 1,757.3 1,763.8 Net debt 1,700.4 125.5 1,825.9 1,566.7 Provisions 100.0 2.1 102.2 112.1 Net deferred tax 37.3 11.0 48.3 51.0 TOTAL LIABILITIES AND EQUITY 3,595.0 138.6 3,733.6 3,493.6
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Net debt at 31 December 2019
31/12/2019 31/12/2018 31/12/2019 Restatement of Operational Operational (in millions of euros) IFRS joint ventures reporting reporting Bond issues (incl. accrued interest and arrangement fees) 1,017.8 - 1,017.8 770.2 Loans and borrowings 941.5 60.8 1,002.3 758.8 Loans and borrowings 1,959.3 60.8 2,020.1 1,529.0 Other financial receivables and payables (120.4) 126.9 6.5 (5.1) Cash and cash equivalents (1,116.7) (86.5) (1,203.2) (797.0) Bank overdraft facilities 70.4 24.3 94.6 29.6 Net cash and cash equivalents (1,046.3) (62.2) (1,108.6) (767.4) TOTAL NET FINANCIAL DEBT BEFORE LEASE LIABILITIES 792.5 125.5 918.0 756.5 Lease liabilities 907.9 - 907.9 810.2 TOTAL NET DEBT 1,700.4 125.5 1,825.9 1,566.7 5
Simplified cash flow statement at 31 December 2019
31/12/2019 31/12/2018 31/12/2019 Restatement of Operational Operational (in millions of euros) IFRS joint ventures reporting reporting Consolidated net profit 169.4 0.0 169.4 282.4 Elimination of non-cash income and expenses 182.2 25.1 207.2 67.6 Cash flow from operating activities after interest and tax expenses 351.5 25.1 376.6 350.0 Elimination of net interest expense/(income) 64.6 1.9 66.5 55.2 Elimination of tax expense, including deferred tax 94.8 6.6 101.4 102.6 Cash flow from operating activities before interest and tax expenses 510.9 33.6 544.5 507.8 Change in operating working capital (34.8) (63.5) (98.2) (102.3) Dividends received from equity-accounted investments 19.9 (19.9) - (0.0) Interest paid (23.2) (1.9) (25.1) (25.5) Tax paid (124.6) (7.3) (131.9) (110.0) NET CASH FROM/(USED IN) OPERATING ACTIVITIES 348.3 (59.0) 289.3 270.0 Net cash from/(used in) net operating investments (59.6) - (59.6) (47.9) Free cash flow 288.7 (59.0) 229.7 222.1 Acquisitions of subsidiaries and other changes in scope 14.9 0.5 15.3 (71.3) Other net financial investments (9.5) (0.0) (9.5) (7.0) NET CASH FROM/(USED IN) INVESTING ACTIVITIES 5.3 0.5 5.8 (78.4) Dividends paid to equity holders of the parent company (138.2) - (138.2) (140.3) Other payments to/(from) minority shareholders (33.6) - (33.6) (35.4) Net disposal/(acquisition) of treasury shares (19.1) - (19.1) (19.8) Repayment of lease liabilities (169.9) - (169.9) (103.9) Change in financial receivables and payables (net) 410.1 56.1 466.2 105.9 NET CASH FROM/(USED IN) FINANCING ACTIVITIES 49.3 56.1 105.4 (193.4) Impact of changes in foreign currency exchange rates 0.2 (0.0) 0.2 (0.1) CHANGE IN CASH AND CASH EQUIVALENTS 343.6 (2.5) 341.2 (49.8)
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5.1.6.1 Cash flows and Working Capital Requirement (WCR)
(in millions of euros) 2019 2018 Cash flow from operating activities before interest and tax expenses 544.5 507.8 Cash flow from operating activities after interest and tax expenses 376.6 350.0 Change in operating working capital (excluding tax) (98.2) (102.3) Changes in tax-related working capital, dividends from equity-accounted investments and other 10.9 22.3 Net cash from/(used in) operating activities 289.3 270.0 Net cash from/(used in) operating investments (59.6) (47.9) Free cash flow 229.7 222.1 Net cash from/(used in) financial investments 5.8 (73.4) Repayment of lease liabilities (169.9) (103.9) Dividends paid by Nexity SA (138.2) (140.3) Net cash from/(used in) financing activities, excluding dividends 413.8 45.7 CHANGE IN CASH AND CASH EQUIVALENTS 341.2 (49.8)
Cash flow from operating activities before interest and tax Net cash from financial investments (€6 million) arose expenses totalled €544 million at end-2019, up from the disposals of Guy Hoquet l’Immobilier and Nexity €37 million relative to 2018, mainly as a result of the Conseil et Transaction, net of the acquisition of Accessite. increase in EBITDA over the financial year. Net cash from financing activities (€414 million) comprised Operating investments rose to €60 million (versus new borrowings (primarily a green bond for €240 million €48 million in 2018), with most of this increase due to the and the arrangement of a Negotiable European Commercial integration of Ægide-Domitys and Morning Coworking, Paper (NEU CP) programme for €120 million) less the cost whose business requires investments in refitting and of share buybacks (€20 million) and minority buyouts maintenance of the premises managed. (€27 million over the period). Nexity’s free cash flow at end-2019 was a net inflow of €230 million, compared with a net inflow of €222 million at end-2018, substantially exceeding the dividend paid in 2019 (€138 million).
Change (in millions of euros) 31 December 2019 31 December 2018 (in million of euros) Individual Clients 875 762 113 Residential Real Estate 862 747 Real Estate Services to Individuals 12 15 Commercial Clients 90 87 3 Commercial Real Estate 84 86 Real Estate Services to Companies 6 1 Other activities 24 51 (28) Total WCR excluding tax 989 900 89 Corporate income tax 30 (4) 34 WCR 1,019 896 123
Operating WCR at 31 December 2019 was €989 million, up For Other activities, WCR was down €28 million, mainly due €89 million from its level in December 2018. to a high level of sales of development rights by the urban For Individual Clients, the rise in WCR reflects the regeneration business (Villes & Projets). expansion of the Group’s business in Residential Real Estate As part of the Group’s controlled land banking strategy, the (WCR up €116 million), in line with this segment’s strong amount of land positions secured totalled €120 million at activity levels and the increase in the backlog, which points 31 December 2019. to higher revenue in the upcoming quarters. The WCR to In addition, in order to boost its land sourcing capacity, in backlog ratio is stable compared to its historical levels. July 2019 Nexity took part in launching the Terrae Optimae 1 For Commercial Clients, the overall WCR remained alternative investment fund for land with strong virtually stable, with changes in WCR for Commercial Real redevelopment potential, in which it holds a minority stake. At Estate (down €1 million) offset by WCR for Real Estate end-2019, the fund had already acquired its first parcel of land. Services to Companies (up €5 million). Tax-related WCR saw a one-off increase at 31 December 2019 (up €34 million) due to an adverse effect of tax instalments that were higher than the effective tax expense due for 2019.
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5.1.6.2 Right-of-use assets Right-of-use assets amounted to €828 million at independent living facilities business, which were higher 31 December 2019 (up €71 million compared with than depreciation, amortisation and impairment for the end-2018). This increase arose from new leases for financial year, reflecting growth in the portfolio of serviced €246 million, including €146 million in the Domitys senior residences.
5.1.6.3 Financial structure Nexity’s consolidated equity (attributable to equity holders of the parent company) was €1,747 million at end-December 2019, stable with respect to end-December 2018 (€1,755 million).
Change (in millions of euros) 31 December 2019 31 December 2018 (in million of euros) Bond issues (incl. accrued interest and arrangement fees) 1,018 806 211 Loans and borrowings 1,002 723 280 5 Net cash and cash equivalents (1,102) (772) (330) Net financial debt before lease liabilities 918 757 161 Lease liabilities 908 810 98 TOTAL NET DEBT 1,826 1,567 259
The increase in net financial debt before lease liabilities Net debt amounted to €1,826 million at 31 December (IFRS 16) mainly resulted from the increase in WCR (up 2019, compared with €1,567 million at 31 December 2018 €98 million). (up €259 million). It equated to 3.2x EBITDA for the past In the fourth quarter of 2019, Nexity set up a Negotiable 12 months. European Commercial Paper (NEU CP) programme with a The Group’s net debt before lease liabilities totalled maximum amount of €300 million, the balance of which €918 million, compared with €757 million at 31 December was €120 million at 31 December 2019. The amount of 2018, i.e. 2.3x EBITDA after leases (€403 million at this programme is covered by available cash and the 31 December 2019), below the average target level of 2.5x Group’s undrawn authorised bank borrowing facilities. EBITDA that the Group has set for itself, which may be In December 2019, Nexity issued its first green bond for temporarily exceeded in 2020 due to rapid business €240 million, including an €84 million tranche maturing in growth, particularly in Residential Real Estate. 7 years (December 2026) with an annual coupon rate of At 31 December 2019, the average maturity of the Group’s 2.257%, and a €156 million tranche maturing in 8 years debt was 3.7 years and the average cost of borrowing was (December 2027) with an annual coupon rate of 2.464%. 2.3%, compared with 2.6% in 2018. At 31 December 2019, Lease liabilities (IFRS 16) amounted to €908 million (versus Nexity was in compliance with the financial covenants €810 million at 31 December 2018) and increased due to attached to its borrowings. At 31 December 2019, Nexity growth in the portfolio of serviced residences. had €555 million in authorised and undrawn corporate credit lines.
5.1.7 Economic uncertainties
The Group’s sales activity and performance will remain • A decline in the financial capacity of households and subject to uncertainties arising from the potential impact of more difficult lending conditions; various risks inherent in its economic, legislative, fiscal and • Change in property ownership and tax incentive competitive environment, as set out in Section 2 – Risk schemes; factors of this Registration Document, including: • Change in regulatory constraints or applicable tax law; • Change in the economic climate and context (including and the impact of the Covid-19 epidemic); • Changes in interest rates.
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5.2 TRENDS
5.2.1 Backlog and business potential at 31 December 2019
The term “backlog” refers to reservations that have been Furthermore, the development business potential at signed but are not yet reflected in revenue. end-December 2019 totalled more than €15 billion in The Group’s backlog at end-December 2019 stood at potential revenue (€12 billion for Residential Real Estate and €5,095 million (€4,640 million for Residential Real Estate €3 billion for Commercial Real Estate), providing the Group and €456 million for Commercial Real Estate), equivalent with high visibility on its future business levels. This business to 18 months’ revenue from Nexity’s development activities potential, which amounts to more than 4 years of revenue (revenue on a rolling 12-month basis), and increasing 14% from Nexity’s development activities (revenue on a rolling relative to 31 December 2018. 12-month basis), increased by 7% year-on-year. Even in times of acute crisis, and in a context of low supply, housing is a basic need, which gives Nexity the ability to rebound very quickly when the economic situation will allow it.
5.2.2 Recent developments
5.2.2.1 Acquisition Pantera AG On 9 March 2020, Nexity announced the acquisition of a 65% This serviced accommodation offer targeted at students, share in the capital of pantera AG, a german developer of business travellers and people over 65 years of age. Its residential real estate, and intends to develop its real estate project portfolio totals more than 2,500 housing units on 15 services platform in Germany. sites and represents a potential revenue of around €600 Pantera AG in Cologne and Nexity have decided to enter million. Pantera is also involved in projects related to into a strategic partnership in order to provide Pantera AG historical monuments, renovation and premium new homes. with the financial resources necessary for its ambitions, and Together, Nexity and Pantera AG wish to offer new models Nexity with the opportunity to enter the German market of intergenerational housing with serviced accommodation with a portfolio of quality projects. (from students to senior citizens), a range of housing units Nexity has acquired 65% of Pantera AG's share capital. that is both affordable for occupants and represents an Michael Ries, founder and managing director of Pantera AG, attractive asset class for individual investors. Pantera AG holds 35%. offers an excellent basis for such a partnership, not only because of its solid history but also because of its highly In just 10 years, Pantera AG has become one of the leading specialised expertise coupled with a strategic vision. developers of serviced accommodation in Germany.
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5.2.2.2 Update concerning the impact of Covid-19 on Nexity’s activities (Press release of 7 April 2020) On Monday 6 April 2020, Nexity’s Board of Directors met to day preceding the date of the General Meeting, i.e. on 13 consider the implications of the Covid-19 pandemic and to May 2020, by 0:00 am (Paris Time) by registered letter with adopt the resolutions to be submitted for approval at the a request for acknowledgement of receipt or by email to : forthcoming Shareholders’ Meeting. [email protected]. Company’ answers will be As stated in its 20 March 2020 press release, Nexity has incorporated into the minutes of the Shareholders’ Meeting, made rapid adjustments to its operating model to which will be published on its website at safeguard the continuity of its operations amid the crisis. https://www.nexity.fr/en/group/finance/shareholders/ The Group’s development business is currently operating at shareholders-meetings. a very reduced level, and its reservations have fallen as a Nexity plans to arrange a forum event for its shareholders result of the lockdown measures, however most of its in the autumn as soon as the current restrictions have been service businesses have reported resilient performance dispelled. figures. Furthermore, the Board of Directors, aware of the It is too early to determine the impact that the crisis recommendation from stakeholders to soften dividend situation will have on Nexity’s 2020 accounts, and the main policies and concerned to create long-term value for its 5 unknown is how long the lockdown will last. In the shareholders, has decided to trim the size of the dividend meantime, Nexity has suspended all its targets and outlook payment to be proposed at the Shareholders’ Meeting from given to investors. €2.70 to €2.00 down 26% compared to what had been The Group’s cash position remains very strong, with €767 previously announced (and representing a 20% reduction million in total cash at 31 March 2020, plus €555 million compared to the dividend paid in 2019). in confirmed credit lines not drawn down. In addition, Nexity has decided to rely on the Nexity is supporting the wave of solidarity towards state-sponsored unemployment scheme only in a selective healthcare staff and victims of the coronavirus pandemic. and targeted fashion, and solely at the level of its operating The Group has immediately made available at no cost close companies whose worksites and projects have been forced to 300 homes in Studéa student residences for healthcare to shut down. Where this occurs, Nexity will top up the staff and vulnerable people designated by the public payments received by the affected employees to the full authorities. It has also decided to make an exceptional amount of their normal salary for its employees receiving donation of €3 million to homeless charities and funds less than 3 times the minimum wage. Furthermore, supporting healthcare staff. employee profit-sharing will be paid, as planned, in May. As a precautionary measure amid this public health Finally, Nexity welcomes the outsantding involvement and emergency, Nexity’s Board of Directors has decided to call a mobilisation of its teams during these challenging Shareholders’ Meeting on the originally announced date of circumstances : fully dedicated to ensure business 19 May 2020 to be held exceptionally behind closed doors continuity, maintain relationships with our clients, suppliers with none of its shareholders physically present. and stakeholders, and taking care of our residents in The preliminary notice of meeting (Avis de réunion student or senior residences operated by the Group. Health préalable) will be published in the coming days in the legal and safety of our employees, our clients and partners is gazette "Bulletin des Annonces Légales et Obligatoires" with obviously an absolute priority. all the instructions relating to the exercise of shareholder Since Nexity addresses fundamental housing and voting rights. Shareholders will be asked to vote by mail or workspace needs, it is ideally placed to plan ahead for the by proxy. They should send any questions they may have, upturn in the real estate and construction market, to supported by a certificate of ownership for their shares, as support its clients effectively and to play a full part in swiftly as possible and no later than the fourth business galvanising economic activity.
There are no other recent developments to report.
5.2.3 Outlook
On 20 March 2020, the Group communicated that it is too The outlook communicated to the market on 25 February early at this stage to determine the impact of the 2020 during the presentation of its annual results is coronavirus crisis on Nexity's 2020 results and on the suspended. outlook given to the market, the main unknown being the The Group will continue to monitor developments and duration of the epidemic crisis and the duration of inform the market as soon as necessary (see section 5.2.2.2 precautionary health measures. above).
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5.3 CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019
5.3.1 CONDENSED FINANCIAL STATEMENTS 263 DEBT AND FINANCIAL RISK FACTORS 286 Note 20 Breakdown of net debt 286 5.3.2 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 267 Note 21 Borrowings and financial liabilities 287 Note 1 Information on the Company and significant Note 22 Other financial receivables 290 developments 267 Note 23 Cash and cash equivalents 290 Note 2 Principles and policies 268 Note 24 Financial risk factors 291 Note 3 Scope of reporting and business combinations 269 Note 25 Fair value of financial instruments by accounting Note 4 Recognition of revenue and operating profit 271 category 292 Note 5 Alternative performance measures 272 PROVISIONS 294 Note 6 Segment information 272 Note 26 Current and non-current provisions 294 NON-CURRENT ASSETS 278 INCOME 297 Note 7 Goodwill 278 Note 27 Personnel costs 297 Note 8 Right-of-use assets, other intangible assets and other property, plant and equipment 279 Note 28 Other operating expenses 297 Note 9 Equity-accounted investments 280 Note 29 Depreciation, amortisation and impairment of non-current assets 297 Note 10 Other financial assets 281 Note 30 Financial income/(expense) 298 WORKING CAPITAL REQUIREMENT 282 Note 31 Taxes 298 Note 11 Breakdown of working capital requirement 282 Note 32 Earnings per share 300 Note 12 Inventories and work in progress 282 ADDITIONAL INFORMATION 301 Note 13 Trade and other receivables 282 Note 33 Off-balance sheet commitments 301 Note 14 Other current assets 283 Note 34 Statutory Auditors’ fees 303 Note 15 Other current liabilities 283 Note 35 Information on related parties 303 EQUITY 284 Note 36 Subsequent events 303 Note 16 Share capital 284 Note 37 Main consolidated companies at 31 December 2019 304 Note 17 Non-controlling interests 284 Note 18 Free share award plans 284 Note 19 Treasury shares held 285
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5.3.1 Condensed financial statements
Consolidated balance sheet
ASSETS Balance Balance (in thousands of euros) Notes at 31/12/2019 at 31/12/2018 Non-current assets Goodwill 7 1,598,043 1,579,107 Other intangible assets 8 106,968 113,503 Right-of-use assets 8 828,394 756,793 Property, plant and equipment 8 121,818 100,637 Equity-accounted investments 9 39,926 35,292 Other financial assets 10 57,123 44,887 Deferred tax assets 31 44,219 39,261 Total non-current assets 2,796,491 2,669,480 5 Current assets Inventories and work in progress 12 1,555,566 1,440,670 Trade and other receivables 13 1,148,195 991,871 Tax receivable 31 42,788 19,989 Other current assets 14 1,403,683 1,320,777 Other financial receivables 22 201,673 160,698 Cash and cash equivalents 23 1,116,706 720,796 Total current assets 5,468,611 4,654,801 TOTAL ASSETS 8,265,102 7,324,281
LIABILITIES AND EQUITY Balance Balance (in thousands of euros) at 31/12/2019 at 31/12/2018 Equity Share capital 16 280,649 280,649 Additional paid-in capital 548,489 521,060 Treasury shares 19 (24,657) (23,980) Reserves and retained earnings 781,470 700,255 Net profit for the period 160,718 276,874 Equity attributable to equity holders of the parent company 1,746,669 1,754,858 Non-controlling interests 17 10,605 8,926 Total equity 1,757,274 1,763,784 Non-current liabilities Long-term borrowings and financial debt 21 1,429,524 1,157,780 Non-current lease liabilities 21 755,355 678,633 Employee benefits 26 24,527 22,346 Deferred tax liabilities 31 81,519 84,505 Total non-current liabilities 2,290,925 1,943,264 Current liabilities Short-term borrowings, financial liabilities and operating liabilities 21 681,370 424,590 Current lease liabilities 21 152,559 131,539 Current provisions 26 75,509 87,705 Trade and other payables 1,726,975 1,619,158 Current tax liabilities 31 13,284 18,658 Other current liabilities 15 1,567,206 1,335,583 Total current liabilities 4,216,903 3,617,233 TOTAL LIABILITIES AND EQUITY 8,265,102 7,324,281
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Consolidated income statement
31/12/2019 31/12/2018 (in thousands of euros) Notes (12-month period) (12-month period) Revenue 4 4,200,728 3,939,575 Purchases (2,625,667) (2,533,035) Personnel costs 27 (717,102) (629,594) Other operating expenses 28 (302,817) (268,123) Taxes (other than income tax) (27,813) (26,138) Depreciation, amortisation and impairment of non-current assets 29 (211,565) (134,915) Current operating profit 315,764 347,770 Remeasurement of equity-accounted investments following acquisition of control - 79,222 Operating profit 315,764 426,992 Share of net profit from equity-accounted investments 9 25,022 17,912 Operating profit after share of net profit from equity-accounted investments 340,786 444,904 Financial expense 30 (79,444) (58,254) Financial income 30 5,011 8,885 Net financial income/(expense) (74,433) (49,369) Pre-tax recurring profit 266,353 395,535 Income tax 31 (96,961) (108,369) Share of net profit/(loss) from other equity-accounted investments 9 7 (4,750) NET PROFIT 169,399 282,416 attributable to equity holders of the parent company 160,718 276,874 attributable to non-controlling interests 8,681 5,542 (in euros) Net earnings per share 32 2.90 4.95 Diluted earnings per share 32 2.52 4.37
Statement of total comprehensive income
31/12/2019 31/12/2018 (in thousands of euros) (12-month period) (12-month period) NET PROFIT 169,399 282,416 Foreign currency translation gains and losses 501 (920) Gains and losses that may be recycled to net profit 501 (920) Actuarial gains and losses on retirement benefits (2,286) 12,269 Deferred tax on actuarial gains and losses 716 (3,894) Gains and losses that may not be recycled to net profit (1,570) 8,375 TOTAL OTHER COMPREHENSIVE INCOME (NET OF TAX) (1,069) 7,455 TOTAL COMPREHENSIVE INCOME 168,330 289,871 attributable to equity holders of the parent company 159,649 284,329 attributable to non-controlling interests 8,681 5,542
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Change in consolidated equity
Equity Reserves Other attributable to Additional Treasury and net compre- equity holders of Non- Share paid-in shares profit hensive the parent controlling Total (in thousands of euros) capital capital held earnings income company interests equity Movements in 2018 At 1 January 2018 280,184 659,888 - 724,056 2,395 1,666,523 6,132 1,672,655 Capital increase 465 (465) - - Treasury shares (23,980) (800) (24,780) (24,780) Share-based payments 14,324 14,324 14,324 Other (251) (251) (251) Impact of acquisitions or disposals of minority interests after acquisition of control (44,963) (44,963) (44,963) Dividends paid by Nexity (€2.50 per share) (110,934) (29,390) (140,324) (140,324) Total movements linked to relationships with 5 shareholders 465 (111,399) (23,980) (61,080) - (195,994) - (195,994) Net profit for the period 276,874 276,874 5,542 282,416 Other comprehensive income 7,455 7,455 7,455 Total comprehensive income - - - 276,874 7,455 284,329 5,542 289,871 Dividends paid by subsidiaries - (1,489) (1,489) Impact of changes in scope - (1,259) (1,259) At 31 December 2018 280,649 548,489 (23,980) 939,850 9,850 1,754,858 8,926 1,763,784 Movements in 2019 At 1 January 2019 280,649 548,489 (23,980) 939,850 9,850 1,754,858 8,926 1,763,784 Reversal of capitalised borrowing costs for property developments (5,172) (5,172) At 1 January 2019 280,649 548,489 (23,980) 934,678 9,850 1,749,686 8,926 1,758,612 Treasury shares 18,042 (18,407) (365) (365) Share-based payments (18,719) 17,428 (1,291) (1,291) Impact of acquisitions or disposals of minority interests after acquisition of control (22,702) (22,702) (22,702) Dividends paid by Nexity (€2.50 per share) (138,232) (138,232) (138,232) Total movements linked to relationships with shareholders - - (677) (161,913) - (162,590) - (162,590) Net profit for the period 160,718 160,718 8,681 169,399 Other comprehensive income (1,069) (1,069) (1,069) Total comprehensive income - - - 160,718 (1,069) 159,649 8,681 168,330 Dividends paid by subsidiaries - (6,513) (6,513) Impact of changes in scope (76) (76) (489) (565) AT 31 DECEMBER 2019 280,649 548,489 (24,657) 933,407 8,781 1,746,669 10,605 1,757,274
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Consolidated statement of cash flows
31/12/2019 31/12/2018 (in thousands of euros) Notes (12-month period) (12-month period) Net profit attributable to equity holders of the parent company 160,718 276,874 Net profit attributable to non-controlling interests 8,681 5,542 Consolidated net profit 169,399 282,416 Elimination of non-cash income and expenses: Elimination of depreciation, amortisation and provisions 37,375 23,744 Elimination of depreciation of right-of-use assets 166,409 103,273 Elimination of gains and losses on asset disposals (16,658) (79,654) Elimination of the impact of changes in fair value 4,003 - Elimination of net profit from equity-accounted investments (25,022) (17,912) Elimination of net profit from other equity-accounted investments (7) 4,750 Elimination of the impact of share-based payments 16,053 14,324 Cash flow from operating activities after interest and tax expenses 351,552 330,941 Elimination of net interest expense/(income) 64,589 54,328 Elimination of tax expense, including deferred taxes and tax credits 94,766 97,816 Cash flow from operating activities before interest and tax expenses 510,907 483,085 Change in operating working capital 11 (34,751) (79,041) Dividends received from equity-accounted investments 9 19,945 11,795 Interest paid (23,221) (24,596) Tax paid (124,571) (109,010) Net cash from/(used in) operating activities 348,309 282,233 Purchase of subsidiaries, net of cash acquired 3.4 (10,420) (71,893) Proceeds from sale of subsidiaries, net of cash divested 3.5 24,380 1,262 Other changes in scope 898 (701) Purchase of property, plant, equipment and intangible assets (68,810) (48,041) Purchase of financial assets (16,372) (15,204) Proceeds from sale of property, plant, equipment and intangible assets 9,232 246 Proceeds from sale and redemption of financial assets 6,856 9,712 Net cash from/(used in) investing activities (54,236) (124,619) Capital increase subscribed by equity holders of the parent company - - Capital increase subscribed by minority shareholders in consolidated companies 54 Dividends paid to equity holders of the parent company (138,232) (140,324) Dividends paid to minority shareholders of consolidated companies (6,514) (1,489) Net disposal/(acquisition) of treasury shares (19,099) (19,797) (Acquisitions)/disposals of minority interests with no gain or loss of control (27,051) (33,889) Proceeds from issuance of bonds 543,450 328,277 Redemption of bonds (90,396) (221,210) Repayment of lease liabilities (169,916) (103,919) Decrease in receivables and increase in short-term financial debt (42,905) (28,702) Net cash from/(used in) financing activities 49,337 (220,999) Impact of changes in foreign currency exchange rates on cash and cash equivalents 236 (134) CHANGE IN CASH AND CASH EQUIVALENTS 343,646 (63,519) Cash and cash equivalents at beginning of period 702,702 766,222 Cash and cash equivalents at end of period 23 1,046,348 702,702
/266 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Consolidated financial statements at 31 December 2019
5.3.2 Notes to the consolidated financial statements
Note 1 Information on the Company and significant developments
1.1 Information on the Company
Nexity is an integrated real estate operator harnessing the • The Commercial Clients division, focused on Commercial entire spectrum of property know-how and skills to serve Real Estate, comprising the development of new or private individuals, companies, institutional investors and refurbished office buildings, high-rises, business parks, local authorities. Covering all segments of the property logistics facilities, retail property and hotels; and on Real development and services business lines, Nexity is one of Estate Services to Companies, comprising property the top players in French real estate and offers its clients a management, real estate advisory and coworking space and unique range of expertise and advice, products, services and other space rental services; and solutions to meet their evolving needs. • The Other activities division, which includes Nexity’s The Group is present throughout France, with some limited urban regeneration business (Villes & Projets), 5 operations elsewhere in Europe. investment activities, innovative startups in the The Group is organised around the following three incubation phase and the holding company. operating divisions: Nexity’s shares are listed on Eurolist by NYSE Euronext • The Individual Clients division, focused on Residential Real Paris. Estate, comprising the development of new homes and subdivisions; and on Real Estate Services to Individuals, including the administration, management, coordination and development of real estate franchise networks, the management of residences for students and seniors, and real estate product distribution activities;
1.2 Significant developments
2019 was marked by the following significant Change in governance developments: At is meeting held on 22 May 2019 following the Shareholders’ Meeting, Nexity’s Board of Directors reappointed Alain Dinin as Business activity Chairman of the Board of Directors and decided to separate the • Over the year, net new home reservations in France roles of Chairman and Chief Executive Officer. totalled 21,837 units, up 11% by volume and up 11% Jean-Philippe Ruggieri was appointed Chief Executive by value year on year compared with 2018; Officer. Julien Carmona was reappointed as Deputy CEO and • €521 million in new orders for Commercial Real Estate. company officer. They make up the Strategy Committee At 31 December 2019, the development backlog together with Deputy CEOs Véronique Bédague-Hamilius (see Note 5) came to €5.1 billion, 14% higher than at and Frédéric Verdavaine. 31 December 2018. To this same end, Alain Dinin serves in a strengthened position as Chairman of Nexity’s Board of Directors, vested Changes in scope with extensive powers relating to investment and strategy, To strengthen its Property Management activity, in and actively supports the new management team. January 2019, the Group acquired 71.3% of the capital of Accessite, a French company specialising in advice and Financing management for commercial property assets, and in Euro PP Green Bond Issue October 2019 it acquired 100% of the shares in Etoile Nexity completed a Green Bond issue in December 2019. The Property Management for an amount of €4.1 million. inaugural issue of this green bond complies with the Group’s The sale of Nexity Conseil et Transaction to its green bond eligibility criteria (the Green Bond Framework). management was finalised early in the year. Nexity has The income from this green bond issue will be allocated to retained a minority stake of 13.31%. financing and/or refinancing of development and construction of Residential Real Estate projects in France which meet several Nexity sold Guy Hoquet l’Immobilier in May 2019. criteria including in particular the European NZEB standards (“Nearly Zero-Energy Buildings”). The allocation of the funds to projects will be the subject of a specific traceability process and an annual reporting process which will be audited and reported on the Group’s website.
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Implementation of a NEU CP programme In the fourth quarter of 2019, Nexity implemented a financing costs, while remaining extremely flexible. short-term negotiable debt securities programme The programme amount is covered by the Group’s available (Negotiable European Commercial Paper – NEU CP) for a cash and banking credit approvals which the Group has not maximum amount of €300 million. The programme yet used. enables Nexity to seize market opportunities to optimise
GENERAL INFORMATION
Note 2 Principles and policies
2.1 Statement of compliance
Nexity’s consolidated financial statements for the year The other new standards, amendments to standards and ended 31 December 2019 have been prepared in interpretations adopted by the European Union that became accordance with the International Financial Reporting mandatory for annual reporting periods beginning on or Standards (IFRS) and the interpretations of the after 1 January 2019 had no material impact on the Group’s IFRS Interpretations Committee (IFRS IC), as adopted by the financial statements. European Union. The Company’s press releases and annual reports – The accounting principles and methods used to prepare the including historical financial information about the consolidated financial statements for the period ended Company and the consolidated financial statements – are 31 December 2019 were the same as those applied for the available on the Company’s website financial year ended 31 December 2018, except for the www.nexity.fr/en/group. Copies may also be obtained from standards mentioned in Note 2.2, “New standards, Nexity’s registered office at 19 rue de Vienne, TSA 50029, interpretations and decisions of the IFRS IC”. 75801 Paris Cedex 8 (France). With respect to IFRS 16 Leases, the Group opted for early The consolidated financial statements were approved by the application from 1 January 2018. Board of Directors on 25 February 2020 and will be submitted for approval at the Shareholders’ Meeting of 19 May 2020.
2.2 New standards, interpretations and decisions of the IFRS IC
2.2.1 IAS 23 Borrowing costs 2.2.3 IFRS 16 Leases The IFRS Interpretations Committee has published a decision Application of IFRS 16 Leases is mandatory for annual that now makes it impossible to capitalise borrowing costs as reporting periods beginning on or after 1 January 2019. part of the cost of construction for a multi-unit property The Group opted for early application of this standard, development sold to end customers as individual units, under starting on 1 January 2018, using the simplified contracts specifying that control is transferred over time, retrospective method, thus applying the simplifying therefore including VEFA off-plan arrangements. measures provided for by the standard. Accordingly, as from 1 January 2019, the Group no longer The procedures followed for the initial application and its capitalises borrowing costs on VEFA contracts and/or CPI impact are presented in the consolidated financial (development) contracts, unless they include specific statements for the year ended 31 December 2018. provisions not calling for the transfer of control over time. This decision does not apply to the Group’s development Lease terms activities in Italy or Poland, where the transfer of ownership The IFRS IC clarified its interpretation of IFRS 16, and is only possible once the unit is completed. reiterated that the enforceable term of a lease must take into account not only the legal interpretation but also the In this context, capitalised borrowing costs at economics of the lease in a broad sense. 31 December 2018 have been reversed by way of an adjustment to equity, in the non-material amount of As part of the Group’s business it has a number of €5.2 million, net of tax. automatically renewable leases (as defined by Article L.145-9 of the French Commercial Code). As the 2.2.2 IFRIC 23 Uncertainty over income tax notice period is under 12 months, the lease obligation does treatments not currently need to be recognised. The IFRIC 23 interpretation (Uncertainty over income tax At 31 December 2019, analyses were underway to estimate treatments) must be applied from 1 January 2019. the impact of the application of this decision. At 31 December 2019, the application of this interpretation had no material impact on the financial statements or their presentation.
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2.3 Estimates and assumptions
In the process of preparing the consolidated financial These assumptions, estimates or assessments are established statements, the measurement of certain balance sheet and and reviewed regularly on the basis of information available income statement items calls for the use of assumptions or and the actual position of the Company on the date the assessments based, in particular, on budgets for property financial statements are prepared, taking into consideration developments. These are used to measure the operating past experience and other relevant factors. Actual results may margin, non-current assets, provisions, inventory differ significantly from estimates due to changes in the impairment and accrued expenses. Other items also require underlying conditions and assumptions. the use of estimates based on assumptions regarding The assumptions, estimates or judgements leading to the business plans, or changes in the rates applied, and include presentation of the financial statements at 31 December provisions, goodwill, and put options granted to minority 2019 were conducted in a context of the new home real shareholders. estate market in France, which should pick up after the French municipal elections in March 2020. Demand remains high, buoyed by an all-time low in the mortgage market, with building costs set to stabilise in 2020. 5
2.4 Date of the financial statements
Group companies are consolidated on the basis of their financial statements for the period ended 31 December 2019.
Note 3 Scope of reporting and business combinations
3.1 Consolidation and reporting
Subsidiaries Subsidiaries are entities controlled by the Group. Control joint ventures are property developments (residential or exists when the Group has power over the entity, has rights commercial) undertaken with another developer to variable returns from its involvement with the entity, and (co-developments). has the ability to affect those returns through its power The consolidated financial statements include the Group’s over the entity. share of the total recognised gains and losses of associates In assessing control, potential voting rights that the Group and joint ventures on an equity-accounted basis, from the is able in practice to exercise are taken into account. date that significant influence or joint control commences The financial statements of subsidiaries are included in the until the date that significant influence or joint control consolidated financial statements from the date that control ceases. commences until the date that control ceases. Transactions eliminated on consolidation Associates and joint ventures The following are eliminated: Associates are entities in which the Group has significant • Intragroup receivables and payables; and influence, but not control, over financial and operating • Intragroup balances and transactions (purchases, sales, policies. dividends, profit, provisions recorded against Joint ventures are entities over whose activities the Group has consolidated companies, etc.). joint control, established by contractual agreement. Most 3.2 Scope of reporting
3.2.1 Scope at 31 December 2019 BASIS OF REPORTING Individual Clients Commercial Clients Other activities Total at 31/12/2019 Fully consolidated 1,999 77 26 2,102 Joint ventures 248 17 7 272 Associates 2 1 3 Equity-accounted 250 17 8 275 TOTAL SCOPE OF REPORTING 2,249 94 34 2,377
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3.2.2 Changes in scope The number of consolidated companies increased by 91 In 2019, 116 companies were removed from the scope of between 31 December 2018 and 31 December 2019. reporting. This mainly relates to completed In 2019, 207 companies were brought into the scope of programme-specific companies and to disposals of Guy reporting, broken down into 201 companies founded primarily Hoquet l’Immobilier and Nexity Conseil et Transaction. to support the Group’s real estate development projects, and 6 companies acquired through external growth.
3.3 Additions to the scope
Individual Clients Commercial Clients Property management for individuals In early January 2019, Nexity acquired control of Accessite, In 2019, the Group acquired several firms active in property a French company specialising in advice and in management and several property management contract management for commercial property assets, by portfolios in France for a purchase price of €2.9 million. purchasing a 71.3% stake for a consideration of These transactions generated provisional goodwill of €9.3 million, along with a commitment to purchase the €2.7 million. remaining shares, valued at €4.6 million. Accessite had revenue of €10.1 million in 2019. Provisional goodwill of €12.0 million was recorded in the consolidated balance sheet at 31 December 2019. In 2019, the Group also purchased 100% of the shares of Etoile Property Management for a purchase price of €4.1 million. This transaction generated provisional goodwill of €3 million.
3.4 Detail of acquisitions reported in the consolidated statement of cash flows
(in thousands of euros) Acquisitions in 2019 Acquisitions in 2018 Purchase price 16,782 81,847 Cash of subsidiaries acquired (6,362) (9,954) ACQUISITIONS OF CONSOLIDATED COMPANIES, NET OF CASH ACQUIRED 10,420 71,893
3.5 Detail of disposals reported in the consolidated statement of cash flows
(in thousands of euros) Disposals in 2019 Disposals in 2018 Sale price received 28,398 1,262 Cash of subsidiaries sold (4,018) - DISPOSALS OF CONSOLIDATED COMPANIES, NET OF CASH DIVESTED 24,380 1,262
This mainly relates to the disposals of Guy Hoquet l’Immobilier and Nexity Conseil et Transaction.
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3.6 Geographical breakdown of revenue
The Group conducts a limited amount of international business in Europe (Italy, Belgium, Poland and Switzerland) which in 2019 represented 0.5% of the revenue generated by the Group (compared with 1.8% in 2018).
FINANCIAL YEAR 2019 (in thousands of euros) France International Total Individual Clients 3,722,859 22,498 3,745,357 Commercial Clients 454,252 454,252 Other activities 1,119 1,119 4,178,230 22,498 4,200,728
FINANCIAL YEAR 2018 (in thousands of euros) France International Total Individual Clients 3,311,295 75,223 3,386,518 5 Commercial Clients 548,807 548,807 Other activities 4,250 4,250 3,864,352 75,223 3,939,575
Note 4 Recognition of revenue and operating profit
Consolidated revenue comprises the Group’s aggregate • Preliminary contract costs, which are capitalised only if revenue from the Group’s various divisions, after the probability of obtaining the contract is high; elimination of intra-Group transactions. It can be broken Project ownership costs; down into €2,980 million for the real estate development • activities (residential and commercial) from Future • Directly allocated marketing and selling costs (in-house Completion Sales Contracts (VEFA) or Property and external sales commissions, etc.); and Development contracts (CPI), and €1,221 million for the • Financial expenses directly attributed to operations (if other development activities and services. the sale is not finished prior to completion). Residential and commercial real estate development Revenue and profit from real estate development Revenue and profit from VEFA or CPI contracts are operations undertaken in Italy and Poland are recognised at recognised for the sold assets as the construction process the time of sale, which cannot be prior to the building’s progresses. completion. Partially completed operations at the end of the financial Services and Other activities year are recorded using the percentage-of-completion Revenue is recognised when transactions are closed and method on the basis of the most updated estimates of the over the period that services are provided. results of operations, discounted at year-end. Income for distribution activities under the iSelection and The status percentage is calculated based on the PERL brands is recognised when the notarised agreement is commercial status and on the cost status percentage signed, based on the contracts, in the form of fees or sales completed on the reporting date. of real estate products. Indeed, the sales contract follows If results on completion cannot be determined reliably, the disposal of a VEFA contract acquired from a third-party revenue is only recognised on recoverable costs. developer, or sales on existing buildings. The operating margin for the Group’s development Current operating profit activities includes all costs directly attributable to Current operating profit includes all operating profit items contracts: with the exception of items resulting from unusual, • Land acquisition costs; abnormal and infrequently occurring transactions. In Site development and construction costs; particular, the impairment of goodwill and the • remeasurement of equity-accounted investments following • Urban planning taxes and duties; the acquisition of control are not included in current operating profit.
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Note 5 Alternative performance measures
EBITDA acts as a measurement of operational cash flow The Group also reports on EBITDA after deduction of rent generated (See note 6.2.2). EBITDA is equal to current (before applying the leases standard). operating profit before depreciation, amortisation and The Group uses Working Capital Requirement (see note 11) impairment of fixed assets, net changes in provisions, and net debt (see note 20) to analyse its financial structure. share-based payment expenses and the transfer from inventory of borrowing costs directly attributable to The backlog comprises the Group’s already secured future property developments, plus dividends received from revenue, expressed in euros, for its development activities equity-accounted companies whose operations are an (Residential Real Estate and Commercial Real Estate). The extension of the Group’s business. backlog includes reservations for which notarial deeds of sale have not yet been signed and the portion of revenue Depreciation and amortisation includes right-of-use assets remaining to be generated on units for which notarial deeds calculated pursuant to IFRS 16. of sale have already been signed (portion still to be built).
Note 6 Segment information
6.1 Segment definitions
Operating segments are subgroups of companies or Commercial Clients Division activities for which separate financial information is This division comprises real estate development and available and reviewed on a regular basis by Company services activities for Commercial Clients, as follows: Management with a view to allocating resources and Commercial Real Estate assessing their economic performance. Development of offices (new or refurbished), high-rises, retail Nexity’s business activities, as presented to the Group’s property and hotels, logistics facilities and other industrial Executive Management (i.e. its main operational decision space (Nexity Immobilier d’Entreprise, Ywood, Térénéo, makers) are based around a client-focused organisation Nexity Contractant Général and project-specific entities). (primarily Individual and Corporate): Real Estate Services to Companies Individual Clients Division Real Estate Services to Companies: Rental management This Division comprises real estate development and and property management, consultancy (Nexity Property services activities for Individual Clients. Management and Accessite), and consultancy and rental of short-duration work spaces with Bureaux à Partager Residential Real Estate (Morning Coworking). • Residential real estate development: in France (Nexity Logement, Edouard Denis Développement, Ægide, their Other activities Division subsidiaries, joint ventures), and outside France (Poland, This Division mainly includes the following companies and Italy, Belgium and Portugal); and activities: • Development of subdivisions, in particular with Foncier • Villes & Projets and pre-development urban Conseil. regeneration projects; Real Estate Services to Individuals • Equity interests in investment vehicles; and Property management for individuals: rental • The Nexity holding company. management, sales and lettings, and managing agent • services under the Nexity and Oralia brands, as well as Operational reporting the management, coordination and development of real Segment reporting is based on the operational reporting estate franchise networks under the Century 21 France that the Group uses for management purposes. In its trade name; operational reporting, Nexity applies proportionate • Management of serviced residences for students (with consolidation to its joint ventures, which in its view Studéa) and for seniors (with Domitys), mainly in France, provides a more accurate reflection of the Group’s and to a lesser extent in Switzerland and Belgium; and performance and risks as measured by revenue, operating • Distribution of real estate products, mainly under two profit, working capital requirement and debt. brands: iSelection (which markets rental properties Notes 6.2.1 and 6.3.1 present the condensed financial directly and on behalf of third parties) and PERL (which statements based on operational reporting data, with a markets properties based on the distinction between reconciliation to the financial statements. usufruct and bare ownership); real estate brokerage Operating reporting data are analysed and commented on in activities carried out by Nexity Solutions Crédits; the management report and the press release on annual financial advisory activities carried out by Nexity results. Patrimoine; and insurance advisory activities carried out by Nexity Solutions Assurances.
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6.2 Income statement
6.2.1 Income statement based on operational reporting 31/12/2019 31/12/2019 31/12/2018 Restatement 31/12/2018 (12-month Restatement of Operational (12-month of joint Operational (in thousands of euros) period) joint ventures reporting period) ventures reporting Revenue 4,200,728 298,109 4,498,837 3,939,575 195,417 4,134,992 Changes in stocks of finished goods Purchases (2,625,667) (255,730) (2,881,397) (2,533,035) (167,633) (2,700,668) Personnel costs (717,102) (10) (717,112) (629,594) (12) (629,606) Other operating expenses (302,817) (3,942) (306,759) (268,123) (2,548) (270,671) Taxes (other than income tax) (27,813) (998) (28,811) (26,138) (270) (26,408) Depreciation, amortisation and impairment of non-current assets (211,565) - (211,565) (134,915) (134,915) Current operating profit 315,764 37,429 353,193 347,770 24,954 372,724 Remeasurement of equity-accounted investments 5 following acquisition of control - 79,222 - 79,222 Operating profit 315,764 37,429 353,193 426,992 24,954 451,946 Share of net profit from equity-accounted investments 25,022 (25,022) - 17,912 (17,912) - Operating profit after share of net profit from equity-accounted investments 340,786 12,407 353,193 444,904 7,042 451,946 Financial expense (79,444) (5,651) (85,095) (58,254) (1,532) (59,786) Financial income 5,011 (161) 4,850 8,885 (763) 8,122 Net financial income/(expense) (74,433) (5,812) (80,245) (49,369) (2,295) (51,664) Pre-tax recurring profit 266,353 6,595 272,948 395,535 4,747 400,282 Income tax (96,961) (6,595) (103,556) (108,369) (4,748) (113,117) Share of net profit/(loss) from other equity-accounted investments 7 - 7 (4,750) (4,750) NET PROFIT 169,399 - 169,399 282,416 - 282,416 attributable to equity holders of the parent company 160,718 - 160,718 276,874 - 276,873 attributable to non-controlling interests 8,681 - 8,681 5,542 - 5,542 (in euros) Net earnings per share 2.90 2.90 4.95 4.95 Diluted earnings per share 2.52 2.52 4.37 4.37
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6.2.2 Income statement broken down by segment AT 31 DECEMBER 2019 Commercial Total (in thousands of euros) Individual Clients Clients Other activities Operational reporting Total revenue 4,014,214 483,733 890 4,498,837 Revenue from other divisions - - - - Revenue 4,014,214 483,733 890 4,498,837 Operating expenses (3,474,530) (421,968) (29,485) (3,925,983) EBITDA 539,684 61,765 (28,595) 572,854 Rent (151,500) (10,135) (8,281) (169,916) EBITDA after rent 388,184 51,630 (36,876) 402,938 Rent cancellation 151,500 10,135 8,281 169,916 Depreciation of right-of-use assets (148,052) (11,616) (6,741) (166,409) Depreciation, amortisation and impairment of non-current assets (29,257) (6,470) (9,429) (45,156) Net change in provisions 4,016 259 3,683 7,958 Share-based payments (8,629) (1,787) (5,637) (16,053) Borrowing costs directly attributable to property developments, transferred from inventory - - - - Current operating profit 357,761 42,151 (46,719) 353,193 Remeasurement of equity-accounted investments following acquisition of control - - - Operating profit 357,761 42,151 (46,719) 353,193 Financial expense (20,688) (6,759) (32,731) (60,178) Financial income 2,898 151 1,802 4,850 Net financial income/(expense) before lease liability expenses (17,790) (6,608) (30,929) (55,327) Financial expense on lease liabilities (22,647) (803) (1,467) (24,917) Net financial income/(expense) (40,437) (7,411) (32,396) (80,244) Pre-tax recurring profit 317,324 34,740 (79,115) 272,949 Income tax (108,167) (8,223) 12,832 (103,558) Share of profit/(loss) from equity-accounted investments 3 - 4 7 NET PROFIT 209,160 26,516 (66,279) 169,398 attributable to equity holders of the parent company 200,425 26,571 (66,278) 160,718 attributable to non-controlling interests 8,736 (55) (1) 8,681
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AT 31 DECEMBER 2018 Commercial Total (in thousands of euros) Individual Clients Clients Other activities Operational reporting Total revenue 3,550,066 580,675 4,251 4,134,992 Revenue from other divisions - - - - Revenue 3,550,066 580,675 4,251 4,134,992 Operating expenses (3,072,700) (508,993) (30,266) (3,611,959) EBITDA 477,366 71,682 (26,015) 523,033 Rent (94,078) (2,970) (8,200) (105,248) EBITDA after rent 383,287 68,712 (34,215) 417,784 Rent cancellation 94,078 2,970 8,200 105,248 Depreciation of right-of-use assets (93,740) (3,563) (5,970) (103,273) Depreciation, amortisation and impairment of non-current assets (17,741) (2,146) (11,755) (31,642) Net change in provisions 1,107 165 4,150 5,422 Share-based payments (7,090) (2,145) (5,090) (14,325) 5 Borrowing costs directly attributable to property developments, transferred from inventory (6,492) - - (6,492) Current operating profit 353,410 63,993 (44,680) 372,724 Remeasurement of equity-accounted investments following acquisition of control - - 79,222 79,222 Operating profit 353,410 63,993 34,542 451,946 Finance costs (13,575) (2,593) (27,983) (44,150) Financial income 4,144 31 3,947 8,122 Net financial income/(expense) before lease liability expenses (9,431) (2,562) (24,035) (36,028) Financial expense on lease liabilities (13,650) (230) (1,756) (15,636) Net financial income/(expense) (23,081) (2,792) (25,791) (51,664) Pre-tax recurring profit 330,329 61,201 8,751 400,282 Income tax (120,990) (16,005) 23,879 (113,117) Share of profit/(loss) from equity-accounted investments 795 - (5,545) (4,750) NET PROFIT 210,134 45,196 27,085 282,416 attributable to equity holders of the parent company 204,778 45,008 27,085 276,873 attributable to non-controlling interests 5,355 188 (1) 5,542
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6.3 Balance sheet
6.3.1 Balance sheet based on operational reporting
ASSETS 31/12/2019 Balance Restatement 31/12/2018 Balance at Restatement of Operational at of joint Operational (in thousands of euros) 31/12/2019 joint ventures reporting 31/12/2018 ventures reporting Non-current assets Goodwill 1,598,043 - 1,598,043 1,579,107 - 1,579,107 Other intangible assets 106,968 - 106,968 113,503 - 113,503 Right-of-use assets 828,394 - 828,394 756,793 - 756,793 Property, plant and equipment 121,818 - 121,818 100,637 - 100,637 Equity-accounted investments 39,926 (38,384) 1,542 35,292 (33,317) 1,975 Other financial assets 57,123 319 57,442 44,887 293 45,180 Deferred tax assets 44,219 2,492 46,711 39,261 1,846 41,107 Total non-current assets 2,796,491 (35,573) 2,760,918 2,669,480 (31,176) 2,638,304 Current assets Inventories and work in progress 1,555,566 289,814 1,845,380 1,440,670 240,520 1,681,190 Trade and other receivables 1,148,195 254,386 1,402,581 991,871 54,584 1,046,455 Tax receivable 42,788 1,604 44,392 19,989 285 20,274 Other current assets 1,403,683 51,136 1,454,819 1,320,777 34,728 1,355,505 Other financial receivables 201,673 (108,617) 93,056 160,698 (83,643) 77,055 Cash and cash equivalents 1,116,706 86,508 1,203,214 720,796 76,219 797,015 Total current assets 5,468,611 574,831 6,043,442 4,654,801 322,693 4,977,494 TOTAL ASSETS 8,265,102 539,258 8,804,360 7,324,281 291,517 7,615,798
LIABILITIES AND EQUITY Restatement 31/12/2019 Restatement 31/12/2018 Balance at of joint Operational Balance at of joint Operational (in thousands of euros) 31/12/2019 ventures reporting 31/12/2018 ventures reporting Equity Share capital 280,649 - 280,649 280,649 - 280,649 Additional paid-in capital 548,489 - 548,489 521,060 - 521,060 Treasury shares (24,657) - (24,657) (23,980) - (23,980) Reserves and retained earnings 781,470 - 781,470 700,255 - 700,255 Net profit for the period 160,718 - 160,718 276,874 - 276,874 Equity attributable to equity holders of the parent company 1,746,669 - 1,746,669 1,754,858 - 1,754,858 Non-controlling interests 10,605 - 10,605 8,926 - 8,926 Total equity 1,757,274 - 1,757,274 1,763,784 - 1,763,784 Non-current liabilities Long-term borrowings and financial debt 1,429,524 1,614 1,431,138 1,157,780 1,614 1,159,394 Non-current lease liabilities 755,355 - 755,355 678,633 - 678,633 Employee benefits 24,527 - 24,527 22,346 - 22,346 Deferred tax liabilities 81,519 13,481 95,000 84,505 7,641 92,146 Total non-current liabilities 2,290,925 15,095 2,306,020 1,943,264 9,255 1,952,519 Current liabilities Short-term borrowings, financial liabilities and operating liabilities 681,370 101,741 783,111 424,590 46,620 471,210 Current lease liabilities 152,559 - 152,559 131,539 - 131,539 Current provisions 75,509 2,117 77,626 87,705 2,052 89,757 Trade and other payables 1,726,975 264,682 1,991,657 1,619,158 220,866 1,840,024 Current tax liabilities 13,284 742 14,026 18,658 5,161 23,819 Other current liabilities 1,567,206 154,881 1,722,087 1,335,583 7,564 1,343,147 Total current liabilities 4,216,903 524,163 4,741,066 3,617,233 282,262 3,899,495 TOTAL LIABILITIES AND EQUITY 8,265,102 539,258 8,804,360 7,324,281 291,517 7,615,798
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6.3.2 Balance sheet items broken down by segment AT 31 DECEMBER 2019 Breakdown by division of assets and liabilities Inter-division eliminations Total Individual Commercial and not Operational (in thousands of euros) Clients Clients Other activities segmented reporting Assets Non-current division assets 2,322,406 250,753 160,310 (19,262) 2,714,207 Deferred tax assets 46,711 46,711 Total non-current assets 2,322,406 250,753 160,310 27,449 2,760,918 Current division assets 4,805,762 828,386 1,364,783 (999,881) 5,999,050 Tax receivable 44,392 44,392 Total current assets 4,805,762 828,386 1,364,783 (955,489) 6,043,442 TOTAL ASSETS 7,128,168 1,079,138 1,525,092 (928,040) 8,804,360 Liabilities and equity Total equity 1,757,274 1,757,274 5 Non-current division liabilities 730,577 52,400 1,431,577 (3,534) 2,211,020 Deferred tax liabilities 95,000 95,000 Total non-current liabilities 730,577 52,400 1,431,577 91,466 2,306,020 Current division liabilities 4,150,557 833,059 759,278 (1,015,856) 4,727,037 Current tax liabilities 14,026 14,026 Total current liabilities 4,150,557 833,059 759,278 (1,001,830) 4,741,066 TOTAL LIABILITIES AND EQUITY 4,881,134 885,459 2,190,855 846,910 8,804,360 Working capital requirement 875,908 90,386 22,497 30,612 1,019,403
AT 31 DECEMBER 2018 Inter-division eliminations and Total Operational (in thousands of euros) Individual Clients Commercial Clients Other activities not segmented reporting Assets Non-current division assets 2,232,723 232,366 136,152 (4,044) 2,597,198 Deferred tax assets 41,108 41,108 Total non-current assets 2,232,723 232,366 136,152 37,064 2,638,306 Current division assets 4,129,854 710,503 1,047,205 (930,344) 4,957,217 Tax receivable 20,274 20,274 Total current assets 4,129,854 710,503 1,047,205 (910,070) 4,977,491 TOTAL ASSETS 6,362,577 942,869 1,183,357 (873,007) 7,615,798 Liabilities and equity Total equity 1,762,233 1,762,233 Non-current division liabilities 625,821 59,010 1,178,986 (3,444) 1,860,373 Deferred tax liabilities 93,698 93,698 Total non-current liabilities 625,821 59,010 1,178,986 90,254 1,954,071 Current division liabilities 3,512,138 653,484 641,244 (931,191) 3,875,674 Current tax liabilities 23,819 23,819 Total current liabilities 3,512,138 653,484 641,244 (907,372) 3,899,493 TOTAL LIABILITIES AND EQUITY 4,137,959 712,494 1,820,230 945,115 7,615,798 Working capital requirement 761,591 86,980 51,161 (3,298) 896,434
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ANALYSIS OF THE FINANCIAL STATEMENTS
Non-current assets Note 7 Goodwill
The Group reports on two cash-generating units (CGUs): To test for impairment, goodwill is broken down into • The Individual Clients CGU, which includes Residential cash-generating units (CGUs), which are groups of similar Real Estate development activities and Real Estate assets generating identifiable cash flows. An impairment Services to Individuals; and test involves comparing the carrying amount of each CGU with the recoverable amount. The recoverable amount • The Commercial Clients CGU, which includes Real Estate corresponds to the value in use, determined on the basis of Development for Companies and Real Estate Services to the present value of expected future cash flows, which is Companies. the most suitable method considering the lack of recent comparable transactions. In the event of impairment the Goodwill impairment testing corresponding amount is recognised as an expense in the Goodwill reflects the expertise and synergies expected from income statement. acquired companies. An impairment loss recognised for a CGU is first allocated Goodwill is tested for impairment at least once a year and to the book value of the goodwill associated with the CGU when there is an indication of impairment loss. and then to the other non-monetary assets of the CGU in proportion to their book value. An impairment loss of goodwill may not be reversed.
Adjustments during Balance Acquisitions and the allocation Balance (in thousands of euros) at 31/12/2018 remeasurements Disposals period at 31/12/2019 Individual Clients 1,412,463 2,682 (7,300) 2,379 1,410,224 Commercial Clients 166,644 15,980 5,195 187,819 TOTAL GOODWILL 1,579,107 18,662 (7,300) 7,574 1,598,043
In the Individual Clients division, acquisitions in the period DISCOUNT RATE (WACC AFTER TAX) generated provisional goodwill of €2,682 thousand for the Individual Clients Commercial Clients acquisition of new firms in property management for At 31 December 2019 6.44% 6.90% individuals in France. At 31 December 2018 6.32% 6.75% In the Commercial Clients division, the provisional goodwill of €15,980 thousand mainly corresponds to the acquisition The value tests use Executive Management’s 5-year of two property management companies (see note 3.2). business plan, which was presented to the Board of Directors in December 2019. The business plan involves Disposals correspond to the share of the goodwill allocated to different growth assumptions depending on the business Guy Hoquet l’Immobilier in the amount of €7,300 thousand. activity involved. These assumptions take into account Adjustments to goodwill during the allocation period current market conditions and foreseeable developments as mainly relate to Ægide-Domitys acquired in June 2018, and well as the Group’s assumptions about changes in the Bureaux à Partager (Morning Coworking) acquired in regulatory environment and competitive pressures. The December 2018. budgeted margin levels are consistent with the margin targets set by the Commitments Committee for Main assumptions used for testing Commercial and Residential Real Estate development At 31 December 2019, the same independent expert as the projects, and with the current profit margin for the business previous financial year calculated the discount rate of the activities of the Services division. future cash flows for the CGUs, using the Capital Asset Beyond the 5-year plan, the perpetual growth rate used to Pricing Model (Modèle d’Évaluation des Actifs Financiers - calculate the terminal value is 1.5% (the same rate as at CAPM) to measure the cost of equity, and using the actual 31 December 2018). This rate is lower than the average cost method to measure the cost of debt. The tax rate takes growth rate for the business activities over the period of the into account the year-on-year decline in rates to 25% in business plan. 2022, in accordance with the legal provisions.
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Sensitivity of useful life values to key assumptions Impact of IFRS 16 Given the very pronounced difference between the DCF value Nexity has been applying IFRS 16 Leases since and the value to be tested, there is no potential loss of value 1 January 2018. As part of the process to determine future for the two CGUs with downgraded assumptions. cash flows, the impacts of EBITDA and ROP have been The threshold at which the DCF would display a loss of value neutralised in order to obtain operating cashflows after rent requires a 67% fall in terminal flows for Individual Clients, has been taken into account. and a 50% fall for Commercial Clients. In parallel, the tested recoverable value does not take into account the IFRS 16 right of use.
Note 8 Right-of-use assets, other intangible assets and other property, plant and equipment
Depreciation, Depreciation, amortisation Balance amortisation Balance (in thousands of euros) Gross and impairment at 31/12/2019 Gross and impairment at 31/12/2018 Other intangible assets 221,642 (114,674) 106,968 207,046 (93,543) 113,503 5 Right-of-use assets (IFRS 16) 1,152,309 (323,916) 828,394 911,025 (154,232) 756,793 Property, plant and equipment 285,362 (163,546) 121,816 246,156 (145,519) 100,637 TOTAL NON-CURRENT ASSETS 1,659,313 (602,135) 1,057,178 1,364,226 (393,294) 970,932
CHANGES IN THE FINANCIAL YEAR Movements Additions net Changes Balance acquisitions and charges for the in scope Balance (in thousands of euros) at 31/12/2018 disposals financial year and other at 31/12/2019 Other intangible assets 113,503 23,463 (21,044) (8,954) 106,968 Right-of-use assets (IFRS 16) 756,793 243,361 (166,409) (5,351) 828,394 Property, plant and equipment 100,637 40,026 (24,289) 5,443 121,816 TOTAL NON-CURRENT ASSETS 970,932 306,849 (211,741) (8,862) 1,057,178
8.1 Other property, plant, equipment and intangible assets
Other intangible assets that are acquired by the Group are Property, plant and equipment is stated at acquisition or stated at cost less accumulated amortisation and production cost less accumulated depreciation and impairment losses. They consist mainly of software, impairment losses. IT developments, and client relationships that may be Property, plant and equipment is mainly composed of fixtures recognised when accounting for business combinations. and fittings, office and computer equipment, and furniture. Amortisations are calculated on a straight-line basis based on Amortisations are calculated on a straight-line basis based the anticipated useful life of each asset: between 1 and 7 years on the useful life of each asset’s components. The for software and IT developments, 2 years for client amortisation periods generally used vary from 3 to relationships as part of real estate development operations, 10 years. and 20 years for client relationships as part of real estate services.
8.2 Right-of-use assets
Right-of-use assets correspond to the initial amount of lease specific office buildings occupied by Nexity employees). The liabilities as defined by IFRS 16 (see note 21.3), minus portion of the margin generated by the share of rents completed amortisations and depreciations, and by the discounted in relation to the sale price is neutralised during restatement of leaseback transactions. construction by a reduction in the value of rights of use, The standard requires neutralisation of the margins for which reduces depreciation over the duration of the lease. leaseback transactions. At Nexity, this covers the sale of These transactions are carried out in the ordinary course of real property to investors, who then rent this property to business and represent individually insignificant amounts. the Group’s subsidiaries (serviced residence activities and
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In order to apply the IFRS 16 standard, the Group restates A number of automatically renewable leases (as defined by leases for assets of more than €5,000 and of a duration of Article L.145-9 of the French Commercial Code) do not need more than one year. to be recognised under lease liabilities, as the notice period is The lease term applied is the minimum duration of the first under 12 months. commitment, increased by any renewal options that the The amount of rent not restated is €38.5 million, of which Group is reasonably certain to exercise. The included rent is €8.9 million for low-value exemptions, €5.3 million for either fixed or linked to a real estate index. Variable rent automatically renewable leases on real estate assets used based on the lessee’s income is excluded from lease by the Group’s employees, and €24.3 million (classified as liabilities and recognised in the profit (loss) for the period in purchases) for automatically renewable leases on senior question. residences, student residences and coworking spaces. Right-of-use assets mainly concern real estate assets, including senior residences, student residences, and managed office buildings for coworking or use by the Group’s employees.
Breakdown of rights of use by asset type Average duration Balance at Balance at (in thousands of euros) 2019 (in years) 31/12/2019 31/12/2018 • Student residences 4.4 138,712 131,241 • Senior residences 7.8 519,634 434,437 • Coworking spaces 4.4 39,162 41,299 Serviced residence and coworking space activities 697,508 606,977 Corporate assets 3.2 130,886 149,816 TOTAL RIGHT-OF-USE ASSETS 5.6 828,394 756,793
CHANGES IN THE FINANCIAL YEAR Movements Net charges for Balance at acquisitions the financial Changes in Balance at (in thousands of euros) 31/12/2018 and disposals year scope and other 31/12/2019 • Student residences 131,241 40,327 (33,601) 745 138,712 • Senior residences 434,437 169,741 (83,610) (934) 519,634 • Coworking spaces 41,299 13,408 (9,271) (6,274) 39,162 Corporate assets 149,816 19,885 (39,927) 1,113 130,886 TOTAL RIGHT-OF-USE ASSETS 756,793 243,361 (166,409) (5,351) 828,394
Movements of acquisitions and disposals on IFRS 16 rights Change in scope and other correspond mainly to the of use (€243,361 thousand) are primarily linked to new change to the opening balance of subsidiaries acquired at leases signed in 2019. the end of 2018.
Note 9 Equity-accounted investments
The Group’s equity-accounted investments are initially If the Group’s share of the losses of an associate or joint recorded at acquisition cost including any goodwill venture exceeds the book value of the investee, the book generated. Their book value is then increased or decreased value is reduced to nil and the recognition of further losses is to take into account the Group’s share in any profit and loss discontinued unless the Group has a legal or constructive generated after the acquisition date. obligation to cover the losses or make payments in respect of said associate or joint venture. If there is an indicator of impairment, a test is performed which compares the book value of the investee to its recoverable amount.
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CHANGE IN THE PERIOD (in thousands of euros) 31/12/2019 31/12/2018 Value of investments at the beginning of financial year 35,287 47,021 Change in scope and foreign exchange gains and losses (546) (4,406) Change in reporting standard 3,234 Change in consolidation method (28,158) Change in equity of equity-accounted investments 101 16,230 Share of profit from investees with activities that are an extension of the Group’s operating activities 25,022 17,912 Group share of profit/(loss) from other investees 7 (4,750) Dividends paid (19,945) (11,796) VALUE OF INVESTMENTS AT THE END OF FINANCIAL YEAR 39,926 35,287 o/w investees with activities that are an extension of the Group’s operating activities 38,384 33,312 o/w other investees 1,542 1,975
“Investees with activities that are an extension of the Other investees, amounting to €1,542 thousand, are 5 Group’s operating activities” are joint ventures. Most joint associates: minority interests in co-development projects ventures are property developments (residential or and the Bien’ici property listings website, in which the commercial) undertaken with another developer Group has a 49.50% stake. (co-developments).
Note 10 Other financial assets
Movements Net charges for Balance at acquisitions the financial Changes in scope Balance at (in thousands of euros) 31/12/2018 and disposals year and other 31/12/2019 Startup investments 16,455 3,177 - 1,814 21,446 Unconsolidated acquired companies 2,095 975 - (2,095) 975 Companies soon to be dissolved 1,307 - 84 351 1,742 Cash allocated to the liquidity agreement 1,547 1,912 - - 3,459 Deposits and guarantees 11,717 (1,314) (50) 2,799 13,153 Investments in funds and property developments 382 5,547 - - 5,929 Loans for property acquisitions from Crédit Financier Lillois 11,212 (939) - - 10,273 Other 170 158 (182) - 146 TOTAL OTHER FINANCIAL ASSETS 44,885 9,516 (148) 2,869 57,123
“Startup investments” are investments in French private “Deposits and guarantees” are held by third parties, and equity funds for professional investors (fonds professionnel mainly include security deposits on the office buildings de capital investissement - FPCIs) or direct investments in leased and occupied by the Group and on the surety, bonds private companies, in business sectors such as digital obtained for property management and brokerage activities technology that may offer future synergies or growth in real estate services. Deposits and guarantees relating to opportunities. the completion of real estate developments are included in “Unconsolidated acquired companies” consists of firms in the calculation of the working capital requirement (WCR). property management for individuals acquired at the end of “Investments in funds and property developments” refers to the financial year and intended to be consolidated in the medium-term financing contributed by the Group to following financial year. The amount presented in the co-developments, and investments in real estate “Changes in scope and other” column corresponds to the investment funds. 1 January 2019 consolidation of firms in property “Loans for property acquisitions from Crédit Financier management for individuals acquired at the end of 2018. Lillois” came to €10,273 thousand (including “Companies soon to be dissolved” means investments in €456 thousand maturing in less than one year) at private companies that have been used as vehicles for 31 December 2019, compared to €11,212 thousand property developments that have been delivered. (including €647 thousand maturing in less than one year) “Cash allocated to the liquidity agreement” designates the at 31 December 2018. financial resources made available to the investment All the other financial assets mainly mature in more than services provider contracted to manage the liquidity one year. contract of Nexity’s publicly traded shares in accordance with the authorisations approved at the Shareholders’ Meeting.
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Working capital requirement Note 11 Breakdown of working capital requirement
Balance at Balance at (in thousands of euros) Notes 31/12/2019 31/12/2018 Current assets Inventories and work in progress 10 1,555,566 1,440,670 Trade and other receivables 11 1,148,195 991,871 Other current assets 12 1,403,683 1,320,777 Current liabilities Trade and other payables (1,726,973) (1,619,155) Other current liabilities 13 (1,567,206) (1,335,585) WORKING CAPITAL REQUIREMENT BEFORE TAX 813,263 798,578 Tax receivable 29 42,788 19,989 Current tax liabilities 29 (13,284) (18,658) TOTAL WORKING CAPITAL REQUIREMENT 842,768 799,909
CHANGE IN THE PERIOD (in thousands of euros) Change in the period WORKING CAPITAL REQUIREMENT BEFORE TAX AT 31/12/2018 798,578 Change in working capital requirement as per cash flow statement 34,751 Impact of changes in scope (11,649) Reversal of capitalised borrowing costs for property developments (6,176) Change in receivables and payables for non-current assets and similar items (included in trade payables) (2,241) WORKING CAPITAL REQUIREMENT BEFORE TAX AT 31/12/2019 813,263
Note 12 Inventories and work in progress
“Inventories and work in progress” includes land recorded Preliminary contract costs for real estate development at acquisition cost, construction in progress (site programmes are included in the cost of inventories if the development and construction costs), selling expenses probability of securing the contract is high. If the contract is assignable to contracts (in-house and external not obtained, the related costs are expensed. commissions) and finished products, recorded at production When the net realisable value of inventories and work in cost. progress is less than their cost, impairment losses are recorded.
Balance at Balance at (in thousands of euros) Gross Impairment 31/12/2019 Gross Impairment 31/12/2018 TOTAL INVENTORIES AND WORK IN PROGRESS 1,600,578 (45,013) 1,555,566 1,496,716 (56,046) 1,440,670
Note 13 Trade and other receivables
Client receivables Trade and other receivables Current contracts are recorded at the original cost, minus Trade and other receivables are stated at fair value upon any payments and increased by the profit amount recorded initial recognition, then at amortised cost less allowances for up to the balance sheet date (minus anticipated losses) and uncollectible items. interim invoices issued. The amount of client receivables due at 31 December 2019 stood at €403,690 thousand.
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Balance at Balance at (in thousands of euros) Gross Impairment 31/12/2019 Gross Impairment 31/12/2018 Assets in VEFA contracts 744,505 744,505 657,998 657,998 Trade and other receivables 422,634 (18,944) 403,690 353,578 (19,705) 333,873 TOTAL TRADE AND OTHER RECEIVABLES 1,167,139 (18,944) 1,148,195 1,011,576 (19,705) 991,871
Balance at Movements linked Balance at (in thousands of euros) 31/12/2018 to operations 31/12/2019 Individual Clients 586,004 102,885 688,889 Commercial Clients 71,995 (16,379) 55,616 TOTAL ASSETS IN VEFA CONTRACTS 657,999 86,506 744,505
Assets in contracts are the share of performance obligations The Group believes that its credit risk is not material as it already completed by the Group, for which the final cash essentially operates in a regulated business environment, collection right is subject to a contractual payment which secures the payment of trade receivables. schedule. Assets in contracts gradually become receivables Services covered by a VEFA off-plan sales contract, but not 5 as calls for funds are issued to clients, demonstrating the yet recognised in the revenue on a percentage-of-completion Group’s unconditional cash collection right. Assets in basis, totalled €2.3 billion at 31 December 2019. contracts are therefore representative of some of the future payments to be received by the Group for on-going contracts.
Note 14 Other current assets
The Real Estate Services business enters into agreements Group manages these accounts and reports them as with clients to perform services on their behalf as separate accounts in its balance sheet under the line items authorised agents. For this purpose, the Group holds client “Other current assets” and “Other current liabilities”. working capital accounts. As the authorised agent, the
Balance at Balance at (in thousands of euros) Gross Impairment 31/12/2019 Gross Impairment 31/12/2018 Suppliers – advances and deposits paid 92,151 (135) 92,016 74,768 (150) 74,618 Government receivables 341,640 - 341,640 376,419 - 376,419 Prepaid expenses 17,898 - 17,898 17,696 - 17,696 Other receivables 87,488 (8,910) 78,578 74,046 (5,924) 68,122 Cash held in client working capital accounts 873,550 - 873,550 783,921 - 783,921 TOTAL OTHER CURRENT ASSETS 1,412,728 (9,045) 1,403,683 1,326,851 (6,074) 1,320,777
Note 15 Other current liabilities
(in thousands of euros) Balance at 31/12/2019 Balance at 31/12/2018 Tax payable and social security contributions 417,681 386,127 Prepaid income and other accruals 116,641 52,997 Clients – advances and deposits received 136,955 89,066 Client working capital accounts 873,550 783,921 Reservation deposits held in escrow 22,380 23,471 TOTAL OTHER CURRENT LIABILITIES 1,567,206 1,335,581
In 2019, deferred income included €44,178 thousand in liabilities on Commercial Clients contracts, which represents the share of performance obligations which the Group has not yet completed, and for which payment has already been received.
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Equity Note 16 Share capital
At 31 December 2019, the share capital of the parent company comprised 56,129,724 shares with a par value of €5 per share, unchanged since 31 December 2018.
Note 17 Non-controlling interests
Non-controlling interests are mainly minority interests in For certain entities, the Group has made undertakings to the subsidiaries that are not wholly owned by the Group. purchase the remaining stake that it does not own. In such cases, the minority stake is reclassified as a financial liability (see note 21.2). The non-controlling interest is no longer recognised, and the entity’s profit or loss is fully consolidated in the Group’s financial statements.
Note 18 Free share award plans
Free shares may be granted to Group employees and senior Employee incentive plans offering free share awards, executives by the Board of Directors, as authorised by a vote ongoing or ended in the period, are as follows: at a Shareholders’ Meeting.
NEXITY PLANS Awarded not cancelled Vesting (number of shares) Awarded Cancelled Vested and not vested period ends May 2016 plan 469,500 45,000 424,500 - Q2 2019 January 2017 plan 50,000 - - 50,000 Q1 2020 April 2017 plan 5,000 - - 5,000 Q2 2020 June 2017 plan 392,600 29,550 - 363,050 Q2 2020 December 2017 plan 13,500 4,500 - 9,000 Q4 2020 May 2018 plan for managers 284,950 20,550 - 264,400 Q2 2021 May 2018 plan for all employees 209,070 56,940 120 152,010 Q2 2021 October 2018 plan 24,000 - - 24,000 Q4 2021 May 2019 plan 222,700 4,000 - 218,700 Q2 2022 October 2019 plan 235,500 - - 235,500 Q4 2022 TOTAL NEXITY PLANS 1,906,820 160,540 424,620 1,321,660
Moreover, the Board of Directors holds a Shareholders’ Meeting The calculated value of the free shares is recognised as a authorisation, which is valid until 22 July 2020, to grant 1% of payroll expense on a straight-line basis over the vesting the capital in free shares (acquired at the end of a minimum period with a corresponding increase in equity. three-month period based on certain conditions having been The aggregate value is modulated to take into account the fulfilled). A total of 458,200 free shares have been awarded probability of the allocation conditions being met for each under this authorisation. plan, based on the following criteria: The maximum potential dilution (taking into account treasury • Length of service at the Company at the end of the plan; shares acquired and held to be granted to recipients of free share and awards) would be 1.4% (as a percentage of share capital ownership) if all free shares already awarded were to vest, and • If applicable, performance conditions: achievement of 1.6% if the calculation includes all possible free shares not yet EBITDA level or cumulative operating income over the awarded. plan’s duration and/or minimum backlog at plan maturity, and/or minimum level of operating income or In 2019, 424,620 free shares were vested, and with all EBITDA at plan maturity, and/or maximum net debt at awards satisfied using treasury shares, the shares were plan maturity, and/or compliance with non-financial transferred to their recipients. criteria (CSR, gender equality index). Valuation of Nexity’s free share plans The aggregate value of Nexity’s free share plans was Free shares are recognised at the grant date at their fair €64,856 thousand in 2019, representing an expense of value. Changes in value after the grant date have no effect €16,679 thousand. on the initial measurement.
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May January April June December May October May October 2016 2017 2017 2017 2017 2018 2018 2019 2019 (in thousands of euros) Plan Plan Plan Plan Plan Plan Plan Plan Plan Aggregate value 15,390 1,932 196 15,808 391 16,265 774 6,281 7,819 Expense 2019 3,236 644 66 5,269 130 5,421 258 1,221 434 Assumptions Share price at grant date (€) 48.4 45.1 49.7 54.5 52.0 49.8 42.1 40.5 45 Vesting period (in years) 3 3 3 3 3 3 3 3 3 Dividend rate (1) 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 6.5% 6.0%
(1) Based on the Nexity underlying rate.
Note 19 Treasury shares held
As authorised at the Shareholders’ Meeting and Nexity treasury shares are recognised at cost and presented implemented by the Board of Directors, the Group may find as a deduction from equity. Any gains or losses from the 5 it necessary to hold treasury shares up to the limit of 10% disposal of treasury shares, determined using the first-in, of the share capital, adjusted for changes. first-out (FIFO) method, are directly recognised in equity At 31 December 2019, treasury shares were held to meet and have no effect on profit or loss for the financial year. for two main purposes: • In connection with a liquidity agreement entered into with an investment services provider; • In connection with share buyback programmes implemented to cover free share plans.
Treasury shares held Treasury shares held Total held to be used for free under the liquidity (number of shares) at transaction date share awards agreement POSITION AT 31 DECEMBER 2018 550,948 450,000 100,948 Purchase and disposal of shares • Via the liquidity agreement entered into with an investment services provider (39,429) • In connection with share buyback programmes implemented to cover free share plans 518,273 Transfer of shares • In connection with share buyback programmes implemented to cover free share plans (424,620) POSITION AT 31 DECEMBER 2019 605,172 543,653 61,519
The 605,172 treasury shares held at 31 December 2019 are recorded at less than the net position at a value of €24,657 thousand.
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Debt and financial risk factors Note 20 Breakdown of net debt
BREAKDOWN OF NET DEBT Balance at Balance at (in thousands of euros) Notes 31/12/2019 31/12/2018 Bond issues 21 1,017,768 770,497 Long-term borrowings and financial debt 21 417,946 393,630 Short-term borrowings and financial debt 21 523,565 319,744 Loans and borrowings 1,959,279 1,483,871 Current accounts held as liabilities and related payables 21 81,259 80,407 Current accounts held as assets and related receivables 22 (201,673) (160,698) Other financial receivables and payables (120,415) (80,292) Cash and cash equivalents 23 (1,116,706) (720,796) Bank overdraft facilities 23 70,358 18,094 Net cash and cash equivalents (1,046,348) (702,702) TOTAL NET FINANCIAL DEBT BEFORE LEASE LIABILITIES 792,516 700,877 Lease liabilities 21 907,914 810,171 TOTAL NET DEBT 1,700,430 1,511,048
CHANGE IN THE PERIOD Put options Impact granted to Balance at of changes Change in minority New Balance at (in thousands of euros) 31/12/2018 Cash flows in scope fair value shareholders leases Other 31/12/2019 Loans and borrowings 1,483,872 426,003 1,567 9,278 35,906 2,653 1,959,279 Other financial receivables and payables (80,292) (42,905) 5,140 (2,358) (120,415) Net cash and cash equivalents (702,703) (343,646) (1,046,348) TOTAL NET DEBT BEFORE LEASE LIABILITIES 700,877 39,452 6,707 9,278 35,906 296 792,516 Lease liabilities 810,171 (169,916) (6,125) 24,917 246,716 2,151 907,914 TOTAL NET DEBT BEFORE LEASE LIABILITIES 1,511,048 (130,464) 582 34,195 35,906 246,716 2,447 1,700,430
Components of net debt recognised in the statement of cash flows
(in thousands of euros) Cash flows Proceeds from issuance of bonds 543,450 Redemption of bonds (90,396) Acquisitions of minority interests (27,051) CHANGE IN BANK BORROWINGS AND ACQUISITION-RELATED DEBT 426,003 REPAYMENT OF LEASE LIABILITIES (169,916) Change in other borrowings and other financial receivables (42,905) Change in cash and cash equivalents (343,646) TOTAL CHANGE IN NET DEBT (130,464)
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Note 21 Borrowings and financial liabilities
Balance at 31/12/2019 Balance at 31/12/2018 (in thousands of euros) Non-current Current Non-current Current Bond issues 1,011,577 6,191 764,152 6,000 Loans and borrowings 417,946 523,565 393,975 319,744 Current account and equivalent liabilities - 81,259 - 80,407 Bank overdraft facilities - 70,358 - 18,094 TOTAL BORROWINGS AND FINANCIAL LIABILITIES BEFORE LEASE LIABILITIES 1,429,523 681,372 1,158,127 424,245 Lease liabilities 755,355 152,559 678,633 131,539 TOTAL BORROWINGS AND FINANCIAL LIABILITIES 2,184,879 833,931 1,836,759 555,783
21.1 Bond issues 5 At 31 December 2019, the reported nominal amount of Bondholders may ask for early redemption in whole or in bond issues (€1,032 million) differed from their part, in cash, if at least 50% of the voting rights attaching consolidated value (€1,018 million), as a result of the to Nexity’s shares are directly held by a single third party. restatement of the OCEANE equity component and the phasing of arrangement costs.
Nexity SA Euro PP bond issues Nominal amount at Nominal amount 31/12/2019 at 31/12/2018 Annual Issue date (in millions of euros) (in millions of euros) interest rate Maturity 5 May 2014 25.0 25.0 3.25% 5 May 2020 5 May 2014 146.0 146.0 3.52% 5 May 2021 29 June 2017 30.0 30.0 2.05% 10 November 2023 29 June 2017 121.0 121.0 2.60% 29 June 2025 20 December 2019 – Green Bond 84.0 2.26% 20 December 2026 20 December 2019 – Green Bond 156.0 2.46% 20 December 2027 TOTAL 562.0 322.0
Euro PP Green Bond issue On 20 December 2019, the Group launched a Green Bond Framework). The income from this Green Bond issue will be issue worth €240 million, under the following conditions: allocated to financing and/or refinancing of development and • €84 million maturing on 20 December 2026, and an construction of Residential Real Estate projects in France annual coupon of 2.257%; which meet several criteria including in particular the European NZEB standards (“Nearly Zero-Energy Buildings”). • €156 million maturing on 20 December 2027, and an The allocation of the funds to projects will be the subject of a annual coupon of 2.464%. specific traceability process and an annual reporting process The inaugural issue of this Green Bond complies with the which will be audited and reported on the Group’s website. Group’s Green Bond eligibility criteria (the Green Bond Under the terms of these issues, the Group is required to comply with the following covenants, which are calculated on the basis of the consolidated financial statements every six months on a rolling 12-month basis:
Issue date of bonds Before 2019 Since 2019 Net debt before IFRS 16/Consolidated equity ≤ 2 ≤ 2 Net debt before IFRS 16 and programme-related debt (1)/EBITDA before IFRS 16 ≤ 3 ≤ 3.5 EBITDA before IFRS 16/Cost of net financial debt before IFRS 16 ≥ 2.5 ≥ 2.5
(1) Programme-related debt is debt linked to commercial real estate developments marketed for lease or sale, and debt linked to real estate assets, taken out by Nexity or one of its subsidiaries, with no possibility of recourse against other members of the Group.
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Convertible bonds issued by Nexity SA CONVERTIBLE BOND ISSUES Nominal amount (in millions Annual interest Number Issue date of euros) rate Maturity of bonds 2016 OCEANE – 13/05/2016 270.0 0.125% 1 January 2023 4,199,066 2018 ORNANE – 27/02/2018 200.0 0.250% 2 March 2025 2,902,336 TOTAL 470.0
2016 OCEANE bond issue (bonds that may be converted 2018 ORNANE bond issue (bonds that may be converted or exchanged for new or existing shares) into cash and/or new shares and/or existing shares) In 2016, the Group issued €270 million of 6.5-year bonds On 27 February 2018, the Group issued €200 million of that may be converted or exchanged for new or existing 7-year bonds that may be converted into cash and/or new shares (OCEANE bonds), redeemable at maturity in shares and/or existing shares (ORNANE bonds), redeemable January 2023 and paying an annual coupon rate of 0.125%. at maturity in March 2025 and paying an annual coupon The nominal unit value per 2016 OCEANE convertible bond rate of 0.25%. was set at €64.30. The conversion rate was adjusted The nominal unit value per 2018 ORNANE convertible bond following the dividend distribution in June 2019. It is was set at €68.91. The conversion rate was adjusted 1.206 shares for one bond (as opposed to one share for one following the dividend distribution in June 2019. It is bond at the date of issuance). 1.121 shares for one bond (as opposed to one share for one If all convertible bonds were converted, the dilution would bond at the date of issuance). be 8.3% (as a percentage of share capital ownership). If all convertible bonds were converted, the dilution would be At 31 December 2019, after taking into account financial 5.5% (as a percentage of share capital ownership). expense for the period, the equity component of this At 31 December 2019, the market value of this instrument instrument amounted to €16.6 million and its debt was €202 million, which is fully accounted for under the component to €253.4 million. “Borrowings and financial liabilities” item. For the recognition of this instrument, the Nexity group has selected the fair value option: all changes in fair value are recorded through “Net financial income/(expense)”.
21.2 Credit facilities
31/12/2019 31/12/2018 Non-current Current (in millions of euros) payables payables Total payables Total payables Nexity corporate borrowing facilities - - - - Other corporate borrowing facilities 122.3 68.5 190.8 114.5 Negotiable debt securities - 120.0 120.0 - Put options granted to minority shareholders 295.6 37.0 332.6 324.1 TOTAL CORPORATE DEBT 417.9 225.5 643.4 438.6 Project-related loans - 298.1 298.1 275.1 TOTAL CREDIT FACILITIES 417.9 523.6 941.5 713.7
At 31 December 2019, the credit facilities and put options Nexity corporate borrowing facilities granted to minority shareholders totalled €941.5 million. Nexity SA has access to non-allocated credit facilities for a The Group has revolving non-allocated credit facilities and maximum amount of €555 million, which breaks down as credit facilities earmarked to fund real estate development follows: programmes. Borrowings and financial liabilities are mainly Up to €500 million on a credit facility taken out with a denominated in euros and are at floating rates indexed to • syndicate of banks maturing in July 2023. One of the Euribor. clauses of the credit agreement provides for early Generally, credit agreements require the borrower to repayment in the event of a change in the control of comply with a number of covenants, particularly of a Nexity SA affecting at least 30% of its share capital or if financial nature, as summarised below: the Group’s equity interest in Nexity Logement were to fall below 95%;
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• Up to €55 million on another credit facility, including Put options granted to minority shareholders €30 million maturing in March 2021 and €25 million The increase from €324.1 million at 31 December 2018 to maturing in April 2024. One of the clauses of the credit €332.6 million at 31 December 2019 is largely due to the agreement provides for early repayment in the event of following factors: a change in the control of Nexity SA affecting at least In 2019, the Nexity group raised its stake in PERL by 50.01% of its share capital. 11.20% to 100%, for a total purchase amount of Under the terms of these credit facilities, and on a €18.5 million. consolidated basis, the Group must maintain the same In light of new assumptions regarding the performance of financial ratios as for its bond issues of December 2019. contractual obligations, total commitments were revalued At 31 December 2019 these credit facilities had not been used. at €22.7 million. Other corporate borrowing facilities A new liability was recognised during the period for the remaining Accessite shares in the amount of €4.6 million Some subsidiaries have access to borrowing facilities to (see note 3.3). finance their operating requirements. At 31 December 2019, such borrowings amounted to €190.8 million. The maturity schedule of put options granted to minority shareholders is based on the probable date of performance of 5 Negotiable debt securities the contractual obligations. At 31 December 2019, those put The Group has set up a NEU CP (Negotiable European options related mainly to Ægide, Bureaux à Partager (Morning Commercial Paper) programme, replacing its former CP Coworking), Accessite, Térénéo, Edouard Denis and Prado programme, with a maturity of less than one year, and a Gestion. cap of €300 million. Project-related loans At 31 December 2019, the outstanding balance stood at Specific bank financing may be arranged on an individual €120 million. project basis to cover funding requirements.
21.3 Lease liabilities
Repayment Impact of Balance at for the changes in Finance Balance at (in thousands of euros) 31/12/2018 period scope costs Reclassification New leases Other 31/12/2019 Current lease liabilities 131,539 (169,916) (1,522) 2,023 129,955 60,480 152,559 Non-current lease liabilities 678,632 - (4,603) 22,894 (129,955) 186,236 2,151 755,355 TOTAL LEASE LIABILITIES 810,171 (169,916) (6,125) 24,917 - 246,716 2,151 907,914
The discount rate is the marginal rate of the lessee’s debt on the lease start date. This rate is calculated every six months by each group of subsidiaries with the same risk profile. At 31 December 2019, these rates were between 1.36% and 3.18%.
21.4 Liquidity risk
AMORTISATION SCHEDULE Drawn Depreciation (in millions of euros) 31/12/2019 2020 2021 2022 2023 2024 > 5 years Bond issues 1,032.0 25.0 146.0 - 300.0 - 561.0 Other corporate borrowing facilities 190.8 17.7 53.2 1.5 32.2 - 86.2 Negotiable debt securities 120.0 120.0 Put options granted to minority shareholders 332.6 36.7 11.5 4.7 241.3 38.4 - TOTAL CORPORATE AND BOND DEBT 1,675.4 199.4 210.8 6.2 573.5 38.4 647.2 Project-related loans 298.1 79.6 202.4 8.8 2.4 - 5.0 Total amortisation 279.0 413.1 15.0 575.9 38.4 652.2 TOTAL BORROWINGS AND FINANCIAL LIABILITIES BEFORE LEASE LIABILITIES 1,973.5 1,694.5 1,281.4 1,266.4 690.5 652.1 - Lease liabilities 907.9 152.6 141.5 126.0 101.3 87.4 299.1 TOTAL BORROWINGS AND FINANCIAL LIABILITIES 2,881.4 2,449.9 1,895.2 1,754.2 1,077.0 951.3 -
The other components of net debt shown in note 20 are short-term items. At 31 December 2019, the maturity of borrowings and financial liabilities prior to IFRS 16 was 86% higher at 1 year, and 33% higher at 5 years. The average maturity of debt outstanding at 31 December 2019 was 3 years and 7 months.
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21.5 Derivative instruments
The Group is exposed to market risk, particularly in terms of Derivative instruments are recognised at fair value in the interest rates. The Group may use a number of derivative balance sheet, based on external appraisals. The gain or financial instruments to manage this risk (such as swaps, loss on remeasurement of the derivative instruments to fair caps and collars). The purpose is to reduce, where value is recognised in the income statement, unless the appropriate, the fluctuations in cash flows related to changes instruments are used for hedging purposes. in interest rates. At 31 December 2019, the Group had no hedging derivatives in place.
Note 22 Other financial receivables
Balance at Balance at (in thousands of euros) Gross Impairment 31/12/2019 Gross Impairment 31/12/2018 Current accounts – assets and similar receivables 201,806 (133) 201,673 160,928 (230) 160,698 TOTAL OTHER FINANCIAL RECEIVABLES 201,806 (133) 201,673 160,928 (230) 160,698
Note 23 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and Highly liquid investments are measured to fair value at the highly liquid investments, generally with maturities of three date of the financial statements. Highly liquid investments months or less, with immaterial risk of changes in value. are recognised on the transaction date. Changes in value This item includes reservation deposits held in escrow for are recorded in the net financial income/(expense) clients of the Residential Real Estate division. Cash held in client working capital accounts by the Services division is recorded as a separate item under “Other current assets”.
(in thousands of euros) Balance at 31/12/2019 Balance at 31/12/2018 Marketable securities – Cash equivalents 319,060 118,236 Cash and cash equivalents 775,266 579,089 Reservation deposits held in escrow 22,380 23,471 TOTAL CASH AND CASH EQUIVALENTS 1,116,706 720,796
Residential Real Estate reservation deposits are placed in released when the property deeds are signed and witnessed escrow accounts at the time of reservation (under by a notary (presented below in “Unavailable cash”). “Reservation deposits held in escrow”). The deposits are The majority of cash and cash equivalents are invested in fixed-rate demand deposit accounts. Aggregate cash and cash equivalents at the reporting date in the statement of cash flows were as follows:
(in thousands of euros) Balance at 31/12/2019 Balance at 31/12/2018 Cash and cash equivalents 1,116,706 720,796 Bank overdraft facilities (70,358) (18,094) CASH AND CASH EQUIVALENTS AS REPORTED IN THE STATEMENT OF CASH FLOWS 1,046,348 702,702 o/w available cash 1,023,968 679,231 o/w unavailable cash 22,380 23,471
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Note 24 Financial risk factors
24.1 Interest rate risk
Exposure to interest rate risk The Group’s exposure to interest rate risk excludes Bond issues pay a fixed rate. The majority of the Group’s fixed-rate debt and debt hedged by financial instruments bank borrowings are at floating interest rates. (swaps), but includes the following items with respect to net interest income: The Group’s cash is mainly invested in demand deposit and term deposit accounts with leading banks offering • In terms of borrowings, all floating-rate loans and borrowings, immediate or short-notice liquidity, and to a limited extent whether or not hedged by interest rate caps and floors, and in UCITS funds applying a “standard money-market held-for-trading instruments; management” approach with portfolios favouring liquidity • In terms of financial income, cash and cash equivalents and a high level of security. and demand deposit accounts; and The cost of borrowing on debt drawn down by the Group • In terms of operating profit generated by the Services was 2.3% in 2019 (2.6% in 2018). division, the interest on cash held in client working 5 The Group may set up interest rate hedging instruments capital accounts (except for separate accounts). using hedge accounting (where effective) to mitigate the The Group is not exposed to long-term interest rate risk as effects of severe interest rate movements. Such regards its net financial expense because its floating-rate instruments are entered into with top-ranking financial debt is mostly indexed to 3-month Euribor. institutions. The following tables provide a simulation sensitivity Interest rate sensitivity analysis analysis of a 50 basis point instantaneous rise in short-term The fixed-rate debt share (before IFRS 16) represents interest rates (and symmetrically a 50 basis point approximately 86.1% of total debt at 31 December 2019. instantaneous decrease in short-term interest rates) on the various items described above based on the Group’s financial structure at 31 December 2019. The simulation merely reflects the purely mathematical impact of a change in interest rates on the Group’s financial assets and liabilities. It does not show the more pervasive influence of interest rate movements on the borrowing capacity of the Group’s clients and the potential impact of such movements on the Group’s business activity and performance.
INTEREST RATE SENSITIVITY ANALYSIS OF FLOATING-RATE DEBT INSTRUMENTS WITHIN NET DEBT ACCOUNTS AFTER HEDGING AND OF CASH AND CASH EQUIVALENTS HELD IN CLIENT WORKING CAPITAL (in millions of euros) Impact on the income statement after tax Sensitivity analysis at 31 December 2019 Impact of a 50-bp increase in short-term interest rates 2.8 Impact of a 50-bp decrease in short-term interest rates (2.8) Sensitivity analysis at 31 December 2018 Impact of a 50-bp increase in short-term interest rates 2.6 Impact of a 50-bp decrease in short-term interest rates (2.6)
24.2 Currency risk
The Group’s exposure to currency risk is not material because it has no material operations outside the eurozone.
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24.3 Bank insolvency risk
The Group maintains ongoing relationships with major the fact that the Group spreads responsibilities for its banking groups, with respect to its financing arrangements banking needs among a number of banks, the Group may be (those for its operating activities as well as its corporate exposed to counterparty risk in the event of default by a credit facilities), guarantees given or received, cash bank with which it maintains a relationship, particularly as investments made, or the derivative instruments used in the the result of a systemic event. This risk is mitigated by context of hedging strategies. For this reason, and despite raising funding on the bond market.
24.4 Equity risk
The Group does not hold any listed securities. However, Other treasury shares are allocated to share transfers under within the scope of an existing liquidity contract, the Group free share plans. may hold a small percentage of treasury shares. The Group thus deems itself not exposed to any material equity risk.
Note 25 Fair value of financial instruments by accounting category
POSITION AT 31 DECEMBER 2019 Balance sheet items Accounting categories Fair value measured on the basis of Assets Internal and Internal model liabilities Listings model based at fair on an based on on non- value active observable observable through Financial Liabilities market data data profit or instruments at Total loss Hedging available Loans and amortised net book Total fair (in millions of euros) Notes income derivatives for sale receivables cost value Level 1 Level 2 Level 3 value Equity investments unconsolidated 10 2.9 2.9 2.9 2.9 Capitalised receivables 10 54.2 54.2 54.2 54.2 Current accounts and other financial receivables 20 201.7 201.7 201.7 - 201.7 Cash and reservation deposits 20 1,116.7 1,116.7 1,116.7 1,116.7 TOTAL FINANCIAL ASSETS - - 2.9 1,372.6 - 1,375.5 1,318.4 57.1 - 1,375.5 Derivatives held for trading 20 4.0 4.0 4.0 4.0 Hedging income derivatives 21 - - - - Credit facilities 20 937.5 937.5 937.5 937.5 Bond issues 20 202.0 815.8 1,017.8 202.0 834.2 1,036.2 IFRS 16 lease liabilities 20 907.9 907.9 907.9 907.9 Current account liabilities 20 81.3 81.3 81.3 81.3 Bank overdraft facilities 20 70.4 70.4 70.4 70.4 TOTAL FINANCIAL LIABILITIES 206.0 - - - 2,812.8 3,018.8 272.4 2,764.9 - 3,037.2
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POSITION AT 31 DECEMBER 2018 Balance sheet items Accounting categories Fair value measured on the basis of Assets Internal and Internal model liabilities Listings model based at fair on an based on on non- value active observable observable through Financial Liabilities Total market data data profit or instruments at net Total loss Hedging available Loans and amortised book fair (in millions of euros) Notes income derivatives for sale receivables cost value Level 1 Level 2 Level 3 value Equity investments unconsolidated 10 4.1 4.1 4.1 4.1 Capitalised receivables 10 40.8 40.8 40.8 40.8 Current accounts and other financial receivables 19 149.2 149.2 149.2 149.2 Cash and reservation deposits 19 720.8 720.8 720.8 720.8 5 Marketable securities 19 -- - TOTAL FINANCIAL ASSETS - - 4.1 910.7 - 914.8 870.0 44.9 - 914.8 Derivatives held for trading 20 2.0 2.0 2.0 2.0 Credit facilities 19 713.4 713.4 713.4 713.4 Bond issues 19 200 570.5 770.5 200 540.7 740.7 IFRS 16 lease liabilities 19 810.2 810.2 810.2 810.2 Current account liabilities 19 80.4 80.4 80.4 80.4 Bank overdraft facilities 19 18.1 18.1 18.1 18.1 TOTAL FINANCIAL LIABILITIES 202.0 - - - 2,192.5 2,394.5 218.1 2,146.7 - 2,364.7
In the absence of an active market, the fair value of bonds has been determined using the risk-free interest rate and a stable risk premium.
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Provisions Note 26 Current and non-current provisions
26.1 Provisions
A provision is recognised in the balance sheet when the If the effect of the time value of money is material, the Group has a legal or constructive obligation as a result of a provision is determined by discounting the expected future past event, and when it is probable that an outflow of cash flows at a pre-tax rate that reflects current market economic benefits will be required to settle that obligation. assessments of the time value of money and, where appropriate, the risks specific to the liability.
CHANGES IN PROVISIONS Balance at Reversals: Reversals: Change scope Balance at (in thousands of euros) 31/12/2018 Additions used unused and other 31/12/2019 Employee benefits 22,346 1,555 (1,421) - 2,047 24,527 Total non-current provisions 22,346 1,555 (1,421) - 2,047 24,527 Litigation 46,908 11,477 (6,812) (5,069) (1,639) 44,866 Tax and investment risk 63 93 (6) (9) (3) 138 Employee benefits (short-term portion) 1,103 219 - - 16 1,338 Provisions for risks and charges 39,631 4,761 (11,404) (1,321) (2,499) 29,167 Total current provisions 87,705 16,550 (18,222) (6,399) (4,125) 75,509 TOTAL PROVISIONS 110,051 18,105 (19,643) (6,399) (2,078) 100,036
ANALYSIS BY TYPE OF EXPENSE Changes in Balance at Net change Net change for Net change scope and Balance at (in thousands of euros) 31/12/2018 for operations financing for tax other 31/12/2019 Employee benefits 22,346 134 - - 2,047 24,527 Total non-current provisions 22,346 134 - - 2,047 24,527 Litigation 46,908 (404) - - (1,639) 44,866 Tax and investment risk 63 - 25 53 (3) 138 Employee benefits (short-term portion) 1,103 219 - - 16 1,338 Provisions for risks and charges 39,631 (7,964) - - (2,499) 29,167 Total current provisions 87,705 (8,149) 25 53 (4,125) 75,509 TOTAL PROVISIONS 110,051 (8,015) 25 53 (2,078) 100,036 “Changes in scope and other” primarily refers to the • provisions for tax to cover risks resulting from tax actuarial gains and losses on employee benefits audits. Any additional tax due is expensed in the (see note 26.2). financial year the reassessment is accepted. If • Non-current provisions (for the share due after one year) contested, the risk may be provisioned, include provisions for employee benefits • provisions for risks and charges including payables (see note 26.2); mainly related to ordinary operations. Individual amounts are relatively low at the Group level. • Current provisions include: • provisions for disputes ongoing at the date of the financial statements. They are valued based on current proceedings and estimated risk exposure on the date of the financial statements. There are many disputes, but the individual amount of each one is not very significant at the Group level. These disputes often take a long time to resolve, due to their technical nature and the time required to seek expert opinions,
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26.2 Employee benefits
As regards the Group, employee benefits are provided through The values obtained are subject to verification by an defined-benefit and defined-contribution plans. Obligations independent actuary using the projected unit credit method. relating to these plans involve retirement and long-service Actuarial gains and losses on retirement benefits are benefits, less the fair value of any qualifying plan assets recognised directly in other comprehensive income. Actuarial (defined-benefit plans). Estimates for these obligations, which are gains and losses on long-service benefits are recognised in discounted to present value, are calculated annually on the basis profit or loss. of actuarial assumptions for life expectancy and rates of employee turnover and salary increases.
DETAIL OF EMPLOYEE BENEFIT OBLIGATIONS (BALANCE SHEET) (in thousands of euros) Balance at 31/12/2019 Balance at 31/12/2018 Measurement of obligations Obligations at beginning of financial year 23,469 32,892 Net current service cost 1,577 2,680 5 Interest expense 302 558 Employee benefits paid (1,955) (1,376) Plan amendment - 1,761 Acquisitions - 326 EXPECTED OBLIGATION AT YEAR-END 23,393 36,841 o/w fair value at year-end 25,865 23,469 o/w actuarial (gains)/losses (2,472) 13,372 Changes in assumptions 2,394 (11,567) Experience adjustments 498 (335) Fair value of plan assets Fair value of assets at beginning of financial year 20 20 Interest income on plan assets and additional payments (20) - OBLIGATIONS AT YEAR-END - 20 o/w fair value at year-end - 20 o/w actuarial (gains)/losses - - Reconciliation of financial position (at year-end) Present value of benefit obligation 25,865 23,469 Fair value of plan assets - (20) NET BENEFIT LIABILITY RECOGNISED IN THE BALANCE SHEET 25,865 23,449 o/w non-current provisions 24,527 22,346 o/w current provisions 1,338 1,103 Assumptions relating to obligations Retirement benefits discount rate at year-end 0.52% 1.50% Long-service award discount rate at year-end 0.14% 0.99% Salary increase rate (at year-end) 2.00% 2.00%
The main assumptions for calculating employee benefits are The discount rate is determined on the basis of the index based on a retirement departure age of 62 years for rate for AA-rated corporate bonds in the eurozone. non-managers and 64 years for managers, on the employee’s The retirement benefits portion of the actuarial loss was initiative, an average turnover rate of 13.5% and a social recorded under “Other comprehensive income”, while the security contribution rate of 42%. These assumptions are long-service award portion was recorded in the income identical to 2018. statement. The INSEE 2013/2015 mortality table is still used.
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DETAIL OF EXPENSES IN THE PERIOD (in thousands of euros) Balance at 31/12/2019 Balance at 31/12/2018 Expense for the year Net current service cost 1,577 2,680 Interest expense 302 558 Plan amendment - 1,761 Amortisation of unrecognised actuarial gains and losses 188 (1,100) Impairment of plan assets - - Return on plan assets and additional payments 20 - TOTAL EXPENSE RECOGNISED UNDER OPERATING PROFIT 2,087 3,899 o/w net expense recognised for employee benefits 131 2,523 o/w expenses included under personnel costs 1,956 1,376 GAINS AND LOSSES RECOGNISED DIRECTLY IN OTHER COMPREHENSIVE INCOME 2,286 (12,272) Actuarial gains and losses on retirement benefits 2,286 (12,272) o/w changes in assumptions 2,045 (11,113) o/w experience adjustments 242 (1,159)
CHANGE IN THE PERIOD Gains and losses recognised directly in other comprehensive (in thousands of euros) Balance at 31/12/2018 income Earnings Balance at 31/12/2019 Employee benefits 23,449 2,286 131 25,865
SENSITIVITY OF PROVISIONS FOR EMPLOYEE BENEFITS TO RATE ASSUMPTIONS Provisions for (in thousands of euros) employee benefits Provisions for employee benefits at 31 December 2019 25,865 Sensitivity analysis at 31 December 2019 Impact of a 10-bp increase in the discount rate (249) Impact of a 10-bp decrease in the discount rate 254 Impact of a 50-bp increase in the salary increase rate 1,263
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Income Note 27 Personnel costs
31/12/2019 31/12/2018 (in thousands of euros) (12-month period) (12-month period) Salaries and withholdings (684,669) (607,463) Tax credit on remuneration (CICE, etc.) 497 9,214 Employee profit-sharing (16,877) (17,021) Expense related to share-based payments (16,053) (14,325) TOTAL PERSONNEL COSTS (717,102) (629,595)
The Group’s average full-time equivalent workforce was 10,772 employees at 31 December 2019, versus 8,939 employees at 31 December 2018. At 31 December 2019, there was a total workforce of 11,003 employees.
Note 28 Other operating expenses 5
31/12/2019 31/12/2018 (in thousands of euros) (12-month period) (12-month period) Rent (14,100) (13,063) Rental expenses (16,637) (11,665) Fees and commissions (88,154) (64,527) Other external services (203,183) (179,744) Other income 17,145 5,339 Other expenses (11,989) (4,267) Gain/(loss) on disposal of consolidated shares 14,101 (197) TOTAL OTHER OPERATING EXPENSES (302,817) (268,124)
Note 29 Depreciation, amortisation and impairment of non-current assets
31/12/2019 31/12/2018 (in thousands of euros) (12-month period) (12-month period) Depreciation of right-of-use assets (166,409) (103,273) Net increase/(decrease) in depreciation, amortisation and impairment of non-current assets (45,156) (31,642) TOTAL DEPRECIATION, AMORTISATION AND IMPAIRMENT OF NON-CURRENT ASSETS (211,565) (134,915)
The increase in the right-of-use asset item in 2019 includes scope effects in respect of the impact of the consolidation of Ægide-Domitys since 1 July 2018, and the consolidation of Bureaux à Partager since 1 January 2019.
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Note 30 Financial income/(expense)
30.1 Detail of financial income/(expense)
31/12/2019 31/12/2018 (in thousands of euros) 12-month period 12-month period Interest expense (43,130) (42,376) Interest income 3,458 3,683 Cost of financial debt before interest expense on lease liabilities (39,672) (38,693) Interest expense on lease liabilities (24,917) (15,636) COST OF NET FINANCIAL DEBT (64,589) (54,328) Other financial expenses (11,397) (242) Other financial income 1,553 5,203 OTHER NET FINANCIAL INCOME/(EXPENSE) (9,844) 4,960 Total financial expenses (79,444) (58,254) Total financial income 5,011 8,885 TOTAL FINANCIAL INCOME/(EXPENSE) (74,433) (49,368)
30.2 Detail of other financial income/(expense) by type
31/12/2019 31/12/2018 (in thousands of euros) 12-month period 12-month period Other net financial expenses (4,416) (2,852) Other net financial income 1,456 2,782 Change in fair value of ORNANE (2,003) - Discount expenses for supplier debts of 1 year or more (2,864) - Net gain/(loss) on derivative instruments (2,000) (1,676) Net financial impairment and provisions (219) 515 Transfer of borrowing costs to inventories 202 6,191 OTHER NET FINANCIAL INCOME/(EXPENSE) (9,844) 4,960
For the recognition of ORNANE for 2018 (see note 21.1), the Nexity group has selected the fair value option: all changes in fair value are recorded through “Financial income/(expense)”. At 31 December 2019, the market value of this instrument was €202 million, which is fully accounted for under the “Borrowings and financial liabilities” item.
Note 31 Taxes
31.1 Income tax
31/12/2019 31/12/2018 (in thousands of euros) 12-month period 12-month period Corporate income tax (82,455) (106,133) Deferred tax 2,673 13,435 Additional tax on dividends - 334 CVAE (French business value-added tax) (17,127) (16,261) Net change in tax provisions (53) 255 TOTAL INCOME TAXES (96,962) (108,370)
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31.2 Changes in balance sheet tax items
CHANGES IN BALANCE SHEET TAX ITEMS Not recognised Balance at in the income Net Balance at (in thousands of euros) 31/12/2018 Expense* Tax credits statement payments* 31/12/2019 Current tax Tax receivable 19,989 42,788 Current tax liabilities (18,658) (13,284) TOTAL CURRENT TAX 1,332 (99,582) 2,143 1,041 124,571 29,505 Deferred tax Assets 39,262 44,219 Liabilities and equity (84,511) (81,519) TOTAL DEFERRED TAX (45,249) 2,673 5,276 (37,300) * Included in the CVAE (French business value-added tax). 5
31.3 Tax analysis
RECONCILIATION OF THEORETICAL AND ACTUAL TAX RATES IN THE CONSOLIDATED INCOME STATEMENT (in thousands of euros) Balance at 31/12/2019 Balance at 31/12/2018 Theoretical tax base Net profit 160,718 276,874 Remeasurement of equity-accounted investments (79,222) Share of profit from investees with activities that are an extension of the Group’s operating activities (25,022) (17,912) Share of profit/(loss) from other equity-accounted investments (7) 4,750 Attributable to non-controlling interests 8,681 5,542 Income tax 96,962 108,369 Pre-tax profit on activities 241,332 298,401 Theoretical tax rate used by the Group 34.43% 34.43% Actual tax rate 40.2% 36.3% Actual tax rate excluding CVAE levy and Additional tax on dividends 35.7% 32.8% Theoretical tax liability (83,091) (102,739) Difference between theoretical tax and actual income tax (13,871) (5,630) The difference is due to: Tax on equity-accounted flow-through entities (2,053) (2,826) Impact of the CVAE levy (net of the income tax saving) (11,230) (10,662) Effect of tax rates 3,486 4,712 Tax on non-taxable net income for the period 7,108 4,432 Tax on non-deductible or uncapitalised net expenses for the period (11,782) (5,002) Impact of derecognition of bases for prior periods 600 3,716 NET DIFFERENCE (13,871) (5,630)
The differences observed between the tax expense based The non-taxable net income comprises primarily to long on the theoretical tax rate in France and the tax expense term gain on equity investments for 2019, and CICE tax recognised for the financial year exist mainly for the credits for 2018. following reasons: The non-deductible net expenses primarily comprise As most equity-accounted investments are tax-transparent, discount expenses for payables calculated under IFRS, and their contribution to the income statement is presented pre-tax. uncapitalised losses for certain subsidiaries. The matching tax expense is included in the Group’s tax Excluding the CVAE levy, the Group’s income tax rate was expense. 35.7% compared with 32.8% in 2017. This increase was The CVAE levy is classified under Income taxes. Excluding primarily due to the end of the CICE tax credit for the CVAE levy, the Group’s tax rate was 35.7% in 2019. competitiveness and jobs, and uncapitalised losses. The effect of tax rates is primarily due to the difference between Nexity group’s tax consolidation rate which is subject to corporate tax rates (34.43%), and the rate for subsidiaries consolidated for all but tax purposes with revenue of less than €250 million (31%).
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31.4 Deferred tax assets and liabilities by nature
Deferred taxes are generally recorded for all timing differences, tax deficits or deferrable tax credits are only differences between the tax value and book value of assets recorded if they are likely to be completed in the future. and liabilities on the consolidated balance sheet, and are This likelihood is assessed at the end of the financial year determined based on the liability method. The effects of based on the forecast results of the tax entities concerned. any tax rate changes are recorded in the income statement Deferred taxes are reported net on the balance sheet at for the financial year in which the rate change is voted on Group tax consolidation level, and in the asset and liability by Parliament. Deferred tax assets resulting from temporary columns of the consolidated balance sheet.
(in thousands of euros) 31/12/2019 31/12/2018 Employee benefits 6,572 5,769 Loss carryforwards 28,411 19,385 Portion of contract revenues earned (81,626) (81,052) Other deferred provisions, income and expenses 9,343 10,652 NET DEFERRED TAX (37,300) (45,245) O/w deferred tax assets 44,219 39,262 O/w deferred tax liabilities (81,519) (84,507)
31.5 Tax amounts by type without tax base
(in thousands of euros) Balance at 31/12/2019 Balance at 31/12/2018 Change Loss carryforwards 91,746 87,994 3,752 Other deferred provisions, income and expenses 15,044 22,932 (7,888) TOTAL AMOUNTS WITHOUT TAX BASE 106,791 110,926 (4,135)
Deferred taxes have not been calculated for these amounts as it is unlikely that they will be used and/or the timing of their use cannot be estimated reliably or is too distant in the future.
Note 32 Earnings per share
The calculation of basic earnings per share (EPS) is based account plans valued at a price lower than the average on the net profit attributable to shareholders of the parent share price during the period. company and the average number of shares outstanding Convertible bonds have a dilutive impact on the diluted during the financial year, less the average number of earnings per share when the net interest expense recorded is treasury shares held during the financial year. lower than the basic earnings per share for each bond. The As regards free share allocations, the calculation of diluted weighted average number of shares is therefore increased by earnings per share is based on the treasury stock method the weighted average number of convertible bonds, and the assuming that all dilutive options and other dilutive Group share of net profit is adjusted for the net financial potential ordinary shares are exercised. Dilution is expense of the convertible bonds. attributable to the free share award plans described in The maximum potential dilution resulting from the note 18. The average number of shares is calculated as the conversion of all the convertible bonds and the vesting of weighted average number of shares outstanding, which all free shares in awards granted would be 13.9% (as a reflects the grant dates of plans during the financial year. percentage of share capital ownership) based on the The numbers of potentially dilutive shares only take into number of shares at the end of the period.
31/12/2019 Earnings per share 31/12/2018 Earnings per share (number of shares) (in euros) (number of shares) (in euros) Number of shares at end of period 56,129,724 56,129,724 Average number of shares outstanding during the period 55,480,572 2.90 55,967,992 4.95 Dilutive effect of share plans using the treasury stock method 254,136 370,628 Dilutive effect of convertible bond issues 8,146,151 7,240,058 Average number of shares (diluted) 63,880,859 2.52 63,578,678 4.37
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Additional information Note 33 Off-balance sheet commitments
Off-balance sheet items are described in the consolidated financial statements for the year ended 31 December 2019.
33.1 Off-balance sheet commitments related to the Group’s scope
LIABILITY GUARANTEES (in thousands of euros) Total at 31/12/2019 Total at 31/12/2018 Liability guarantees received 34,408 34,520 Liability guarantees given 4,090 1,530
Liability guarantees received are related to the acquisition of companies and decrease at the end of the guaranteed period.
33.2 Off-balance sheet commitments related to Group financing 5
The amount of credit facilities granted is shown in note 21.2. Guarantees, collateral and pledges granted to banks in connection with certain lines of credit break down as follows:
TYPE OF GUARANTEE Total Amount consolidated Inception Maturity payables balance % of item (in thousands of euros) date date guaranteed sheet item posted Intangible assets: - 2,533,405 Property, plant and equipment: - 121,818 Financial assets: - 57,123 Inventories: 100,907 1,555,566 6.5% Mortgages on land and buildings to guarantee the loan granted to Neximmo 101 22/12/2017 21/04/2021 99,407 Pledging of securities by Oralia Investissements as collateral for a loan to acquire companies 18/10/2016 29/11/2022 1,500 Cash and cash equivalents: 12,380 1,116,706 1.1% Oralia term deposit pledges 26/11/2014 04/01/2021 12,380 RATIO OF TOTAL GUARANTEES TO TOTAL CONSOLIDATED ASSETS 113,287 8,265,102 1.4%
33.3 Off-balance sheet commitments relating to operating activities
The commitments given and received listed below include activities related to co-developments and reflect operational reporting.
Commitments received
COMMITMENTS RECEIVED FOR RECURRING OPERATIONS (in thousands of euros) Total at 31/12/2019 Total at 31/12/2018 Payment guarantees received from clients in respect of development contracts 289,584 251,352 Other commitments 525 1,080 TOTAL COMMITMENTS RECEIVED 290,109 252,432
Payment guarantees in respect of development contracts Other commitments mainly concern guarantees on various primarily relate to Commercial Real Estate. These indemnity payments. guarantees are issued by financial institutions, and are In the course of its ordinary business in France, the Group calculated every six months on the basis of the aggregate also receives retention bonds in lieu of holdback from outstanding amount still due from clients. The Group grants contractors on construction projects (up to 5% of the the client a corresponding performance bond contract amount). (see hereafter).
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Commitments given
COMMITMENTS GIVEN FOR RECURRING OPERATIONS (in thousands of euros) Total at 31/12/2019 Total at 31/12/2018 Residential Real Estate 2,471,308 1,783,343 Commercial Real Estate 470,306 239,294 Counter-guarantees for performance bonds 2,941,614 2,022,637 Counter-guarantees for deposit payment bonds 49,642 39,470 Other commitments given 510,091 435,816 TOTAL COMMITMENTS GIVEN 3,501,347 2,497,923
Completion bonds are issued on a case-by-case basis by the Group agrees to pay an indemnity, which the financial institutions to clients buying property, in landowner may retain if the transaction falls accordance with existing law. In exchange, Nexity grants through, financial institutions an irrevocable undertaking to • under bilateral sale agreements, the landowner mortgage the property and a commitment not to transfer or agrees to sell the land, and the Group agrees to buy sell its shares in the Company backing the development it if the conditions precedent are fulfilled. The Group project. also agrees to pay an indemnity or penalty if it The value of completion bonds is measured internally on a decides not to buy the land, despite the fulfilment of quarterly basis, before being reconciled and adjusted to the the conditions precedent, values set by the financial institutions based on changes in • when agreements are signed, security deposits are their commitments. Such a guarantee has never been either paid by the Group and held in escrow by the exercised. notary, or are covered by a bank guarantee; Deposit payment bonds are bank guarantees that may • In order to market its real estate development and substitute cash payments on reacquisition agreements and subdivision programmes, the Group signs reservation or promises to buy land and involve counter guarantees pre-acquisition agreements with its clients: offered by Nexity to the banks issuing the guarantees (see • the pre-acquisition agreements become deeds of section on bilateral commitments below). sale if the conditions precedent are fulfilled Other commitments given include guarantees on deferred (particularly if clients obtain financing to buy the payments relating to land purchases and planning taxes property), and duties. • to reserve property, clients pay a deposit (or guarantee), which is returned if the sale falls through; Bilateral commitments Real estate agents and intermediaries from the Services In the course of its normal business, the Group enters into • division are also required to provide guarantees the following agreements: pursuant to the Hoguet Act, which sets forth regulations • In order to secure land for future housing and land governing the profession, particularly with regard to the development, the Group signs unilateral and bilateral management of client working capital accounts. At pre-acquisition agreements with landowners: 31 December 2019, the amount guaranteed came to • under a unilateral agreement to sell, the landowner €1,107 million. agrees to sell the land. In exchange, 33.4 Schedule of contractual obligations
Total at Schedule at 31 December 2019 (in thousands of euros) 31/12/2019 under 1 year 1 year to 5 years over 5 years Long-term borrowings and financial debt 1,415,656 61,718 768,753 585,185 Operating loans and borrowings 543,932 223,457 259,362 61,112 Completion bonds 2,941,614 1,280,681 1,575,643 85,290 Other off-balance sheet commitments 510,091 121,040 380,775 8,276 TOTAL CONTRACTUAL OBLIGATIONS 5,411,293 1,688,896 2,984,533 739,863
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Note 34 Statutory Auditors’ fees
FINANCIAL YEARS: KPMG Mazars Other audit firms 2019 AND 2018 (1) Amount excl. VAT % Amount excl. VAT % Amount excl. VAT % (in thousands of euros) 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Statutory Auditors, certification, review of individual and consolidated accounts (2) Issuer: Nexity SA 337 545 14% 19% 337 472 22% 30% Fully consolidated subsidiaries 1,946 2,215 83% 79% 995 1,095 64% 69% 310 261 100% 95% Services excluding account certification (3) Issuer: Nexity SA 0 0 - - 127 25 8% 2% Fully consolidated subsidiaries 58 60 2% 2% 84 5% - 13 - 5% TOTAL 2,341 2,819 100% 100% 1,543 1,592 100% 100% 310 274 100% 100%
(1) Services provided during the accounting period and expensed in the income statement. 5 (2) Including the services of independent experts and members of the audit firm’s network, who were called upon in connection with the statutory audit. (3) Essentially acquisition audits and various certificates.
Note 35 Information on related parties
35.1 Services between related parties
Co-development projects The Group engages in numerous co-developments via special-purpose entities. In accordance with IFRS 11, those entities are accounted for using the equity method. Their results are reflected in the column entitled “Restatement of joint ventures” in note 6.
35.2 Remuneration of directors and company officers
Remuneration payable to directors and executive officers concerns the Chairman of the Board of Directors, the Chief Executive Officer and the three Deputy Chief Executive Officers who make up the Strategy Committee. The amounts equal the expense recognised in the income statement for the financial year.
(in thousands of euros) 31/12/2019 Short-term benefits 4,658 Short-term benefits (Deferred remuneration – Amounts due if criteria are met in full) 600 Post-employment benefits NA Long-term benefits NA Valuation of the awarded free shares 2,704 N/A: Not applicable.
Note 36 Subsequent events
No significant events occurred between 31 December 2019 and the Board of Directors’ meeting of 25 February 2020 convened to approve the financial statements for the period ended 31 December 2019.
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Note 37 Main consolidated companies at 31 December 2019
MAIN FULLY CONSOLIDATED COMPANIES Legal % of Company name Address Siren form holding NEXITY 19, rue de Vienne – 75801 PARIS CEDEX 08 444.346.795 SA 100.00% ACCESSITE 35, quai du Lazaret – 13002 MARSEILLE 394.232.300 SAS 71.30% ÆGIDE 42, avenue Raymond-Poincaré – 75116 PARIS 401.397.765 SA 63.16% AGEN LES VERGERS D'EBEN 42, avenue Raymond-Poincaré – 75116 PARIS 808.455.497 SCI 63.16% ANNECY VALLIN FIER 25, allée Vauban – 59562 LA MADELEINE CEDEX 488.404.120 SCI 100.00% APOLLONIA 19, rue de Vienne – 75801 PARIS CEDEX 08 332.540.087 SAS 100.00% ARCEUIL AVENUE DE LA CONVENTION 25, allée Vauban – 59562 LA MADELEINE CEDEX 818.783.243 SCI 100.00% AUBERVILLIERS ZAC NOZAL FRONT 25, allée Vauban – 59562 LA MADELEINE CEDEX 821.634.615 SCI 80.00% BEZIERS 29 RUE DU BEL AIR 25, allée Vauban – 59562 LA MADELEINE CEDEX 794.012.179 SCI 85.26% BRIANCON LES AIGLONS BLANCS 42, avenue Raymond Poincaré - 75116 PARIS 808.774.772 SCI 63.16% BUREAUX À PARTAGER 21, place de la république – 75003 PARIS 789.597.317 SAS 57.22% CARRIERES CENTRALITE ILOT L6D 25, allée Vauban – 59562 LA MADELEINE CEDEX 492.155.908 SCI 100.00% CENTURY 21 FRANCE 3, rue des Cévennes – 91017 EVRY CEDEX LISSES 339.510.695 SAS 100.00% CERGY BOULEVARD DE L’OISE 25, allée Vauban – 59562 LA MADELEINE CEDEX 814.368.023 SNC 100.00% CERGY GALILEE 25, allée Vauban – 59562 LA MADELEINE CEDEX 829.186.006 SCI 78.95% CHEMIN DE PARIS 19, rue de Vienne – 75116 PARIS 518.877.204 SNC 100.00% CLICHY HUNTZIGER CASTERES 25, allée Vauban – 59562 LA MADELEINE CEDEX 825.382.419 SCI 100.00% COEUR DE MONT 25, allée Vauban – 59562 LA MADELEINE CEDEX 812.885.283 SCI 50.10% COMPAGNIE IMMOBILIERE ET DIGITALE 19, rue de Vienne – 75116 PARIS 851.681.874 SAS 100.00% CONSTRUGESTION 2, rue Leday Le Nouvel Hermitage – 80100 ABBEVILLE 430.342.667 SARL 55.00% CORMEILLES LOT 3 25, allée Vauban – 59562 LA MADELEINE CEDEX 811.896.695 SCI 100.00% DIVES LES SAFRANCS 42, avenue Raymond-Poincaré – 75116 PARIS 809.403.900 SCI 63.16% DOMAINES FEREAL 10, rue Marc-Bloch – 92613 CLICHY CEDEX 415.120.955 SNC 100.00% DOMITYS CENTRE OUEST 42, avenue Raymond-Poincaré – 75116 PARIS 452.414.774 SARL 63.16% DOMITYS EST 42, avenue Raymond-Poincaré – 75116 PARIS 750.184.632 SARL 63.16% DOMITYS NORD 42, avenue Raymond-Poincaré – 75116 PARIS 750.157.612 SARL 63.16% DOMITYS NORD OUEST 42, avenue Raymond-Poincaré – 75116 PARIS 531.823.698 SARL 63.16% DOMITYS SAS 42, avenue Raymond-Poincaré – 75116 PARIS 488.701.434 SAS 63.16% DOMITYS SUD EST 42, avenue Raymond-Poincaré – 75116 PARIS 537.705.022 SARL 63.16% DOMITYS SUD OUEST 42, avenue Raymond-Poincaré – 75116 PARIS 519.083.406 SARL 63.16% EDOUARD DENIS DEVELOPPEMENT 2, rue Leday Le Nouvel Hermitage – 80100 ABBEVILLE 531.728.889 SAS 55.00% ETOILE PROPERTY MANAGEMENT 10/12, rue Marc Bloch – 92110 CLICHY-LA-GARENNE 425.059.904 SAS 100.00% EVRY LE BRAS DE FER 19, rue de Vienne – 75801 PARIS CEDEX 08 821.812.336 SAS 75.00% FEREAL 19, rue de Vienne – 75801 PARIS CEDEX 08 334.850.690 SA 100.00% FONCIER CONSEIL 19, rue de Vienne – 75801 PARIS CEDEX 08 732.014.964 SNC 100.00% GEORGE V GESTION 19, rue de Vienne – 75801 PARIS CEDEX 08 327.256.947 SAS 100.00% HIPTOWN 19, rue de Vienne – 75801 PARIS CEDEX 08 843.950.494 SAS 75.00% I INVEST 400, promenade des Anglais – 06200 NICE 479.020.893 SAS 100.00% IMMOPERL 1 115, rue Réaumur – 75002 PARIS 518.090.964 SNC 100.00% ISELECTION 400, promenade des Anglais – 06200 NICE 432.316.032 SAS 100.00% IVRY PLATEAU LOT 10 25, allée Vauban – 59562 LA MADELEINE CEDEX 813.599.792 SCI 80.00% L ESPACE 21, place de la République – 75003 Paris 811.806.215 SAS 57.22% LA LONDE CHATEAUVERT OUEST 25, allée Vauban – 59562 LA MADELEINE CEDEX 820.011.252 SCI 90.00% LE LAVANDOU VILLAGE 25, allée Vauban – 59562 LA MADELEINE CEDEX 820.142.784 SCI 85.00% LES DUNES DE FLANDRES 2, rue Leday Le Nouvel Hermitage – 80100 ABBEVILLE 408.888.659 SARL 55.00% LINSELLES-HALLUIN-LHDF 2, rue Leday Le Nouvel Hermitage – 80100 ABBEVILLE 821.634.003 SCI 55.00% L'UNION LES PASTELLISTES 25, allée Vauban – 59562 LA MADELEINE CEDEX 812.885.077 SCI 85.26% LYON 3 59 ALBERT THOMAS 25, allée Vauban – 59562 LA MADELEINE CEDEX 821.812.120 SCI 100.00% LYON BERTHELOT 2 25, allée Vauban – 59562 LA MADELEINE CEDEX 824.089.361 SAS 55.00% MARSEILLE CREMIEUX 25, allée Vauban – 59562 LA MADELEINE CEDEX 808.682.934 SNC 100.00% MARSEILLE LA BADIANE 25, allée Vauban – 59562 LA MADELEINE CEDEX 821.055.563 SCI 85.26% MELUN LA COURTINE 42, avenue Raymond Poincaré – 75116 PARIS 810.545.962 SCI 63.16% MEUDON BASSE TERRASSE SNC 25, allée Vauban – 59562 LA MADELEINE CEDEX 820.126.225 SNC 100.00%
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MAIN FULLY CONSOLIDATED COMPANIES Legal % of Company name Address Siren form holding MONT ST AIGNAN ATHENEE 42, avenue Raymond Poincaré – 75116 PARIS 817.485.055 SCI 63.16% MONTREUIL LES RESERVOIRS BOULEVARD DE LA BOISSIERE 25, allée Vauban – 59562 LA MADELEINE CEDEX 480.556.042 SCI 70.00% MOULINS LA DELLAMIRE 42, avenue Raymond Poincaré – 75116 PARIS 800.032.534 SCI 63.16% NANTES REZE SARRAIL 42, avenue Raymond Poincaré – 75116 PARIS 814.150.728 SCI 63.16% NEVERS LE BELVEDERE 42, avenue Raymond Poincaré – 75116 PARIS 819.489.261 SCI 63.16% NEXIMMO 39 19, rue de Vienne – 75801 PARIS CEDEX 08 488.710.567 SAS 100.00% NEXIMMO 65 19, rue de Vienne – 75801 PARIS CEDEX 08 513.636.142 SAS 100.00% NEXIMMO 85 19, rue de Vienne – 75801 PARIS CEDEX 08 752.524.454 SAS 100.00% NEXIMMO 91 19, rue de Vienne – 75801 PARIS CEDEX 08 752.307.314 SAS 100.00% NEXIMMO 96 19, rue de Vienne – 75801 PARIS CEDEX 08 808.177.364 SAS 100.00% NEXIMMO 100 19, rue de Vienne – 75801 PARIS CEDEX 08 808.145.650 SAS 100.00% NEXIMMO 101 19, rue de Vienne – 75801 PARIS CEDEX 08 814.249.702 SAS 100.00% 5 NEXIMMO 102 19, rue de Vienne – 75801 PARIS CEDEX 08 814.256.442 SAS 100.00% NEXIMMO 104 19, rue de Vienne – 75801 PARIS CEDEX 08 814.257.036 SAS 100.00% NEXIMMO 106 19, rue de Vienne – 75801 PARIS CEDEX 08 823.421.482 SAS 100.00% NEXIMMO 108 19, rue de Vienne – 75801 PARIS CEDEX 08 823.425.764 SAS 100.00% NEXIMMO 115 19, rue de Vienne – 75801 PARIS CEDEX 08 830.845.426 SAS 100.00% NEXITY BELGIUM 53-55 rue Vilain XIIII 1000 BRUSSELS 872.755.619 SA 100.00% NEXITY CONTRACTANT GÉNÉRAL 10/12, rue Marc-Bloch – 92110 CLICHY-LA-GARENNE 813.337.136 SAS 100.00% NEXITY FRANCHISES 19, rue de Vienne – 75801 PARIS CEDEX 08 488.710.740 SAS 100.00% NEXITY HOLDING ITALIA Corso Galileo Ferraris – 110 – 10129 TURIN 495.089 0964 SRL 100.00% NEXITY IMMOBILIER D’ENTREPRISE 19, rue de Vienne – 75801 PARIS CEDEX 08 332.335.769 SA 100.00% NEXITY IMMOBILIER RÉSIDENTIEL RÉGION SUD 5, rue René-Cassin – 13003 MARSEILLE 351.039.193 SNC 100.00% NEXITY IR PROGR ATLANTIQUE 25, allée Vauban – 59562 LA MADELEINE CEDEX 824.381.305 SAS 100.00% NEXITY IR PROGR. DOMAINES 25, allée Vauban – 59562 LA MADELEINE CEDEX 824.309.751 SAS 100.00% NEXITY IR PROGR. GFI 25, allée Vauban – 59562 LA MADELEINE CEDEX 824.381.586 SAS 100.00% NEXITY IR PROGR. GRAND PARIS 25, allée Vauban – 59562 LA MADELEINE CEDEX 824.350.763 SAS 100.00% NEXITY LAMY 19, rue de Vienne – 75801 PARIS CEDEX 08 487.530.099 SAS 100.00% NEXITY LOGEMENT 19, rue de Vienne – 75801 PARIS CEDEX 08 399.381.821 SAS 100.00% NEXITY PATRIMOINE 19, rue de Vienne – 75801 PARIS CEDEX 08 329.087.118 SNC 100.00% NEXITY POLSKA ul. Aleje Jerozolimskie, n° 98-00807 WARSAW 281.618 SP.Z.O.O 100.00% Rua Professor Carlos Alberto da Mota Pinto, NEXITY PORTUGAL 514.895.900 SARL 100.00% n°9 - 1070-374 Lisboa NEXITY PROPERTY MANAGEMENT 10/12, rue Marc-Bloch – 92110 CLICHY-LA-GARENNE 732.073.887 SA 100.00% NEXITY STUDÉA 19, rue de Vienne – 75801 PARIS CEDEX 08 342.090.834 SA 100.00% NEXIVILLE 6 19, rue de Vienne – 75801 PARIS CEDEX 08 815.058.516 SAS 100.00% NOGENT SUR OISE DOMAINES 25, allée Vauban – 59562 LA MADELEINE CEDEX 811.816.453 SCI 100.00% ORALIA INVESTISSEMENTS 94, quai Charles-de-Gaulle – 69006 LYON 395.329.113 SA 100.00% ORALIA MANAGEMENT 94, quai Charles-de-Gaulle – 69006 LYON 395.190.051 SARL 100.00% ORALIA PARTENAIRES 94, quai Charles-de-Gaulle – 69006 LYON 397.581.984 SAS 100.00% PERL 115, rue Réaumur – 75002 PARIS 438.411.035 SAS 100.00% PERROS LES MEGALITHES ROSES 25, allée Vauban – 59562 LA MADELEINE CEDEX 813.898.640 SCI 85.26% POISSY LA COUDRAIE 25, allée Vauban – 59562 LA MADELEINE CEDEX 808.164.685 SCI 100.00% PRADO GESTION 30, rue Louis-Rège – 13008 MARSEILLE 479.927.238 SAS 65.00% PRIMOSUD 30, rue Louis-Rège – 13008 MARSEILLE 339.901.365 SAS 65.00% PUTEAUX ZAC DES BERGERES 25, allée Vauban – 59562 LA MADELEINE CEDEX 808.086.342 SCI 100.00% RÉSIDENCE AMBROISE PARE 30, rue Louis-Rège – 13008 MARSEILLE 788.756.054 SCI 82.51% RICHARDIÈRE 19, rue de Vienne – 75801 PARIS CEDEX 08 682.009.121 SAS 100.00% ROMAINVILLE PAUL DE KOCK 25, allée Vauban – 59562 LA MADELEINE CEDEX 794.012.195 SCI 100.00% RUEIL RICHELIEU 9 Impasse de Borderouge – 31200 TOULOUSE 821.696.374 SAS 50.00% SAINT SOUPPLETS DOMAINES 25, allée Vauban – 59562 LA MADELEINE CEDEX 802.545.442 SCI 100.00% SEERI 19, rue de Vienne – 75801 PARIS CEDEX 08 331.129.437 SAS 100.00% SAINT-OUEN RUE PAULIN TALABOT NC4 25, allée Vauban – 59562 LA MADELEINE CEDEX 813.458.353 SCI 100.00% STRASBOURG RUE ALFRED KASTLER 25, allée Vauban – 59562 LA MADELEINE CEDEX 812.423.739 SCI 100.00% TÉRÉNÉO 10, rue Horus – 59650 VILLENEUVE D’ASCQ 502.931.777 SAS 91.66%
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MAIN FULLY CONSOLIDATED COMPANIES Legal % of Company name Address Siren form holding TOULOUSE ROUTE DE REVEL 25, allée Vauban – 59562 LA MADELEINE CEDEX 815.284.245 SCI 100.00% TREILLIERES L'ANGELIQUE BLEUE 25, allée Vauban – 59562 LA MADELEINE CEDEX 814.515.326 SCI 85.26% VERSAILLES ÎLOT OUEST 25, allée Vauban – 59562 LA MADELEINE CEDEX 813.844.024 SCI 100.00% VILLENEUVE LE ROI COEUR DE SEINE 25, allée Vauban – 59562 LA MADELEINE CEDEX 498.975.507 SNC 100.00% VILLES & PROJETS 19, rue de Vienne – 75801 PARIS CEDEX 08 409.260.775 SAS 100.00% YWOOD GESTION 19, rue de Vienne – 75801 PARIS CEDEX 08 752.288.399 SAS 100.00%
MAIN EQUITY-ACCOUNTED COMPANIES Legal % Company name Address Siren form held Associates BIEN’ICI 19, rue de Vienne – 75801 PARIS CEDEX 08 488.073.412 SAS 49,50% Joint ventures GARENNE AMENAGEMENT 19, rue de Vienne – 75801 PARIS CEDEX 08 837.487.172 SAS 51,00% BAGNEUX BRIAND 19, rue de Vienne – 75801 PARIS CEDEX 08 818.336.059 SAS 50,00% MEUDON TRIVAUX 25, allée Vauban – 59562 LA MADELEINE CEDEX 834.040.297 SAS 70,00% LYON RUE DES GIRONDINS 25, allée Vauban – 59562 LA MADELEINE CEDEX 821.286.580 SCI 90,00% RUEIL MASSENA 25, allée Vauban – 59562 LA MADELEINE CEDEX 821.695.830 SAS 50,00%
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5.3.3 Statutory Auditors’ report on the consolidated financial statements
This is a free translation into English of the Statutory Auditors' report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France. Year ended 31 December 2019 To the Shareholders’ Meeting of Nexity,
1 Opinion In compliance with the assignment entrusted to us by your Shareholders' Meeting, we have audited the accompanying consolidated financial statements of Nexity for the year ended 31 December 2019. These financial statements were approved by the Board of Directors on 25 February 2020, based on the information available on that date in the context of the developing Covid-19 health crisis. In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial 5 position of the Group as at 31 December 2019 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. The audit opinion expressed above is consistent with our report to the Audit and Financial Statements Committee.
2 Basis for Opinion Audit Framework We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the “Statutory Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. Independence We conducted our audit engagement in compliance with the independence rules applicable to us for the period from 1 January 2019 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Section 1, Article 5 of Regulation (EU) No. 537/2014 or in the French code of ethics (Code de déontologie) for Statutory Auditors.
3 Justification of assessments - Key audit matters In accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period, and how we addressed those risks. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, approved under the conditions set out previously, and in forming our opinion thereon. We cannot provide an opinion on individual items of these consolidated financial statements. Measurement of goodwill (Note 7 to the consolidated financial statements) Risk identified In the framework of its development, the Group has undertaken a certain number of acquisitions and has recognised goodwill in the consolidated statement of financial position as at 31 December 2019 for a total carrying amount of €1,598 million. Management shall ensure during each financial year that the book value of the goodwill shall not present any risk of an impairment loss. Goodwill is tested for impairment at least once a year and when there is an indication of impairment loss. For that purpose, goodwill is allocated to cash-generating units (CGUs) defined as homogeneous groups of assets that generate separately identifiable cash flows. Impairment testing involves comparing the carrying amount of each CGU with its recoverable amount. The bases applied for that purpose by management, and details of the applicable assumptions, are described in note 7 to the consolidated financial statements. Recoverable amounts are determined by reference to the value in use of each CGU based on the present value of its estimated future cash flows, the applicable 5-year business plan used by Executive Management and presented to the Board of Directors, and the perpetual growth rate estimated for the period beyond the 5-year horizon. The Group performs sensitivity analyses as described in note 7 to the consolidated financial statements.
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Given the judgement required by management to determine recoverable amounts, the sensitivity analysis and the amounts of goodwill involved, we consider the measurement of goodwill to be a key audit point. Audit procedures in response to the risk identified We assessed the compliance of the company’s valuation methodology with the applicable accounting standards, and its bases of application, with particular regard to: • The appropriateness of the approach used to determine the applicable CGUs for testing and of the process for preparing the applicable 5-year business plans, in particular by comparing the prior year’s impairment test projections with the current year’s results; • The consistency of the estimated future cash flows used to calculate the values in use of each CGU with those included in the 5-year business plans presented by Executive Management to the company’s Board of Directors in December 2019; • The appropriateness of the applicable discount rate and perpetual growth rate assumptions as assessed by our financial appraisal specialists; • Management’s analysis of the sensitivity of value in use to changes in the main underlying assumptions. We also assessed the appropriateness of the financial information provided in note 7 to the consolidated financial statements. Recognition of revenue and profit based on percentage of completion for real estate development operations under VEFA off-plan agreements and CPI development contracts (Note 4 to the consolidated financial statements) Risk identified As indicated in note 4 to the consolidated financial statements, Nexity’s revenue from residential and commercial real estate development operations involving VEFA off-plan sales contracts and CPI property development contracts amounts to 71% of consolidated revenue, representing the majority of the Group’s revenue. Revenue and profit for such real estate development operations are recognised using the percentage of completion method. Percentage of completion is determined on the basis of the commercial stage of development and on the percentage of development expenditure already incurred at year-end in comparison with the latest budget estimate updated at year-end. Given the requirement for management to exercise judgement and make estimates to determine the operating budgets used for the percentage of completion method, we consider the recognition of revenue and profit based on the percentage of completion of real estate development operations involving VEFA off-plan agreements and CPI property development contracts to be a key audit matter. Audit procedures in response to the risk identified Our approach was adapted to the degree of maturity of the system of internal control applicable to each business or subsidiary: The first such approach was notably based on the following work: • Assessment of the relevant controls implemented by Group management for the preparation and updating of operating budgets contributing to their reliability; • Assessment of the relevant controls implemented by Group management for the management of purchases and sales contributing to the reliability of the calculation of percentage of technical and commercial completion of real estate development operations; • Analysis of significant changes in revenue and profit from one period to the next. The second such approach was notably based on the following work: • Assessment of the consistency of the latest updated operating budgets for the period and comparison with supporting documentation and information obtained from the applicable financial controllers and/or programme managers; • Comparison of accounting data with the operating data for each programme and cross-checking of percentage of completion data with operating data on contract progress or architects’ certificates or sale agreements. We also assessed the appropriateness of the financial information provided in note 4 to the consolidated financial statements.
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4 Specific verifications We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations of the Group information given in the management report of the Board of Directors approved on 6 April 2020. Management has indicated that a communication will be made to the Shareholders' Meeting called to approved the financial statements regarding the events which have occurred and information which has emerged on the Covid-19 crisis subsequent to the financial year reporting date. We have no matters to report as to its fair presentation and consistency with the consolidated financial statements. We attest that the consolidated non-financial information required by Article L.225-102-1 of the French Commercial Code (Code de commerce) is included in the Group’s management report, it being specified that, in accordance with article L.823-10 of the Code, we have verified neither the fair presentation nor the consistency with the consolidated financial statements of the information contained therein. This information should be reported on by an independent third party.
5 Report on other legal and regulatory requirements Appointment of the Statutory Auditors 5 We were appointed as Statutory Auditors of Nexity by decision of the Shareholders’ Meeting of 30 April 2008 for Mazars and by decision of the Shareholders’ Meeting of 16 October 2003 for KPMG in view of the acquisitions or mergers of firms that have taken place since that date. As at 31 December 2019, Mazars and KPMG were in the 12th year and 17th year of the total uninterrupted engagement, which are the 12th year and 16th year respectively since securities of the Company were admitted to trading on a regulated market.
6 Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is intended to liquidate the Company or to cease operations. The Audit and Financial Statements Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management systems and where applicable, internal audit, regarding accounting and financial reporting procedures. The consolidated financial statements have been approved by the Board of Directors.
7 Statutory Auditors’ responsibilities for the audit of the consolidated financial statements Objectives and audit approach Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As specified in Article L.823-10-1 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company. As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional judgment throughout the audit. Furthermore, it: • Identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for the audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control;
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• Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control; • Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the consolidated financial statements; • Assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not provided or are inadequate, to modify the opinion expressed therein; • Evaluates the overall presentation of the consolidated financial statements and assesses whether they represent the underlying transactions and events in a manner that achieves fair presentation; • Obtains sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. The Statutory Auditor is responsible for the direction, supervision and performance of the audit of the consolidated financial statements and for the opinion expressed on the consolidated financial statements. Report to the Audit and financial Statements Committee We submit a report to the Audit and Financial Statements Committee which includes a description of the scope of the audit and the audit programme implemented, as well as the results of our audit. We also report any significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified. Our report to the Audit and Financial Statements Committee includes the risks of material misstatement that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period and which are therefore the key audit matters that we are required to describe in this report. We also provide the Audit and Financial Statements Committee with the declaration provided for in Article 6 of Regulation (EU) No. 537/2014, confirming our independence within the meaning of the rules applicable in France as set out in Articles L.822-10 to L.822-14 of the French Commercial Code (Code de commerce) and in the French code of ethics (Code de déontologie) for Statutory Auditors. Where appropriate, we discuss with the Audit and Financial Statements Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
Paris-La Défense, 6 April 2020 The Statutory Auditors
KPMG Audit IS MAZARS Francois Plat Olivier Thireau Michel Barbet-Massin Partner Partner Partner
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5.4 PARENT COMPANY FINANCIAL STATEMENTS AT 31 DECEMBER 2019
Note 19 Employee profit-sharing 327 5.4.1 CONDENSED FINANCIAL STATEMENTS 312 Note 20 Corporate income tax 327 BALANCE SHEET 312 Note 21 Net profit 328 INCOME STATEMENT 314 Note 22 Analysis by nature of the regulated provisions, depreciation, amortisation and provisions 328 5.4.2 NOTES TO THE PARENT COMPANY FINANCIAL Note 23 Schedules of receivables and payables 328 STATEMENTS 316 Note 24 Adjustment accounts 329 Note 1 Information on the Company and significant developments 316 Note 25 Analysis of the statement of cash flows and change in net debt 330 Note 2 Accounting principles 317 Note 26 Off-balance sheet commitments 330 Note 3 Change of method 317 Note 27 Workforce 331 Note 4 Estimates and assumptions 317 5 Note 28 Free share plans 331 Note 5 Accounting principles 318 Note 29 Information on related parties 332 Note 6 Non-current assets 320 Note 30 Subsequent events 332 Note 7 Current assets 322 Note 31 List of significant subsidiaries and holdings 332 Note 8 Equity 323 Note 9 Provisions 324 5.4.3 STATUTORY AUDITORS’ REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS 334 Note 10 Payables 324 Note 11 Operating income 325 5.5.1 INFORMATION ON INVOICE PAYMENT TERMS 338
Note 12 Operating expenses 326 5.5.2 NON-DEDUCTIBLE EXPENSES 338 Note 13 Analysis of the operating results 326 5.5.3 DIVIDEND POLICY 338 Note 14 Impact of share buyback on the operating results 326 Note 15 Financial income 326 5.5.4 PROPOSAL FOR THE ALLOCATION AND DISTRIBUTION OF 2019 EARNINGS 339 Note 16 Finance costs 327 Note 17 Analysis of the net financial income/(expense) 327 5.5.5 STATUTORY LIMITATION PERIOD 339 Note 18 Analysis of the non-recurring profit/(loss) 327 5.5.6 TABLE OF NEXITY’S RESULTS OVER THE PAST FIVE FINANCIAL YEARS 340
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5.4.1 Condensed financial statements
Balance sheet
ASSETS 31/12/2019 31/12/2018 Amortisation, (In thousand of euros) Notes Gross amount depreciation Net amount Net amount Intangible assets Concessions, patents and similar rights 6.1 114,503 (37,368) 77,135 71,894 Goodwill 6.1 - - - - Other intangible assets 6.1 30,817 (1,630) 29,187 26,326 Property, plant and equipment Property, plant and equipment 6.2 43,312 (26,429) 16,883 14,973 Assets in progress 260 - 260 218 Non-current financial assets Equity investments 6.3 2,314,546 (152,228) 2,162,318 2,087,625 Receivables from equity investments 21,045 (4,332) 16,713 1,585 Other equity securities 6.4 20,355 (182) 20,173 13,199 Loans 6.5 28,081 (155) 27,926 25,819 Other non-current financial assets 6.6 145,855 - 145,855 145,105 Non-current assets 6.7 2,718,774 (222,324) 2,496,450 2,386,744 Inventories and work in progress Advances and deposits paid on orders 4,861 - 4,861 4,803 Receivables Trade and other receivables 7.1 23,693 (72) 23,621 22,312 Other receivables 7.2 616,928 (48,158) 568,770 542,739 Other Marketable securities 7.3 - - - 116,788 Treasury shares 7.4 21,907 - 21,907 19,797 Cash and cash equivalents 7.5 508,727 - 508,727 127,038 Adjustment accounts Prepaid expenses 7.6 3,112 - 3,112 3,083 Current assets 1,179,228 (48,230) 1,130,998 836,560 Deferred expenses 7.7 5,857 - 5,857 6,007 Foreign currency translation gains and losses assets 487 - 487 532 TOTAL ASSETS 3,904,346 (270,554) 3,633,792 3,229,843
/312 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
LIABILITIES AND EQUITY (in thousands of euros) Notes 31/12/2019 31/12/2018 Equity Share capital 8.1 280,649 280,649 Share issue, merger, contribution premiums 1,130,173 1,130,173 Legal reserve 28,065 28,018 Other reserves - - Retained earnings 260,696 - Profit/(loss) for the financial year 178,087 398,974 Regulated provisions 4,894 3,869 TOTAL EQUITY 8 1,882,564 1,841,683 Provisions 35,946 34,327 5 TOTAL PROVISIONS 9 35,946 34,327 Financial debt Convertible bonds 10.1 470,167 470,167 Bond issues 10.1 568,021 327,833 Loans and borrowings from financial institutions 10.2 979 425 Borrowings and financial liabilities 10.3 605,542 480,533 Operating liabilities Trade and other payables 35,072 32,748 Tax payable and social security contributions 22,501 24,925 Other liabilities Liabilities in respect of fixed assets 8,822 9,856 Other liabilities 4,048 7,283 Adjustment account Deferred income 55 54 TOTAL LIABILITIES 1,715,207 1,353,824 Foreign currency translation gains and losses liabilities 75 9 TOTAL LIABILITIES AND EQUITY 3,633,792 3,229,843
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 313 5 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Income statement
(in thousands of euros) Notes 31/12/2019 31/12/2018 Production of services sold 126,804 116,597 Revenue 126,804 116,597 Capitalised production 9,318 8,518 Operating subsidies - 1 Reversals on depreciation, provisions, transfers of charges 30,571 11,276 Other income 2 - Operating income 11 166,695 136,392 Purchase of raw materials and other supplies (13) (8) Other purchases and external expenses (84,178) (81,110) Taxes, duties and other levies (2,952) (2,723) Wages (65,777) (37,821) Social security contributions (19,257) (16,774) Operating additions On fixed assets: depreciation, amortisation and impairment (12,758) (10,576) On fixed assets: provisions (1,630) - On current assets: provisions (17) - For risks and charges: provisions (18,408) (19,019) Other expenses (6,895) (3,162) Operating expenses 12 (211,885) (171,193) OPERATING RESULTS 13 (45,190) (34,801) Financial income from investments 199,147 200,499 Income from other securities and receivables from non-current assets 346 1,039 Other interest and equivalent 7,200 7,929 Reversals on provisions and transfers of charges 35,155 200,184 Positive exchange rate differences - 1 Net income on disposals of marketable securities - 25 Financial income 15 241,848 409,677 Financial additions to depreciation, amortisation and provisions (36,419) (64,968) Interest and equivalent expenses (25,472) (17,128) Negative exchange rate differences (29) (22) Finance costs 16 (61,920) (82,118) NET FINANCIAL INCOME/(EXPENSE) 17 179,928 327,559 CURRENT PROFIT/(LOSS) BEFORE TAX 134,738 292,758 Non-recurring income from management operations - 6 Non-recurring income from equity operations 16,503 106,609 Reversals on provisions and transfers of charges 56,233 28,313 Non-recurring income 72,736 134,928 Non-recurring expenses from management operations (206) - Non-recurring expenses from equity operations (53,662) (57,829) Non-recurring additions to depreciation, amortisation and provisions (1,025) (965) Non-recurring expenses (54,893) (58,794) NON-RECURRING PROFIT/(LOSS) 18 17,843 76,134 Employee profit-sharing (Participation) 19 (377) (160) Income tax 20 25,883 30,242 Total income 481,279 680,997 Total expenses (303,192) (282,023) PROFIT (OR LOSS) 21 178,087 398,974
/314 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Statement of cash flows
(in thousands of euros) Notes 31/12/2019 31/12/2018 Net accounting profit/(loss) 178,087 398,974 Elimination of non-cash income and expenses and gains and losses: Elimination of depreciation, amortisation and provisions (39,690) (133,101) Elimination of gains and losses on asset disposals 38,139 (50,080) Other non-cash income and expenses Net losses arising on mergers of assets and liabilities 10,818 Cash flow 187,354 215,793 Change in Working Capital Requirement 8,071 (20,118) Net cash from/(used in) operating activities 195,425 195,675 Purchase of intangible assets (16,755) (19,718) Purchase of property, plant and equipment (7,685) (5,064) Acquisition/increase in equity investments (78,392) (103,505) 5 Increase in receivables attached to investments and other financial receivables (125,041) (84,632) Proceeds from sale of property, plant, equipment and intangible assets 15 Proceeds from disposals of equity investments 15,578 747 Repayment of capital for subsidiaries - 656 Decrease in receivables attached to investments and other financial receivables 99,742 87,501 Net cash from/(used in) investing activities (112,553) (124,001) Dividends paid (138,232) (140,324) Acquisition of treasury shares (20,829) (19,797) Increase in convertible bonds issues - 200,000 Increase in bond issues 240,000 - Repayment of bond issues - (135,000) Change in negotiable debt securities 120,000 Net change in financial current accounts (18,298) (169,743) Increase in deferred expenses (1,211) (4,557) Net cash from/(used in) financing activities 181,430 (269,421) Impact of changes in foreign currency exchange rates on cash and cash equivalents 45 125 CHANGE IN CASH AND CASH EQUIVALENTS 25 264,347 (197,622) Cash and cash equivalents at beginning of period 243,401 441,023 Cash and cash equivalents at end of period 507,748 243,401
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5.4.2 Notes to the parent company financial statements
Note 1 Information on the Company and significant developments
1.1 Information on the Company
Notes to the balance sheet, before appropriation of The Company’s press releases and annual reports – earnings, for the financial year ended 31 December 2019, including historical financial information about the showing a balance sheet total of €3,633,792,039.30, and to Company and parent company financial statements – are the income statement, showing earnings of available on the Company’s website: €178,087,368.01. www.nexity.fr/en/group. Copies may also be obtained from The Company’s financial year runs from 1 January to Nexity’s registered office at 19, rue de Vienne – TSA 50029 31 December 2019 (12 months). – 75801 Paris Cedex 08 (France). The notes and tables presented below are an integral part The Company is the central holding company of the Nexity of the parent company financial statements. Group and controls the Group's main subsidiaries (see list of the main subsidiaries in Note 31 ). Nexity’s shares are listed on Eurolist of Euronext Paris.
1.2 Significant developments during the financial year
2019 was marked by the following significant • In October 2019, Nexity implemented a short-term developments: negotiable debt securities programme (Negotiable In terms of external growth and disposals: European Commercial Paper – NEU CP) for a maximum amount of €300 million, registered with Banque de • In January 2019, the Group acquired a 71.3% stake in France on 10 September 2019. At 31 December 2019, Accessite, a French company specialising in advice and the outstanding balance stood at €120 million. management for commercial property assets; The programme is an additional short-term funding tool • The sale of Nexity Conseil et Transaction to its which enables Nexity to seize market opportunities to management was finalised early in the year. Nexity has optimise financing costs, while remaining extremely retained a minority stake of 13.3%; and flexible. The programme is secured by a number of • The disposal of the holding in Bien’ici to wholly-owned undrawn revolving credit facilities for more than Nexity subsidiary Compagnie Immobilière et Digitale. €555 million, and by available cash. In terms of financing: Change in governance: • In December 2019, Nexity completed its first green At its meeting held on 22 May 2019 following the bond issue to eligible investors for the amount of Shareholders’ Meeting, Nexity’s Board of Directors €240 million (Euro PP Green). reappointed Mr Alain Dinin as Chairman of the Board of Directors and decided to separate the roles of Chairman This issue included a tranche of €84 million, with a 7-year and Chief Executive Officer. maturity (due December 2026) linked to a 2.257% annual coupon rate, and a tranche of €156 million with an 8-year Mr Jean-Philippe Ruggieri was appointed Chief Executive maturity (due December 2027) linked to a 2.464% annual Officer. Mr Julien Carmona was reappointed as Deputy CEO coupon rate. and company officer. They make up the Strategy Committee together with Deputy CEOs Mrs Véronique These green bonds reflect the Group’s CSR policy in fighting Bédague-Hamilius and Mr Frédéric Verdavaine. global warming and contributing to the transition towards a low-carbon economy, in line with Nexity’s ambitious To this same end, Mr Alain Dinin serves in a strengthened objective of a reduction of 30% in tCO2e. per home position as Chairman of Nexity’s Board of Directors, vested delivered by 2030 (base 2015). with extensive powers relating to investment and strategy, and actively supports the new management team.
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1.3 Subsidiaries and investments
Equity investments and the associated technical merger • €50 million mainly due to capital increases for losses went from €2,227 million at 31 December 2018 to subsidiaries; €2,302 million net at 31 December 2019, i.e. a net increase • €29 million due to acquisitions of securities in Accessite of €75 million which corresponds to: (71%) and PERL (11% taking the holding from 89% to • €53 million in net financial reversals of amortisation on 100%); equity investments and technical losses; • -€3 million for asset transfers from Weroom and Neximmo 14; and • -€54 million in security disposals from Nexity Conseil et Transaction and Bien’ici.
GENERAL INFORMATION 5 Note 2 Accounting principles
The parent company financial statements were approved in with the basic assumptions: going concern, consistency of accordance with the provisions of the French Commercial accounting methods from one financial year to another, Code, Ruling No. 2014-03 of the Accounting Standards independence of financial years, in accordance with the Authority (Autorité des Normes Comptables ANC) relating to general rules for preparing and presenting parent company the French General Accounting Plan and the applicable financial statements. regulations. The basic method selected to assess the items entered into The general accounting conventions were applied in the accounts is the historical cost method. compliance with the principle of prudence, in accordance
Note 3 Change of method
The presentation of the parent company financial statements and the assessment methods selected have not changed compared to the previous financial year.
Note 4 Estimates and assumptions
In the process of preparing the parent company financial other relevant factors. Actual results may differ significantly statements, the measurement of certain balance sheet and from estimates due to changes in the underlying conditions income statement items calls for the use of assumptions or and assumptions. assessments based, in particular, on budgets for property The assumptions, estimates or assessments leading to the developments. These notably concern the valuation of presentation of the financial statements at 31 December equity investments. 2019 were conducted in a context of the new home real These assumptions, estimates or assessments are estate market in France, which should pick up after the established and reviewed regularly on the basis of French municipal elections in March 2020. Demand information available and the actual position of the remains high, buoyed by an all-time low in the mortgage Company on the date the financial statements are market, with building costs set to stabilise in 2020. prepared, taking into consideration past experience and
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Note 5 Accounting principles
5.1 Property, plant, equipment and intangible assets
Property, plant and equipment and intangible assets are • Fixtures and fittings: 7 to 9 years straight-line basis; stated at acquisition (purchase price and associated Office equipment: 1 to 5 years straight-line basis; expenses) or contribution cost. Moreover, in accordance • with the obligations placed by the BOI instruction 4 I-1-93 • IT equipment: 1 to 5 years straight-line basis; (paragraph 32), the cost of entry of the goods subject to a • Office furniture: 8 to 10 years straight-line basis. universal transmission of assets is broken down into gross Technical losses are allocated in the accounts according to value and depreciation. Article 745-5 et seq. and Article 12 of the ANC Ruling Depreciation is calculated on a straight-line or degressive No. 2015-06 of 23 November 2015. The technical losses basis according to the estimated life of the goods: presented in Nexity’s financial statements are all allocated • Software: 1 to 7 years straight-line basis; to the equity investments contributed by the absorbed company, and to the related depreciations (Note 6.6).
5.2 Non-current financial assets
5.2.a Equity investments This rate is lower than the average growth rate for the Equity investments are stated according to the valuation business activities over the period of the business plan. rules for the cost of entry of assets. Assets acquired subject By way of derogation to the General Accounting Plan to payment are recognised at their acquisition cost, principle, reversals on amortisation and provisions relating comprising the purchase price plus the directly attributable to equity investments are recognised in non-recurring costs. Assets acquired by contribution are recognised at the income if the investments are sold, so that all impacts of value indicated on the contribution document. the disposal are recognised in non-recurring profit/(loss). Impairment is recognised when the current value of an equity investment becomes lower than its cost. 5.2.b Loans The goodwill recognised is subject to impairment. Loans are stated at their nominal value. They are assessed Subsequently, if needed, the receivables held in the on a case-by-case basis. Impairment is recognised when subsidiary may be impaired and a provision for risks may be there is a strong risk of non-recovery. recognised. 5.2.c Other non-current financial assets The current value of the investment is determined Nexity shares held as part of a liquidity contract are according to the share of the net position and the recognised at their acquisition price less expenses. If at the profitability forecasts. end of the financial year, the average price of the last The profitability forecasts for the operational subsidiaries month of the financial year is lower than the acquisition are generally based on the discounted future cash flow price, impairment is recognised. Gains and losses on asset method, calculated based on the 5-year business plan disposals are recognised in non-recurring profit/(loss) defined by the Executive Management team and presented according to the FIFO (First In – First Out) method. to the Board of Directors in December 2019. The business By way of derogation to the General Accounting Plan plan involves different growth assumptions depending on principle, reversals on amortisation and provisions relating the business activity involved. These assumptions take into to treasury shares are recognised in non-recurring income if account current market conditions and foreseeable the investments are sold, so that all impacts of the disposal developments as well as the Company’s assumptions about are recognised in non-recurring profit/(loss). changes in the regulatory environment and competitive pressures. The technical losses allocated to the equity investments contributed by the absorbed company are impaired when Beyond the 5-year plan, the perpetual growth rate used to the current value of the investments becomes lower than calculate the terminal value is 1.5% (the same rate as at the cumulative value of the investments and the losses 31 December 2018). allocated to them.
/318 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
5.3 Receivables
5.3.a Trade and other receivables Receivables acquired or contributed for a discounted value Trade receivables are stated at their nominal value. are stated at their acquisition or contribution value. They are assessed on a case-by-case basis. Impairment is The difference between the nominal value and the recognised when there is a strong risk of non-recovery. acquisition or contribution value is only recognised in profit after cashing a surplus compared to the amount entered in 5.3.b Other receivables the balance sheet. The risk of non-recovery gives rise to the Other receivables are recognised at their nominal value. recognition of impairment only if the loss compared to the They are assessed individually and impaired if required. nominal value of the receivable exceeds the discount amount. Receivables on indirect subsidiaries are not subject to impairment when the risks relating to these subsidiaries are entered into the financial statements of their direct parent companies. 5 5.4 Marketable securities
They are recognised at the acquisition cost. If at the end of the financial year, the asset value is lower than the acquisition value, the difference is subject to financial impairment. Gains and losses on disposals are recognised the in net financial income/(expense) according to the FIFO (First In – First Out) method.
5.5 Treasury shares
Treasury shares acquired for the purpose of their free allocation to Group employees (free share plans) are recognised in a “Treasury shares” item according to their destination, pursuant to the share allocation decision. These shares are not stated at their market value due to the commitment to allocate them to employees, which is subject to a provision for charges.
5.6 Deferred expenses
Bank commissions and miscellaneous costs paid as part of the setting up of loans are spread out as finance costs over the duration of the loan. When a loan is repaid early, these commissions and costs are cleared into the financial income/(expense) of the repayment year.
5.7 Regulated provisions
The costs directly attributable to the acquisition of shares, incorporated into their entry costs, are amortised for tax purposes on a straight-line basis over a period of five years.
5.8 Provisions
The provisions are stated for the amount corresponding to The provision for charges representing the obligation to the best estimate of the outflow of resources required to deliver the securities to the beneficiaries of free shares was extinguish the obligation, pursuant to ANC Ruling stated according to the cost of the purchased shares, the No. 2014-03. At the end of the financial year, this estimate number of shares to be delivered and the services rendered. is made according to the information known at the date of As each free share plan provides for a vesting period, preparation of the financial statements. the provision is calculated for each plan on a pro rata temporis basis for the vesting periods elapsed at the closing date.
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BALANCE SHEET – ASSETS
Note 6 Non-current assets
6.1 Intangible assets
This item comprises: • Concessions, patents and similar rights for • Other intangible assets comprising expenses related to €77,135 thousand net of depreciation, amortisation and IT projects in progress for €29,187 thousand. impairment comprising the Nexity brand (€56,417 thousand) and various software used in the Group for €20,718 thousand net of depreciation, amortisation and impairment; and
6.2 Property, plant and equipment
Property, plant and equipment is mainly composed of fixtures and fittings, and office furniture at the Group’s registered office and IT equipment. These fixed assets are used by the central services and other Group subsidiaries.
6.3 Equity investments
This item comprises the shares of the Group’s main operating subsidiaries. The main investments are indicated in Note 31.
6.4 Other equity securities
This item mainly comprises the investments made by the Group in a certain number of investment funds in innovative activities. The share of the commitments not paid at the end of the financial year are indicated in liabilities in payables to fixed asset suppliers for €5,005 thousand.
6.5 Loans
This item mainly comprises loans granted to subsidiaries and holdings. It notably includes a loan of €22,000 thousand to the subsidiary Némoa, the maturity of which has been extended to July 2022.
6.6 Other non-current financial assets
(in thousands of euros) 31/12/2019 31/12/2018 Guarantees paid 397 168 Amounts allocated to the liquidity contract: Cash account 3,459 1,547 Treasury shares 2,751 4,183 Impairment of treasury shares (41) Technical losses allocated to equity investments 139,248 139,248 TOTAL OTHER NON-CURRENT FINANCIAL ASSETS 145,855 145,105
/320 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Treasury shares held Pursuant to the authorisations granted by the Shareholders’ • Via the liquidity contract entered into with an Meeting and implemented by the Board of Directors, the investment services provider, recorded under “Other Group may hold treasury shares up to 10% of the share non-current financial assets”; capital adjusted for changes, i.e. 5,612,972 shares at • In connection with share buyback programmes 31 December 2019. implemented to cover free share plans, recorded under At the closing date, this holding was carried out for two “Treasury shares”. reasons:
NEXITY SHARES HELD Total held o/w liquidity o/w to cover free (at transaction (number of shares) Authorisations contract share plans date) Position at 31 December 2018 5,612,972 100,948 450,000 550,948 Purchase, sale and transfer of shares • via the liquidity contract entered into with an investment services 5 provider (39,429) (39,429) • as part of the buyback programme of treasury shares destined to be awarded under the free share plans 518,273 518,273 • transfers during the financial year to cover free shares vested (424,620) (424,620) 10% of the adjusted capital Implementation of the programme authorised by the Shareholders’ Meeting according to its of 22 May 2019 change POSITION AT 31 DECEMBER 2019 5,612,972 61,519 543,653 605,172
In respect of the liquidity contract, the Group owned 61,519 treasury shares at 31 December 2019. Their net value stood at €2,751 thousand. The cash account stood at €3,459 thousand. These elements are recorded in non-current financial assets.
6.7 Gross fixed assets: changes
Increase acquisition Reclassification Disposals, scrapping, (in thousands of euros) 31/12/2018 creation restructuring repayment 31/12/2019 Concessions, patents and similar rights 102,550 225 11,728 114,503 Other intangible assets 26,327 16,530 (12,040) 30,817 Intangible assets 128,877 16,755 (312) - 145,320 General installations, fixtures and fittings 12,123 81 1,142 13,346 Transport equipment 140 5 (4) 141 Office, IT equipment, furniture 23,338 6,581 146 (240) 29,825 Property, plant and equipment in progress 218 1,018 (976) 260 Property, plant and equipment 35,819 7,685 312 (244) 43,572 Equity investments 2,292,991 78,392 (3,212) (53,625) 2,314,546 Receivables from equity investments 5,872 15,173 21,045 Other equity securities 13,198 7,359 (202) 20,355 Loans 25,974 2,142 (35) 28,081 Other non-current financial assets 145,146 100,416 (99,707) 145,855 Non-current financial assets 2,483,180 203,482 (3,212) (153,569) 2,529,881 TOTAL NON-CURRENT ASSETS 2,647,877 227,922 (3,212) (153,813) 2,718,774
Equity investments: the main changes are as follows: • Increase of €78,392 thousand: purchase of securities • Restructuring of -€3,212 thousand: essentially universal (€28,318 thousand), capital increases to reconstitute transfers of assets from Weroom and Neximmo 14; and the equity of loss-making subsidiaries • Decrease of €53,625 thousand: mainly security (€17,799 thousand) and subscription to the capital of disposals from Bien’ici and Nexity Conseil et companies (€32,274 thousand); Transaction.
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6.8 Amortisation, depreciation
Movements during the period (in thousands of euros) 31/12/2018 Additions Reversals 31/12/2019 Concessions, patents and similar rights (amortisation) 30,463 6,803 37,266 Concessions, patents and similar rights (depreciation) 193 (92) 101 Intangible assets 30,657 6,803 (92) 37,368 General installations, fixtures and fittings 6,509 1,606 8,115 Transport equipment 5 34 (4) 35 Office, IT equipment, furniture 14,113 4,314 (149) 18,278 Property, plant and equipment 20,628 5,954 (153) 26,429 TOTAL AMORTISATION 51,284 12,757 (245) 63,796
Amortisation for the period mainly comprises straight-line amortisation.
Note 7 Current assets
7.1 Trade and other receivables
This item mainly comprises inter-group receivables due to invoicing of operating income.
7.2 Other receivables
(in thousands of euros) 31/12/2019 31/12/2018 Trade payables 328 419 Workforce and social organisations 106 90 State – Corporate income tax and VAT 30,057 11,404 Group: financial current accounts and share of profits 574,298 558,608 Impairment on Group current accounts (48,158) (53,213) Group: tax consolidation current accounts 11,725 19,967 Group: miscellaneous payables 367 370 Miscellaneous payables 47 5,094 TOTAL OTHER RECEIVABLES 568,770 542,739
7.3 Marketable securities
This item mainly comprises interest-bearing bank accounts and time deposit accounts, which on 31 December 2019 had been reallocated to “Cash and cash equivalents”.
7.4 Treasury shares
At 31 December 2019, Nexity held a total of 605,172 treasury shares (1.08% of the share capital) for a total of €24,658 thousand: • 61,519 shares for a total of €2,751 thousand in respect • 543,653 shares for a total of €21,907 thousand which of the liquidity contract recognised in non-current are destined to be given to Group employees after the financial assets (see Note 6.6); vesting period as part of free share plans, if the vesting conditions are met.
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7.5 Cash and cash equivalents
The cash and cash equivalents of €508,727 thousand mainly comprise interest-bearing bank accounts (reallocated from “Marketable securities”) and the balance of bank current accounts. At 31 December 2018, cash and cash equivalents stood at €243,826 thousand, which included marketable securities.
(in thousands of euros) 31/12/2019 31/12/2018 Interest-bearing bank accounts and term deposits 317,572 Bank current accounts 191,155 127,038 TOTAL CASH AND CASH EQUIVALENTS 508,727 127,038
7.6 Prepaid expenses The prepaid expenses comprise expenses relating to the following financial year for €3,112 thousand. 5 7.7 Deferred charges
These correspond to the commissions paid when credit facilities are set up, and are spread over the duration of the contract.
Amortisation, (in thousands of euros) 31/12/2018 Increases depreciation 31/12/2019 Deferred bond issue expenses 6,007 1,211 (1,361) 5,857
The increase in 2019 essentially relates to the expenses for the green bond issue, and the setting up of the NEU CP negotiable debt securities programme.
BALANCE SHEET – LIABILITIES
Note 8 Equity
8.1 Share capital
At 31 December 2019, the share capital of the Company comprised 56,129,724 shares with a par value of €5 per share, unchanged since 31 December 2018.
8.2 Diluted share capital
The maximum potential dilution resulting from the conversion of all the OCEANE and ORNANE bonds and the vesting of all free shares in awards granted would be 13.9% (as a percentage of share capital ownership) based on the number of shares at the end of the period.
8.3 Change in equity
Share issue, merger, Profit/(loss) contribution Retained for the Regulated (in thousands of euros) Share capital premiums Legal reserve earnings financial year provisions Equity AT 1 JANUARY 2019 280,649 1,130,173 28,018 0 398,974 3,869 1,841,683 Allocation of earnings 47 398,928 (398,974) 0 Distribution (138,232) (138,232) Equity movements (free shares) 0 Additions to regulated provisions 1,025 1,025 Profit/(loss) for the financial year 178,087 178,087 AT 31 DECEMBER 2019 280,649 1,130,173 28,065 260,696 178,087 4,894 1,882,563
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Note 9 Provisions
Increases Decreases Additions for Provisions not (in thousands of euros) 31/12/2018 financial year Provisions used used 31/12/2019 Provisions for litigation 543 250 (487) 306 Provisions for exchange rate losses 524 412 936 Provisions for commitment to transfer free shares 18,719 18,158 (17,733) 19,144 Other provisions 14,541 10,264 (8,945) (300) 15,560 TOTAL PROVISIONS 34,327 29,084 (27,165) (300) 35,946
The provisions for free shares cover the expense corresponding to the commitment to allocate free shares to Group employees. The other provisions mainly cover the risks due to the net financial positions of certain subsidiaries, notably real estate development companies.
Note 10 Payables
10.1 Bond issues
Fixed (in thousands of euros) Issue date Opening amount Closing amount Maturity annual rate Convertible bond issue (OCEANE) 13 May 2016 270,000 270,000 1 January 2023 0.125% Convertible bond issue (ORNANE) 2 March 2018 200,000 200,000 2 March 2025 0.250% Accrued interest 167 167 Convertible bond issue subtotal 470,167 470,167 Bond issue 5 May 2014 25,000 25,000 5 May 2020 3.252% Bond issue 5 May 2014 146,000 146,000 5 May 2021 3.522% Bond issue 29 June 2017 30,000 30,000 10 November 2023 2.053% Bond issue 29 June 2017 121,000 121,000 29 June 2025 2.600% Green bond issue 20 December 2019 84,000 20 December 2026 2.257% Green bond issue 20 December 2019 156,000 20 December 2027 2.464% Accrued interest 5,833 6,021 Bond issues subtotal 327,833 568,021 TOTAL 798,000 1,038,188
2016 OCEANE bond issue (bonds that may be converted existing shares (ORNANE bonds), redeemable at maturity in or exchanged for new or existing shares) March 2025 and paying an annual coupon rate of 0.25%. In 2016, the Group issued €270 million of 6.5-year bonds The nominal unit value per 2018 ORNANE convertible bond that may be converted or exchanged for new or existing was set at €68.91. The conversion rate was adjusted shares (OCEANE bonds), redeemable at maturity in following the dividend distribution in May 2018. It is January 2023 and paying an annual coupon rate of 0.125%. 1.121 shares for one bond (as opposed to one share for one The nominal unit value per 2016 OCEANE convertible bond bond at the date of issuance). was set at €64.30. The conversion rate was adjusted following If all convertible bonds were converted, the dilution would the dividend distribution in May 2019. It is 1.206 shares for be 5.5% (as a percentage of share capital ownership). one bond (as opposed to one share for one bond at the date of issuance). Other bond issues If all convertible bonds were converted, the dilution would Under the terms of the other bond issues, the Group must be 8.3% (as a percentage of share capital ownership). maintain certain financial ratios (Net debt/equity, Net debt/EBITDA, EBITDA/cost of borrowing), calculated based 2018 ORNANE bond issue (bonds that may be converted on the Group’s consolidated financial statements excluding into cash and/or new shares and/or existing shares) the impact of IFRS 16 (Lease contracts). The Group was in In 2018, the Group issued €200 million of 7-year bonds compliance with these ratios at 31 December 2019. that may be converted into cash and/or new shares and/or
/324 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Green bond issue Nexity completed a green bond issue in December 2019. These green bonds reflect the Group’s CSR policy in fighting global warming and contributing to the transition towards a low-carbon economy, in line with Nexity’s ambitious objective of a reduction of 30% in tCO2e. per home delivered by 2030 (base 2015).
10.2 Loans and borrowings from financial institutions
This item mainly comprises the outstanding capital on credit drawdowns, accrued interest and bank overdrafts:
(in thousands of euros) Authorised amount Amount used Maturity Syndicated corporate credit facility 500,000 - 31 July 2023 Corporate credit 30,000 - 27 March 2021 Corporate credit 25,000 - 25 April 2024 Bank overdrafts 979 TOTAL 979 5 Under the terms of the corporate credit line, the Group must maintain certain financial ratios (Net debt/equity, Net debt/EBITDA, EBITDA/cost of borrowing), calculated based on the Group’s consolidated financial statements excluding the impact of IFRS 16 (Leases). The Group was in compliance with these ratios at 31 December 2019.
10.3 Borrowings and financial liabilities
This item essentially comprises: • Financial current account advances granted by the • And negotiable debt securities (NEU CP) totalling direct and indirect subsidiaries as part of the Group’s €120 million as part of an issuance programme for cash centralisation, and shares of losses to be paid, negotiable securities registered with Banque de France, totalling €485.5 million; and for a maximum amount of €300 million.
INCOME STATEMENT
Note 11 Operating income
(in thousands of euros) 31/12/2019 31/12/2018 Brand fees 31,396 29,743 Professional assistance fees 27,134 21,623 IT services 32,046 27,077 Rent from sub-lettings and services related to premises 15,556 15,393 Provision of workforce 6,109 5,677 Rebilling of expenses related to free shares 8,788 12,567 Rebilling of other operating expenses 5,775 4,517 Revenue subtotal 126,804 116,597 Reversals on operating provisions and other income 878 132 Reversals on provisions for free share expense 17,733 Transfers of charges 11,809 11,016 Capitalised production 9,318 8,518 Other income 153 129 TOTAL OPERATING INCOME 166,695 136,392
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Note 12 Operating expenses
(in thousands of euros) 31/12/2019 31/12/2018 Salaries and social security contributions (55,907) (48,443) Free shares (29,127) (6,152) Rent and related expenses (17,946) (17,608) Fees (11,575) (11,394) Additions to amortisation and depreciation (12,758) (10,576) Additions to impairment of assets (1,647) - Additions to provisions: free shares (18,157) (18,719) Additions to provisions: other (250) (300) Other overheads (64,518) (58,001) TOTAL OPERATING EXPENSES (211,885) (171,193)
Note 13 Analysis of the operating results
The Company generated revenue of €126,804 thousand in The operating expenses, net of reversals of provisions, 2019 compared to revenue of €116,597 thousand in 2018. which amounted to €211,885 thousand in 2019 compared The revenue mainly corresponds to invoicing to other Group to €171,193 thousand in 2018, correspond to the costs of companies. the Group’s central services and to the holding’s overheads. 99.8% of the revenue is generated in France. The operating loss was -€45,190 thousand compared to a loss of -€34,801 thousand in 2018.
Note 14 Impact of share buyback on the operating results
The net expense for buyback of treasury shares due to be transferred to cover free share awards stood at -€10,355 thousand, compared with -6,152 thousand in 2018, and is broken down as follows under different income statement items:
(in thousands of euros) 31/12/2019 31/12/2018 Rebilling of expenses related to free shares (subsidiary employees) 8,788 12,567 Revenue subtotal 8,788 12,567 Reversals on provisions for free share expense (awarded during the financial year) 17,733 Transfers of charges 10,408 6,152 Total operating income 36,929 18,719 Salaries and social security contributions: securities awarded during the financial year and transferred expenses (29,127) (6,152) Provisions for expenses: delivery commitment (18,157) (18,719) Total operating expenses (47,284) (24,871) NET EXPENSE ON FREE SHARES (10,355) (6,152)
Note 15 Financial income
(in thousands of euros) 31/12/2019 31/12/2018 Dividends and share of profits 199,147 200,499 Reversals of depreciation, amortisation and provisions 35,155 200,184 Interest on financial current accounts and loans to subsidiaries 7,546 8,968 Net income on disposals of marketable securities - 25 Other financial income - 1 TOTAL FINANCIAL INCOME 241,848 409,677
/326 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Note 16 Finance costs
(in thousands of euros) 31/12/2019 31/12/2018 Additions to depreciation, amortisation and provisions (35,058) (63,865) Additions to amortisation of deferred expenses (loans) (1,361) (1,102) Share of losses (11) (9) Losses arising on mergers of assets (10,819) (1) Interest and commissions on bond issues (10,743) (15,455) Interest and commissions on bank loans (3,899) (1,664) Subsidies and debt write-offs Exchange rate losses (29) (22) TOTAL FINANCIAL EXPENSES (61,920) (82,118)
The additions to depreciation, amortisation and provisions are related to the amortisation of equity investments or subsidiary current accounts. 5
Note 17 Analysis of the net financial income/(expense)
The net financial income/(expense) totalled €179,929 thousand in 2019, compared to €327,559 thousand in 2018. The net financial income/(expense) is broken down as • -€8.459 thousand in respect of financial cash expenses follows: (compared to -€9,227 thousand in 2018), resulting from • €188,317 thousand in respect of dividends net of losses €16,003 thousand in financial expenses for deferred arising on mergers of assets and liabilities, and shares interest and expenses on bank financing and current of income paid to Group subsidiaries and holdings accounts of subsidiaries lending to Nexity, less (compared to €200,490 thousand in 2018); €7,545 thousand of net income on disposals of marketable securities and interest on current accounts • €509 thousand in respect of the different movements of granted to subsidiaries. additions and reversals on current accounts and equity investments induced by subsidiary profit/(loss) forecasts (compared to €136,432 thousand in 2018); and
Note 18 Analysis of the non-recurring profit/(loss)
The non-recurring profit – amounting to €17,843 thousand – €17,851 thousand, completed as part of the disposal of the mainly takes into account the reversal of provision minus the holding in Bien’ici to the wholly owned Nexity subsidiary losses on asset disposals for a net amount of Compagnie Immobilière et Digitale.
Note 19 Employee profit-sharing
The Company is part of an Economic and Social Unit (UES). The profit-sharing relating to employees of the Company As such, employee profit-sharing is calculated at the UES estimated for the 2019 financial year (to be paid in 2020) level by each company generating profit-sharing. amounted to €377 thousand. Profit-sharing relating to the employees of the UES is allocated to the expenses of each company employing beneficiary employees.
Note 20 Corporate income tax
As a parent company, the Company has opted for the tax The income on the line “Income taxes” of consolidation regime, stipulated in the provisions of €25,883 thousand (compared to €30,242 thousand in Article 223A of the French General Tax Code. Consequently, 2018) mainly comprises the amount of income tax, the the Company is the only entity that pays corporate income social contribution of 3.3% from each of the subsidiaries tax for the entire consolidated tax Group. consolidated under the income tax deduction (including The Group’s principle is that the Group’s consolidation additional contributions) calculated for the whole Group. option should be financially neutral for all of the member subsidiaries during the consolidation period.
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Note 21 Net profit
The Company’s net profit amounted to €178,087 thousand (compared to €398,974 thousand in 2018).
ADDITIONAL INFORMATION
Note 22 Analysis by nature of the regulated provisions, depreciation, amortisation and provisions
(in thousands of euros) 31/12/2018 Additions Reversals 31/12/2019 Derogatory amortisation and depreciation 3,729 667 4,396 Non-recurring amortisation and depreciation 140 357 497 Regulated provisions 3,869 1,024 - 4,893 Provisions for litigation 543 250 (487) 306 Provisions for exchange rate losses 524 412 936 Provisions for free shares 18,719 18,158 (17,733) 19,144 Other provisions 14,541 10,264 (9,245) 15,560 Provisions 34,327 29,084 (27,465) 35,946 Amortisation and impairment on concessions, patents and similar rights 193 1,630 (91) 1,732 Amortisation and impairment on equity investments 205,366 1,605 (54,743) 152,228 Amortisation and impairment on receivables attached to investments 4,287 45 4,332 Amortisation and impairment on loans 155 155 Amortisation and impairment on other non-current financial assets - 182 182 Amortisation and impairment on treasury shares 41 (41) - Amortisation and impairment on customer accounts 55 17 72 Other amortisation and impairment 53,213 22,604 (27,659) 48,158 Depreciation and impairment 263,310 26,083 (82,534) 206,859 TOTAL 301,506 56,191 (109,999) 247,698 Operating additions and reversals 20,055 (18,611) Financial additions and reversals 35,058 (35,155) Non-current additions and reversals 1,025 (56,233) Additions and reversals for income tax 53
Note 23 Schedules of receivables and payables
23.1 Receivables
Gross amount Schedule (in thousands of euros) 31/12/2019 1 year at most Over 1 year Receivables from equity investments 21,045 21,045 Loans 28,081 - 28,081 Other non-current financial assets 145,855 145,855 Trade and other receivables 23,693 23,693 Other receivables 616,928 616,928 Prepaid expenses 3,112 3,112 TOTAL RECEIVABLES 838,714 643,733 194,981 Amount of loans granted during the financial year - Amount of repayments obtained during the financial year 1,832
/328 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
23.2 Payables
Schedule over Gross amount 1 year under (in thousands of euros) 31/12/2019 1 year at most 5 years Over 5 years Convertible bonds 470,167 167 270,000 200,000 Bond issues 568,021 31,021 176,000 361,000 Loans and borrowings from financial institutions 979 979 Negotiable debt securities (NEU CP) 120,000 120,000 Trade and other payables 35,072 35,072 Tax payable and social security contributions 22,501 22,501 Liabilities in respect of fixed assets 8,822 5,022 3,800 Group and partners 485,542 485,542 Other liabilities 4,048 4,048 Deferred income 55 55 TOTAL DEBT 1,715,207 704,407 449,800 561,000 5 Loans subscribed during the financial year 360,000 Loans repaid during the financial year 0
Note 24 Adjustment accounts
24.1 Statement of accrued income
(in thousands of euros) 31/12/2019 Other non-current financial assets 864 Trade and other receivables 14,866 Other receivables 6,520 Cash management 59 TOTAL ACCRUED INCOME 22,309
24.2 Statement of accrued expenses
(in thousands of euros) 31/12/2019 Accrued interest on bond issues 6,189 Trade and other payables 28,941 Tax payable and social security contributions 18,477 Other liabilities 501 Loans and borrowings from financial institutions 951 TOTAL ACCRUED EXPENSES 55,059
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Note 25 Analysis of the statement of cash flows and change in net debt
Cash and cash equivalents amounted to • Cash flows from/(used in) financing activities of €507,748 thousand (excluding treasury shares) at -€181,430 thousand, notably including the 31 December 2019 (compared to €243,401 thousand at December 2019 green bond issue (€240,000 thousand), 31 December 2018), up €264,347 thousand mainly due to: the issuance of short-term negotiable debt securities • Cash flows from/(used in) operating activities of (€120,000 thousand), less dividend payments €195,425 thousand notably including the cash flow (-€138,232 thousand), the acquisition of treasury shares position (€187,354 thousand) less the decrease in the (-€20,829 thousand) and the cash requirements of working capital requirement (€8,071 thousand); operating subsidiaries (-€18,298 thousand). • Net cash from/(used in) investing activities of The Company’s net debt amounted to €582,020 thousand -€112,553 thousand mainly corresponding to (compared to €504,747 thousand in 2018). It corresponds -€24,440 thousand in acquisitions of fixed assets and to the amount of bond issues (€1,038,000 thousand) plus -€78,392 thousand in respect of external growth and debts (€52,558 thousand) and less gross cash capital increases; and (-€508,727 thousand).
Note 26 Off-balance sheet commitments
26.1 Commitments given
Related to the current operations of Group subsidiaries sums owed to the latter under signed commitments As parent company of the Nexity group, the Company (completion bonds, guarantees, etc.) as part of the guarantees or counter-guarantees some commitments €1.8 billion package awarded on behalf of its development made by its subsidiaries within the normal framework of subsidiaries. their activities. The following table summarises the other off-balance sheet In accordance with the contractual provisions of the commitments made in the context of the subsidiaries’ syndicated corporate credit facility of July 2018, the activities: Company is jointly and severally liable to lenders for all
(in thousands of euros) 31/12/2019 31/12/2018 Completion bonds 66,547 40,722 Reservation fees 422 417 Other guarantees on real estate projects 150,910 166,462 Loan guarantees - 3,780 Liability guarantees 1,390 1,390 Other commitments 23,269 26,476 TOTAL 242,538 239,247
Other commitments given As part of the tax consolidation agreements, the amount of their investments. These options mainly concern Bureaux à tax deficits likely to be used by the consolidated Partager, Ægide, Edouard Denis and Accessite securities. subsidiaries would represent a tax expense of €87.6 million Based on the price or price formulas defined in the for the Company. contracts and the probable date of execution of the As part of various external growth operations, the Company contractual obligations, the discounted amount of these granted several put options to minority shareholders for commitments may be estimated at €316.6 million.
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26.2 Commitments received
The Company benefits from liability guarantees for a total of €21.0 million in respect of the acquisitions of Edouard Denis Développement, Costame, Némoa and Bureaux à Partager.
26.3 Workforce commitments
Pensions Pension commitments amounted to €2.1 million and are employee’s initiative, an average turnover rate of 13.5% stated according to the updated IAS 19 method. and a social security contribution rate of 42%. The The main assumptions for calculating employee benefits mortality table used is that of INSEE 2013/2015, the are based on a retirement departure age of 62 years for discount rate at year-end is 0.52% and the salary increase non-managers and 64 years for managers, on the rate at year-end is 2%. 26.4 Deferred and unrealised tax position 5
Deferred tax position: the temporarily non-deductible Unrealised tax position: the unrealised tax gains would lead provisions and charges generate corporate income tax to an increase in corporate income tax of €18,798 thousand savings for a total of €23,508 thousand during reversal in the event of the disposal of the concerned assets. financial years.
Note 27 Workforce
In 2019, the Company’s average workforce was 411 people The 2019 headcount included 19 employees made compared to 358 in 2018. available to the subsidiaries.
Note 28 Free share plans
A total of 424,620 free shares were vested during the Vesting of free shares is subject to conditions of presence at financial year, with all awards satisfied using existing the end of the plans and, if applicable, to performance shares, and the shares were transferred to their recipients. conditions (achievement of a level of operating profit or At the end of the financial year, the number of free shares cumulative EBITDA over the plan’s duration, and/or in vesting periods amounted to 1,321,660 shares, for all minimum backlog at plan maturity, and/or minimum level plans. of operating income or EBITDA at plan maturity, and/or maximum net debt at plan maturity). The following table summarises the plans which expired in 2019, and which were ongoing at year-end:
NEXITY PLANS Awarded, not cancelled Vesting (number of shares) Awarded Cancelled Vested and not vested period ends May 2016 plan 469,500 45,000 424,500 - Q2 2019 January 2017 plan 50,000 - - 50,000 Q1 2020 April 2017 plan 5,000 - - 5,000 Q2 2020 June 2017 plan 392,600 29,550 - 363,050 Q2 2020 December 2017 plan 13,500 4,500 - 9,000 Q4 2020 May 2018 plan for managers 284,950 20,550 - 264,400 Q2 2021 May 2018 plan for all employees 209,070 56,940 120 152,010 Q2 2021 October 2018 plan 24,000 - - 24,000 Q4 2021 May 2019 plan 222,700 4,000 - 218,700 Q2 2022 October 2019 plan 235,500 - - 235,500 Q4 2022 TOTAL NEXITY PLANS 1,906,820 160,540 424,620 1,321,660
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 331 5 FINANCIAL REPORT Parent company financial statements at 31 December 2019
The Shareholders’ Meeting has granted the Board of The maximum potential dilution (taking into account Directors the right until 22 July 2020 to allocate 1% of the treasury shares acquired and held to be granted to share capital for free share awards (subject to certain recipients of free share awards) would be 1.4% conditions and with a minimum three-year vesting period). (as a percentage of share capital ownership) if all free A total of 458,200 free shares have been awarded under shares already awarded were to vest, and 1.6% if the this authorisation. calculation includes all possible free shares not yet awarded. At 31 December 2019, Nexity held a total of 543,653 treasury shares, set aside to cover the delivery commitment to employees and to limit the impact of any dilution.
Note 29 Information on related parties
The remuneration for Nexity directors and executive officers The remuneration for directors who are neither employees (Strategy Committee) amounted to €4,658 thousand in nor company officers amounted to €280 thousand for the 2019. 2019 financial year.
Note 30 Subsequent events
No significant events occurred between 31 December 2019 and the Board of Directors’ meeting of 25 February 2020 convened to approve the financial statements for the period ended 31 December 2019.
Note 31 List of significant subsidiaries and holdings
Name Share capital Share held Gross value Shares Loans, advances Revenue Equity other than Dividends Registered office share capital received Net value Shares Guarantees Earnings (in thousands of euros) 1 – Subsidiaries 1.1 – French subsidiaries (over 50%) NEXITY LOGEMENT 6,562 100.00% 969,558 0 1,669 19, rue de Vienne – TSA 60030 – 75801 PARIS CEDEX 08 540,755 98,429 969,558 0 117,438 ISELECTION 2,578 100.00% 154,688 0 64,852 400, promenade des Anglais – 06600 Nice 29,457 24,999 154,688 0 14,917 PERL 3,568 100.00% 143,218 6,463 96,986 115, rue Réaumur – 75002 PARIS 82,458 2,000 143,218 0 7,295 EDOUARD DENIS DÉVELOPPEMENT 32,625 55.00% 55,433 64,828 8,692 2, rue Leday Le nouvel Hermitage – 80100 ABBEVILLE 4,015 440 55,433 0 3,932 NEXITY IMMOBILIER D’ENTREPRISE 150 99.68% 32,992 0 16,093 19, rue de Vienne – TSA 50029 – 75801 PARIS CEDEX 08 (22,901) 0 0 0 (12,166) NEXITY LAMY 219,388 100.00% 258,632 116,030 213,553 19, rue de Vienne – TSA 10034 – 75801 PARIS CEDEX 08 (875) 0 258,632 0 6,545 ORALIA PARTENAIRES 33,098 100.00% 87,597 15,635 10,077 94, quai Charles-de-Gaulle – 69006 Lyon 4,836 0 87,597 0 (953) NEXITY FRANCHISES 37 100.00% 21,088 4,223 0 19, rue de Vienne – TSA 50029 – 75801 PARIS CEDEX 08 27,727 0 21,088 0 21,739 NEXIMMO 39 88,016 64.15% 61,374 0 0 19, rue de Vienne – TSA 50029 – 75801 PARIS CEDEX 08 7,423 12,987 61,374 0 3,597 NEXITY PROPERTY MANAGEMENT 11,519 100.00% 30,712 9,964 54,312 10, rue Marc-Bloch – 92110 Clichy 30,979 1,822 30,712 0 (1,460) NEXITY RESIDENCES GÉRÉES 175,000 100.00% 175,000 8,912 0 19, rue de Vienne – TSA 50029 – 75801 PARIS CEDEX 08 329 0 175,000 0 768
/332 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Name Share capital Share held Gross value Shares Loans, advances Revenue Equity other than Dividends Registered office share capital received Net value Shares Guarantees Earnings (in thousands of euros) BUREAUX À PARTAGER 21 57.70% 32,348 - 2,677 21, place de la République – 75003 PARIS 8,907 - 32,348 2 (641) COMPAGNIE IMMOBILIÈRE ET DIGITALE 29,037 100.00% 29,037 19, rue de Vienne – TSA 50029 – 75801 PARIS CEDEX 08 (3) 0 29,034 (3) ACCESSITE 80 71.30% 9,768 11,128 35, quai du Lazaret -13006 MARSEILLE 06 4,248 - 9,768 1 919
1.2 – Foreign subsidiaries (over 50%) NEXITY HOLDING ITALIA 17,771 100.00% 50,010 7,654 NC Corso Galileo Ferraris n°110 – 10129 TURIN – ITALY 9,125 0 21,833 5,377 4,076 5
2 – Holdings (10% to 50%)
3 – Subsidiaries not covered in paragraph 1 French 136,924 130,656 (2) (1) 48,896 57,816 181,197 (3) Foreign 61,788 30,258 (4) (4) - 46,496 423 (5) 4 – Holdings not covered in paragraph 2 French 4,302 17,762 (7) (6) 9,565 3,578 5,948 (8) Foreign 74 320 - 69 7,000 5 – Other holdings (less than 10%)
6 – Overall information French subsidiaries 2,198,373 356,923 189,572 2,086,266 181,200 Foreign subsidiaries 111,798 37,912 - 72,405 5,800 Equity investments in French companies 4,302 17,762 9,575 3,578 5,948 Equity investments in foreign companies 74 320 - 69 7,000 2,314,546 412,917 TOTAL 199,147 2,162,318 199,948
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 333 5 FINANCIAL REPORT Parent company financial statements at 31 December 2019
5.4.3 Statutory Auditors’ report on the parent company financial statements
This is a free translation into English of the Statutory Auditors' report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France. Year ended 31 December 2019 To the Shareholders’ Meeting of Nexity,
1 Opinion In compliance with the assignment entrusted to us by your Shareholders’ Meeting, we have audited the accompanying parent company financial statements of Nexity for the year ended 31 December 2019. These financial statements were approved by the Board of Directors on 25 February 2020, based on the information available on that date in the context of the developing Covid-19 health crisis. In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of Nexity as at 31 December 2019 and of the results of its operations for the year then ended in accordance with French accounting principles. The audit opinion expressed above is consistent with our report to the Audit and Financial Statements Committee.
2 Basis for opinion Audit framework We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the “Statutory Auditors’ Responsibilities for the Audit of the Parent Company Financial Statements” section of our report. Independence We conducted our audit engagement in compliance with the independence rules applicable to us for the period from 1 January 2019 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Section 1, Article 5 of Regulation (EU) No. 537/2014 or in the French code of ethics (Code de déontologie) for statutory auditors.
3 Justification of assessments - Key audit matters In accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the parent company financial statements of the current period, and how we addressed those risks. These matters were addressed in the context of our audit of the parent company financial statements as a whole, approved under the conditions set out previously, and in forming our opinion thereon. We cannot provide an opinion on individual items of these parent company financial statements. Valuation of equity investments (Note 5.2 to the parent company financial statements) Risk identified Equity investments reported in the company’s statement of financial position as at 31 December 2019 at a carrying amount of €2,162 million, represented 60% of the company’s total assets. Equity investments are recognised at cost and impaired based on their current value. The current value of the investment is determined by Management according to the share of the net position held and the profitability forecasts. Estimation of the present value of investments requires judgement by Management in choosing the elements to be taken into consideration, which, for each investment, may be based on historical (net assets) or forward-looking (profitability outlook) information. For these reasons, we considered the measurement of equity investments as a key audit point.
/334 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Audit procedures in response to the risk identified To assess the reasonableness of the estimated present values of the investments, based on the information communicated to us, our work mainly consisted in verifying that management’s estimates were founded on appropriate justification of the valuation method applied and financial data used and, depending on the investments, in: For valuations based on historical data (net assets): verifying that the net asset values used were consistent with the financial statements of the applicable entities subject to an audit or analytical review and that any equity adjustments were backed up by adequate supporting documentation. For valuations based on forward-looking data (profitability outlook): assessing the approach used to determine the present value of the investments, in particular with regard to: • The appropriateness of the underlying 5-year business plans, notably by comparing the prior year’s impairment test projections with the current year’s results; • The consistency of the estimated future cash flows used to calculate the present value of the investments with those included in the 5-year business plans presented by Executive Management to the company’s Board of Directors in December 2019; 5 • The appropriateness of the applicable discount rate and perpetual growth rate assumptions as assessed by our financial appraisal specialists. In addition to the assessment of the value in use of the investments, our work also consisted in: • Assessing the collectability of any associated receivables; • Verifying the due recognition of a provision for risk in the event of the company being required to absorb the losses of an equity investment with negative equity.
4 Specific verifications We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations. Information given in the management report and in other documents with respect to the company’s financial position and to the parent company financial statements provided to Shareholders We have no matters to report as to the fair presentation and the consistency with the parent company financial statements of the information given in the management report of the Board of Directors approved on 6 April 2020 and in other documents with respect to the company’s financial position and to the financial statements provided to Shareholders. Management has indicated that a communication will be made to the Shareholders' Meeting called to approved the financial statements regarding the events which have occurred and information which has emerged on the Covid-19 crisis subsequent to the financial year reporting date. We attest the fair presentation and consistency with the parent company financial statements of the information relating to payment terms mentioned in Article D.441-4 of the French Commercial Code (Code de commerce). Corporate Governance Report We attest that the Board of Directors’ Corporate Governance Report sets out the information required by Articles L.225-37-3 and L.225-37-4 of the French Commercial Code (Code de commerce). Concerning the information given in accordance with the requirements of Article L.225-37-3 of the French Commercial Code (Code de commerce) relating to the remuneration and benefits received by the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare the financial statements and, where applicable, with the information obtained by your company from controlled companies included in the scope of consolidation. Based on these procedures, we attest the accuracy and fair presentation of the information. With respect to the information relating to items that your company considered likely to have an impact in the event of a takeover bid or exchange offer, provided pursuant to Article L.225-37-5 of the French Commercial Code (Code de commerce), we checked this information with the source documents communicated to us. Based on these procedures, we have no observations to make on the information. Other information In accordance with French law, we have verified that the required information concerning the purchase of investments and controlling interests and the identity of the shareholders and holders of voting rights has been properly disclosed in the management report.
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 335 5 FINANCIAL REPORT Parent company financial statements at 31 December 2019
5 Report on other legal and regulatory requirements Appointment of the Statutory Auditors We were appointed as Statutory Auditors of Nexity by decision of the Shareholders’ Meeting of 30 April 2008 for Mazars and by decision of the Shareholders’ Meeting of 16 October 2003 for KPMG in view of the acquisitions or mergers of firms that have taken place since that date. As at 31 December 2019, Mazars and KPMG were in the 12th year and 17th year of the total uninterrupted engagement, which are the 12th year and 16th year respectively since securities of the Company were admitted to trading on a regulated market.
6 Responsibilities of Management and those charged with governance for the parent company financial statements Management is responsible for the preparation and fair presentation of the parent company financial statements in accordance with French accounting principles and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the parent company financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is intended to liquidate the Company or to cease operations. The Audit and Financial Statements Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management systems and where applicable, internal audit, regarding accounting and financial reporting procedures. The parent company financial statements have been approved by the Board of Directors.
7 Statutory Auditors’ responsibilities for the audit of the parent company financial statements Objectives and audit approach Our role is to issue a report on the parent company financial statements. Our objective is to obtain reasonable assurance about whether the parent company financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As specified in Article L.823-10-1 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company. As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional judgment throughout the audit. Furthermore, it: • Identifies and assesses the risks of material misstatement of the parent company financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for the audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control; • Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control; • Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management in the parent company financial statements; • Assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the parent company financial statements or, if such disclosures are not provided or are inadequate, to modify the opinion expressed therein; • Evaluates the overall presentation of the parent company financial statements and assesses whether they represent the underlying transactions and events in a manner that achieves fair presentation.
/336 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Parent company financial statements at 31 December 2019
Report to the Audit and Financial Statements Committee We submit a report to the Audit and Financial Statements Committee which includes a description of the scope of the audit and the audit programme implemented, as well as the results of our audit. We also report any significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified. Our report to the Audit and Financial Statements Committee includes the risks of material misstatement that, in our professional judgment, were of most significance in the audit of the parent company financial statements of the current period and which are therefore the key audit matters that we are required to describe in this report. We also provide the Audit and Financial Statements Committee with the declaration provided for in Article 6 of Regulation (EU) No. 537/2014, confirming our independence within the meaning of the rules applicable in France as set out in Articles L.822-10 to L.822-14 of the French Commercial Code (Code de commerce) and in the French code of ethics (Code de déontologie) for Statutory Auditors. Where appropriate, we discuss with the Audit and Financial Statements Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
Paris-La Défense, 6 April 2020 5
The Statutory Auditors
KPMG Audit IS MAZARS Francois Plat Olivier Thireau Michel Barbet-Massin Partner Partner Partner
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 337 5 FINANCIAL REPORT Additional items
5.5 ADDITIONAL ITEMS
5.5.1 Information on invoice payment terms
Pursuant to Article L.441-6-1 of the French Commercial 104 supplier invoices are payable, representing €0.2 million Code and its Implementing Decree No. 2015-1553 of excluding VAT and 0.2% of purchases. 27 November 2015, the table below shows the invoices 962 (primarily Group) client invoices are payable, received and issued that were payable at the balance sheet representing €3.3 million and 2.6% of revenue. date. Invoices that become payable on the balance sheet date are not included in this table.
Article D.441 I.(1)°: invoices received that were payable Article D.441 I.(2)°: invoices issued that were payable at the balance sheet date but had not been paid at the balance sheet date but had not been paid Total Total 1 to 31 to 61 to 91 days (1 day 1 to 31 to 61 to 91 days (1 day (in thousands of euros) 30 days 60 days 90 days or more or more) 30 days 60 days 90 days or more or more) (A) Invoices by number of days past due Total number of invoices 104 962 Total amount of these invoices (excl. VAT) (19) 1 (4) 217 195 0 2,098 54 1,125 3,278 Percentage of the total amount of purchases for the financial year (excl. VAT) 0.0% 0.0% 0.0% 0.3% 0.2% Percentage of annual revenue for the financial year (excl. VAT) 0.0% 1.7% 0.0% 0.9% 2.6% (B) Invoices not included in Section (A) relating to payables or receivables that are disputed or have not been recognised Number of invoices excluded ------1 - Total amount of the invoices excluded ------66 - (C) Reference payment terms used (contractual or statutory pursuant to Article L.441-6 or L. 443-1 of the French Commercial Code) Information on invoice payment terms used to calculate payment delays Contractual payment terms: 30 days end of month Contractual payment terms: 30 days NB: Payables and receivables that fall due on the balance sheet date are not included in the total payables and receivables that are payable.
5.5.2 Non-deductible expenses
In 2019, the Company had expenses of €67,241 as set out by Article 39.4 of the French General Tax Code.
5.5.3 Dividend policy
In the light of the Covid-19 health crisis, and on the dividend amount first announced for this year (and a recommendations by certain stakeholders to limit 20% fall on the amount of €2.50 distributed in 2019). dividends paid, and in order to continue long-term value The amount of the dividend in respect of each financial creation for shareholders, at its meeting of 6 April 2020 the year is assessed in line with the Company’s earnings, Board of Directors decided to reduce the dividend of €2.70 financial position and any other factors deemed relevant by proposed at the Shareholders' Meeting for the 2019 the Board of Directors. financial year to €2.00. This represents a reduction of 26%
DIVIDENDS PAID OVER THE PAST FIVE FINANCIAL YEARS 2018 2017 2016 2015 2014 Financial year paid in 2019 paid in 2018 paid in 2017 paid in 2016 paid in 2015 Number of shares (1) 56,129,724 56,129,724 55,305,044 54,783,017 54,189,017 Dividend per share (in €) 2.50 (2) 2.50 (3) 2.40 (4) 2.20 (4) 2.00 (4) Total amount paid out (in €) 138,231,835 140,324,310 132,732,106 120,522,637 108,378,034
(1) Equal to the total number of shares comprising the share capital less the number of treasury shares on the ex-dividend date. (2) This amount should be treated in its entirety as a dividend for tax purposes. (3) This amount is a return of capital (remboursement d’apport) for €1.98 and dividend for €0.52 for tax purposes.. (4) This amount is a return of capital in its entirety for tax purposes
/338 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 FINANCIAL REPORT Additional items
5.5.4 Proposal for the allocation and distribution of 2019 earnings
As regards the earnings for the financial year ended 2020 and the ex-dividend date, primarily based on the 31 December 2019, the Shareholders’ Meeting, ruling under number of treasury shares held and final free share awards. the quorum and majority conditions required for Ordinary If, when these amounts are paid out, the Company should Shareholders’ Meetings, having heard the report of the hold any of its own shares in treasury, the amount of any Board of Directors and having recorded, before assigning payments not paid out in respect of those shares would be the profit for the financial year, that the retained earnings allocated to “Retained earnings”. amount is €260,695,951.85 and that the legal reserve of €28,064,862 is fully provisioned: The distribution of the amounts taken from distributable profits, i.e. €112,259,448.00, or €2.00 per share, is eligible • Notes that the profit for the 2019 financial year to be treated as a dividend under the French General Tax together with the previous year’s retained earnings Code. brings the distributable profit for the financial year to €438,783,319.86; As of 1 January 2018, the share of amounts distributed to shareholders who are natural persons tax resident in • Decides to pay shareholders €2.00 per share, totalling France, eligible to be treated as a dividend for tax purposes 5 €112,259,448.00, to be deducted in full from the under the French General Tax Code, is subject to a flat tax distributable profit; and rate of 30% (12.80% corresponding to a flat rate of tax on • Decides to allocate the full balance of the distributable income and 17.20% for social security contributions). profit for the financial year, i.e. €326,523,871.86, to the If dividends are taxed under this regime, the tax-free retained earnings, which will thus be increased to allowance of 40% is not applicable. However, shareholders €326,523,871.86. may still opt for taxation of dividends at the progressive The total dividend distribution amount set out above is income tax rate, including the application of the 40% calculated based on the total number of shares making up deduction. the Company’s share capital as at 31 December 2019, i.e. The amounts to be paid out would be paid on or after 56,129,724 shares, which may vary if the number of shares 27 May 2020. with a dividend entitlement changes between 1 January Shareholders’ equity after the proposed appropriation and dividend would total €1,770,304,446.87.
5.5.5 Statutory limitation period
Any dividends not claimed within five years of their payment date are forfeited to the French state.
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 339 5 FINANCIAL REPORT Additional items
5.5.6 Table of Nexity’s results over the past five financial years
Financial year-end date 31/12/2019 31/12/2018 31/12/2017 31/12/2016 31/12/2015 Length of financial year (months) 12 12 12 12 12 (in euros) Year-end capital Share capital 280,648,620 280,648,620 280,183,620 274,045,220 270,945,085 Number of ordinary shares 56,129,724 56,129,724 56,036,724 54,809,044 54,189,017 Maximum number of new shares issuable in respect of conversion rights 8,317,592 7,895,833 4,597,977 4,368,238 4,373,327 in respect of subscription rights 1,321,660 1,379,220 1,012,200 1,281,820 1,462,360 Operations and results Pre-tax revenue 126,804,032 116,596,885 98,259,593 89,179,253 85,083,930 Profit before tax, profit-sharing, depreciation, amortisation and provisions 112,839,720 235,790,799 2,818,328 (54,945,583) 24,403,410 Corporate income tax 25,882,530 30,242,762 22,570,783 33,451,509 11,999,247 Employee profit-sharing (376,705) (160,352) (260,681) (363,753) Net additions/reversals of amortisation, depreciation and provisions 39,741,822 133,101,078 5,491,281 19,294,854 (50,541,018) Net profit 178,087,368 398,974,287 30,619,711 (2,562,973) (14,138,362) Distributed profit (1) 112,259,448 (2) 138,231,835 140,324,310 132,732,106 120,522,637 Earnings per share Profit after tax, profit-sharing, and before additions to depreciation, amortisation and provisions 2.47 4.74 0.45 (0.39) 0.67 Profit after tax, profit-sharing, additions to depreciation, amortisation and provisions 3.17 7.11 0.55 (0.05) (0.26) Dividend paid 2.00 (2) 2.50 2.50 2.40 2.20 Workforce Average headcount 411 359 309 280 252 Salaries and wages(3) 36,649,803 31,669,650 28,588,324 27,340,009 22,686,450 Amount paid in employee benefits (social security, social benefits, etc.) 17,164,949 15,550,269 13,856,190 12,337,467 10,282,026
(1) Based on the average number of shares outstanding at the date of the Shareholders’ Meeting (without deduction of number of any treasury shares held which are not attached to a distribution right) and for 2019, on the Universal registration document publication date. (2) Subject to approval at the Shareholders’ Meeting of 19 May 2020. (3) Excluding the expense for free shares.
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6 INFORMATION ABOUT THE ISSUER
6.1 GENERAL INFORMATION 342 6.5 STATUTORY AUDITORS 346
6.2 HISTORY OF THE COMPANY AT 31 DECEMBER 6.6 OTHER INFORMATION 347 2019 342 6.7 CROSS-REFERENCE TABLES 348 6.3 ORGANISATION STRUCTURE 343 6.7.1 Cross-reference table of the Universal Registration Document in accordance with Directive (EU) No. 2017/1129 (“Prospectus 3”) 348 6.4 PERSONS RESPONSIBLE FOR THE UNIVERSAL 6.7.2 Cross-reference table for the management report REGISTRATION DOCUMENT 346 provided for by Articles L.225-100 et seq. of the French Commercial Code 350 6.7.3 Cross-reference table for the Annual Financial Report 351 6 INFORMATION ABOUT THE ISSUER General information
6.1 GENERAL INFORMATION
Company name Registered office, legal form and applicable The Company’s corporate name is Nexity. legislation The address of the Company’s registered office is: 19, rue Place of registration of the issuer and its de Vienne TSA 50029 -75801 Paris Cedex 08 (France). registration number Phone: +33 (0)1 85 55 12 12. The Company is a French public limited company (société The Company is listed in the Paris Trade Register under anonyme) with a Board of Directors, regulated in particular number 444 346 795. by the provisions of Book II of the French Commercial Code. The registered office SIRET (business premises) number is 444 346 795 00057. The Company’s APE (business activity) Available documents code is 7010 Z. The Company’s press releases and annual reports – LEI France Register including historical financial information about the Company – are available on the Company’s website: The Company’s LEI code is 969500JJ71T2DIPDVV84. www.nexity.fr. Copies may also be obtained from Nexity’s registered office at 19, rue de Vienne – TSA 50029 – 75801 Date of incorporation and length of life Paris Cedex 08 (France). of the issuer The Company’s Articles of Association as well as the minutes of Shareholders’ Meetings, the Statutory Auditors’ The Company was incorporated on 21 November 2002 reports, a list of subsidiaries, the parent company financial under the name “Maine Equity Capital 10” and was listed in statements and any other corporate documentation may be its local trade register on 5 December 2002. consulted at the Company’s registered office. The length of the Company’s life is ninety-nine years from the date of its registration, unless this term of existence is extended or the Company is liquidated at an earlier date. 6.2 HISTORY OF THE COMPANY AT 31 DECEMBER 2019
Ferret Savinel Férinel becomes Férinel becomes (Groupe Arnault) George V 1996 2000 2004 1979 1989 1995 George V contributed Creation of Nexity Initial public to CGIS by offering Creation of CGIS(1), Groupe Arnault SARI- within the Générale Exit of Vivendi Group SEERI CIP (2) des Eaux Group via LBO
2012 2007 2009 2011 2014 2016 2018 2019
Transforming deal with Proceeds from Disposal of the Single brand Acquisitions Acquisition Acquisition Acquisition Caisse d’Epargne(3) the disposal stake in Eurosic launch of Oralia E. Denis Aegide Domitys, Accessite of CFF stake and PERL Primosud Morning Coworking (38% of the capital in exchange for cashed-in Costame a 25% stake in CFF(4), 32 % of Eurosic and 100% of Lamy)
Nexity is the product of the sale by Vivendi in 2000 of a part of 2009-2011 by its financial investments in Crédit Foncier de the activities of CGIS, which were combined into Nexity SA. The France (CFF) and Eurosic. sale, undertaken by Vivendi for strategic reasons, was made in From 2000 to 2011 and in parallel with these transactions, the the form of a leveraged buyout (LBO) to certain members of Group strengthened its businesses by enlarging its territorial management of CGIS and three financial investors (CDC coverage in France, expanding its product range and making Entreprises FCPR, LBO France and Lehman Brothers). Nexity strategic acquisitions to round out its areas of activity. subsequently conducted two refinancing operations, and was listed on the Paris Stock Exchange on 21 October 2004. At the end of 2011, the Group founded LFP Nexity Services Immobiliers (of which it then owned 75.36%) in partnership with Following the LBO in 2000, the Group decided to concentrate on La Française AM to combine the activities in Real Estate Services its core real estate development business and, in 2001, sold its to Companies (property management, commercial real estate subsidiaries Gymnase Club and Maeva as well as a portfolio of advisory and transactions services) owned by both groups. In real estate assets acquired from the Vivendi group, followed in February 2016, Nexity completed the acquisition of 100% of LFP Nexity Services Immobiliers. /342 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 INFORMATION ABOUT THE ISSUER Organisation structure
In 2014, Nexity successively acquired the following: • A majority stake in Prado Gestion, a developer with a • Oralia, property management group. With this presence, in the markets of Aix-en-Provence, Marseille, acquisition, Nexity strengthened its leading position as under the Primosud brand; the number-one fully integrated real estate group, and • Costame, provider of technical solutions after damage. secured its place as France’s second-largest property This deal rounds out Nexity’s offering in services to manager; companies; and • A majority stake in PERL, pioneer and leader in France of • An additional stake in Ægide-Domitys, leader in the the social housing usufruct solution. Usufruct solutions market of senior independent living facilities. divide ownership (via a process called démembrement) of a Nexity has an organisational structure that is adapted to its social housing property between usufruct (the right to use strategic ambition of being a real estate services platform or derive income from the property, called usufruit) and resolutely focused on its three client groups: Individual, bare ownership (title to the property, or nue-propriété). This Commercial and Local Authority Clients (see Section 1.1.1 acquisition rounded out the Residential Real Estate “An integrated real estate operator model with a real estate division’s diversified offering; and services platform” of this Universal Registration Document). • A majority stake in Térénéo, a wood-frame developer In 2018 this strategy resulted, for Individual Clients, in buying based in the north of France that has acquired specific the call option enabling it to acquire an additional 18% of the expertise in the development of wood-frame, capital of Ægide, parent company of Ægide-Domitys, and for low-energy green buildings. Through this deal, Nexity Commercial Clients, the creation of Nexity Enterprise rounded out its geographical coverage, making it the Solutions through acquisitions or strategic partnerships 6 number one developer of wood-frame office buildings in (Morning Coworking, Service Personnel and Intent). France. Furthermore, in January 2019, Nexity acquired a stake of In 2015, the BPCE group, which had owned around 40% of 71% in Accessite, a company specialising in the Nexity since 2007, decreased its holding in line with its management of retail space. strategic plan. BPCE announced on 2 March 2016 that it had sold its remaining stake in Nexity. In late March 2019, Nexity sold a majority stake in its subsidiary Nexity Conseil et Transaction to the Since 2016, Nexity has acquired: subsidiary’s senior management, while retaining a minority • A majority take in Edouard Denis Développement, a stake of 16.3%. generalist real-estate developer benefiting from strong Lastly, in May 2019, Nexity sold its stake in the franchise positions in the Hauts-de-France, Paris regions, Lyon, network Guy Hoguet l'Immobilier, in which it was the Bordeaux and Nantes markets, consolidating Nexity’s majority shareholder since 2006, to Arche, the Citya Group market-leading position in Residential Real Estate; holding company.
6.3 ORGANISATION STRUCTURE
Below is an organisation chart covering the Company’s Where a lease is taken up for an office building occupied by main subsidiaries (showing the percentage of capital held) more than one subsidiary, the lease is generally signed by at 1 March 2020. Voting rights correspond to the the Company that occupies the largest surface area. percentage of share capital held. Annually renewable subleases are signed with the various A list of the main consolidated companies is provided in subsidiaries occupying the premises, and rental payments Note 35 to the Group’s consolidated financial statements, and charges are re-invoiced in proportion to each set out in Section 5.3 “Consolidated financial statements as company’s actual usage. at 31 December 2019” of this Universal Registration For more information on the regulated agreements Document. The full list is available on request from the between the Company and its significant subsidiaries, see Investor Relations Department ([email protected]). Section 4.3 “Related-party transactions” of this Universal The parent company pools the cash from a majority of the Registration Document. Group’s subsidiaries and manages the Group’s central However, certain development projects are undertaken in functions. It also holds the Nexity trademark. As part of its partnership. A prior financial analysis of the associates is management assistance agreements, Nexity charges its made in accordance with the size of the project (see subsidiaries management fees. It also charges them Section 1.8 “Material contracts” of this Universal royalties for using the Nexity trademark, where applicable. Registration Document). Internal Group agreements are signed under market The Group holds no subsidiaries in which the existence of conditions. minority interests would constitute a risk to its business on the whole or to its financial structure (see Section 4.11.8 “Conditional or unconditional options or agreements over the capital of any Group member” of this Universal Registration Document).
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 343 6 INFORMATION ABOUT THE ISSUER Organisation structure
NEXITY (SA) Individual Clients
100% 100% Nexity Logement (SAS) Operational subsidiaries
Programme-specific companies « Immobilier résidentiel France »
100% Foncier Conseil (SNC)
100% George V Gestion (SAS)
65% 100% Prado Gestion (SAS) Primosud (SAS)
55% 100% Programme-specific companies Édouard Denis Développement (SAS) Les Dunes De Flandres (SARL) “Édouard Denis”
100% Nexity Belgium (Belgian SA)
100% Nexity Portugal (Portuguese SARL)
100% Nexity Holding Italia 100% Programme-specific companies (Italian SARL) “Immobilier résidentiel Italie”
100% Nexity Polska Programme-specific companies (Polish SARL) “Immobilier résidentiel Pologne” 100%
100% PERL (SAS)
100% 100% Iselection (SAS) Iinvest (SAS)
100% 85.28% Nexity Lamy (SAS) Nexity Studéa (SA)
100% 14.72% Nexity Résidences Gérées (SAS)
63.16% 100% Ægide (SA) Domitys (SAS)
100% 100% Oralia Partenaires (SAS) Oralia Management (SARL) 2.50% 97.50% 100% Oralia Investissements (SA) Property Management for Individuals 100% Nexity Franchises (SAS) 35.85% 64.15% 100% Neximmo 39 (SAS) Century 21 France (SAS)
/344 Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 INFORMATION ABOUT THE ISSUER Organisation structure
NEXITY (SA) Commercial Clients
100% Nexity Immobilier d’entreprise (SA)
Programme-specific companies “Immobilier d’entreprise France et International”
100% 91.66% Ywood Gestion (SAS) Térénéo (SAS)
100% Nexity Contractant Général (SAS)
100% 100% Nexity Property Management (SA) L’Etoile Property Management (SAS) 6 71.30% Accessite (SAS)
75% Hiptown (SAS)
57.70% 100% Bureaux à partager (SAS) Lespace (SAS)
Local Authority Clients
100% Villes et Projets (SAS)
Programme-specific companies “Régénération urbaine”
51% Garenne Aménagement (SAS)
Other Activities
Innovation Ventures
100% 49.50% Compagnie Immobilière et digitale (SAS) Bien’Ici (SAS)
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 345 6 INFORMATION ABOUT THE ISSUER Persons responsible for the Universal Registration Document
6.4 PERSONS RESPONSIBLE FOR THE UNIVERSAL REGISTRATION DOCUMENT
Person responsible for the information I confirm, to the best of my knowledge, that the financial contained in this report statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or Mr Julien Carmona, Deputy CEO – Company Officer. loss of the Company and all consolidated entities. I also confirm that the management report whose sections are Statement by the person responsible shown on page 350 presents a true and fair view of the for the information contained in this report business developments, the results of operations and the financial position of the Company and of all consolidated entities, as well as a description of the main risks and I declare, to the best of my knowledge and having taken all uncertainties that they face. reasonable care to ensure that such is the case, that the information contained in this Universal Registration Paris, 8 April 2020 Document is in accordance with the facts and does not Julien Carmona omit anything likely to affect the import of said Deputy CEO information.
6.5 STATUTORY AUDITORS
Principal Statutory Auditors Alternate Statutory Auditors
KPMG Audit ID SAS KPMG Audit ID SAS Tour Eqho, 2, avenue Gambetta – CS 60055 Tour Eqho, 2, avenue Gambetta – CS 60055 92066 Paris La Défense Cedex (France) 92066 Paris La Défense Cedex (France) Represented by Mr François Plat. Appointed by the Combined Shareholders’ Meeting of Appointed by the Combined Shareholders’ Meeting of 20 May 2014 (first appointment), for a term of office 20 May 2014 (first appointment was on 16 October 2003), expiring at the close of the Ordinary Shareholders’ Meeting for a term of office expiring at the close of the Ordinary called to approve the financial statements for the year Shareholders’ Meeting called to approve the financial ending 31 December 2019. statements for the year ending 31 December 2019. Mr Franck Boyer Mazars 61, rue Henri-Regnault – Tour Exaltis 61, rue Henri-Regnault – Tour Exaltis 92075 Paris La Défense Cedex (France) 92075 Paris La Défense Cedex (France) Appointed by the Combined Shareholders’ Meeting of Represented by Mr Olivier Thireau and 20 May 2014 (renewal; first appointment was on Mr Michel Barbet-Massin. 30 April 2008), for a term of office expiring at the close of the Ordinary Shareholders’ Meeting called to approve the Appointed by the Combined Shareholders’ Meeting of financial statements for the year ending 31 December 2019. 20 May 2014 (renewal: first appointment was on 30 April 2008), for a term of office expiring at the close of the Ordinary Shareholders’ Meeting called to approve the Fees paid to Statutory Auditors financial statements for the year ending 31 December 2019. The fees paid by the Group to the Statutory Auditors are broken down in Note 34 to the Group’s Consolidated financial statements, set out in Section 5.3.2 of this Universal Registration Document.
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6.6 OTHER INFORMATION
Shareholder information
Nexity has agreed to issue regular communications about Financial calendar its business activities, strategy and outlook for its individual or institutional shareholders and, more generally, the 6 May 2020: Q1 2020 business activity and revenue. financial community. 19 May 2020: Shareholders’ Meeting. During the 2019 financial year, Nexity’s managers and the 28 July 2020: 2020 half-year results. Investor Relations Department made over 350 contacts with analysts and investors, primarily during roadshows, 28 October 2020: Q3 2020 business activity and revenue. conferences and meetings in France, the United Kingdom, the United States, Switzerland, Belgium, the Netherlands Investor Relations contact and Germany. For the first year, the entire Group Strategy Committee participated in these various events. [email protected] Phone: +33 (0)1 85 55 14 97 Address: Nexity – 19, rue de Vienne – TSA 50029 – 75801 Paris Cedex 08 (France) 6
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 347 6 INFORMATION ABOUT THE ISSUER Cross-reference tables
6.7 CROSS-REFERENCE TABLES
6.7.1 Cross-reference table of the Universal Registration Document in accordance with Directive (EU) No. 2017/1129 (“Prospectus 3”)
Item of Annex 1 of Commission Delegated Regulation (EC) No. 2019/980 Section Page number 1. Persons responsible, third-party information, report from experts and approval of the competent authority 1.1. Persons responsible 6.4 346 1.2. Declaration by those responsible 6.4 346 1.3. Third-party information, statements by experts N/A N/A 1.4. Other certification in the event of information from third parties N/A N/A 1.5. Statement regarding the approval of the document N/A N/A 2. Statutory Auditors 6.5 346 2.1. Contact details 2.2. Changes 3. Risk factors Chapter 2 74-108 4. Information about the issuer 4.1. Legal and commercial name of the issuer 6.1 340 4.2. Place of registration of the issuer, registration number and LEI 6.1 340 4.3. Date of incorporation and length of life of the issuer 6.1 340 4.4. Registered office and legal form of the issuer 6.1 340 5. Business overview Nexity in brief 2-11 5.1. Principal activities 1.2 to 1.4 22-66 5.2. Principal markets 1.2 to 1.4 22-66 5.3. Important events in the development of the issuer’s business N/A N/A Nexity in brief 2-11 5.4. Strategy and objectives 1.1 14-22 5.5. Extent to which the issuer is dependent on patents or licences, industrial, commercial or financial contracts, or new manufacturing processes N/A N/A Nexity in brief 2-11 5.6. Competitive position 1.2 to 1.4 22-66 5.7. Investments 1.6 68-70 6. Organisation structure 6.1. Description of the Group 6.3 343-345 5.3.2 Note 37 302 6.2. List of significant subsidiaries 6.3 343-345 7. Operating and financial review 9.1. Financial position 5.1 242-257 9.2. Operating results 5.1 242-257 8. Capital resources 8.1. Information concerning the issuer’s capital resources 5.1.6 254-257 8.2. Cash flows 5.1.6 254-257 8.3. Financing requirement and structure 5.1.6 254-257 8.4. Restrictions on the use of capital resources N/A N/A 8.5. Anticipated sources of funds 5.1.6 254-257 9. Regulatory environment 1.7 70 10. Trends 5.2 258-259 11. Profit forecasts or estimates 5.2 258-259 12. Board practices 12.1. Information about administrative and management bodies 4.1 162-180 12.2. Conflicts of interest involving administrative, management and supervisory bodies and senior management 4.1.6 180 13. Remuneration and benefits 13.1. Amount of remuneration paid and benefits in kind granted 4.4 195-220 13.2. Total amounts provisioned or accrued by the issuer or its subsidiaries to provide pension, retirement or similar benefits 4.4 195-220
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Item of Annex 1 of Commission Delegated Regulation (EC) No. 2019/980 Section Page number 14. Board practices 14.1. Terms of office of members of administrative, management and supervisory bodies 4.1.1 to 4.1.4 163-179 14.2. Information about service contracts of members of the administrative, management or supervisory bodies 4.3 191-195 14.3. Information about the issuer’s Audit Committee and Remuneration Committee 4.2.7 186-189 14.4. Statement as to whether or not the issuer complies with the applicable corporate governance regime 4.2.10 190 14.5 Potential significant impacts on corporate governance Chapter 4 162-238 15. Employees 15.1. Number of employees 3.2 118-131 3.2.1 119-126 15.2. Shareholdings and stock options 4.9 226 3.2.1 119-126 15.3. Employee shareholding arrangements 4.10 227-229 16. Major shareholders 16.1. Names and ownership interests of major shareholders 4.10 227-229 16.2. Different voting rights 4.12 236-240 16.3. Control of the issuer 4.11 229-235 16.4. Agreements whose implementation may result in a change in control 4.10.6 229 17. Related-party transactions 4.3 191-195 6 18. Financial information concerning the issuer’s assets and liabilities, financial position and the issuer’s profit (loss) Incorporated 18.1. Historical financial information by reference 18.2. Interim and other financial information N/A N/A 5.3.3 305-308 18.3. Audit of annual historical financial information 5.4.3 332-335 18.4. Pro forma financial information N/A N/A 18.5. Dividend policy 5.5.3 336 18.6. Legal and arbitration proceedings 2.6 106 18.7. Significant change in the financial position N/A N/A 19. Additional information 19.1. Share capital 4.11.1 229 19.1.1. Amount of issued capital and number of shares 4.11.1 229 19.1.2. Shares not representing capital 4.11.2 229 19.1.3. Treasury shares 4.11.3 227-230 19.1.4. Convertible securities, exchangeable securities or securities with warrants 4.11.5 234 19.1.5. Terms of any acquisition rights and/or obligations over authorised but unissued capital or of 4.11.6 234 an undertaking to increase the capital 19.1.6. Information on the capital of any Group member subject to an option or conditional or unconditional 4.11.8 235 agreement to place it under option 19.1.7. Share capital history 4.11.9 235 19.2. Memorandum and Articles of Association 4.12 236-240 19.2.1. Corporate purpose 4.12.1 236 19.2.2. Rights and restrictions attached to shares 4.12.3 236 19.2.3. Requirements that may have an effect of delaying, deferring or preventing a change in control N/A N/A of the issuer 20. Material contracts 1.8 72 24. Available documents 6.6 347
Nexity / UNIVERSAL REGISTRATION DOCUMENT 2019 / 349 6 INFORMATION ABOUT THE ISSUER Cross-reference tables
6.7.2 Cross-reference table for the management report provided for by Articles L.225-100 et seq. of the French Commercial Code
The management report for the 2019 financial year covering the items listed below is included in this Universal Registration Document. The management report to which the Corporate Governance report is attached was approved by Nexity’s Board of Directors on 6 April 2020.
Items required under the French Commercial Code, the French Monetary and Financial Code, the French General Tax Code and the AMF General Regulation Section Page number Analysis of the Company’s business performance, results and financial position during the year ended (L.225-100 and 5.1 242-257 L.232-1 of the French Commercial Code) 5.1 242-257 Analysis of the Group’s business performance, results and financial position during the year ended (L.225-100-2 5.2 258-259 and L.233-26 of the French Commercial Code) 5.3 261-304 Results of the subsidiaries and controlled companies by business sector (L.223-6 of the French Commercial Code) 5.1 242-257 Forecasts and outlook (L.232-1 and L.233-26 of the French Commercial Code) 5.2 258-259 5.2.2 258-259 Significant events occurring after the year-end (L.232-1 and L.233-26 of the French Commercial Code) 5.3.2 Note 36 301 Research and development activities 1.6 68 (L.232-1 and L.233-26 of the French Commercial Code) Acquisition of stakes or control in companies having their registered office in France 5.3.2 Note 1.2 265 (L.233-6 of the French Commercial Code) 6.2 341-342 Information on personnel matters and the impact of activities on employees (L.225-100, L.225-102-1 Chapter 3 110-159 and R.225-105 of the French Commercial Code) Information on employee-related issues and impacts of the business on employees Chapter 3 110-159 (L.225-100, L.225-102-1 and R.225-104 of the French Commercial Code) Description of the main risks and uncertainties (L.225-100 and L.225-100-2 of the French Commercial Code) Chapter 2 76-108 Group policy concerning financial risk management (L.225-100 and L.225-100-2 of the French Commercial Code) Chapter 2 76-108 2.2.2 97 The Group’s exposure price, credit, liquidity and cash risk (L.225-100 and L.225-100-2 of the French Commercial Code) 5.3.2 Note 24 289 Summary table of current valid authorisations granted to the Board of Directors at a Shareholders’ Meeting in connection 4.11.4 231-233 with increases in share capital, and use of those authorisations during the year (L.225-37-4 of the French Commercial Code) 4.4 195-220 Information liable to have an impact in the event of a takeover bid (L.225-37-5 of the French Commercial Code) 4.10 227-229 4.10 227-229 Employee shareholding at year-end (L.225-102 of the French Commercial Code) 4.11 229-235 Information on supplier payment terms (L.441-6-1 of the French Commercial Code) 5.5.1 334 Table of Company results over the past five financial years (R.225-102 of the French Commercial Code) 5.5.6 338 4.10 227-229 Identity of the shareholders with a stake exceeding 5%; treasury shares (L.223-13 of the French Commercial Code) 4.11 229-235 Summary of the transactions in the Company’s shares involving executives 4.9 226 (L.621-18-2 of the French Monetary and Financial Code and 223-26 of the AMF General Regulation) Total remuneration and benefits of any kind paid to each company officer 4.4 195-220 (L.225-37-3 of the French Commercial Code) Offices and roles held in any company by the company officers during the year (L.225-37-4 of the French Commercial 4.1 162-180 Code) 4.11.3 229-231 Information concerning the trading of treasury shares (L.225-211 of the French Commercial Code) 4.11.4 231-233 Amount of the dividends paid in respect of the past three financial years (Article 243 bis of the French General Tax Code) 5.5.3 336 Changes in the presentation of the annual financial statements (L.223-6 of the French Commercial Code) N/A N/A Duty of care plan 2.4 101-106 Corporate Governance report Chapter 4 162-240
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6.7.3 Cross-reference table for the Annual Financial Report
This Universal Registration Document includes the Annual Financial Report required under Article L.451-1-1 of the French Monetary and Financial Code and Article 222-3 of the AMF General Regulation and reporting on the items listed below.
Items required under Article L.451-1-1 of the French Monetary and Financial Code Section Page number Consolidated financial statements (IFRS) 5.3 261-304 Parent company financial statements (French GAAP) 5.4 310-338 Chapter 3 110-159 Management report including the non-financial performance statement Chapter 5 242-338 Statement by the person responsible for the document 6.4 348 Statutory Auditors’ report on the consolidated financial statements 5.3.3 305-308 Statutory Auditors’ report on the parent company financial statements 5.4.3 332-335 5.3 Note 34 301 Statutory Auditors’ fees 6.5 348 Corporate Governance report Chapter 4 162-240
The cross-reference table with the French Act on the statement of non-financial performance is provided in Section 3.7 of this Universal Registration Document. 6
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