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FINANCIAL REPORT

2015

Group Overview Consolidated Division ESH Division

3SNI GROUP - FINANCIAL REPORT 2015

GROUP OVERVIEW

GROWTH IN PORTFOLIO

The owned and managed portfolio grew by 1% during the year due to the combined impacts of the following:

■■ a 621-unit increase in Adoma’s housing portfolio;

■■ delivery of 8,153 new units (excluding Adoma);

■■ disposal of 3,949 units;

■■ demolition of 815 units;

■■ downgrading of state-owned housing (366 units);

■■ termination of agreements or leases (41 units belonging to SNI).

Changes in managed portfolio in number of units 2013 2014 2015

345,769 units of housing end-2015

Consolidated division■86,747

■85,930 ■86,273

EFIDIS■50,440■51,424

■53,007

OSICA■53,637■54,416■54,791

ESHs outside the Paris region■80,440

■79,546■80,177

Adoma■70,655■70,900■71,521

Changes in owned portfolio in number of units 2013 2014 2015

342,370 units of housing end-2015

Consolidated division■83,168

■82,528■82,874

EFIDIS■50,440

■51,424■53,007

OSICA■53,637■54,416■54,791

ESHs outside the Paris region■80,440

■79,546■80,177

Adoma■70,655■70,900■71,521

4 SNI GROUP - FINANCIAL REPORT 2015

GROUP OVERVIEW

HIGHER RENTAL INCOME

Net rental income grew by 2.5% to €1,403 million for the year on the back of new deliveries (particularly as part of the framework agreement signed with EDF as regards the consolidated division) and despite the very small rise in the rent review index.

Adoma reported revenue of €353 million for the year.

Net income excluding consolidation adjustments/Adoma revenue (€ million) 2013 2014 2015

Net income of €1,403 million in 2015

Consolidated division■513.0 ■516.1

■533.6

EFIDIS■256.3■259.5■267.3

OSICA■223.2■226.5■230.7

ESHs outside the Paris region■366.7■367.6■371.8

Adoma revenue (100%)■336.0■340.0

■353.1


CONTINUED HIGH LEVELS OF BUSINESS

SNI Group’s operating activities (exclu-ding Adoma) generated a consolidated operating ratio* of 7.6% for the period, representing a slight improvement on 2014:

■■ development now accounts for 36% of the Group’s operating activity. This represents an increase on last year and a sign of the higher levels of business being driven by the stimulus plan;

■■ work on renovation and enhancing neighbourhood quality continues to represent approximately 40% of the Group’s total business (32% and 46%, respectively, for the Consolidated and ESH divisions);

■■ selling activity was slightly ahead of last year thanks to the contribution of the ESH division and accounted for 20% of activity for the period.

Basics: portfolio in number of equivalent housing units at 1st january

2014 2015

CONSOLIDATED DIVISION 82,908 82,318Development (SO) 2,182 3,296Demolition 208 347Disposals 2,000 1,861Renovations 2,668 2,541Total (%) 8.5% 9.8%

ESH DIVISION 165,261 166,494Development (SO) 3,970 3,600Demolition 401 468Disposals 1,310 1,834Renovations (SO) 4,858 4,726Enhancing neighbourhood quality (SO) 916 306Total (%) 6.9% 6.6%

EFIDIS 47,290 47,859

Development (SO) 981 679Demolition 79 91Disposals 89 417Renovations (SO) 1,810 1,431Enhancing neighbourhood quality (SO) 356 67Total (%) 7.0% 5.6%

OSICA 46,176 46,907Development (SO) 753 573Demolition 254 191Disposals 163 251Renovations (SO) 2,006 1,719Enhancing neighbourhood quality (SO) 531 135Total (%) 8.0% 6.1%

ESHs outside the Paris region 71,795 71,728Development (SO) 2,236 2,348Demolition 68 186Disposals 1,058 1,167Renovations (SO) 1,042 1,576Enhancing neighbourhood quality (SO) 29 105Total (%) 6.2% 7.5%

SUMMARY/CATEGORY 248,169 248,812Development (SO) 2.5% 2.8%Demolition 0.2% 0.3%Disposals 1.3% 1.5%Renovations (SO) 3.0% 2.9%Enhancing neighbourhood quality (SO) 0.4% 0.1%Total (%) 7.5% 7.6%

This ratio is calculated from service orders (SO) relative to equivalent housing units at 1st January.

* The operating ratio is calculated as the number of developed/demolished/sold/renovated hou-sing units reported, divided by the total number of equivalent housing units owned by the company at 1st January. This ratio calculates an internal benchmark and highlights the contribu-tion of each activity (development, renovation, etc.) to the total activity of the company/Group.


SHARP INCREASE IN INVESTMENT

The Group Investment Contribution Ratio (INCR) is equal to:

■■ gross cash flow divided by;

■■ investment for the period, net of subsidies received.

For information, gross cash flow is calculated as gross cash flow from operating activities - repayment of related principal and interest + cash proceeds on disposal.

There was a large 18% increase in the amount of Group investment (excluding Adoma) when compared to 2014. Consequently, as gross cash flow remained stable year on year, the Group investment contribution ratio for the period fell to 18.9%.

This means that investments net of subsidies are more than five times higher than gross cash flow.

Group Investment Contribution Ratio (INCR) in €M

2014 2015 Cumulative 2014/2015CONSOLIDATED DIVISIONInvestments net of subsidies 458.7 608.6 1,067.3 Gross cash flow 101.3 103.2 204.5 INCR 22.1% 17.0% 19.2%

ESH DIVISIONInvestments net of subsidies 669.9 723.6 1,393.5 Gross cash flow 150.2 148.4 298.6 INCR 22.4% 20.5% 21.4%

o/w EFIDISInvestments net of subsidies 159.2 254.4 413.6 Gross cash flow 29.3 52.6 81.8 INCR 18.4% 20.7% 19.8%

o/w OSICAInvestments net of subsidies 290.8 174.6 465.4 Gross cash flow 37.6 30.7 68.3 INCR 12.9% 17.6% 14.7%

o/w ESHs outside the Paris regionInvestments net of subsidies 219.9 294.6 514.5 Gross cash flow 83.3 65.1 148.5 INCR 37.9% 22.1% 28.9%

TOTALInvestments net of subsidies 1,128.6 1,332.1 2,460.7 Gross cash flow 251.5 251.6 503.1 INCR 22.3% 18.9% 20.4%

GROUP OVERVIEW


VERY EFFECTIVE MANAGEMENT

Intra-group benchmarking highlights the following developments:

■■ continuing sustained development activity in both the Consolidated division – buoyed by the beginning of work under programmes signed with the EDF and the launch of intermediate housing development programmes – and the ESH division. Growth was especially strong outside the Paris region;

■■ a tight rein on maintenance expenditure: this accounted for 8.7% and 11.2%, respectively, of net rental income in the Consolidated and ESH divisions. Recurring maintenance expenditure throughout the Group averages €580/unit;

■■ vacancy rates for the Consolidated division have improved and are still very low for the ESH division;

■■ the continuing decline in the proportion of bad debts in the ESH division to 1.22% at end-2015 (a drop of -18 bp on the year) thanks to careful monitoring and support initiatives deployed at Group level. In the Consolidated division the proportion of bad debts remained stable at 0.77%;

■■ management fees are carefully controlled: the ratio of costs/net rental income is 20% for the Consolidated division and 21.1% for the ESH division, reflecting the large number of projects in progress and the development of intermediate housing programmes;

■■ the ratio of EBITDA to net rental income is between 56% and 58% for all entities (with the exception of OSICA in the Paris region, which is penalised by lower rents than EFIDIS);

■■ higher net debt / net income ratios throughout the entities in 2015, reflecting the major Group-wide development and investment drive.

Operating data

GROUPConso-lidated

division

ESH division

o/w EFIDIS

o/w OSICA

o/w ESHs outside

the Paris region

DEVELOPMENTNew SOs/acquisition ratio 2.77% 4.00% 2.16% 1.42% 1.22% 3.27%Disposal ratio 1.49% 2.26% 1.10% 0.87% 0.54% 1.63%PROPERTY MANAGEMENTMaintenance (excl. asbestos removal)/in € per equiv. housing unit €579 €578 €580 €603 €645 €521Maintenance (excl. asbestos removal)/as% of Net income 10.3% 8.7% 11.2% 11.0% 13.2% 10.1%Ratio of renovation work/Work to enhance neighbourhood quality 3.0% 3.1% 3.0% 3.1% 4.0% 2.3%RENTAL MANAGEMENTAverage vacancy rate on available units (end of period) 1.75% 2.86% 1.34% 1.17% 1.83% 1.15%For info. 2014 1.83% 2.94% 1.31% 1.14% 1.68% 1.20%Average vacancy rate on available units (>1 month) 1.12% 2.07% 0.78% 0.71% 1.12% 0.60%For info. 2014 1.28% 2.19% 0.74% 0.70% 0.93% 0.64%Bad debts (incl. completed service orders) 1.07% 0.77% 1.22% 1.49% 0.57% 1.43%For info. 2014 N/C 0.73% 1.40% 1.52% 0.92% 1.64%MANAGEMENT FEES (excluding technical expertise) as a% of rental income* 20.7% 20.0% 21.1% 20.6% 22.2% 20.9%

For info. 2014 N/C 18.5% 21.4% 21.1% 22.7% 20.7%* For the consolidated division: rental income = net rents + income from other activities; ESH division: rental income = net rental income

Financial data

GROUPConsolidated

divisionESH division o/w EFIDIS o/w OSICA

o/w ESHs outside the

Paris regionINCOME STATEMENTNet income 1,403 534 870 267 231 372For info. 2014 1,370 516 854 259 227 368 Recurring operating income or EBITDA/Net income* 56.6% 57.3% 56.1% 56.7% 52.3% 58.1%

For info. 2014 58.4% 59.9% 56.8% 56.3% 53.0% 59.4%Gains on disposals/Profit before tax** 50.7% 54.9% 46.9% 32.6% 43.3% 61.3%For info. 2014 62.5% 55.0% 43.6% 8.3% 40.5% 65.6%GROSS CASH FLOW/INV (INCR) 18.9% 17.0% 20.5% 20.7% 17.6% 22.1%For info. 2014 22.3% 22.1% 22.4% 18.4% 12.9% 37.9%NET DEBT/NET INCOME 6.5 5.8 6.9 6.2 7.1 7.4For info. 2014 N/C 5.6 6.8 6.2 6.8 7.3 * For the consolidated division: Recurring operating income excluding property development/net rents

+ income from other activities; ESH division: EBITDA/Net rental income. ** For the consolidated division: Gains on disposals/Profit before tax (adjusted for provisions booked for swaps)


Highlights in 2015 included:

■■ Ramping up of the intermediate housing investment fund, Fonds Logement Intermédiaire (FLI). Following the second closing completed in July 2015, SNI held a 19.14% stake in FLI (33.33% end-2014), which it continued to account for by the equity method.

■■ SNI and AMPERE Gestion were awarded the contract to provide the fund and asset management activities of a new investment fund set up by the French State to finance the acquisition of around 13,000 units of intermediate housing. In early 2016, SNI was also retained to provide property management services following a competitive bidding process launched in 2015.

■■ Adoma’s €47 million capital increase brought SNI’s stake from 42.74% to 56.31%. Adoma continues to be consolidated using the equity method.

SNI’s scope of consolidation now includes the following entities:

■■ SNI, Sainte-Barbe, and AMPERE Gestion, all of which are fully consolidated (fol-lowing the merger of S2AI and Caserts into SNI in 2015).

■■ Adoma (56.31% stake) and FLI, (19.14% stake) consolidated using the equity method.

This scope of consolidation is itself consolidated in the books of Caisse des Dépôts. SNI’s Fitch rating applies to this same group of consolidated entities.

Consolidated profit for 2015 came in at €131.7 million, compared to €113.7 million for 2014.

If fair value adjustments to derivatives are excluded, profit was €121.7 million, com-pared to €130 million for 2014, mainly due to lower amounts of disposal gains.

Net income excluding property development (rental income + income from other activities) grew by €13 million to €516 million, on the back of new buildings placed in service, notably as part of the agreement signed with EDF. Operating expense increased by €19 million to €220 million in line with strong growth in the Development activity requiring additional human and material resources.

However, stable maintenance ratios attest to the tight rein being kept on most items of operating expenditure, and management cost ratios also held up well.

The property development margin came in at €5.9 million, well up on last year.

Recurring operating income was €301.6 million. Excluding property development, the recurring operating income ratio for 2015 came out at 57.3%.

Disposal gains accounted for 55% of pre-tax profit (€90 million).

Adoma contributed €22 million to consolidated profit for the year (versus €8.7 million in 2014), thanks to SNI’s increased stake and enhanced fair value adjustments to derivatives.

FLI contributed a net loss of €0.2 million to consolidated profit.

Net depreciation of property and equipment rose to €144.7 million due to major deli-veries of new housing (agreement with EDF), and negatively impacted EBIT which fell back to €269,1 million for the year.

Cost of gross debt was 22% lower in 2015 thanks to savings generated by lower interest rates, positive fair value adjustments to derivatives (€8 million before tax), and the recognition of a positive €7.4 million fair value adjustment to a derivative asset following the increase in Adoma’s capital.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED DIVISION

FITCH RATING UPGRADE

Fitch uses its public sector entities methodology and applies a top-down approach when rating SNI, i.e., its rating is based around that of its shareholder, Caisse des Dépôts et Consignations, whose rating is in turn dependent on that of the State. SNI’s rating factors in its financial and strategic integration within Caisse des Dépôts as well as its key role in providing social housing at national level. Differences between SNI’s and Caisse des Dépôts’s ratings reflect the fact that intermediate housing does not benefit from the same institutional support as social housing (via the social housing companies [ESHs]).

In mid-July 2015, as part of Fitch’s annual ratings review, SNI’s rating was raised to AA- with a stable outlook, i.e., one notch below Caisse des Dépôts, instead of two notches below, which was the case previously.


It may be recalled, while changes in the fair value of deriva-tives do not automatically push up/decrease finance costs, they need to be analysed in terms of an opportunity cost/gain due to lower forecast interest rates.

The Group’s interest rate hedging policy is to use interest rate swaps to insure the finance costs of Group entities over the very long term and is not intended to be used for speculative purposes.

Profit before tax was €177.1 million, an increase of €9.4 million year on year.

Net profit for the year came in at €131.7 million.

Because no dividend was paid this year, return on equity (ROE) was a very comfortable 9.3%.

Consolidated income statement - Prepared under IFRS in €M

2014 2015YoY change

2015/2014

YoY change 2015/2014

in%

Gross rental income 490.3 510.0 19.7 4%Loss on recoverable rental charges -5.8 -6.9 -1.0 17%NET RENTAL INCOME 484.5 503.2 18.7 4%Income from property development 39.5 38.5 -1.0 -3%Cost of inventory -34.9 -32.6 2.3 -6%PROPERTY DEVELOPMENT MARGIN 4.6 5.9 1.2 27%Income from other activities 18.6 12.7 -5.8 -31%Purchases consumed -1.8 -1.5 0.3 -19%Maintenance -52.6 -51.9 0.7 -1%External services -38.6 -41.9 -3.3 8%Taxes other than income taxes -44.6 -43.5 1.0 -2%Personnel expenses, discretionary and non-discretionary profit-sharing -64.9 -70.2 -5.3 8%

Other operating income (expense) 0.7 -11.3 -12.0 -1683%RECURRING OPERATING INCOME 305.9 301.6 -4.3 -1%Disposal gains on investment property 103.5 90.0 -13.5 -13%EBITDA 409.4 391.6 -17.8 -4%Depreciation and amortisation net of government grants and subsidies -132.9 -144.7 -11.8 9%

Net (additions to) reversals of provisions 1.1 0.3 -0.8 -74%EBIT BEFORE SHARE IN NET INCOME OF ASSOCIATES 277.7 247.2 -30.4 -11%Share in net income of associates 7.7 21.8 14.1 183%EBIT AFTER SHARE IN NET INCOME OF ASSOCIATES 285.4 269.1 -16.3 -6%Cost of net debt -117.7 -91.9 25.8 -22%PROFIT BEFORE TAX 167.7 177.1 9.4 6%Income tax expense -54.0 -45.4 8.6 -16%NET PROFIT 113.7 131.7 18.1 16%Non-controlling interests 0.0 0.0 0.0 n.aNET PROFIT ATTRIBUTABLE TO OWNERS 113.7 131.7 18.1 16%

2014 2015

Recurring operating income (excluding property development margin)/net income (net rents + income from other activities) 59.9% 57.3%

Gains on disposals/Profit before tax (excluding impact of swaps) 55.0% 54.9%

ROE 9.0% 9.3%


In assetsNon-current assets grew by €289 million (5%) mainly reflecting the combined effects of:

■■ a €312 million increase in investment property. The value of new buildings placed in service exceeded disposals and depreciation expense for the period;

■■ the €84 million increase in investments in associates, reflecting the share in net assets of Adoma and FLI;

■■ the €90 million decrease in other non-current financial assets, with matching amounts in other financial liabilities, correspond mainly to enhanced fair value adjustments to hedging instruments used by the ESHs (social housing companies);

■■ a deferred tax asset has been recognised for an amount of €28 million.

Current assets decreased by €186 million in the year to 31 December 2015 in line with:

■■ the €153 million drop in cash and cash equivalents due to lower amounts of borrowings raised in 2015 and normal expenditure on operations that had been pre-financed in prior periods;

■■ inventory run-down and the drop in trade receivables balances (by €17 million and €16 million, respectively) from property development transactions.

In liabilities and equityEquity grew by 12% thanks to the contribution of profit for the year (€132 million) and positive fair value adjustments to derivatives totalling €38 million.

Non current liabilities were down by 4% or €186 million in 2015, attributable to:

■■ a €38 million drop in non-current borrowings: the Group repaid more than it borrowed during the period;

■■ the €148 million decrease in other non-current financial liabilities, of which €137 million comprised enhanced fair value adjustments to derivatives with nega-tive fair values.

Current liabilities grew by 18% or €116 million:

■■ Current borrowings grew by €91 million (including subsidiary current account balances and overdrafts of €20 million and €69 million, respectively);

■■ Other payables also increased by an amount of €23 million (mostly attributable to accrued amounts due to property developers).

CONSOLIDATED ASSETS GREW BY NEARLY €100 MILLION

OVERVIEW OF THE GROUP’S BORROWINGS

In 2015, SNI continued to seek out institutional investors €85 million in new borrowings with an average maturity of 15 years were raised by means of private placements.

For information, the Group raised very large amounts of borrowings in 2013 and 2014 in order to finance building operations that came on stream in 2015 (mostly under agreements signed with EDF). The resulting cash proceeds are therefore consumed over time as the work progresses.

As regards the intermediate housing programmes, financing will be used as and when the resulting expenditure arises.

The gearing ratio (net debt/equity) remained stable at 2. Once it is adjusted for fair value adjustments to interest rate swaps it comes out at 1.7.

The Loan to Value (LTV) ratio was also held at 44% in spite of the sluggish property market.



Balance sheet 2014-2015 in €M

2014 2015 YoY change 2015/2014

ASSETSIntangible assets 0.0 2.9 2.9Investment property 4,351.6 4,663.8 312.2Other non-current assets 10.8 12.4 1.6Rental property 4,362.3 4,679.1 316.8Available-for-sale financial assets 81.0 81.1 0.1Investments in associates 85.6 170.1 84.4Other financial assets 755.2 665.0 -90.2Deferred tax assets 50.2 28.4 -21.9Non-current financial assets 972.0 944.5 -27.5NON-CURRENT ASSETS 5,344.4 5,623.7 289.3Cash and cash equivalents 992.7 839.7 -153.0Inventories 55.1 37.9 -17.1Trade receivables 262.1 245.8 -16.2CURRENT ASSETS 1,309.8 1,123.4 -186.4Assets held for sale 3.7 1.4 -2.2TOTAL ASSETS 6,647.8 6,748.5 100.7

EQUITY AND LIABILITIESShare capital 493.5 493.5 -0.1Reserves 767.8 919.6 151.8Net profit for the period 113.7 131.7 18.1Equity attributable to owners of the parent 1,375.0 1,544.8 169.8Non-controlling interests 0.1 0.0 -0.1TOTAL EQUITY 1,375.0 1,544.8 169.7TOTAL PROVISIONS 26.3 29.3 3.0Non-current borrowings 3,475.6 3,437.3 -38.3Other non-current financial liabilities 1,118.4 970.5 -147.8Deferred tax liabilities 0.0 0.0 0.0NON-CURRENT LIABILITIES 4,594.0 4,407.8 -186.1Current provisions 18.2 19.3 1.1Current borrowings 426.7 518.0 91.3Other current liabilities 206.1 229.3 23.3CURRENT LIABILITIES 651.0 766.6 115.6Liabilities related to assets held for sale 1.5 0.0 -1.5TOTAL EQUITY AND LIABILITIES 6,647.8 6,748.5 100.7

Balance sheet ratios2014 2015

Net debt (€ million) 2,910 3,116Gearing (net debt/equity) 2.1 2.0Gearing, excluding derivatives measured at fair value 1.7 1.7

Net debt/income (statutory accounts) 5.6 5.8NB: Net debt = Non-current borrowings + Current borrowings - Cash and cash equivalents


FINANCING THE ACTIVITY

■■ Cash generated by operating activities was €11 million higher in 2015 and enabled the Group to meet all of its principal repayments.

■■ In order to meet forthcoming bullet loan repayments for loans taken out from 2012 on, a reserve was set up based on the maturities of 25-year loans repayable in equal annual instalments. An amount of €20 million was booked to the reserve for 2015.

■■ Cash proceeds on disposals were used to finance the capital outlay required for work on the housing portfolio (€19 million), development (€92 million) and the bullet loan repayment reserve. Consequently, the net funding require-ment before payment of dividends and acquisitions was limited to €7 million.

After adjusting for equity invested in the FLI (€6 million in 2015), the €47 million increase in Adoma’s capital and the absence of any dividend payment in 2015, the net funding requirement amounted to €60 million (in line with budget forecasts).

Consolidated Group in €M

2014 2015

A = Cash flow from operating activities 168 179B = Repayment of capital (excl. early repayments) -174 -178B’ = Reserves set up to meet bullet loan repayments - -20C = A-B = Gross operating cash flow -5 -19D = Capital invested in building programs -18 -19E = C-D = Net operating cash flow -23 -38F = Cash proceeds on disposals 157 123G = Capital invested in development (NB + Acq)* (new delivaries) -72 -92H = Other early repayments - -I = F+G+H = Development activity and disposals 84 31

J = E+I = Free Cash Flow before payment of dividends and acquisitions 61 -7

Cost of raising funds for FLI -2 -6Acquisition of a stake in Adoma 0 -47Disposal of EXTERIMMO shares 5 0FREE CASH FLOW AFTER DIVIDENDS 63 -60* New buidings and acquisitions



ESHs OUTSIDE THE PARIS REGION

This division comprises all social housing companies (ESHs) in which SNI is the strategic shareholder. In view of restrictions on the shareholder base, voting rights, the disposal of shares and dividend entitlements under current regulations, this division is not consolidated either by SNI or Caisse des Dépôts. These entities are subject to very specific tax treatment (exemption from income tax and property tax exemption over long periods, VAT at a reduced rate).

INCOME STATEMENTStable net profit (excluding impact of disposals)

The very small increase in the rent review index (0.47% in 2015) generated only a modest 1.1% increase in rental income for the year in spite of high levels of production.

Operating expenses (mostly comprising payments into the social rental housing guarantee fund [CGLLS], maintenance, payments to meet regulatory obligations and payroll) were carefully controlled even though they increased at a slightly higher rate than rents. Consequently, EBITDA dropped 1.1% year on year to €216 million, and represented 58% of net rental income, which is a very satisfactory ratio.

EBIT was also hit by big increases in depreciation charges related to new buildings placed in service and renovation work carried out.

The cut in interest rates paid on Livret A* knocked €5 million off financial expense and there was a €7 million drop in the Division’s net financial expense.

Disposal gains amounted to €49 million, which was €5 mil-lion less than in 2014. Block sales exhibited an uneven pattern year on year and were for higher amounts in 2014.

The division generated non-recurring income for the period of €2.3 million (combined impact of Energy Saving Certificates and one-off repayments of borrowings).

Consequently, net profit came in at a little over €79 million.

Income statement in €M

2014 2015YoY change

2015/2014YoY change

2015/2014 in%

NET RENTAL INCOME 367.6 371.8 4.2 1.1%Fees paid -1.3 -2.3 -1.0 76.2%Maintenance -36.3 -38.1 -1.8 5.0%Local non-recoverable payroll -5.4 -5.4 0.0 0.1%Property tax on developed property -33.8 -34.6 -0.8 2.3%Other direct costs -7.3 -9.0 -1.7 23.3%CONTRIBUTION MARGIN 283.4 282.2 -1.1 -0.4%Administrative staff payroll -40.0 -41.8 -1.8 4.5%Other indirect costs -13.2 -12.6 0.6 -4.5%Services -12.8 -12.6 0.1 -1.1%Own work capitalised 0.8 0.7 -0.1 -12.4%GENERAL EXPENSES -65.2 -66.3 -1.2 1.8%EBITDA 218.2 215.9 -2.3 -1.1%Depreciation and amortisation net of government grants and subsidies -105.7 -111.6 -5.9 5.5%

Variance MR/PMRs** 2.1 2.0 -0.1 -3.8%EBIT 114.6 106.3 -8.2 -7.2%Financial expense -86.4 -81.2 5.2 -6.0%Financial income 4.4 6.1 1.7 38.5%NET FINANCIAL INCOME (EXPENSE) -82.0 -75.1 6.9 -8.4%PROFIT FROM ORDINARY ACTIVITIES 32.5 31.2 -1.3 -4.0%Profit from selling activity 54.5 49.1 -5.3 -9.8%Non-recurring profit (loss) -0.1 2.3 2.4 -1,873.3%Profit sharing -1.9 -2.4 -0.5 24.6%Income and other taxes -0.6 -1.1 -0.5 72.7%NET PROFIT 84.3 79.2 -5.1 -6.1%* Remember that social housing loans are indexed on Livret A rate. Livret A rate is a regulated French passbook saving accounts. ** Major repairs/Provision for major repairs

ESH DIVISION


BALANCE SHEETContinued investment outlay

The net increase in rental property was €164 million.

The main changes in non-current assets (excluding amortisa-tion and depreciation charges) were as follows:

■■ deliveries for the period: 2,065 units of housing represen-ting a total investment of €263 million,

■■ investment work delivered for an amount of €61 million,

■■ sales for the period, leading to the derecognition of assets totalling €34 million.

The increase in equity net of subsidies is directly related to profit for the year given the regulatory restrictions on the dis-tribution of dividends.

The ratio of net debt / net rental income came out at 7.4, compared to 7.3 in 2014, and debt grew by €74 million.

At end-2015, cash on hand represented seven months’ worth of rental income.

Balance sheet in €M

2014 2015YoY change

2015/2014YoY change

2015/2014 in%

ASSETS 4,336.6 4,475.7 139.1 3%Rental property 3,593.4 3,758.8 165.5 5%Renovation and building work in-progress 285.3 283.6 -1.6 -1%Rental property 3,878.6 4,042.5 163.9 4%Owner-occupied property 12.6 13.2 0.6 5%Non-current financial assets 15.6 15.8 0.2 1%NON-CURRENT ASSETS 3,906.9 4,071.5 164.6 4%Cash and cash equivalents 239.3 220.4 -18.9 -8%Inventories 10.4 14.3 3.9 38%Trade receivables 179.8 169.4 -10.4 -6%Deferred charges 0.3 0.1 -0.2 -58%CURRENT ASSETS 429.7 404.3 -25.5 -6%

EQUITY AND LIABILITIES 4,336.6 4,475.7 139.1 3%Capital and reserves 654.7 738.0 83.3 13%Profit for the period 84.3 79.2 -5.1 -6%Government grants 469.4 481.6 12.2 3%Other 0.0 0.0 0.0 n.aEQUITY 1,208.4 1,298.8 90.4 7%Provisions for major repairs 13.8 11.7 -2.1 -15%Other provisions 31.5 32.3 0.8 2%PROVISIONS 45.3 43.9 -1.3 -3%Borrowings (outstanding principal) 2,863.8 2,928.0 64.2 2%Accrued interest on borrowings not yet due 33.8 28.4 -5.4 -16%Compensating interest 7.5 4.2 -3.2 -43%NON-CURRENT LIABILITIES 2,905.1 2,960.6 55.6 2%Current borrowings 176.8 171.7 -5.2 -3%Deferred income 1.0 0.7 -0.4 -34%CURRENT LIABILITIES 177.8 172.3 -5.5 -3%

2014 2015

Net debt/net rental income 7.3 7.4Net debt/rental property 0.7 0.7Gearing (net debt/equity) 2.2 2.1Cash on hand/rental income (no. months' rental income) 7.8 7.1

Total assets grew by 3% (or by €139 million) for the second year in a row.


FREE CASH FLOW

Development is consuming more and more resources

The net funding requirement in 2015 amounted to €12.9 mil-lion, compared to positive free cash flow of €17.8 million in 2014. This was mainly attributable to:

■■ an €11 million drop in gross cash flow from operating acti-vities: cash generated by operating activities was stable year on year but principal repayments were €12.4 million higher, reflecting higher levels of debt;

■■ equity invested in renovation work and in building compo-nents dropped by €7.8 million year on year to €28.2 million

in the wake of the high levels of investment generated by the national programme for urban renewal (PNRU);

■■ cash proceeds on disposals amounted to €58.6 million, which was €7.1 million less than in 2014;

■■ equity invested in development increased by €14.6 million to €41.5 million on the back of the large volume of delive-ries over the period;

■■ a €5 million year-on-year increase in early repayments.

Free cash flow in €M

2014 2015

Cash flow from operating activities 141.0 141.0Compensating interest -4.4 -3.2Repayment of capital (excl. early repayments) -118.9 -131.3GROSS OPERATING CASH FLOW 17.6 6.5Capital invested in renov./enhancement work -12.6 -8.2Capital invested in building components -23.4 -20.0NET OPERATING CASH FLOW -18.3 -21.7Cash proceeds on disposals (price - outstanding principal) 65.7 58.6Capital invested in development (NB + Acq) -26.9 -41.5Capital invested in development (NB + Acq) -1.4 -1.9Capital invested in owner-occupied property 0 0.0Other early repayments -0.4 -5.4Dividends paid -0.9 -0.9FREE CASH FLOW 17.8 -12.9Additional resources 0.0 0.0FREE CASH FLOW AFTER EQUITY FINANCING 17.8 -12.9

ESH DIVISION


EFIDIS

INCOME STATEMENTIncrease in earnings

Net rental income grew by 3% year on year. This increase was mostly due to the deployment of new operations and rent indexation to a lesser extent.

Maintenance expenses grew by 1.5% and represented 11% of net rental income.

EBITDA increased by €5.4 million on the year to €152 million and operating margin edged up to 56.7%.

EBIT came in at €90 million following big increases in depre-ciation expenses linked to deliveries of new housing.

The Division’s net financial expense fell by €1.7 million in line with lower finance costs tied to falling interest rates paid on Livret A passbook savings accounts.

Profit from ordinary activities increased by €5 million to €48 million for the year.

The significant volume of disposals in 2015 (437 block sales and 37 split sales) generated disposal gains of €22.9 million.

Non-recurring profit for the year came in at €5 million and reflects the reversal of unused provisions.

Consequently, net profit for the period came in at €72.7 mil-lion, which represents a €27.6 million increase on the prior period.


2014 2015YoY change

2015/2014YoY change

2015/2014 in%

NET INCOME 259.5 267.3 7.8 3.0%Fees paid -2.8 -3.3 -0.5 17.1%Maintenance -29.0 -29.5 -0.4 1.5%Local non-recoverable payroll -7.1 -7.3 -0.3 3.6%Property tax on developed property -25.8 -26.5 -0.7 2.6%Other direct costs -6.1 -7.0 -1.0 15.7%CONTRIBUTION MARGIN 188.6 193.6 5.0 2.7%Administrative staff payroll -27.8 -29.2 -1.4 5.1%Other indirect costs -11.2 -11.1 0.2 -1.6%Services -5.9 -6.9 -1.0 16.3%Own work capitalised 2.4 5.0 2.6 109.3%GENERAL EXPENSES -42.6 -42.1 0.4 -1.0%EBITDA 146.1 151.5 5.4 3.7%Depreciation and amortisation net of government grants and subsidies -58.7 -61.6 -2.9 4.9%

Variance MR/PMRs* -0.4 0.4 0.8 -185.2%EBIT 86.9 90.3 3.4 3.9%Financial expense -46.3 -44.3 2.0 -4.4%Financial income 2.7 2.4 -0.4 -13.3%NET FINANCIAL INCOME (EXPENSE) -43.6 -41.9 1.7 -3.8%PROFIT FROM ORDINARY ACTIVITIES 43.3 48.4 5.0 11.6%Profit from selling activity 3.6 22.9 19.3 534.3%Non-recurring profit (loss) 0.1 4.5 4.4 5,722.9%Profit sharing -1.7 -2.2 -0.5 29.3%Income and other taxes -0.2 -0.8 -0.6 327.8%NET PROFIT 45.1 72.7 27.6 61.2%* Major repairs/Provision for major repairs


ESH DIVISION

BALANCE SHEETContinuing high levels of investment – controlled levels of debt

Total assets grew by 4% or by €125 million year on year.

Net rental property grew by €113 million. The main changes in non-current assets (excluding amortisation and deprecia-tion charges) were as follows:

■■ deliveries for the period, i.e., 2,114 units of housing (exclu-ding programmes for first-time buyers) representing a total amount of €233 million;

■■ investment work for the period totalling €67 million;

■■ derecognition of €9 million worth of disposed assets;

■■ work in-progress, which was €93 million lower than last year.

Equity rose 6% (or by €67 million) on the previous year, most of which was attributable to profit for the period.

The amount of cash on hand rose to eight months of rental income and this helped limit the increase in net debt.

Consequently the ratio of net debt / net rental income and the ratio of net debt / net rental property remained stable at 6.2 and 0.6, respectively.

The gearing ratio declined slightly to 1.4 thanks to the increase in equity.


2014 2015YoY change

2015/2014YoY change

2015/2014 in%

ASSETS 2,998.5 3,123.8 125.2 4%Rental property 2,455.9 2,661.9 206.1 8%Renovation and building work in-progress 245.5 152.5 -93.1 -38%Rental property 2,701.4 2,814.4 113.0 4%Owner-occupied property 5.6 7.2 1.7 30%Non-current financial assets 4.5 4.3 -0.2 -3%NON-CURRENT ASSETS 2,711.4 2,825.9 114.5 4%Cash and cash equivalents 146.7 181.8 35.1 24%Inventories 0.1 0.1 0.0 0%Trade receivables 140.3 115.9 -24.4 -17%Deferred charges 0.0 0.0 0.0 n.aCURRENT ASSETS 287.1 297.8 10.8 4%

EQUITY AND LIABILITIES 2,998.5 3,123.8 125.2 4%Capital and reserves 580.7 625.3 44.6 8%Profit for the period 45.1 72.7 27.6 61%Government grants 451.9 447.0 -4.9 -1%Other 0.0 0.0 0.0 n.aEQUITY 1,077.7 1,145.0 67.3 6%Provisions for major repairs 6.0 5.6 -0.4 -6%Other provisions 12.2 11.6 -0.6 -5%PROVISIONS 18.1 17.2 -1.0 -5%Borrowings (outstanding principal) 1,732.1 1,810.2 78.2 5%Accrued interest on borrowings not yet due 23.6 22.5 -1.1 -5%Compensating interest 1.7 0.9 -0.8 -45%NON-CURRENT LIABILITIES 1,757.4 1,833.7 76.3 4%Current borrowings 139.8 123.6 -16.3 -12%Deferred income 5.5 4.3 -1.1 -21%CURRENT LIABILITIES 145.3 127.9 -17.4 -12%

2014 2015


EFIDIS


FREE CASH FLOW Strong free cash flow

■■ Gross cash flow from operating activities was stable year on year: the slight increase in cash flow from operating activities was used to absorb the higher repayments on borrowings.

■■ Net operating cash flow (after work carried out on the pro-perty portfolio) totalled €5 million – half of what it was in 2014 – reflecting the large volume of renovation work deli-vered during the period and the increase in capital outlay from 18% to 23% of investment costs.

■■ The big increase in cash proceeds on disposals was used to cover capital outlay for development work and Free Cash Flow came out at €6.6 million.


2014 2015

Cash flow from operating activities 103.5 109.6Compensating interest -1.0 -0.8Repayment of capital (excl. early repayments) -78.2 -84.6GROSS OPERATING CASH FLOW 24.2 24.2Capital invested in renov./enhancement/demolition -5.2 -11.7Capital invested in building components -8.5 -7.5NET OPERATING CASH FLOW 10.5 5.1Cash proceeds on disposals 5.0 28.3Capital invested in development (NB + Acq) -17.6 -24.0Capital invested in structural work -0.3 -0.4Other early repayments -1.2 -2.0Dividends paid -0.5 -0.5FREE CASH FLOW -4.0 6.6Additional resources 0.0 0.0FREE CASH FLOW AFTER EQUITY FINANCING -4.0 6.6


ESH DIVISION

OSICA

INCOME STATEMENTStable earnings

Net rental income rose 1.9% on one year previously, mainly on the back of recent deliveries, as the impact of rent indexa-tion is fairly low.

General expenses remained stable at €37 million and repre-sented 16% of net income.

EBITDA was stable year on year at €121 million and repre-sented 52.5% of net income.

The €5 million increase in depreciation and amortisation charges reflect the significant investments made over the past few years. They weighed on EBIT which came in at €51.8 million.

The Division’s financial expense remained stable year on year thanks to low interest rates on Livret A passbook savings accounts and financial income was higher than in 2014. Consequently, profit from ordinary activities came out at €11.5 million, close to what it was in 2014.

Capital gains on disposals were stable at €12 million. Non-recurring income was €1.7 million lower than in 2014 when significant income was generated by an equity pooling headed up the social housing body, USH (Union sociale pour l’habitat).

Consequently, the Division reported net profit of €28 million for the period.


2014 2015YoY change

2015/2014YoY change

2015/2014 in%

NET RENTAL INCOME 226.5 230.7 4.2 1.9%Fees paid -1.2 -1.1 0.2 -12.4%Maintenance -29.0 -30.8 -1.7 6.0%Local non-recoverable payroll -9.2 -9.5 -0.2 2.7%Property tax on developed property -24.0 -25.1 -1.0 4.4%Other direct costs -5.6 -6.6 -1.0 18.7%CONTRIBUTION MARGIN 157.4 157.7 0.3 0.2%Administrative staff payroll -24.8 -25.6 -0.8 3.3%Other indirect costs -5.7 -5.7 0.0 -0.5%Services -11.9 -7.4 4.5 -37.6%Own work capitalised 4.8 1.8 -3.0 -62.7%GENERAL EXPENSES -37.5 -36.9 0.6 -1.7%EBITDA 119.9 120.8 0.9 0.8%Depreciation and amortisation net of government grants and subsidies -64.2 -68.9 -4.7 7.3%

Variance MR/PMRs* -0.9 0.0 0.9 -96.1%EBIT 54.7 51.8 -2.9 -5.3%Financial expense -44.4 -43.8 0.6 -1.3%Financial income 2.0 3.5 1.5 75.9%NET FINANCIAL INCOME (EXPENSE) -42.4 -40.3 2.1 -4.9%Acquisition cost 0.0 0.0 0.0 n.aPROFIT FROM ORDINARY ACTIVITIES 12.3 11.5 -0.8 -6.6%Profit from selling activity 12.2 12.1 -0.1 -0.5%Non-recurring profit (loss) 8.1 6.3 -1.7 -21.3%Profit sharing -1.8 -2.0 -0.2 9.2%Income and other taxes 0.0 0.0 0.0 n.aNET PROFIT 30.7 28.0 -2.8 -9.0%* Major repairs/Provision for major repairs


BALANCE SHEETHigher levels of debt to support an ambitious invest-ment drive

Total assets grew by 5%, or by €129 million year on year, mainly on the back of the €154 million increase in rental property.

The main changes in non-current assets (excluding amortisa-tion and depreciation charges) were as follows:

■■ deliveries for the period, i.e., 778 units of housing (exclu-ding programmes for first-time buyers) representing a total amount of €118 million;

■■ investment work for the period totalling €81 million;

■■ derecognition of €6 million worth of disposed assets;

■■ work in-progress, which increased by €39 million year on year.

Equity rose 3% (or by €27 million) on the previous year, most of which was attributable to profit for the period.

The ambitious investment policy pursued over the past few years, coupled with limited growth in net income, had a nega-tive impact on the net debt / net rental income ratio which rose to 7.1 in line with the €119 million increase in debt. However, the gearing ratio remained stable at 1.8.

Cash on hand represented nearly 11 months’ worth of ren-tal income and included amounts paid under pre-financing arrangements.


2014 2015YoY change

2015/2014YoY change

2015/2014 in%

ASSETS 2,812.3 2,941.6 129.3 5%Rental property 2,180.2 2,294.8 114.6 5%Renovation and building work in-progress 237.7 277.1 39.3 17%Rental property 2,417.9 2,571.8 153.9 6%Owner-occupied property 2.3 2.0 -0.3 -13%Non-current financial assets 4.2 4.3 0.1 3%NON-CURRENT ASSETS 2,424.4 2,578.2 153.8 6%Cash and cash equivalents 185.4 203.8 18.4 10%Inventories 8.5 11.5 3.0 36%Trade receivables 193.7 148.1 -45.7 -24%Deferred charges 0.2 0.0 -0.2 -89%CURRENT ASSETS 387.9 363.4 -24.5 -6%

EQUITY AND LIABILITIES 2,812.3 2,941.6 129.3 5%Capital and reserves 498.7 529.2 30.5 6%Profit for the period 30.7 28.0 -2.8 -9%Government grants 370.6 370.2 -0.4 0%Other 0.0 0.0 0.0 n.aEQUITY 900.0 927.3 27.3 3%Provisions for major repairs 9.9 9.9 0.0 0%Other provisions 17.9 18.4 0.5 3%PROVISIONS 27.8 28.3 0.5 2%Borrowings (outstanding principal) 1,702.2 1,825.4 123.3 7%Accrued interest on borrowings not yet due 20.2 19.1 -1.2 -6%Compensating interest 6.5 3.6 -2.9 -45%NON-CURRENT LIABILITIES 1,728.9 1,848.1 119.2 7%Current borrowings 124.1 107.8 -16.3 -13%Deferred income 31.6 30.1 -1.4 -4%CURRENT LIABILITIES 155.6 137.9 -17.7 -11%

2014 2015



FREE CASH FLOWLower net funding requirements

Higher cash flow from operating activities was unable to absorb all of the increase in principal repayments and the capital outlay required for work on the housing portfolio, resul-ting in a net operating funding requirement of €6 million.

Outlay for property development projects decreased by €8 million in line with deliveries over the period. Cash proceeds on disposals also declined by an amount of €1.6 million.

Overall, net funding requirements at end-2015 were €8.4 mil-lion lower than at the end of the prior period.


2014 2015

Cash flow from operating activities 83.8 85.3Compensating interest -3.3 -2.9Repayment of capital (excl. early repayments) -60.1 -67.3GROSS OPERATING CASH FLOW 20.4 15.1Capital invested in renov./enhancement/demolition -14.9 -11.0Capital invested in building components -9.4 -10.1NET OPERATING CASH FLOW -3.9 -6.0Cash proceeds on disposals (price - outstanding principal) 17.2 15.6Capital invested in development (NB + Acq) -28.0 -16.3Capital invested in owner-occupied property 0.0 0.0Other early repayments -1.3 -0.8Dividends paid -0.1 -0.1FREE CASH FLOW -16.0 -7.6Additional resources 0.0 0.0FREE CASH FLOW AFTER EQUITY FINANCING -16.0 -7.6

ESH DIVISION OSICA

100-104 avenue de France - 75013 PARIS

Tél. : 01 55 03 33 18

www.groupesni.fr

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