Rating Rationale
The main weakness of the evaluated group is its financial situation, notably its asset protection, profitability and liquidity. Despite significant growth in turnover (+41%) between 2011 and 2012 the ratio stocks versus turnover worsened between 2011 and 2012 due to significantly increased inventories (+73%) in the same period. Profitability was low. The equity ratio decreased from reasonable 21,9% in 2011 to 17,4% in 2012.

Due to growth in turnover, the cash flow margin improved slightly, but is still insufficient based on the highly negative operative cash flow in 2011 and 2012. The overall liquidity ratios are of medium to low quality. The group has accumulated short-term debt during the evaluated period, which has led to a deteriorating cash ratio.

Réalités has nevertheless a strong order backlog of about 73,6 mill. EUR by end 2012, which indicates relative stability of the group in the short-term.

The company has adjusted its strategic direction to become a sole real estate developer in 2010. Due to its shift in strategy and ongoing volatile market conditions in the housing market its targets of planned units had to be downsized from 1000 produced units by 2015 to just 600 per year.

The quality of its management structure is very high combined with a strong HR policy, taking into consideration the size of Réalités with 61 employees. To reinforce sales, the group has a well established and innovative marketing strategy with its own subsidiary Réalités.com.

The rating outlook is stable due to positive forecasts for the current year that indicate growth in turnover of more than 20% with a positive result. In addition, the company’s solid order backlog of about 73,6 mill. EUR indicate good stability in the short-term.

Réalitès – Corporate profile
The French real estate company S.C.A. Réalités (cons.) was founded in 2003 and is a limited company as a Société en Commandite par Actions (S.C.A.) with board directors and with its headquarters located in Nantes, Saint-Herblain, France. Réalites is a new housing developer in the west of France and owns five agencies which are spread from Brittany and Charente Maritime to Pays de la Loire. The focus of Réalités’ activity is on housing for owners, social housing, residences, institutional sales and second homes.