DJ Kaufman & Borad SA: H1 2019 Results
Kaufman & Borad SA
Kaufman & Borad SA: H1 2019 Results
10-Jul-2019 / 18:47 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Press release
Paris, July 10, 2019
H1 2019 Results
- Significant increase in Backlog (+7.9%), to more than EUR2.2bn, and in
the housing property portfolio (+14.5%)
- A solid financial structure with a financing capacity of EUR454.4m
- Projected 2019 dividend of at least EUR2.50 per share
Today, Kaufman & Broad SA
announced its results for the
? Key sales data first half of the 2019 fiscal
year (from December 1, 2018 to
May 31, 2019).
(H1 2019 vs. H1 2018)
Nordine Hachemi, Chairman and
Chief Executive Officer of
Kaufman & Broad, made the
following comments:
? Orders:
? Housing: 4,177 units
(+0.7%) "Kaufman & Broad's H1 2019
EUR807.8m incl. tax (- 6.5%) results are in line with our
expectations. The new housing
? Commercial property: market should be in decline
EUR118.6m overall for the year, at around
115,000 housing units. This
decline is primarily due to the
decrease in the number of
? Take-up period for buliding permits issued.
Housing:
5.1 months (stable vs. H1
2018)
"Conversely, demand for housing
is still high, which is visible
through a stable take-up period
for Kaufman & Broad's programs,
at less than six months.
? Key financial data
(H1 2019 vs. H1 2018)
"Sales performance in H1 was
stable, as anticipated.
Nevertheless, the generally
slower pace in building permit
issuance could lead to a
decrease in new programs opening
? Revenue: in the second half.
Housing: EUR610.9M (+0.3%)
Overall: EUR703.8m (- 9.4%)
"On top of this, the increases
? Gross margin: in the land reserve (+14.5%) and
in overall Backlog (+7.9%)
confirm our strong long-term
growth capacity. The 13.5%
EUR135.6m, 19.3% of revenue increase in Housing Backlog, now
more than EUR2bn, allow a good
visibility for our business.
? Adjusted EBIT:
EUR67.7m, 9.6% of revenue
? Attributable net income:
EUR38.5m (+1.9%)
? Net cash:
"In Business Property, the
EUR54.6m vs. EUR50.0m at end building permit for block A7A8
2018 in the Austerlitz district was
filed in May. This 92,000 sq.m
project is made up of offices,
retail space, housing, and a
? Financing capacity: hotel. It seems reasonable to
expect that the building permit
will come through in late 2020 /
early 2021.
EUR454.4m (EUR353.4m at end
2018)
"In this context, Kaufman &
Broad sets the following
? Key growth indicators projections for the current
year: revenue should stand at
around EUR1.5bn, with an around
5% increase in Housing and a
(H1 2019 vs. H1 2018) decline in Commercial business,
in line with expectations.
"The gross margin ratio is
expected to hold at around 19%
and the adjusted EBIT ratio
? Overall backlog: should remain above 9%.
EUR2,253.1m (+7.9%) Attributable net income should
be at least equal to 2018
levels. Given the expected
financial structure and results,
Of which Housing: EUR2,026.4m a dividend of at least EUR2.50
(+13.5%) per share should be proposed to
the Board of Directors for the
2019 fiscal year."
? Housing property
portfolio:
32,109 units (+14.5 %)
Sales activities
? Housing
In H1 2019, in value terms, housing orders totaled EUR807.8m including tax,
a 6.5% decrease compared with H1 2018. In volume, 4,177 units were ordered,
a 0.7% increase compared with the same period in 2018.
The take-up period for projects was 5.1 months in the first half of 2019,
stable compared with H1 2018 (5.1 months).
The commercial offer, 97% of which is located in high-demand, low-supply
areas (A, Abis and B1), amounted to 3,575 housing units at the end of May
2019 (3,527 housing units at the end of May 2018).
Breakdown of the customer base
For the first half of 2019, orders in value (excl. tax) from first-time
buyers were down by 23% and represented 15% of sales. Orders from
second-time buyers decrease by 16%, making up 9% of sales. Orders from
investors accounted for 32% of sales (26% just for the Pinel Scheme). Block
sales made up 43% of housing orders, up by 10% compared with H1 2018, when
they represented 37% of orders. Moreover, around 52% of block orders were
for managed housing (for tourists, students, business travelers, and
seniors).
? Commercial Property
In H1 2019, the Commercial Property segment recorded net orders of EUR118.6m
including tax.
The building permit for block A7A8 in the Austerlitz district was filed in
May. This 92,000 sq.m project is made up of offices, retail space, housing,
and a hotel. Given the upcoming elections, it seems reasonable to expect
that the building permit will come through in late 2020 / early 2021.
Kaufman & Broad is currently marketing or studying around 293,000 sq.m of
office space and around 126,000 sq.m of logistics and industrial space.
It is also currently building around 63,000 sq.m in office space.
Two XXL logistics platforms with a total surface area of 150,000 sq.m were
also delivered in the first half, to a subsidiary of the Casino group and to
Lapeyre (Saint Gobain group).
At the end of May 2019, the commercial backlog amounted to EUR226.7m.
? Forward-looking sales and development indicators
At May 31, 2019, the housing backlog amounted to EUR2,026.4m (excl. tax),
i.e. 18.8 months of business. At the same date, Kaufman and Broad had 200
housing programs on the market, representing 3,575 housing units (compared
with 217 programs representing 3,527 housing units at the end of May 2018).
The housing property portfolio represents 32,109 units, up 14.5% compared
with the end of May 2018, corresponding to potential revenue of around four
years of business.
? Financial results
? Business volumes
Total revenues amounted to EUR703.8m (excl. tax), down 9.4% compared to H1
2018.
Revenue from Housing amounted to EUR610.9m (excl. tax), versus EUR608.8m
(excl. tax) in H1 2018. This represents 86.8 % of group revenue. Revenue
from Apartments was down by 1.2% compared to H1 2018 and stood at EUR566.6m
(excl. tax). Revenue from Single-family homes in communities amounted to
EUR44.3m (excl. tax), versus EUR35.2m (excl. tax) in H1 2018.
Revenue from Commercial Property amounted to EUR89.8m (excl. tax), compared
with EUR163.9m (excl. tax) in H1 2018.
? Profitability highlights
Gross margin for H1 2019 amounted to EUR135.6m, compared with EUR150.0m in
H1 2018. The gross margin ratio was 19.3%, stable compared with H1 2018
(19.3%).
Current operating expenses amounted to EUR72.9m (10.4 % of revenue), versus
EUR78.5m in H1 2018 (10.1% of revenue).
Current operating income stood at EUR62.7m, versus EUR71.5m in H1 2018. The
current operating margin ratio was 8.9%, compared with 9.2% in H1 2018.
The group's adjusted EBIT amounted to EUR67.7m in H1 2019 (compared with
EUR77.6m in H1 2018). The adjusted EBIT margin was 9.6% (compared with 10.0%
in H1 2018).
Attributable net income for H1 2019 was EUR38.5m (compared with EUR37.8m in
H1 2018). At May 31, 2019, in accordance with IFRS IAS12, this attributable
net income includes a reduction in tax liability worth EUR3.8m, due to the
provisions voted on under the 2018 finance law that gradually reduces the
normal tax rate on companies from 33.3% to 26.5% in 2021, and to 25.0%
starting in 2022. If these tax provisions change in the future, the company
will have to increase its tax liability accordingly.
? Financial structure and liquidity
The net cash position was EUR54.6m at May 31, 2019, compared with net cash
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of EUR50.0m at the end of 2018, a EUR4.6m improvement. Cash assets
(available cash and investment securities) amounted to EUR204.4m, compared
with EUR253.4m at November 30, 2018. The group's financing capacity was
EUR454.4m (EUR353.4m at November 30, 2018).
The working capital requirement amounted to EUR105.9m (7.1% of revenue, over
12 consecutive months), compared with EUR110.8m at November 30, 2018 (7.1%
of revenue); restated for the 2018 dividend paid on June 14, 2019, it would
have been EUR159.5m, i.e. 10.7% of revenue .The tight control over working
capital primarily relies on the very short take-up period for the Group's
programs.
On May 6, 2019, Kaufman & Broad SA decreased its capital by canceling
210,732 treasury shares worth a value of EUR7.2m, bringing the number of
shares in its capital from 21,864,074 to 21,653,342 shares.
? Dividend
On June 14, 2019, Kaufman & Broad paid a dividend of EUR2.50 per share for
the year ended November 30, 2018 with a full or partial stock dividend
option. The issue price of these new shares was set at EUR32.23,
representing 95% of the average price of Kaufman & Broad shares on the
Euronext Paris regulated market over the 20 trading sessions preceding the
date of said Shareholders' Meeting, less the net dividend of EUR2.50 per
share, rounded up to the nearest euro cent.
The option was open for acceptance from May 17 to June 6, 2019 inclusive. At
the end of this period, the shareholders who chose payment of the dividend
in stock accounted for 8.96% of Kaufman & Broad SA shares. 150,690 new
shares were issued for the purpose of paying the stock dividend,
representing 0.70% of the share capital and 0.59% of the voting rights of
Kaufman & Broad SA on the basis of the share capital and voting rights as of
May 31, 2019. Settlement/delivery of the shares and their admission to
trading on the Euronext Paris regulated market took place on June 14, 2019.
The total dividend in cash to be paid to those shareholders who did not
accept the stock dividend option, or who opted for partial payment in
shares, amounted to EUR48.7m and was paid on June 14, 2019.
? KB Actions 2019
In a press release published on May 13, 2019, Kaufman & Broad SA announced
that it would set up a shareholding plan reserved for group employees,
called "KB Actions 2019," through a capital increase.
In addition to the information given in the press release issued on May 13,
2019, the maximum number of shares that may be issued under the shareholding
plan was set at 300,000 shares.
Through the "KB Actions 2019" shareholding plan, Kaufman & Broad marks its
desire to get all employees more closely involved in the Group's
performance, through an ambitious pay policy.
? 2019 outlook
For the entire current year, revenue should stand at around EUR1.5bn, with
around 5% growth in the Housing segment, and a decline in Commercial
property, in line with expectations. The gross margin ratio is expected to
hold at around 19% and the adjusted EBIT ratio should remain above 9%.
Attributable net income should be at least as high as in 2018, and as a
result, a dividend of at least EUR2.50 per share for the 2019 fiscal year
will be proposed to the Board of Directors.
This press release is available at www.kaufmanbroad.fr [1]
? Next regular publication date:
? September 30, 2019: Q3 2019 results (after market close)
Chief Financial Officer Press Relations
Bruno Coche
01 41 43 44 73
Infos-invest@ketb.com
Media relations: Hopscotch Capital:
Valerie Sicard
01 58 65 00 77 / k&b@hopscotchcapital.fr
Kaufman & Broad: Emmeline Cacitti
06 72 42 66 24 / ecacitti@ketb.com
About Kaufman & Broad - Kaufman & Broad has been designing, developing,
building, and selling single-family homes in communities, apartments, and
offices on behalf of third parties for more than 50 years. Kaufman & Broad
is one of the leading French developers-builders due to the combination of
its size and profitability, and the strength of its brand.
Kaufman & Broad's 2018 Registration Document was filed with the French
Financial Markets Authority ("AMF") under No. D.19-0228 on March 29, 2019.
It is available on the AMF (www.amf-france.org [2]) and Kaufman & Broad
(www.kaufmanbroad.fr [1]) websites. It contains a detailed description of
Kaufman & Broad's business activities, results, and outlook, as well as the
associated risk factors. Kaufman & Broad specifically draws attention to the
risk factors set out in Chapter 1.2 of the Registration Document. The
occurrence of one or more of these risks might have a material adverse
impact on the Kaufman & Broad group's business activities, net assets,
financial position, results, and outlook, as well as on the price of Kaufman
& Broad's shares.
This press release does not amount to, and cannot be construed as amounting
to a public offering, a sale offer or a subscript ion offer, or as intended
to seek a purchase or subscription order in any country.
? Glossary
Backlog: a summary that, at any given moment, makes it possible to estimate
revenue for the coming months.
Lease-before-completion (BEFA): a lease-before-completion involves a
customer leasing a building before it is built or redeveloped.
Financing capacity: corresponds to cash assets plus lines of credit not yet
drawn
Take-up period: The inventory take-up period is the number of months
required for the available housing units to be sold if sales are maintained
at the same pace as in previous months, i.e., housing units outstanding
(offer available) per quarter divided by the number of orders per quarter
ended and with orders in turn divided by three.
Adjusted EBIT: corresponds to income from current operations restated for
capitalized "IAS 23 revised" borrowing costs, which are deducted from gross
margin.
EHU: The EHUs (Equivalent Housing Units) are a direct reflection of business
volumes. The number of EHUs is a function of multiplying (i) the number of
housing units of a given program for which notarized sales deeds have been
signed by (ii) the ratio between the group's property expenses and
construction expenses incurred on said program and the total expense budget
for said program.
Gross margin: corresponds to revenue less cost of sales. The cost of sales
is made up of the price of land and any related costs plus the cost of
construction.
Property supply: it is represented by the total inventory of properties
available for sale as of the date in question, i.e. all unordered housing
units as of this date (minus the programs that have not entered the
marketing phase).
Property portfolio: represents all of the land for which any commitment
(contract of sale, etc.) has been signed.
Orders: measured in volume (units) and in value terms; orders reflect the
group's sales activity. Orders are recognized in revenue based on the time
necessary for the "conversion" of an order into a signed and notarized deed,
which is the point at which income is generated. In addition, in the case of
multi-occupancy housing programs that include mixed-use buildings
(apartments, business premises, retail space, and offices), all of the floor
space is converted into housing unit equivalents.
Take-up rate: The take-up rate represents the percentage of the initial
inventory for a property program that is sold on a monthly basis (sales per
month divided by the initial inventory), i.e., net monthly orders divided by
the ratio between the opening inventory and the closing inventory, divided
by two.
Units: Units are the number of housing units or equivalent housing units
(for mixed projects) for a given project. The number of equivalent housing
units is calculated as a ratio between the surface area by type (business
premises, retail space, or offices) and the average surface area of the
housing units previously obtained.
Sale-before-completion (VEFA): a sale-before-completion is an agreement by
which the vendor transfers its rights to the land and its ownership of the
existing buildings to the purchaser immediately. The future structures will
become the purchaser's property as they are completed: the purchaser is
required to pay the price of these structures as the works progress. The
seller retains the powers of the Project Owner until the acceptance of the
work.
NOTES
? Financial data
Key consolidated data
EUR thousands H1 H1
2019 2018
Revenue 703,751 776,864
610,915 608,821
? Of which housing
89,782 163,864
? Of which Commercial Property
3,054 4,179
? Of which other
Gross margin 135,631 150,036
Gross margin ratio (%) 19.3% 19.3%
Current operating income 62,685 71,543
Current operating margin (%) 8.9% 9.2%
Adjusted EBIT* 67,733 77,553
Adjusted EBIT margin (%) 9.6% 10.0%
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