DJ Kaufman & Broad SA: Results for the first nine months of 2019
Kaufman & Borad SA
Kaufman & Broad SA: Results for the first nine months of 2019
30-Sep-2019 / 17:36 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, September 30, 2019
Results for the FIRST NINE MONTHS of 2019
· Growth in overall backlog of 5.8%, i.e. EUR2.2 billion
· Full-year guidance confirmed:
· Growth in net income
· The aim is to submit a proposal to the Board of Directors to pay a
dividend of at least EUR2.50 per share for fiscal year 2019
Kaufman & Broad SA today
announced its results for the
· Key sales data first nine months of fiscal
year 2019 (from December 1,
2018 to August 31, 2019).
Nordine Hachemi, Chairman and
(9m 2019 vs. 9m 2018) Chief Executive Officer of
Kaufman & Broad, made the
following statement:
· Housing orders:
"The results for the first nine
months of 2019 are in line with
EUR1,146 million (-7.1%) our expectations and with our
first-half performance. They
confirm that Kaufman & Broad's
business model has the capacity
5,626 units (-5.9%) to deliver solid shareholder
returns over the long term.
This capacity is based on its
cash-generating profitability,
· Commercial orders: EUR118.7 shoring up its financial
million strength and growth prospects.
· Take-up period for Housing*:
5.7 months vs. 6.2 months, i.e.
-0.5 months
The new housing market
continues to enjoy solid
demand, as reflected in take-up
rates which remain healthy.
However, as we had predicted at
· Key financial data the end of the first half, the
issuance of building permits is
slowing down due to the
upcoming elections and this
(9m 2019 vs. 9m 2018) took a toll on new project
launches in the third quarter.
This is set to continue over
the coming months, resulting in
a decrease in orders of about
10% in the market over the full
year; this is also likely to be
the case at Kaufman & Broad.
· Revenue:
EUR1,029.7 million (-6.1%)
Of which Housing: EUR920.1
million (+3.7%)
Despite such unfavorable
conditions, Kaufman & Broad
delivered another set of solid
· Gross margin: economic and financial
performances in the first nine
months of the fiscal year.
EUR198.4 million (19.3% of
revenue)
· Adjusted EBIT: The increase in our land
EUR96.6 million (9.4% of reserve (+12.4%) and in our
revenue) overall backlog (+5.8%) is
evidence of our ability to
· Attributable net income: generate sustainable growth and
EUR54.0 million (+4.2%) give us a good view of the
years to come.
· Cash net of financial debt:
EUR3.6 million vs. EUR36.7
million at end-August 2018
In these circumstances, Kaufman
& Broad's revenue for the
current year should amount to
around EUR1.5 billion, with
about 5% growth in the Housing
segment and a decline in the
· Key growth indicators Commercial Property segment in
line with expectations.
(9m 2019 vs. 9m 2018)
The gross margin ratio is
expected to hold at around 19%
and the adjusted EBIT ratio
should remain above 9%.
· Overall backlog: EUR2,213.5 Last of all, the expected
million (+5.8%) growth in attributable net
income combined with a still
healthy financial structure
should result in a proposal
Of which Housing: EUR2,002.5 being submitted to the Board of
million (+9.9%) Directors to pay out a dividend
of at least EUR2.50 per share
for fiscal year 2019."
· Property portfolio: 33,511
units (+12.4%)
Sales activity
· Housing segment
Housing orders in the first nine months of 2019 amounted to EUR1,146.4
million (including VAT) in value terms, which is 7.1% lower than in the
first nine months of 2018. In volume terms, they corresponded to 5,626
housing units, which is 5.9% lower than in the same period in 2018.
The take-up period for projects was 5.7 months during the first nine months
of the year, which is 0.5 months better than in the same period in 2018 (6.2
months).
Housing supply, 98% of which concerns programs located in high-demand /
low-supply areas (A, Abis and B1), totaled 3,569 units at end-August 2019
(4,142 housing units at end-August 2018).
Breakdown of the customer base
During the first nine months of 2019, orders (excluding VAT) placed by
first-time buyers were lower in value terms than in the same period in 2018
and corresponded to 16% of sales. Second-time buyers accounted for 9% of
sales vs. 11% in the same period in 2018. Orders placed by investors
accounted for 34% of sales (of which 27% under the Pinel Scheme alone). The
portion of block sales increased by 6%, representing 41% of sales in the
first nine months of 2019; over 44% of these sales were of managed housing
(for tourists, students, business travelers and seniors).
· Commercial Property segment
The Commercial Property segment recorded net orders of EUR118.7 million
(including VAT) in the first nine months of 2019.
Kaufman & Broad is currently marketing or studying around 300,000 sq.m of
office space and around 125,000 sq.m of logistics and industrial space. It
is also currently building around 71,000 sq.m of office space.
The APAVE head office for the South-West region in Toulouse was delivered
recently and will be inaugurated soon.
Earlier in the year the group delivered the POLARIS building in Nantes
(6,500 sq.m) whose user is the Nantes metropolitan council.
Last of all, work is still underway on the following buildings: Highlight in
Courbevoie (31,000 sq.m, of which 24,000 sq.m of office space and 7,000 sq.m
of hotel accommodation), Green Oak in Arcueil (10,700 sq.m of office space
with a mixed wood / concrete structure), as well as buildings in Bordeaux
(27,000 sq.m of office space for Caisse des Dépôts) and Lille (7,000 sq.m,
EFS head office).
The Commercial Property backlog at end-August 2019 amounted to EUR210.9
million.
· Leading sales and development indicators
The Housing backlog at August 31, 2019 amounted to EUR2,002.5 million
(excluding VAT), i.e. 18.1 months of business. At the same date, Kaufman and
Broad had 208 housing programs on the market, corresponding to 3,569 housing
units (compared with 220 programs representing 4,142 housing units at
end-August 2018).
The Housing property portfolio amounts to 33,445 units. This is 12.4% higher
than at end-August 2018 and corresponds to over 3 years of sales activity.
· Financial results
· Business volumes
Total revenues amounted to EUR1,029.7 million (excluding VAT), down 6.1%
compared with the same period in 2018.
Revenue from Housing came to EUR920.1 million (excluding tax) vs. EUR886.9
million (excluding tax) in the first nine months of 2018. This accounts for
89.4% of group revenue. Revenues from the Apartments business were up just
1.8% compared with the first nine months of 2018 and amounted to EUR850.7
million (excluding VAT). Revenue from Single-family Homes in Communities
totaled EUR69.4 million (excluding VAT) vs. EUR51.0 million (excluding VAT)
in the same period in 2018.
Revenues from the Commercial Property segment totaled EUR104.7 million
(excluding VAT), compared with EUR202.8 million for the same period in 2018.
· Profitability highlights
The gross margin for the first nine months of 2019 totaled EUR198.4 million
compared with EUR211.8 million in 2018. The gross margin ratio was 19.3%,
holding steady compared with the same period in 2018.
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DJ Kaufman & Broad SA: Results for the first nine -2-
Current operating expenses amounted to EUR109.7 million (10.7% of revenues),
compared with EUR113.6 million for the same period in 2018 (10.4% of
revenues).
Current operating income totaled EUR88.7 million, compared with EUR98.3
million in the first nine months of 2018. The current operating margin ratio
was 8.6%, compared with 9.0% for the same period in 2018.
The Group's adjusted EBIT amounted to EUR96.6 million in the first nine
months of 2019 (vs. EUR106.3 million in the same period in 2018). The
adjusted EBIT margin ratio was 9.4% (compared with 9.7% for the same period
in 2018).
Attributable net income came to EUR54.0 million (vs. EUR51.8 million for the
first nine months of 2018).
At August 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 stood at EUR3.6 million at August 31, 2019, compared
with positive net cash of EUR36.7 million at end-August 2018. Cash assets
(available cash and investment securities) amounted to EUR154.4 million,
compared with EUR253.4 million at November 30, 2018. Financing capacity
stood at EUR404.4 million, compared with EUR353.4 million at end-November
2018 (and EUR389.7 million at end-August 2018).
Working capital requirement amounted to EUR176.4 million, i.e. 11.8% of
revenues over 12 consecutive months, compared with EUR110.8 million at
November 30, 2018 (7.1% of revenues). The tight control over working capital
was largely attributable to the very rapid take-up of the group's programs.
· Share offer reserved for employees
Pursuant to the decision by its Board of Directors on May 2, 2019, Kaufman &
Broad launched, from September 9 to 23 inclusive, a reservation period to a
share offering reserved for group employees that the company may launch
soon. According to the decision of the Board of Directors of July 9, this
offering would be made by issuance of new shares representing a maximum of
1.37% of the share capital at August 31, 2019. Shares would be subscribed
through the "KB Actions 2019" compartment of the corporate mutual fund (FCPE
"KB Actions") and would be subject to lock-up until July 1, 2024 unless
released early where permitted by applicable regulations.
The main objective is to get employees more closely involved in the
company's future by allowing them to subscribe to shares on preferential
terms. Employees currently hold close to 13.9% of their company's capital
and, together, are now Kaufman & Broad's biggest shareholder. An active
policy promoting employee share ownership is a guarantee of independence and
stability for the company, as well as an opportunity for each employee to
benefit from its growth.
· 2019 outlook
For fiscal year 2019, Kaufman & Broad's revenue should stand at around
EUR1.5 billion, with about 5% growth in the Housing segment and a decline in
the Commercial Property segment in line with expectations.
The gross margin ratio is expected to hold at around 19% and the adjusted
EBIT ratio should remain above 9%.
Last of all, the expected growth in attributable net income combined with a
still healthy financial structure should result in a proposal being
submitted to the Board of Directors to pay out a dividend of at least
EUR2.50 per share for fiscal year 2019.
This press release is available at www.kaufmanbroad.fr [1]
· Next regular publication date:
· January 30, 2020: 2019 annual results (after the market close)
Contacts
Chief Financial Officer Press Relations
Bruno Coche
01 41 43 44 73
Infos-invest@ketb.com
Media relations: Hopscotch Capital:
Violaine Danet
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 developer-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 subscription offer, or as intended
to seek a purchase or subscription order in any country.
· Glossary
Adjusted EBIT: corresponds to income from current operations restated for
capitalized "IAS 23 revised" borrowing costs, which are deducted from gross
margin.
Backlog: in the case of sales before completion (VEFA), this covers orders
for housing units that have not been delivered and for which a notarized
deed of sale has not yet been signed, and orders for housing units that have
not been delivered for which a notarized deed of sale has been signed for
the portion not yet recorded in revenue (in the case of a program for which
an advance of 30% has been received, 30% of the revenue from a housing unit
for which a notarized deal has been signed is recognized as revenue, while
70% is included in the backlog). The backlog is an overview of the situation
at a given time, which enables the revenue yet to be recognized over the
coming months to be estimated, thus supporting the Group's forecasts - with
the proviso that there is an element of uncertainty in the transformation of
the backlog into revenue, particularly for orders that have not yet been
signed.
EHU: EHUs (Equivalent Housing Units) are a direct reflection of business
volumes. The number of EHUs is calculated by 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.
Financing capacity: corresponds to cash assets plus lines of credit not yet
drawn.
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.
Lease-before-completion (BEFA): a lease-before-completion involves a
customer leasing a building before it is built or redeveloped.
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 to "convert" 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.
Property portfolio: represents all of the land for which any commitment
(contract of sale, etc.) has been signed.
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).
Sale-before-completion (VEFA): a sale-before-completion is an agreement by
which the seller 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 acceptance of the work.
Take-up period: the take-up period is the number of months required for the
available housing units to be sold, if sales continue at the same rate as in
previous months, or the number of housing units (available supply) per
quarter divided by the orders for the previous quarter, and divided by three
in turn.
Take-up rate: the take-up rate represents the percentage of the initial
inventory that is sold on a monthly basis for a property program (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
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(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.
NOTES
· Financial data
Key consolidated data
EUR thousands Q3 9M Q3 9M
2019 2018
2019 2018
Revenue 325,926 1,029,678 319,473 1,096,337
309,199 920,114 278,093 886,914
· Of which Housing
14,876 104,658 38,973 202,837
· Of which Commercial
Property
1,852 4,906 2,408 6,587
· Of which Other
Gross margin 62,814 198,445 61,807 211,843
Gross margin ratio (%) 19.3% 19.3% 19.3% 19.3%
Current operating income 26,017 88,702 26,731 98,273
Current operating margin 8.0% 8.6% 8.4% 9.0%
(%)
Adjusted EBIT* 28,875 96,608 28,706 106,258
Adjusted EBIT margin (%) 8.9% 9.4% 9.0% 9.7%
Attributable net income 15,461 53,961 13,994 51,763
Attributable net earnings EUR0.71 EUR2.47 EUR0.64 EUR2.37
per share (EUR/share)**
* Adjusted EBIT corresponds to current operating income adjusted for
capitalized "IAS 23 revised" borrowing costs, which are deducted from the
gross margin.
** Based on the number of shares that make up Kaufman & Broad S.A.'s share
capital, i.e. 21,864 shares at August 31, 2018 and 21,804,032 shares at
August 31, 2019
Consolidated income statement*
EUR thousands Q3 9M Q3 9M
2019 2018
2019 2018
Revenue 325,926 1,029,677 319,473 1,096,337
Cost of sales -263,112 -831,232 -257,666 -884,494
Gross margin 62,814 198,445 61,807 211,843
Sales expenses -6,968 -21,737 -8,736 -26,132
Administrative expenses -16,679 -48,729 -13,906 -48,316
Technical and customer -5,610 -16,762 -5,329 -16,432
service expenses
Development and program -7,539 -22,518 -7,105 -22,691
expenses
Current operating income 26,017 88,702 26,731 98,273
Other non-recurring income - - - -
and expenses
Operating income 26,017 88,702 26,731 98,273
Cost of net financial debt -635 -3,245 -1,854 -6,998
Other financial income and - - - -
expenses
Income tax -6,973 -22,099 -7,313 -27,724
Share of income (loss) of 704 2,383 1,165 3,216
equity affiliates and
joint ventures
Net income of the 19,113 65,742 18,730 66,767
consolidated entity
Minority interests 3,652 11,781 4,735 15,004
Attributable net income 15,461 53,961 13,994 51,763
*Not approved by the Board of Directors and not audited.
Consolidated balance sheet*
EUR thousands August 31, November 30,
2019 2018
ASSETS
Goodwill 68,661 68,661
Intangible assets 90,851 90,017
Property, plant and equipment 7,010 8,407
Equity affiliates and joint ventures 7,935 6,185
Other non-current financial assets 2,055 1,826
Deferred tax assets 4,233 4,233
Non-current assets 180,746 179,330
Inventories 444,123 396,786
Accounts receivable 404,864 406,309
Other receivables 172,374 172,173
Cash and cash equivalents 154,360 253,358
Prepaid expenses 1,456 1,100
Current assets 1,177,176 1,229,726
TOTAL ASSETS 1,357,922 1,409,056
LIABILITIES
Share capital 5,669 5,685
Additional paid-in capital 192,900 168,816
Attributable net income 53,961 72,972
Attributable shareholders' equity 252,530 247,473
Minority interests 8,152 14,282
Shareholders' equity 260,681 261,755
Non-current provisions 33,341 33,402
Non-current financial liabilities 148,815 199,652
(maturing > 1 year)
Deferred tax liability 64,723 42,692
246,879 275,746
Non-current liabilities
Current provisions 2,027 2,265
Other current financial liabilities 1,935 3,705
(maturing < 1 year)
Accounts payable 739,441 705,958
Other payables 106,619 159,199
Current tax - -
Prepaid income 340 428
Current liabilities 850,362 871,555
TOTAL LIABILITIES 1,357,922 1,409,056
*Not approved by the Board of Directors and not audited
· Operational data
Housing Q3 9M Q3 9M
2019 2018
2019 2018
Revenue (EUR million, 309.2 920.1 278.1 886.9
excluding VAT)
284.1 850.7 262.2 835.9
· Of which apartments
25.1 69.4 15.8 51.0
· Of which single family
homes in communities
Deliveries (EHUs) 1,555 4,753 1,581 5,180
1,454 4,490 1,520 4,963
· Of which apartments
101 263 61 217
· Of which single family
homes in communities
Net orders (number) 1,449 5,626 1,832 5,981
1,348 5,354 1,736 5,704
· Of which apartments
101 272 96 277
· Of which single family
homes in communities
Net orders (EUR million, 338.6 1,146.4 369.2 1,233.5
including VAT)
311.7 1,065.9 341.7 1,152.8
· Of which apartments
26.9 80.5 27.5 80.7
· Of which single family
homes in communities
Property supply at end of 3,569 4,142
the period (number)
End-of-period backlog
2,002.5 1,822.3
· In value terms (EUR
million, excl. VAT)
1,883.0 1,727.0
· Of which apartments
119.5 95.3
· Of which single family
homes in communities
18.1 17.1
· In months of business
End-of-period land reserve 33,445 29,766
(number)
Commercial Q3 9M Q3 9M
2019 2018
2019 2018
Revenue (EUR million, 14.9 104.7 38.9 202.8
excluding VAT)
Net orders (EUR million, 0.2 118.7 - 346.2
including VAT)
End-of-period backlog (EUR 211.0 269.4
million, excl. VAT)
Regulatory filing PDF file
Document title: Results for the first nine months of 2019
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