DJ Kaufman & Broad SA: Q1 2020 RESULTS
Kaufman & Broad SA
Kaufman & Broad SA: Q1 2020 RESULTS
19-March-2020 / 19:45 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, Thursday, 19 March, 2020
A SOLID FINANCIAL POSITION IN THE CURRENT CONTEXT OF HEALTH CRISIS
Q1 2020 Results
SUSPENSION OF 2020 OBJECTIVES
· Q1 2020 results at 29 February 2020 are characterized by:
· An overall Backlog of EUR 3,403.3m (excl.VAT) (+51.6% vs Q1 2019) and
a housing property portfolio up +8.2 % vs Q1 2019 at 33,429 units,
· A gross margin ratio of 19.1% and an EBIT margin of 8.5%,
· No net debt and financing capacity of EUR 412.5 million.
· In light of the current health crisis, the Board of Directors has
decided:
· to bring forward the publication of Q1 2020 results,
· to suspend the 2020 objectives previously announced
Kaufman &
Broad SA
· Key sales data (Q1 2020 vs Q1 2019) is today
announcin
g its
unaudited
results
for Q1
2020
(from 1
December
· Orders 2019 to
29
Total: EUR 1,401.5M incl. VAT (x February
3.0) 2020).
Nordine
Hachemi,
Chairman
Of which: and Chief
Commercial: EUR 1,075.0M incl. Executive
VAT(x 9.5) Officer
of
Kaufman &
Broad,
Housing: EUR 326.5M incl. VAT made the
(-8.6%) following
1,482 units (-16.3%) comments:
· Take-up period2 for Housing:
"In the
6.8 months vs. 5.5 months (+1.3 months) context
of the
recent
developme
nts of
the
current
health
· Key financial data crisis
and its
impact on
general
(Q1 2020 vs. Q1 2019) economic
activity,
the board
of
· Revenues: directors
of
Total: EUR 299.2m (-8.8 %) Kaufman &
Of which Housing: EUR 272,2m Broad has
(-4.8%) decided
to
anticipat
e the
release
of its
results
· Gross margin: for the
first
EUR 57.1m (19.1% of revenue) quarter
of 2020,
in order
to inform
the
market of
its
· EBIT: analysis
of the
EUR 25.4m (8.5 % of revenue) situation
as quicly
as
possible.
· Attributable net income:
EUR 13.2m (-8.1%)
Kaufman &
Broad
fully
takes its
responsib
· Net cash 1: ilities
towards
EUR 9.2m (vs. EUR 56.0m at end-2019) its
employees
, whose
safety
and
health is
essential
· Financing capacity: , but
also its
EUR 412.5m (vs EUR 458.1m to customers
end 2019) , who are
still
being
provided
with
Kaufman &
Broad's
services
· Main growth indicators (Q1 2020 vs Q1 when
2019) possible,
and its
suppliers
, whose
ability
to get
through
this
crisis is
· Overall backlog: vital in
order to
EUR 3,403.3m (+51.6 %) resume
Of which Housing: EUR 2,073.2m (+5.0%) construct
ion
activitie
s as soon
as
possible.
· Housing property portfolio:
33,429 units (+8.2 %)
During
these
difficult
times,
the end
of which
is
currently
unknown,
and
beyond
continuin
g to
control
its
costs,
working
capital
requireme
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DJ Kaufman & Broad SA: Q1 2020 RESULTS -2-
nts and
capital
expenditu
res,
Kaufman &
Broad
relies in
particula
r on two
fundament
al
parameter
s:
· A net
debt
equal
to
zero,
which
provide
s a
very
strong
financi
al
structu
re at
29
Februar
y 2020
featuri
ng:
· A
high
level
of
availab
le cash
of
EUR 41
2.5
million
;
· An
average
maturit
y of
its
gross
debt
higher
than 4
years;
·
Consoli
dated
shareho
lders'
equity
of
EUR 30
8.8
million
·
Growth
indicat
ors
allowin
g
Kaufman
& Broad
to
project
itself
beyond
the
next
coming
months:
· An
overall
backlog
of
EUR 3.
403
billion
and
EUR 2.
073
billion
for the
sole
Housing
activit
y. The
backlog
is a
summary
at a
given
time,
which
enables
the
revenue
yet to
be
recogni
zed
over
the
coming
months
to be
estimat
ed,
thus
support
ing the
group's
forecas
ts -
being
specifi
ed that
there
is an
element
of
uncerta
inty in
the
transfo
rmation
of the
backlog
into
revenue
,
particu
larly
for
orders
that
have
not yet
been
signed
(i.e.
approxi
mately
40% for
Housing
and 85%
for
Commerc
ial
Propert
y).
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DJ Kaufman & Broad SA: Q1 2020 RESULTS -3-
· * A
Housing
propert
y
portfol
io
which
reached
a
record
high of
33 429
units
as of
end of
Februar
y 2020.
The
Housing
propert
y
portfol
io
represe
nts all
of the
land
for
which
any
commitm
ent
(contra
ct of
sale,
etc.)
has
been
signed.
Regarding
the 2020
outlook,
in light
of the
current
health
crisis,
Kaufman &
Broad has
decided
to
suspend
its
annual
objective
s
announced
at the
end of
January
this
year.
Kaufman &
Broad
will
propose
new
objective
s for the
2020
financial
year as
soon as
the
conductin
g of a
forecast
for the
whole
financial
year will
be
appropria
te in
light of
the
general
situation
.
Kaufman &
Broad
will
continue
to
monitor
carefully
the
developme
nts of
the
health
crisis
over the
next
weeks and
will
inform
the
market of
its
impact on
its
activitie
s, if
necessary
"
Sales activity
· Housing
In Q1 2020, housing reservations in value terms stood at EUR 326.5m (incl.
VAT), i.e. 8.6% lower than 2019. In volume terms they stood at 1,482 homes,
down 16.3% vs. 2019.
The take-up period for projects was 6.8 months over three months, a 1.3
month deterioration compared to 2019 (5.5 months).
Housing supply, with 96% of projects located in high-demand, low-supply
areas (A, Abis, and B1), stood at 3,359 homes at end-February 2020 (3,261 at
end-February 2019).
Breakdown of the customer base
Orders from first-time buyers accounted for 9 % of sales in volume terms,
while those from second-time buyers accounted for 5 %. Orders from investors
represent 49% of sales (36% for the Pinel scheme alone) while block sales
accounted for 37%, of which around 30% is managed housing (tourism, student,
business, or senior)
· Commercial property
In Q1 2020, the Commercial Property division recorded net orders of
EUR 1,075.0m including VAT (vs. EUR 113.8m incl. VAT at end February
2019).
Kaufman & Broad is currently marketing or studying around 155,000 m² of
office space and about 74,500 m² of logistics and industrial premises space,
as well as 115,000 m² for which the deeds of sale are yet to be signed.
Meanwhile, around 73,000 m² of office space is under construction as well as
36,000m² of logistics space.
· Leading sales and development indicators
On 29 February 2020, the Housing backlog stood at EUR 2,073.2m (excl. VAT),
i.e. 18.6 months of business (vs. EUR 1,975.3m (excl. VAT) for 18.3 months
at end February 2019). As the same date, Kaufman and Broad had 181 home
programs on the market, representing 3,359 housing units, (194 programs
representing 3,261 housing units at the end of February 2019).
The housing property portfolio represents 33,429 units, up 8.2% compared
with the end of February 2019, corresponding to potential revenue of around
four years of business.
At the end of February 2020, the commercial backlog stood at EUR 1.330.0m
excl. VAT.
· Financial results
· Business volumes
Total revenue amounted to EUR 299.2m (excl. VAT), down 8.8% vs. 2019.
The impact of building sites interruptions in the Ile-de-France region,
during transport strikes is estimated around EUR 15 million (excl. VAT) on
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Q1 revenue
Housing revenue amounted to EUR 272.2m (excluding VAT). It represents 91.0%
of group revenues (vs. EUR 286.0m excl. VAT., i.e. 87.2% in 2019).
Revenue from the Apartments business was down -7.8% compared with 2019, and
amounted
to EUR 245.9m (excl. VAT).
Commercial revenue amounted to EUR 25.2m (excl. VAT), compared with
EUR 41.0m (excl. VAT) in 2019.
The other businesses generated revenue of EUR 1.8m (excl. VAT), compared
with EUR 1.1m in 2019.
· Profitability highlights
Gross margin for Q1 2020 came to EUR 57.1m, down compared to 2019. The
gross margin ratio stood at 19.1%, down vs. Q1 2019 (20.2%).
Current operating expenses amounted to EUR 31.7m (10.6% of revenue),
compared with EUR 35.6m for 2019 (10.9% of revenue).
Current operating profit came to EUR 25.4m, compared with EUR 30.6m in
2019. The current operating margin ratio was 8.5%, compared with 9.3% in
2019.
Attributable net income for 2020 was EUR 13.2m, down compared to February
2019 by 8.1%.
· Financial structure and liquidity
Positive net cash stood at EUR 9.2m as of 29 February 2020 (excl. impact of
IFRS 16) vs. positive net cash of EUR 56.0m at 30 November 2019. Cash
assets (available cash and investment securities) amounted to EUR 162.5m,
compared with EUR 208.1m at November 30, 2019.
The group's financing capacity was EUR 412.5m (EUR 458.1m at November 30,
2019).
The working capital requirement amounted to EUR 215.6m (14.9% of revenue),
compared with EUR 150.1m at November 30, 2019 (10.3% of revenue). The
increase is due to delays incurred on fund calls on transactions in the
Ile-de-France region, following transport strikes - excluding this impact,
the working capital requirement would have stood in a range of 11% to 13%.
· 2020 outlook
With respect to the outlook for full-year 2020, in light of the current
health crisis, Kaufman & Broad has decided to suspend its annual objectives
announced at the end of January. Kaufman & Broad will propose new 2020
objectives as soon as the conducting of a forecast for the whole financial
year will be appropriate in light of the general situation.
Kaufman & Broad will continue to monitor carefully the developments of the
health crisis over the next weeks and will inform the market of its impact
on its activities, if necessary.
This press release is available on the website www.kaufmanbroad.fr [1]
· Next regular publication date:
· Tuesday, May 5, 2020: Shareholders' Meeting
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
est l'un des premiers Développeurs-Constructeurs français par la combinaison
de sa taille, de sa rentabilité et de la puissance de sa marque.
Disclaimer
Certain information included in this press release are not historical facts
but are forward-looking statements. These forward-looking statements are
based on current beliefs, expectations and assumptions, including, without
limitation, assumptions regarding present and future business strategies and
the environment in which Kaufman & Broad SA operates, which is significantly
affected by the current health crisis. These forward-looking statements
speak only as of the date of this press release. Actual results may be
materially different from those expressed or implied by these
forward-looking statements. Forward-looking statements and statements are
not guarantees of future performances and are subjet to risks and
uncertainties which are difficult to assess and generally outside of the
control of Kaufman & Broad. In addition to the current health crisis, these
risks and uncertainties include those discussed and identified under Chapter
1.2. "Facteurs de risques" of the 2018 registration document of Kaufman &
Broad filed with the Autorité des marchés financiers (AMF) on 29 March 2019,
available on the Company's website (www.kaufmanbroad.fr) and the AMF's
website (www.amf-france.org). This press release includes only summary
information and does not purport to be comprehensive.
· Glossary
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 a summary 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.
EBIT: corresponds to income from current operations income, ie gross margin
less current operating expenses.
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.
Financing capacity: corresponds to cash assets plus lines of credit not yet
drawn.
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 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.
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 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.
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
(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 Q1 Q1
2020 2019
Restated***
Revenue 299,214 328,074
Of which housing 272,159 286,015
Of which Commercial Property 25,197 41,010
Of which other 1,858 1,049
Gross margin 57,098 66,172
Gross margin ratio (%) 19.1% 2.2%
Current operating income 25,354 30,563
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