DJ Kaufman & Broad SA: H1 2020 RESULTS
Kaufman & Broad SA
Kaufman & Broad SA: H1 2020 RESULTS
09-Jul-2020 / 18:37 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 9, 2020
H1 2020 Results
· *Robust sales activity* *with institutional investors: *
·
· *Overall orders in value terms: EUR 1.95bn (+110.7%)*
· *Housing orders: EUR 872m incl. VAT (+7.9%)*
· *Work resumed on all sites on May 31, 2020*
· *Continued strong business performance: *
·
· *Overall backlog: EUR 3.8bn (+68.2%) *
· *Housing property portfolio: +8.6% to 34,864 units*
· *Financing capacity: EUR 326.4m*
· *2020-2021 outlook*
Today, Kaufman & Broad SA announced its results
for the first half of the 2020 fiscal year (from
· Key sales December 1, 2019 to May 31, 2020). Nordine
data Hachemi, Chairman and Chief Executive Officer of
Kaufman & Broad, made the following comments:
(H1 2020 vs. H1
2019) _"At the end of a first half of 2020 marked by
the strikes of December 2019 and the sharp
contraction in the broader economy for two
· Total months, from mid-March to mid-May, Kaufman &
orders: Broad's results attest to the soundness of its
business model. This means financial balances
· will be preserved in the short term while
EUR 1,951.9m keeping our momentum in preparing for the
incl. VAT future._
(+110.7%)
_The sales activity in the first half enjoyed
order growth in value terms, both overall
(doubling to nearly EUR 2 billion) and for the
· Housing: Housing business (+7.9%). _
EUR 872m _This was boosted by keen interest from
incl. VAT institutional buyers, both private and public,
(+7.9%) and in particular from CDC Habitat. Their orders
rose 69% from one half-year to the next,
· Commercial accounting for two-thirds of total Housing
property: orders in value terms._
EUR 1,079.9m
incl. VAT _In addition, 4,144 units totaling EUR 842.6
(x9.1) million (including VAT) have been ordered for
projects that could obtain a building permit in
2021. These orders will be recognized according
to the time frame for obtaining building permits
· Take-up and therefore do not appear in the backlog._
period *[1]*
for Housing: _This strong momentum, which is in line with our
strategy, significantly increases the visibility
3.1 months (-2 of our business over 2021. It also confirms that
months) our commercial offering is in tune with current
societal issues._
· Key _The overall backlog was up 68.2% year-on-year
financial at the end of May to EUR 3.8 billion. The
data Housing property portfolio recorded continued
growth (+8.6% at end-May)._
(H1 2020 vs. H1
2019) _Finally, in Business Property, a
sale-before-completion (VEFA) was signed
post-closing with GCI/Crédit Suisse on June 19
· Overall for the c.10,000 sq.m "Blue Bird" office
revenue: building in Montrouge. Meanwhile, the public
EUR 385.0m consultation on the A7-A8 Austerlitz project
vs. (around 92,000 sq.m in offices, retail space and
EUR 703.8m a hotel) began on June 29._
Of which _The stoppage of activity during the lockdown
Housing: period has resulted in an increase in net debt,
EUR 352.3m vs which will be gradually reduced as work resumes
EUR 610.9m at all sites._
_The financial structure remains extremely
· Gross solid, with a financing capacity of EUR 326.4
margin: million at the end of May. _
EUR 73.5 vs.
EUR 140.7m
· EBIT:
EUR 12.3m vs
EUR 69.8m
·
Attributable
net income:
EUR 2.1m vs
EUR 39.3m
· Net
financial
debt*[2]*:
EUR 78.6m vs.
EUR 56.0m at
end 2019
· Financing
capacity:
EUR 326.4m vs.
EUR 458.1m at
end 2019
· Key growth
indicators
(H1 2020 vs. H1
2019)
· Overall
backlog:
EUR 3,788.8m
(+68.2%)
Of which
Housing:
EUR 2,464.2m
(+21.6%)
· Housing
property
portfolio:
34,864 units
(+8.6%)
_As regards the market, there was a sharp drop in supply due to delays in
processing building permits on account of the municipal elections in France,
further compounded by the postponement of the second round. We can therefore
expect a drop in orders in 2020, with a corresponding impact on new
construction projects in 2021._
_For fiscal 2020 as a whole, we are looking for revenue of around EUR 1
billion, EBIT close to 6% and virtually no net debt._
_For 2021, the backlog at end-May 2020 allows us to forecast revenue growth
of around 30%. This increase would be significantly higher should the A7-A8
Austerlitz project get full green light in 2021._
_This outlook is based on a stabilization of the health situation. "_
· Sales activities
· Housing
In H1 2020, in value terms housing orders totaled EUR 872.0m (incl. VAT), a
7.9% increase compared with H1 2019. In volume terms, 3,635 units were
ordered, a 13% decrease compared with the same period in 2019.
Breakdown of the customer base
Over H1 2020 as a whole, buyers' orders in value terms (incl. VAT) fell by
47% (first-time buyers) and 53% (second-time buyers) and accounted for 11%
of sales compared with 24% in the first half of 2019.
Orders from investors accounted for 22% of sales (19% for the Pinel Scheme
alone), down 29% from one half-year to the next.
Block sales made up 67% of housing orders, i.e. EUR 581.1m. They rose by
69% compared with H1 2019, when they represented 43% of orders.
Take-up period and sales offer
The take-up period for programs was 3.1 months in the first half of 2020,
down from 5.1 months in H1 2019.
The commercial supply, 98% of which is located in high-demand, low-supply
areas (A, Abis and B1), amounted to 1,850 housing units at the end of May
2020 (3,484 housing units at the end of May 2019, i.e. 97% in high-demand,
low-supply areas).
· Commercial Property
In H1 2020, the Commercial Property segment recorded net orders of
EUR 1,079.9m (incl. VAT).
A sale before completion (VEFA) was signed on 19 June on the c.10,000 sq.m
Blue Bird office building in Montrouge with GCI/Crédit Suisse. Meanwhile,
the public consultation on the A7-A8 Austerlitz project (about 92,000 sq.m
in offices, retail and hotel) began on June 29.
Kaufman et Broad currently has around 150,000 sq.m in office space and
around 75,000 sq.m in logistics space under marketing or under study. It is
currently building nearly 73,000 sq.m in office space and more than 36,000
sq.m in logistics space. Lastly, it has around 120,000 sq.m of office space
to be finalized.
At the end of May 2020, the commercial backlog amounted to EUR 1,324.5m.
· Forward-looking sales and development indicators
On May 31, 2020, the housing backlog amounted to EUR 2,464.2m (excl. VAT),
i.e. 27.1 months of business. At the same date, Kaufman and Broad had 156
housing programs on the market, representing 1,881 housing units (compared
with 200 programs representing 3,575 housing units at the end of May 2019).
The Group's total backlog amounts to nearly EUR 3.8bn, of which 36.5% of
the revenue still to be recognized is based on land already acquired. Of the
remainder to be acquired, 56.3% is related to projects for which a building
permit has either been filed, obtained or under review and so being cleared.
Finally, within the share of projects for which the permit has only been
filed, the Commercial operations of Austerlitz A7/A8 and Galion Puteaux
alone represent nearly 30% of the Group's total backlog as of May 31, 2020.
The Housing property portfolio represents 34,864 units. It is up 8.6%
compared with the end of May 2019, corresponding to potential revenue of
around four years of business.
· Financial results
· Business volumes
Overall revenues totaled EUR 385.0m (excl. VAT), down 45.3% compared to H1
2019, mainly due to the sharp contraction in general business for two
months, from mid-March to mid-May.
Revenue from Housing amounted to EUR 352.3m (excl. VAT), versus EUR 610.9m
(excl. VAT) in H1 2019. This represents 91.5% of group revenue. Revenue from
Apartments was down by 43.7% compared to H1 2019 and stood at EUR 319.1m
(excl. VAT). Revenue from Single-family homes in communities amounted to
EUR 33.2m (excl. VAT), versus EUR 44.3m (excl. VAT) in H1 2019.
Revenue from Commercial Property amounted to EUR 30.0m (excl. VAT),
compared with EUR 89.8m (excl. VAT) in H1 2019.
· Profitability highlights
Gross margin for H1 2020 amounted to EUR 73.5m, compared with EUR 140.7m
in H1 2019.
Current operating expenses amounted to EUR 61.2m (15.9% of revenue), versus
EUR 70.9m in H1 2019 (10.1% of revenue).
Current operating income stood at EUR 12.3m, versus EUR 69.8m in H1 2019.
The current operating margin ratio was 3.2%, compared with 9.9% in H1 2019.
Attributable net income for H1 2020 was EUR 2.1m (compared with EUR 39.3m
in H1 2019).
· Financial structure and liquidity
During the Covid-19 pandemic, most of the Group's construction sites were
totally or partially shut down, and sales activity slowed dramatically. This
had a significant negative impact on the Group's financial position, with
virtually no cash inflows during this period, even though settlement of work
carried out in Q1 became due.
Kaufman & Broad did not request deferral or suspension of payment of its tax
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DJ Kaufman & Broad SA: H1 2020 RESULTS -2-
and social security charges or apply for the government-backed bank loans
introduced as one of the measures to support the economy. In March 2020, as
a precaution, the group drew down EUR 150 million of the EUR 250 million
available under the revolving credit facility set up in January 2019, in
order to further strengthen its sound cash position and ensure funding for
its general needs during the current situation. This amount is repayable
over periods of one, three and six months.
Net financial debt was EUR 78.6m on May 31, 2020 (excluding the effect of
lease obligations under IFRS 16), compared with net cash of EUR 56.0m at
end 2019 and EUR 54.6m on May 31, 2019. Net financial debt to May 31, 2020
takes into account a residual drawdown of EUR 118.0m on the "RCF" line to
address deterioration of the balance sheet caused by the pandemic.
Cash assets (available cash and investment securities) amounted to
EUR 194.4m, compared with EUR 208.1m as of November 30, 2019.
The group's financing capacity was EUR 326.4m (EUR 458.1m as of November
30, 2019).
The working capital requirement amounted to EUR 245.4m (21.3% of revenue,
over 12 consecutive months), compared with EUR 150.1m as of November 30,
2019 (10.2% of revenue); restated for the 2019 dividend paid on June 10,
2020, it would have been EUR 283.4m, i.e. 24.6% of revenue.
· Dividend
On June 10, 2020, Kaufman & Broad paid a dividend of EUR 1.75 per share for
the year ended November 30, 2019. The total cash dividend paid to
shareholders amounted to EUR 38.0m.
· 2020 outlook
With respect to the outlook for 2020, Kaufman & Broad forecasts full-year
sales of about EUR 1bn, an EBIT ratio of about +6% and net financial debt
close to zero.
These prospects are based on a return to a normal level of productivity for
the sites, which have fully restarted at May 31, 2020, on the assumption of
a stabilization of the health situation, without a new period of
containment, and without significant social movements, which could have an
unfavorable impact on the progress of work on construction sites.
For 2021, the backlog at end-May 2020 allows us to forecast revenue growth
of around 30%. This increase would be significantly higher should the A7-A8
Austerlitz project get full green light in 2021.
This press release is available at www.kaufmanbroad.fr [1]
· Next regular publication date:
· October 1st,?2020 9 months 2020 results (after market close)
*Chief Financial Officer* *Press Relations*
Bruno Coche Agence Shadow
+33 1 41 43 44 73 Alice Polack - +33 6 33 71 91 58
Infos-invest@ketb.com alicepolack@shadowcommunication.fr
Aurélie Vinzent - +33 6 58 66 80 49
aurelievinzent@shadowcommunication.fr
Kaufman & Broad: Emmeline Cacitti
+33 6 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 builder-developers due to the combination of
its size and profitability, and the strength of its brand.
Certain information included in this press release is not historical data
but is forward-looking statements. These forward-looking statements are
based on estimates, forecasts and assumptions, including, in particular,
assumptions concerning Kaufman & Broad's current and future strategy and the
economic environment in which Kaufman & Broad operates, which is
significantly impacted by the current health crisis. These forward-looking
statements are only valid on the date of this press release. Actual results
could differ materially from those expressed or implied by these
forward-looking statements. Forward-looking statements and information are
not guarantees of future performance and are subject to risks and
uncertainties that are difficult to predict and generally beyond the control
of Kaufman & Broad. In addition to the current health crisis, these risks
and uncertainties include those detailed and identified in Chapter 1.2 "Risk
Factors" of the Kaufman & Broad 2019 Universal Registration Document filed
with the French Financial Markets Authority (AMF) on March 31, 2020 under
number D.20-0231, available on the Company's website. (www.kaufmanbroad.fr
[2]_) and that of the AMF (_www.amf-france.org [3]_). This press release
includes only summarized information and does not purport to be complete._
· Glossary
*Backlog*: a summary that, at any given moment, makes it possible to
estimate revenue for the coming months.
*EBIT:* corresponds to current operating income, i.e. 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:* 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 creditnot 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 for 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): *Sale before completion is a contract
whereby the seller immediately transfers to the buyer its land rights and
ownership of existing buildings. 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 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.
*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 used to define the number of housing units or equivalent
housing units (for mixed programs) in a given program. 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_ *Q2* *H1* *Q2* *H1*
*2020* *2020* *2019* *2019*
*Restated** *Restated**
Revenue 85,750 384,96 375,677 703,751
4
80,109 352,26 324,900 610,915
8
· _Of which housing_
4,819 30,016 48,771 89,782
· _Of which Commercial
Property_
821 2,680 2,006 3,054
· _Of which other_
Gross margin 16,394 73,492 74,507 140,679
_Gross margin ratio (%)_ 19.1% 19.1% 19.8% 20.0%
Current operating income -13,07 12,275 39,220 69,783
9
_Current operating margin -15.3% 3.2% 10.4% 9.9%
(%)_
Attributable net income -11,05 2,145 24,902 39,264
3
Attributable net earnings -0.50 0.10 1.14 1.80
per share (EUR /share)**
_* Restatement following the end of the capitalization of financing costs
following the change in interpretation of the IAS 23 standard and a
reclassification of the CVAE expense from the operating expenses item to the
income tax item. _
_** Based on the number of shares that make up Kaufman & Broad SA's share
capital, i.e. 21,864,074 shares at Friday, May 31, 2019 and 22,088,023
shares at May 31, 2020._
Consolidated income statement*
_EUR thousands_ *Q2* *H1* *Q2* *H1*
*2020* *2020* *2019 *2019
restated*** restated***
*Revenue* *85,750 *384,96 *375,677* *703,751*
* 4*
Cost of sales -69,356 -311,47 -301,170 -563,072
2
*Gross margin* *16,394 *73,492 *74,507* *140,679*
* *
Sales expenses -4,432 -9,319 -7,171 -14,768
Administrative expenses -12,205 -25,556 -15,412 -30,000
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Technical and customer -4,078 -9,465 -5,743 -11,150
service expenses
Development and program -8,757 -16,878 -6,962 -14,978
expenses
*Current operating *-13,07 *12,275 *39,220* *69,783*
income* 9* *
Other non-recurring 0 0 0 0
income and expenses
*Operating income * *-13,07 *12,275 *39,220* *69,783*
9* *
Cost of net financial -2,838 -5,416 -3,578 -6,456
debt
Other financial income 0 0 0 0
and expense
Income tax 5,730 1,058 -7,346 -17,580
Share of income (loss) 260 450 710 1,674
of equity affiliates
and joint ventures
*Net income of the *-9,927 *8,366* *29,006* *47,421*
consolidated entity* *
Non-controlling equity 1,126 6,221 4,104 8,157
interests
*Attributable net *-11,05 *2,145* *24,902* *39,264*
income* 3*
*_Not approved by the Board of Directors and not audited._
_ * Restatement following the end of the capitalization of financing costs
following the change in interpretation of the IAS 23 standard and a
reclassification of the CVAE expense from the operating expenses item to the
income tax item. _
Consolidated balance sheet*
_EUR thousands_ May 31, November
2020 30,
2019**
*ASSETS*
Goodwill 68,661 68,661
Intangible assets 91,161 91,209
Property, plant and equipment 5,921 5,976
Right to use IFRS16 18,679 0
Equity affiliates and joint ventures 6,501 5,929
Other non-current financial assets 1,860 1,756
Deferred tax assets 4,002 4,002
*Non-current assets* *196,784* *177,533*
Inventories 451,051 455,976
Accounts receivable 425,956 511,907
Other receivables 151,032 189,731
Cash and cash equivalents 194,373 211,501
Prepaid expenses 599 1,435
*Current assets* *1,223,01 *1,388,921*
1*
*TOTAL ASSETS* *1,419,79 *1,566,454*
5*
May 31, November
2020 30,
2019**
*LIABILITIES*
Share capital 5,743 5,743
Additional paid-in capital 231,693 198,527
Attributable net income 2,145 77,890
*Attributable shareholders' equity* *239,581* *282,160*
Non-controlling equity interests (balance 13,873 10,953
sheet)
*Shareholders' equity* *253,454* *293,113*
Non-current provisions 38,270 37,706
Non-current financial liabilities 148,853 148,900
(maturing in > 1 year)
IFRS 16 lease obligations (maturing >1 11,560 0
year)
Deferred tax liability 50,065 50,346
*248,748* *236,952*
Non-current liabilities
Current provisions 3,860 2,529
Other current financial liabilities 124,146 3,189
(maturing in < 1 year)
IFRS 16 lease obligations (maturing in < 1 6,305 0
year)
Accounts payable 671,394 907,498
Other payables 110,809 119,771
Prepaid income 404 126
*Current liabilities* *917,593* *1,036,389*
*TOTAL LIABILITIES* *1,419,79 *1,566,454*
5*
*Not approved by the Board of Directors and not audited
_** Restatement following the end of the capitalization of financing costs
following the change in interpretation of the IAS 23 standard and a
reclassification of the CVAE expense from the operating expenses item to the
income tax item. _
*Operational data*
*Housing* *Q2* *H1* *Q2* *H1*
*2020* * 2020* *2019 *2019
restated** restated**
Revenue (EUR 80.1 352.3 324.9 610.9
million, excluding
VAT)
73.2 319.1 299.9 566.6
· _Of which
apartments_
6.9 33.2 25.0 44.3
· _Of which single
family homes in
communities_
Deliveries (EHUs) 405 1,885 1,725 3,198
378 1,750 1,628 3,036
· _Of which
apartments_
27 135 97 162
· _Of which single
family homes in
communities_
Net orders (number) 2,153 3,635 2,406 4,177
1,920 3,360 2,331 4,006
· _Of which
apartments_
233 275 75 171
· _Of which single
family homes in
communities_
Net orders (EUR 545.5 872.0 450.5 807.8
million, including
VAT)
475.9 789.8 428.7 754.3
· _Of which
apartments_
69.5 82.2 21.8 53.6
· _Of which single
family homes in
communities_
Property supply at the 1,881 3,575
end of the period (in
number)
End-of-period backlog
2,464.2 2,026.4
· _In value terms
(EUR m, excluding
VAT)_
2,315.9 1,904.4
· _Of which
apartments_
148.3 121.9
· _Of which single
family homes in
communities_
27.1 18.8
· _In months of
business_
End-of-period land 34,864 32,109
reserve (number)
*Commercial* *Q2* *H1 *Q2* *H1 2019*
*2020* 2020* *2019 *Restated**
restated**
Revenue (EUR 4.8 30.0 48.8 89.8
million, excluding
VAT)
Net orders (EUR 4.9 1,079.9 4.8 118.6
million, including
VAT)
End-of-period backlog 1,324.5 226.7
(EUR million,
excluding VAT)
*Not approved by the Board of Directors and not audited
4
[1] On the basis of the first six months of the year
[2] On the basis of net debt excluding IFR16 lease debt
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