DJ Kaufman & Broad SA: RESULTS FOR THE FIRST NINE MONTHS OF FISCAL YEAR 2020
Kaufman & Broad SA Kaufman & Broad SA: RESULTS FOR THE FIRST NINE MONTHS OF FISCAL YEAR 2020 01-Oct-2020 / 18:22 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, October 1,?2020 Results for the first nine months of fiscal year 2020 · *Overall backlog: &euro3.7 billion (+67.0%) * · *Still a very solid balance sheet: * · · *net financial debt reduced to &euro27.5 million* · *financing capacity of &euro374.0 million* · *Confirmation of outlook announced on July 9 2020* _Kaufman & Broad SA today announced its results for the first nine months of its fiscal year 2020 (from · Key December 1, 2019 to August 31, 2020). Nordine componen Hachemi, Chairman and Chief Executive Officer of ts of Kaufman & Broad, made the following comments: _ sales activity _"Overall economic activity may have contracted sharply in the first half of fiscal year 2020, but (9M 2020 Kaufman & Broad saw activity at its construction vs. 9M sites pick up in the third quarter, as expected._ 2019) However, beyond the public health crisis, the Housing market has been penalized to date by a very steep · Total drop in the number of building permits granted along orders: with their associated administrative authorizations. The property supply decreased as a direct result of · this, as did the number of orders, even though we can &euroM2, still see that investors, institutional and 175.7 individuals have a great deal of appetite for all our (+72.0%) programs. incl. VAT _We continue to roll out our land planning strategy by redeveloping brownfield sites and derelict business districts. Our redevelopment plans include the A7A8 project in the Austerlitz district of Paris, · for which the public consultation was completed in Housing: late July. _ &euroM1, 077.4 _We can see that institutional investors are (-6.0%) increasingly interested in housing assets, including incl. managed housing, which shows that they are placing VAT more value on the sector's investment quality; the solid performances delivered by residential property i.e. 4,700 companies are testament to this, as their revenues units have been affected very little by the public health (-16.5%) crisis. _ · _As per our strategy, therefore, we continue to Commerci develop serviced housing programs in our capacity as al a developer-investor-operator thanks to Kaufman__ & Property Broad's solid balance sheet, which includes net : financial debt reduced to &euro27.5__(1)__ million &euroM1, and financing capacity of &euro374 million._ 098.3 _As such, we are able to reiterate all our guidance targets on the back of Kaufman & Broad's solid financial structure as well as its historically large · backlogs in both the Business Property and Housing Take-up segments._ period*[ 2]* for _For fiscal year 2020, we see revenue reaching around Housing: &euro1 billion, with an EBIT margin of close to 6% and virtually no net debt._ 3.0 months _Going further forward, the backlog at end-August vs. 5.7 2020 points to revenue growth of around 30% in 2021. months This increase will be higher if the A7A8 Austerlitz (-2.7 project gets the full green light from the months) authorities in 2021._ _This outlook assumes that our construction sites are · Key able to make progress in the current economic and financia social circumstances, and that the pace at which l data building permits are granted rapidly returns to normal. "_ (9M 2020) · Overall revenue: &euroM65 7.4 Of which Housing: &euroM585. 7 · Gross margin: &euroM12 1.6 · EBIT: &euroM30 .3 · Attribut able net income: &euroM10 .6 · Net financia l debt1: &euroM27 .5 · Financin g capacity : &euroM37 4.0 · Key growth indicato rs (9M 2020 vs. 9M 2019) · Overall backlog: &euroM3, 697.0 (+67.0%) Of which Housing: &euroM2,38 9.5 (+19.3%) · Housing property portfoli o: 35,594 units (+6.4%) · Sales activity · Housing Orders for housing in the first nine months of 2020 amounted to &euro1,077.4 million (including VAT) in value terms, down 6.0% on the first nine months of 2019. In volume terms, this corresponded to 4,700 units, a 16.5% decrease compared with the same period in 2019. The take-up period for programs was 3.0 months over the 9-month period, an improvement of 2.7 months compared with the same period in 2019 (5.7 months). With 96% of programs located in high-demand, low-supply areas (zones A, A-bis, and B1), property supply totaled 1,558 housing units at end-August 2020 (vs. 3,569 units at end-August 2019). Breakdown of the customer base In the first nine months of 2020, orders from first-time buyers were down in value terms (including VAT) compared with the same period in 2019 and corresponded to 7% of sales. Second-time buyers accounted for 5% of sales, compared with 9% for the same period in 2019. Orders from investors accounted for 23% of sales (of which 19% under the Pinel incentive scheme alone). The proportion of block sales increased by 52% and corresponded to 65% of sales in the first nine months of 2020, i.e. &euro610.7 million. · Commercial Property The Commercial Property segment recorded net orders of &euro1,098.3 million (including VAT) in the first nine months of 2020. Kaufman & Broad is currently in the process of marketing or studying around 150,000 sq.m of office space and around 75,000 sq.m of logistics space. It is also currently building nearly 30,000 sq.m of office space and more than 32,500 sq.m of logistics space. Lastly, it has around 120,000 sq.m of office space transactions yet to sign. At the end of August 2020, the Commercial Property backlog totaled &euro1,307.5 million. · Forward-looking sales and development indicators The Housing backlog at August 31, 2020 amounted to &euro2,389.5 million (excluding VAT), i.e. 28.7 months of activity. At the same date, Kaufman & Broad had 150 housing programs on the market, representing 1,558 housing units (compared with 208 programs representing 3,569 housing units at the end of August 2019). The Housing property portfolio represents 35,594 units. It has increased by 6.4% since the end of August 2019 and corresponds to more than 4 years of sales activity. · Financial results · Business volumes Total revenue amounted to &euro657.4 million (excluding VAT), down 36.2% compared with the same period in 2019. Housing revenue totaled &euro585.7 million (excluding VAT), versus &euro920.1 million (excluding VAT) in the first nine months of 2019. This represents 89.1% of group revenue. Revenue from the Apartments business was down 37.7%, compared with the first nine months of 2019, and amounted to &euro529.7 million (excluding VAT). Revenue from the Single-family Homes in Communities business totaled &euro56.1 million (excluding VAT), versus &euro69.4 million (excluding VAT) for the same period in 2019. Revenue from the Commercial Property segment totaled &euro67.4 million (excluding VAT), compared with &euro104.7 million for the same period in 2019. · Profitability highlights The gross margin for the first nine months of 2020 totaled &euro121.6 million, compared with &euro206.3 million in 2019. The gross margin ratio was 18.5%, which is 41.1% lower than in the same period of 2019. Current operating expenses amounted to &euro91.3 million (13.9% of revenue), compared with &euro106.8 million for the same period in 2019 (10.4% of revenue). Current operating income totaled &euro30.3 million, compared with &euro99.6 million in the first nine months of 2019. The current operating margin ratio was 4.6%, compared with 9.7% in the same period in 2019. Consolidated net income amounted to &euro19.6 million in the first nine months of 2020 (versus &euro67.2 million in the same period in 2019). Non-controlling equity interests (minority interests) totaled &euro9.0 million, compared with &euro11.8 million for the same period in 2019. Attributable net income amounted to &euro10.7 million (versus &euro55.3 million for the first nine months of 2019). In accordance with IAS 12, attributable net income at August 31, 2020 included a reduction in the tax liability due to the provisions stipulated in the 2018 Finance Law that gradually reduces the normal corporate tax rate from 33.3% to 26.5% in 2021, and to 25.0% starting from 2022. If these tax provisions were to change in the future, the Company would have to increase its tax liability accordingly. · Financial structure and liquidity During the Covid-19 pandemic, work on most of the group's construction sites was halted or scaled back, and sales activity was extremely sluggish. This situation had a material adverse impact on the group's financial position as cash inflows were virtually zero during this period (since no new calls for funds were issued) while payments for work performed in the first quarter became due. Kaufman & Broad did not request deferral or suspension of payment of its tax and social security charges, nor did it 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 &euro150 million from its revolving credit facility in order to further strengthen its already sound cash position and secure funding for its general needs given the circumstances.
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