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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DJ Kaufman & Broad SA: RESULTS FOR THE FIRST NINE -2-
Net financial debt (excluding liabilities under IFRS 16) totaled &euro27.5 million at August 31, 2020, compared with a positive net cash position of &euro3.6 million at the end of August 2019. Cash assets (available cash and investment securities) amounted to &euro162.0 million, compared with &euro154.4 million at August 31, 2019. Financing capacity totaled &euro374.0 million, compared with &euro404.4 million at end-August 2019 (and &euro458.1 million at end-November 2019). The working capital requirement amounted to &euro201.8 million (i.e. 18.3% of revenue on a 12-month rolling basis), compared with &euro150.1 million at November 30, 2019 (10.2% of revenue). The group's tight control over its working capital requirement relies primarily on the very short take-up period for its programs. At August 31, 2019, the working capital requirement totaled &euro174.6 million, corresponding to 11.7% of revenue. · Outlook Kaufman & Broad's 2020 guidance targets include around &euro1 billion of revenue, an EBIT margin in the region of 6% and almost zero net debt. Going further forward, the backlog at end-August 2020 points to revenue growth of around 30% in 2021. This increase will be higher if the A7A8 Austerlitz project gets the full green light from the authorities in 2021. This outlook assumes that our construction sites are able to make progress in the current economic and social circumstances, and that the pace at which building permits are granted rapidly returns to normal. The press release is available at www.kaufmanbroad.fr  Contacts *Chief Financial *Press Relations* Officer* Shadow Communication agency Bruno Coche Alice Polack - +33 (1)6 33 71 91 58 +33 (1) 41 43 44 73 email@example.com Infosfirstname.lastname@example.org Aurélie Vinzent - +33 (1) 6 58 66 80 49 email@example.com Kaufman & Broad: Emmeline Cacitti +33 (1) 6 72 42 66 24 / firstname.lastname@example.org *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. Certain information included in this press release refers not to historical data but to forward-looking statements. These forward-looking statements are based on estimates, forecasts and assumptions, including assumptions about Kaufman & Broad's current and future strategy and about the economic environment in which Kaufman & Broad operates, which has been significantly affected by the current public 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. Besides the current public health crisis, these risks and uncertainties include those identified and presented in Chapter 1.2 "Risk factors" of the Kaufman & Broad 2019 Universal Registration Document, which was filed with the French Financial Markets Authority (AMF) on March 31, 2020 under No. D.20-0231; it is available on the Company's website (www.kaufmanbroad.fr _) and that of the AMF (_www.amf-france.org _). This press release includes only summarized information and does not purport to be complete._ · Glossary *Backlog (order book)*: an overview 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: *EHUs (Equivalent Housing Units delivered) 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. *Financing capacity: *corresponds to cash assets plus lines of creditnot yet drawn. *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. *Lease-before-completion (BEFA): *a lease-before-completion involves a customer leasing a building before it is built or redeveloped. *Orders*: measured in volume terms (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*: this represents all of the land for which any commitment (contract for sale, etc.) has been signed. *Property supply*:corresponds to 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 yet entered the marketing phase). *Sale before completion (VEFA)*: 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 and when they are completed: the purchaser is required to pay the price of these structures as work progresses. The seller retains the powers of the Project Owner until acceptance of the work. *Take-up period*: the inventory take-up period is the number of months required for available housing units to be sold if sales are maintained at the same pace as in previous months, i.e. housing units outstanding (available supply) per quarter divided by the number of orders per quarter ended and with orders in turn divided by three. *Take-up rate*: this 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*: used to define the number of housing units or equivalent housing units (for mixed-use 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. APPENDICES · Financial data Key consolidated data _in &euro thousands_ *Q3* *9M* *Q3* *9M* *2020* *2020* *2019(1)* *2019(1)* Revenue 272,420 657,384 325,926 1,029,677 233,451 585,718 309,199 920,114 · _Of which Housing_ 37,390 67,406 14,876 104,658 · _Of which Commercial Property_ 1,579 4,260 1,851 4,906 · _Of which Other_ Gross margin 48,130 121,622 65,672 206,351 _Gross margin ratio (%)_ _17.7%_ _18.5%_ _20.1%_ _20.0%_ Current operating income 18,067 30,343 29,812 99,596 _Current operating margin _6.6%_ _4.6%_ _9.1%_ _9.7%_ (%)_ Attributable net income 8,502 10,647 16,076 55,340 Attributable net income per 0.38 0.48 0.74 2.53 share (&euro/share)** 1) _Restated as financing costs are no longer capitalized following the change in interpretation of the IAS 23 standard and a reclassification of the CVAE tax 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 21,864 shares at August 31, 2019 and 22,088,023 shares at August 31, 2020._ Consolidated income statement* _in &euro thousands_ *Q3* *9M* *Q3* *9M* *2020* *2020* *2019*** *2019*** *Revenue* *272,42 *657,38 *325,926* *1,029,677* 0* 4* Cost of sales -224,29 -535,76 -260,254 -823,326 0 2 *Gross margin* *48,130 *121,62 *65,672* *206,351* * 2* Marketing expenses -4,697 -14,016 -6,968 -21,736 Administrative expenses -13,163 -38,719 -15,742 -45,741 Technical and customer -5,371 -14,835 -5,610 -16,760 service expenses Development and program -6,832 -23,710 -7,539 -22,518 expenses *Current operating income* *18,067 *30,343 *29,812* *99,596* * * Other non-recurring income 0 0 0 0 and expenses *Operating income * *18,067 *30,343 *29,812* *99,596* * * Cost of net financial debt -3,018 -8,434 -2,532 -8,989 Other financial income and 0 0 0 0 expenses Income tax -4,713 -3,655 -8,234 -25,814 Share of income (loss) 909 1,359 698 2,371 of equity affiliates and joint ventures *Consolidated net income* *11,246 *19,612 *19,744* *67,164* * * Non-controlling equity 2,744 8,965 3,668 11,826 interests (P&L) *Attributable net income* *8,502* *10,647 *16,076* *55,338* * *_Not approved by the Board of Directors and not audited._
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