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Friday, 29 September 2017

Kaufman & Broad SA :RESULTS FOR THE FIRST NINE MONTHS OF2017

Kaufman & Broad SA    

Published: 19:22 CEST 29-09-2017 /GlobeNewswire /Source: Kaufman & Broad SA / : KOF /ISIN: FR0004007813


Press release

 

Paris, September 29, 2017

 

 

Results for the first nine months

 

 

 

  • Strong sales and financial results, strengthened financial structure                                                                               
  • Full-year targets confirmed

 

 

  • Key components
    of sales activity

(9m 2017, compared with 9m 2016)

 

  • Housing Unit Orders

  Value: €1,166.7 million(+15.0%) including VAT 

  Volume: 5,879 housing units (+12.5%)

  • Marketing period

  6.1 months compared with 7.2 months
 
(on a12-month rolling basis)

 

  • Key financial data

(9m 2017 vs 9m 2016)

 

  • Revenues:
    €947.9 million (+13.5%)

With Housing Units: €820.8 million (+18.5%)

 Gross margin:

€181.8 million compared with €158.3 million over 9 months in 2016

 Adjusted EBIT:
€80.6 million compared with €70.9 million over 9 months in 2016

 Attributable net income:
€33.2 million compared with €27.8 million over 9 months in 2016

 Net financial debt:

€35.0 million compared with €85.1 million at the end of 2016

 

  • Key growth indicators
     
  • Overall backlog:
    €1,728.0 million (+13.1% vs. 9 months 2016)

Of which Housing Units:
€1,529.9 million (+19.3% vs. 9 months 2016)

  • Housing Property Portfolio:
    28,167 units (+17.0% vs. 9 months 2016)

Kaufman & Broad SA today announced its results for the first nine months of the 2017 financial year (fromDecember 1, 2016 to August 31, 2017).

Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman & Broad, said:

 

"The results for the first nine months of 2017 confirm the strong momentum shown in the past four years.

 

The value of housing unit orders grew by 15.0% and volumes by 12.5%. This increase was mainly driven by first-time buyers (+16.0% by volume). The increases in the land reserve and in the backlog confirm our strong long-term growth capacity.

 

Lastly, Kaufman & Broad has, with SERENIS, a company specialized in senior managed accomadations and health infrasructures, created a joint venture to develop residences for seniors. This initiative reaffirms the Group's commitment to the booming managed accommodation segment. 

 

During the third quarter, Kaufman & Broad registered for € 110M in orders in the Commercial Property Segment.

 

Our capacity to maintain a significantly smaller marketing period compared to the market allows us to manage our working capital requirements and our margins. It results into a reduction of the net financial debt and a strengthening of shareholder's equity.

Those different indicators show our capacity to deliver high quality goods with relevant pricing considering our customers bargaining power.

 

As expected, french government have recently announced the upkeep of current arrangements for purchasing and rental proprety investment in areas with housing shortage. This leads us to confirm our perspectives for the year in a stable market.

 

Thus, we confirming a growth around 10% for 2017 revenues. Gross margin and adjusted EBIT should remain around 19% and 8.5% respectively. Net financial debt will continue to decline relative to 2016 to around €50 million."


Sales activities

 

  • Housing Segment

 

In the first nine months of 2017, orders for housing amounted to €1,166.7 million (including VAT) in value terms, up 15.0% on the same period in 2016.

In volume terms, orders for housing totaled 5,879 units, up 12.5% on the same period in 2016.

The marketing period for projects was 6.1 months on a rolling 12-month basis, a decrease of 1.1 months compared with the same period in 2016 (7.2 months).

 

The commercial offer, at 92.2% in housing shortage areas, amounted to 4,487 units at the end of August 2017, up 5.3% on the end of 2016.

 

Breakdown of the customer base

 

In the first nine months of the year, orders from first-time buyers accounted for 16% of sales by volume, and those from second-time buyers 6%. Orders by investors accounted for 48% of sales (Pinel arrangements alone 35%) and block sales 29%.

 

 

 

  • Commercial Property segment

 

In the first nine months of 2017, the Commercial Property segment recorded €108.6 million (including  VAT) in orders.

 

During the summer, Kaufman & Broad (through its specialist subsidiary Concerto) signed an off-plan sale (VEFA) and a promissory off-plan sale for two logistics platforms totaling more than 100,000 sq.m, representing some €110 million excluding VAT of orders, in line with the €150 to €200 million target announced last July.

 

 

At the end of August 2017, the Commercial Property backlog totaled €194.7 million (excluding VAT).

 

 

  • Forward-looking indicators for the sales and development activity

 

At August 31, 2017, the Housing backlog amounted to €1,529.9 million (excluding VAT), i.e. 15.4 months of business. Kaufman and Broad had 238 housing programs on the market at the same date, which represent 4,487 housing units, compared with 208 programs representing 4,739 housing units at the end of August 2016.

 

The Housing property portfolio, 98% of which is in housing shortage areas, amounted to 28,167 units, and was up 17.0% compared with the portfolio at the end of August 2016. This corresponds to potential revenue of close to 4 years of business, stable relative to November 30, 2016 (4.1 years) and to August 31, 2016 (4 years).

 

In the 4th quarter of 2017, the Group is planning to launch 50 new programs, including 15 in the Ile-de-France Region, representing 1,466 units; 34 programs in the French Regions, representing 2,907 units, and 1 Commercial Property program.

 

 

 

  • Financial results
     
  • Business activity 

 

Total revenues amounted to €947.9 million (excluding VAT), up 13.5% compared with the same period in 2016.

 

Housing revenues amounted to €820.8 million (excluding VAT), compared with €692.5 million (excluding VAT) in 2016. They accounted for 86.6% of the group's revenues.

 

Revenues from the Apartments business were up 20% compared with the first nine months of 2016, and amounted to €792.6 million (excluding VAT).

 

Revenues from the Commercial property segment totaled €122.9 million (excluding VAT), compared with €137.8 million (excluding VAT) over the same period in 2016.

 

The other businesses generated revenues of €4.3 million (excluding VAT).

 

 

  • Profitability highlights 

 

The gross margin for the first nine months of 2017 totaled €181.8 million compared with €158.3 million in 2016. The gross margin ratio was 19.2%, or slightly higher than in the same period of 2016 (19.0%).

 

Current operating expenses for the first nine months amounted to €106.4 million (11.2% of revenues), versus €92.5 million for the same period in 2016 (11.1% of revenues).

 

Current operating profit totaled €75.4 million, compared with €65.8 million in the first nine months of 2016. The current operating margin was 8.0%, compared with 7.9% in the first nine months of 2016.

 

The Group's adjusted EBIT amounted to €80.6 million in the first nine months of 2017 (versus €70.9 million in the same period 2016). The adjusted EBIT was 8.5% (stable relative to the same period in 2016).

 

Attributable net income amounted to €33.2 million, compared with €27.8 million for the first nine months of 2016.

 

 

  • Financial structure and liquidity

 

Net financial debt amounted to €35.0 million at August 31, 2017. Cash assets (available cash and investment securities) amounted to €214.7 million, compared with €118.1 million at November 30, 2016. Financing capacity totaled €314.7 million (€218.1 million at November 30, 2016).

 

Working capital requirement amounted to €118.9 million (8.8% of revenues on a 12-month rolling basis), compared with €129.2 million at November 30, 2016 (10.4% of revenues). The tight control on working capital primarily relies on the very short marketing period for the Group's programs.

 

 

 

  • Offer reserved for employees

 

Pursuant to a decision by its Board of Directors on July 10, Kaufman & Broad launched a subscription offer for new shares reserved for group employees, from September 21 to October 1 inclusive, representing a maximum total of 1.7% of the share capital at August 31, 2017. Subscribed through the corporate mutual fund (FCPE "KB Actions 2017"), the shares will be unavailable until July 1, 2022 unless released early where permitted by applicable regulations.

 

The main objective is to link employees more closely to the future of the business by allowing them to subscribe to shares on preferential terms. Currently holding close to 12.4% of their company's capital, employees are now the largest shareholder in Kaufman & Broad. A policy of strong employee shareholding is a guarantee of independence and stability for the company, as well as an opportunity for every employees to benefit from its growth.

 

 

 

  • 2017 outlook

 

The group believes that the increase in its revenues over the 2017 fiscal year should be in the order of 10%, despite the wait-and-see attitudes to government land tax announcements. The gross margin and adjusted EBIT ratios should remain around 19% and 8.5% respectively. Net financial debt will continue to decline relative to 2016 to around €50 million.

 

 

 

This release is available on the www.kaufmanbroad.fr website

 

  • Next regular publication date:
     
    • Second half of January: 2017 Annual results (after market close)

 

Contacts

Chief Financial Officer

Bruno Coche

 

+33 (0)1 41 43 44 73

Infos-invest@ketb.com

Press Relations

Marianne Cruciani

 

Corporate Communication
Emmeline Cacitti

Burson-Marsteller

+33 (0)1 56 03 12 80

contact.presse@ketb.com

 

(+33) 1 41 43 44 17

ECACITTI@ketb.com

 

 

 

 

About Kaufman & Broad - Kaufman & Broad has been designing, building and selling single-family homes in communities, apartments, and offices on behalf of third parties for almost 50 years. Kaufman & Broad is one of the leading French Property Development & Construction companies due to the combination of its size and profitability, and the strength of its brand.

 

The Kaufman & Broad Registration Document was filed with the French Financial Markets Authority ("AMF") under No. D.17.0286 on March 31, 2017. It is available on the AMF (www.amf-france.org) and Kaufman & Broad (www.kaufmanbroad.fr) websites. It contains a detailed description of Kaufman & Broad's business activities, results, and prospects, as well as of the related risk factors. Kaufman & Broad specifically draws attention to the risk factors set out in Chapter 1.2 of the Registration Document. The materialization of one or several of these risks may 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 

 

Backlog: For off-plan sales (VEFA), it covers housing ordered but not delivered for which the notarized sale deeds have not yet been signed, and housing ordered but not delivered for which the notarized sale deeds have been signed but not yet posted to revenue (for a program that is 30% completed, 30% of housing revenue for which the notarized sale deed has been signed is accounted for as sales, 70% is included in the backlog). The backlog is a summary at any given time that allows an estimate of the remaining revenue to be recognized in the months ahead and that serves as a basis the group's forecasts. It should be noted that a degree of uncertainty exists when converting backlog into revenue, especially for orders not yet officially notarized.

 

Off-plan lease (BEFA): an off-plan lease involves a customer leasing a building before it is even built or redeveloped.

 

Marketing period: the inventory marketing period is the number of months required for the available housing units to be sold, if sales continue at the same rate as for the previous units, or the number of housing units (available supply) per quarter divided by the orders for the previous quarter, and divided by three in turn.

 

Adjusted EBIT: corresponds to income from current operations restated for capitalized "IAS 23 revised" borrowing costs, which are deducted from the gross margin.

 

EHU: The EHUs (Equivalent Housing Units) delivered are a direct reflection of business volumes. The number of EHUs is obtained by multiplying (i) the number of housing units in a given program for which notarized sale 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: Gross margin corresponds to revenues less cost of sales. Cost of sales consists of the price of land parcels, the related property costs (taxes, etc.), commissions paid to developers and to Kaufman & Broad sales staff, as well as fees and commissions provided for in the agency agreements executed by Kaufman & Broad in order to sell its real estate programs, construction costs and borrowing costs that may be directly attributed to program development.

 

Commercial offer: is represented by the total inventory of housing units available for sale at the relevant date, i.e. all housing units that have not been ordered on that (minus the sales tranches that have not been released for marketing).

 

Property portfolio: represents all of the land for which any commitment (contract for sale, etc.) has been signed.

 

Orders: measured in volume (Units) and in value terms; orders reflect the Group's sales activity. Their inclusion in revenues is conditional on the time required to turn an order into a signed and notarized deed, which is the triggering event for booking the income. In addition, in the case of multiple-dwelling programs that include mixed-use buildings (apartments, business premises, retail space, and offices), all of the floor space is converted into housing equivalents.

 

Land reserve: This includes land to be developed (otherwise known as the "land portfolio"), i.e. land for which a deed or contract of sale has been signed, as well as land still being surveyed or assessed, i.e. land for which a deed or a contract of sale has not yet been signed.

 

Marketing period ratio: the marketing period ratio 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. NB: The inverse of the take-up rate (1/Te) gives the projected duration (in months) of the marketing of a program, i.e. the take-up period. For example, a 4.0% take-up rate corresponds to a projected duration of 25 months of marketing.

 

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.

 

Off-plan sale (VEFA): anoff-plan sale is an agreement via which the vendor transfers their rights to the land and their 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 vendor retains Project Management powers until the works are accepted.

 


 

APPENDICES

 

 

  • Financial data

 

Key consolidated data*

 

€ '000s

Q3 2017

9M 2017

T3 2016

9M 2016

Revenues

320,264

947,940

260,504

835,304

  • Of which Housing

285,855

820,820

240,960

692,529

  • Of which Commercial Property

35,850

122,866

17,527

137,766

  • Of which Other

1,529

4,254

2017

5,009

 

 

 

 

 

Gross margin

61,859

181,762

49,372

158,338

Gross margin (%)

19.3%

19.2%

19.0%

19.0%

Current operating profit

26,630

75,380

20,163

65,793

Current operating margin (%)

8.3%

8.0%

7.7%

7.9%

Adjusted EBIT**

28,498

80,597

21,465

70,902

Adjusted EBIT margin (%)

8.9%

8.5%

8.2%

8.5%

Attributable net income

13,048

33,200

9,609

27,756

Attributable net earnings per share (€/share)***

0.63

1.59

0.46

1.33

  • Unaudited and not approved by the Board of Directors.
  • Adjusted EBIT corresponds to income from current operations restated 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. 20,839,037 shares.

 

 

Consolidate income statement*

 

€ '000s

Q3 2017

9M 2017

Q3 2016

9M 2016

Revenues

320,264

947,940

260,504

835,304

Cost of sales

-258,405

-766,178

-211,132

-676,966

Gross margin

61,859

181,762

49,372

158,338

Selling expenses

-9,196

-27,082

-7,231

-23,329

Administrative expenses

-15,408

-47,949

-12,643

-40,082

Technical and customer service expenses

-4,454

-15,044

-4,611

-14,404

Development and program expenses

  - 6,171

-16,306

-4,724

-14,730

Current operating profit

26,630

75,380

20,163

65,793

Other non-recurring income and expenses

-

-

-

-

Operating income

26,630

75,380

20,163

65,793

Cost of net financial debt

-1,266

-3,397

-1,016

-2,410

Other financial expenses and income

-

-

-

-

Income tax

-7,407

-20,773

-5,529

-20,435

Share of income/loss
of equity affiliates and joint ventures

709

507

-67

-187

Net income of the consolidated entity

18,666

51,717

13,552

42,761

Non-controlling interests

5,617

18,517

3,943

15,005

Attributable net income

13,049

33,200

9,609

  1. 27,756

 

 

*Unaudited and not approved by the Board of Directors.

Consolidated balance sheet*

 

€ '000s

August 31, 2017

30 Nov 2016

ASSETS

 

 

Goodwill

68,661

68,661

Intangible assets

88,659

87,570

Property, plant and equipment

8,149

7,449

Equity affiliates and joint ventures

12,008

5,634

Other non-current financial assets

1,752

2,504

Deferred tax assets

2,613

-

Non-current assets

181,842

171,818

Inventories

379,918

371,381

Accounts receivable

317,201

375,669

Other receivables

147,313

159,772

Cash and cash equivalents

214,745

118,108

Prepaid expenses

1,337

1,345

Current assets

1,060,514

1,026,275

TOTAL ASSETS

1,242,356

1,198093

 

 

LIABILITIES

 

 

Share capital

5,418

5,418

Premiums, reserves and other

124,983

79,119

Attributable net income

33,200

46,035

Attributable equity capital

163,601

130,571

Non-controlling interests

13,905

15,196

Equity capital

177,506

145,767

Non-current provisions

22,746

23,229

Borrowings and other non-current financial liabilities
(portion maturing in > 1 year)

248,319

191,362

Deferred tax liabilities

64,037

45,471

Non-current liabilities

335,102

260,062

Current provisions

1,441

1,499

Other current financial liabilities (portion maturing in < 1 year)

1,435

11,841

Trade payables

641,660

675,146

Other payables

84,777

97,382

State - current taxes

-

5,858

Deferred income

435

539

Current liabilities

729,748

792,264

TOTAL LIABILITIES

1,242,356

1,198093

 

*Unaudited and not approved by the Board of Directors.

  • Operating data

 

 

Housing

Q3 2017

9M 2017

Q3 2016

9M 2016

 

 

 

 

 

Revenues (€ million, excl. VAT)

282.9

820.8

241.0

692.5

  • Of which Apartments

272.7

792.6

229.7

660.6

  • Of which Single-Family Homes in communities

10.2

28.2

11.3

31.9

 

 

 

 

 

Deliveries (EHUs)

1,800

5,271

1,446

4,244

  • Of which Apartments

1,746

5,135

1,396

4,105

  • Of which Single-Family Homes in communities

54

136

50

139

 

 

 

 

 

Net orders (in number)

1,779

5,879

1,711

5,228

  • Of which Apartments

1,664

5,669

1,684

5,093

  • Of which Single-Family Homes in communities

115

210

27

135

 

 

 

 

 

Net orders (€ millions, excl. VAT)

381.9

1,166.7

340.9

1,014.5

  • Of which Apartments

341.2

1,105.3

333.6

979.0

  • Of which Single-Family Homes in communities

40.7

61.3

7.3

35.4

 

 

 

 

 

Commercial offer at end of period (by number)

4,508

4,739

 

 

 

 

 

Backlog at end of period

 

 

 

 

  • In value terms (€ million, excl. VAT)

1,529.9

1,282.9

1,245.8

 

37.1

 

14.9

 

24,077

  • Of which Apartments

1,459.2

  • Of which Single-Family Homes in communities

70.7

  • In months of business activity

15.4

 

 

Land reserve at end of period (by number)

28,167

 

 

 

Commercial property

Q3 2017

9M 2017

Q3 2016

9M 2016

 

 

 

 

 

Revenues (€ million, excl. VAT)

35.8

122.9

17.5

137.8

Net orders (€ millions, excl. VAT)

108.6

108.6

29.7

251.3

Backlog at end of period (€ millions, excl. VAT)

194.7

245.0

 

 

  •  


RESULTS FOR THE FIRST NINE MONTHS 2017 Kaufman & Broad



This announcement is distributed by Nasdaq Corporate Solutions (One Liberty Plaza, 165 Broadway, New York, NY 10006. Tel: +1 212 401 8700. www.nasdaqomx.com) on behalf of Nasdaq Corporate Solutions clients. Source: Kaufman & Broad SA, 127 avenue Charles de Gaulle, NEUILLY SUR SEINE 92207, France
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