KAUFMAN & BROAD SA
Kaufman & Borad SA Press release Paris, July 10, 2019
H1 2019 Results
In H1 2019, in value terms, housing orders totaled EUR807.8m including tax, a 6.5% decrease compared with H1 2018. In volume, 4,177 units were ordered, a 0.7% increase compared with the same period in 2018.
The take-up period for projects was 5.1 months in the first half of 2019, stable compared with H1 2018 (5.1 months).
The commercial offer, 97% of which is located in high-demand, low-supply areas (A, Abis and B1), amounted to 3,575 housing units at the end of May 2019 (3,527 housing units at the end of May 2018).
Breakdown of the customer base
For the first half of 2019, orders in value (excl. tax) from first-time buyers were down by 23% and represented 15% of sales. Orders from second-time buyers decrease by 16%, making up 9% of sales. Orders from investors accounted for 32% of sales (26% just for the Pinel Scheme). Block sales made up 43% of housing orders, up by 10% compared with H1 2018, when they represented 37% of orders. Moreover, around 52% of block orders were for managed housing (for tourists, students, business travelers, and seniors).
In H1 2019, the Commercial Property segment recorded net orders of EUR118.6m including tax.
The building permit for block A7A8 in the Austerlitz district was filed in May. This 92,000 sq.m project is made up of offices, retail space, housing, and a hotel. Given the upcoming elections, it seems reasonable to expect that the building permit will come through in late 2020 / early 2021.
Kaufman & Broad is currently marketing or studying around 293,000 sq.m of office space and around 126,000 sq.m of logistics and industrial space.
It is also currently building around 63,000 sq.m in office space.
Two XXL logistics platforms with a total surface area of 150,000 sq.m were also delivered in the first half, to a subsidiary of the Casino group and to Lapeyre (Saint Gobain group).
At the end of May 2019, the commercial backlog amounted to EUR226.7m.
At May 31, 2019, the housing backlog amounted to EUR2,026.4m (excl. tax), i.e. 18.8 months of business. At the same date, Kaufman and Broad had 200 housing programs on the market, representing 3,575 housing units (compared with 217 programs representing 3,527 housing units at the end of May 2018).
The housing property portfolio represents 32,109 units, up 14.5% compared with the end of May 2018, corresponding to potential revenue of around four years of business.
Total revenues amounted to EUR703.8m (excl. tax), down 9.4% compared to H1 2018.
Revenue from Housing amounted to EUR610.9m (excl. tax), versus EUR608.8m (excl. tax) in H1 2018. This represents 86.8 % of group revenue. Revenue from Apartments was down by 1.2% compared to H1 2018 and stood at EUR566.6m (excl. tax). Revenue from Single-family homes in communities amounted to EUR44.3m (excl. tax), versus EUR35.2m (excl. tax) in H1 2018.
Revenue from Commercial Property amounted to EUR89.8m (excl. tax), compared with EUR163.9m (excl. tax) in H1 2018.
Gross margin for H1 2019 amounted to EUR135.6m, compared with EUR150.0m in H1 2018. The gross margin ratio was 19.3%, stable compared with H1 2018 (19.3%).
Current operating expenses amounted to EUR72.9m (10.4 % of revenue), versus EUR78.5m in H1 2018 (10.1% of revenue).
Current operating income stood at EUR62.7m, versus EUR71.5m in H1 2018. The current operating margin ratio was 8.9%, compared with 9.2% in H1 2018.
The group's adjusted EBIT amounted to EUR67.7m in H1 2019 (compared with EUR77.6m in H1 2018). The adjusted EBIT margin was 9.6% (compared with 10.0% in H1 2018).
Attributable net income for H1 2019 was EUR38.5m (compared with EUR37.8m in H1 2018). At May 31, 2019, in accordance with IFRS IAS12, this attributable net income includes a reduction in tax liability worth EUR3.8m, due to the provisions voted on under the 2018 finance law that gradually reduces the normal tax rate on companies from 33.3% to 26.5% in 2021, and to 25.0% starting in 2022. If these tax provisions change in the future, the company will have to increase its tax liability accordingly.
The net cash position was EUR54.6m at May 31, 2019, compared with net cash of EUR50.0m at the end of 2018, a EUR4.6m improvement. Cash assets (available cash and investment securities) amounted to EUR204.4m, compared with EUR253.4m at November 30, 2018. The group's financing capacity was EUR454.4m (EUR353.4m at November 30, 2018).
The working capital requirement amounted to EUR105.9m (7.1% of revenue, over 12 consecutive months), compared with EUR110.8m at November 30, 2018 (7.1% of revenue); restated for the 2018 dividend paid on June 14, 2019, it would have been EUR159.5m, i.e. 10.7% of revenue .The tight control over working capital primarily relies on the very short take-up period for the Group's programs.
On May 6, 2019, Kaufman & Broad SA decreased its capital by canceling 210,732 treasury shares worth a value of EUR7.2m, bringing the number of shares in its capital from 21,864,074 to 21,653,342 shares.
On June 14, 2019, Kaufman & Broad paid a dividend of EUR2.50 per share for the year ended November 30, 2018 with a full or partial stock dividend option.The issue price of these new shares was set at EUR32.23, representing 95% of the average price of Kaufman & Broad shares on the Euronext Paris regulated market over the 20 trading sessions preceding the date of said Shareholders' Meeting, less the net dividend of EUR2.50 per share, rounded up to the nearest euro cent.
The option was open for acceptance from May 17 to June 6, 2019 inclusive.At the end of this period, the shareholders who chose payment of the dividend in stock accounted for 8.96% of Kaufman & Broad SA shares. 150,690 new shares were issued for the purpose of paying the stock dividend, representing 0.70% of the share capital and 0.59% of the voting rights of Kaufman & Broad SA on the basis of the share capital and voting rights as of May 31, 2019. Settlement/delivery of the shares and their admission to trading on the Euronext Paris regulated market took place on June 14, 2019.
The total dividend in cash to be paid to those shareholders who did not accept the stock dividend option, or who opted for partial payment in shares, amounted to EUR48.7m and was paid on June 14, 2019.
In a press release published on May 13, 2019, Kaufman & Broad SA announced that it would set up a shareholding plan reserved for group employees, called "KB Actions 2019," through a capital increase. In addition to the information given in the press release issued on May 13, 2019, the maximum number of shares that may be issued under the shareholding plan was set at 300,000 shares. Through the "KB Actions 2019" shareholding plan, Kaufman & Broad marks its desire to get all employees more closely involved in the Group's performance, through an ambitious pay policy.
For the entire current year, revenue should stand at around EUR1.5bn, with around 5% growth in the Housing segment, and a decline in Commercial property, in line with expectations. The gross margin ratio is expected to hold at around 19% and the adjusted EBIT ratio should remain above 9%. Attributable net income should be at least as high as in 2018, and as a result, a dividend of at least EUR2.50 per share for the 2019 fiscal year will be proposed to the Board of Directors.
This press release is available at www.kaufmanbroad.fr
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.
Kaufman & Broad's 2018 Registration Document was filed with the French Financial Markets Authority ("AMF") under No. D.19-0228 on March 29, 2019. 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 outlook, as well as the associated risk factors. Kaufman & Broad specifically draws attention to the risk factors set out in Chapter 1.2 of the Registration Document. The occurrence of one or more of these risks might 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 subscript ion offer, or as intended to seek a purchase or subscription order in any country.
Backlog: a summary that, at any given moment, makes it possible to estimate revenue for the coming months.
Lease-before-completion (BEFA): a lease-before-completion involves a customer leasing a building before it is built or redeveloped.
Financing capacity: corresponds to cash assets plus lines of creditnot yet drawn
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.
Adjusted EBIT:corresponds to income from current operations restated for capitalized "IAS 23 revised" borrowing costs, which are deducted from gross margin.
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.
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).
Property portfolio: represents all of the land for which any commitment (contract of sale, etc.) has been signed.
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.
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 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.
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.
NOTES
Key consolidated data
* Adjusted EBIT corresponds to current operating profit 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. 21,864,074 shares at May 31, 2018 and 21,653,342 shares at May 31, 2019
Consolidated income statement*
*Not approved by the Board of Directors and not audited. Consolidated balance sheet*
*Not approved by the Board of Directors and not audited
Regulatory filing PDF file Document title: H1 2019 Results Document: http://n.eqs.com/c/fncls.ssp?u=RXXRMGCNVT |
839601 10-Jul-2019 CET/CEST
