Kaufman & Broad SA: Q1 2020 RESULTS

Kaufman & Broad SA Kaufman & Broad SA: Q1 2020 RESULTS 19-March-2020 / 19:45 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, Thursday, 19 March, 2020   A SOLID FINANCIAL POSITION IN THE CURRENT CONTEXT OF HEALTH CRISIS Q1 2020 Results SUSPENSION OF 2020 OBJECTIVES   Q1 2020 results at 29 February 2020 are characterized by: An overall Backlog of ?3,403.3m (excl.VAT) (+51.6% vs Q1 2019) and a housing property portfolio up +8.2 % vs Q1 2019 at 33,429 units, A gross margin ratio of 19.1% and an EBIT margin of 8.5%, No net debt and financing capacity of ?412.5 million.   In light of the current health crisis, the Board of Directors has decided: to bring forward the publication of Q1 2020 results, to suspend the 2020 objectives previously announced   Key sales data (Q1 2020 vs Q1 2019)         Orders     Total: ?1,401.5M incl. VAT (x 3.0) Of which:   Commercial: ?1,075.0M incl. VAT(x 9.5) Housing: ?326.5M incl. VAT (-8.6%)                    1,482 units (-16.3%)   Take-up period2 for Housing:   6.8 months vs. 5.5 months (+1.3 months)         Key financial data (Q1 2020 vs. Q1 2019)       Revenues:      Total: ?299.2m (-8.8 %)   Of which Housing: ?272,2m (-4.8%)   Gross margin:    ?57.1m (19.1% of revenue)     EBIT:    ?25.4m (8.5 % of revenue)     Attributable net income:    ?13.2m (-8.1%)     Net cash 1:   ?9.2m (vs. ?56.0m at end-2019)     Financing capacity:      ?412.5m (vs ?458.1m to end 2019)           Main growth indicators (Q1 2020 vs Q1 2019)         Overall backlog:    ?3,403.3m (+51.6 %)    Of which Housing: ?2,073.2m (+5.0%)     Housing property portfolio:    33,429 units (+8.2 %)             Kaufman & Broad SA is today announcing its unaudited results for Q1 2020 (from 1 December 2019 to 29 February 2020). Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman & Broad, made the following comments:   "In the context of the recent developments of the current health crisis and its impact on general economic activity, the board of directors of Kaufman & Broad has decided to anticipate the release of its results for the first quarter of 2020, in order to inform the market of its analysis of the situation as quicly as possible.   Kaufman & Broad fully takes its responsibilities towards its employees, whose safety and health is essential, but also its customers, who are still being provided with Kaufman & Broad's services when possible, and its suppliers, whose ability to get through this crisis is vital in order to resume construction activities as soon as possible.   During these difficult times, the end of which is currently unknown, and beyond continuing to control its costs, working capital requirements and capital expenditures, Kaufman & Broad relies in particular on two fundamental parameters:   A net debt equal to zero, which provides a very strong financial structure at 29 February 2020 featuring:   A high level of available cash of ?412.5 million; An average maturity of its gross debt higher than 4 years; Consolidated shareholders' equity of ?308.8 million   Growth indicators allowing Kaufman & Broad to project itself beyond the next coming months:   An overall backlog of ?3.403 billion and ?2.073 billion for the sole Housing activity. The backlog is a summary at a given time, which enables the revenue yet to be recognized over the coming months to be estimated, thus supporting the group's forecasts - being specified that there is an element of uncertainty in the transformation of the backlog into revenue, particularly for orders that have not yet been signed (i.e. approximately 40% for Housing and 85% for Commercial Property).   * A Housing property portfolio which reached a record high of 33 429 units as of end of February 2020. The Housing property portfolio represents all of the land for which any commitment (contract of sale, etc.) has been signed.   Regarding the 2020 outlook, in light of the current health crisis, Kaufman & Broad has decided to suspend its annual objectives announced at the end of January this year. Kaufman & Broad will propose new objectives for the 2020 financial year as soon as the conducting of a forecast for the whole financial year will be appropriate in light of the general situation.   Kaufman & Broad will continue to monitor carefully the developments of the health crisis over the next weeks and will inform the market of its impact on its activities, if necessary"   Sales activity   Housing   In Q1 2020, housing reservations in value terms stood at ? 326.5m (incl. VAT), i.e. 8.6% lower than 2019. In volume terms they stood at 1,482 homes, down 16.3% vs. 2019.   The take-up period for projects was 6.8 months over three months, a 1.3 month deterioration compared to 2019 (5.5 months).   Housing supply, with 96% of projects located in high-demand, low-supply areas (A, Abis, and B1), stood at 3,359 homes at end-February 2020 (3,261 at end-February 2019).     Breakdown of the customer base   Orders from first-time buyers accounted for 9 % of sales in volume terms, while those from second-time buyers accounted for 5 %. Orders from investors represent 49% of sales (36% for the Pinel scheme alone) while block sales accounted for 37%, of which around 30% is managed housing (tourism, student, business, or senior)     Commercial property   In Q1 2020, the Commercial Property division recorded net orders of ?1,075.0m including VAT (vs. ? 113.8m incl. VAT at end February 2019).   Kaufman & Broad is currently marketing or studying around 155,000 m² of office space and about 74,500 m² of logistics and industrial premises space, as well as 115,000 m² for which the deeds of sale are yet to be signed.    Meanwhile, around 73,000 m² of office space is under construction as well as 36,000m² of logistics space.     Leading sales and development indicators   On 29 February 2020, the Housing backlog stood at ?2,073.2m (excl. VAT), i.e. 18.6 months of business (vs. ?1,975.3m (excl. VAT) for 18.3 months at end February 2019).As the same date, Kaufman and Broad had 181 home programs on the market, representing 3,359 housing units, (194 programs representing 3,261 housing units at the end of February 2019).   The housing property portfolio represents 33,429 units, up 8.2% compared with the end of February 2019, corresponding to potential revenue of around four years of business.   At the end of February 2020, the commercial backlog stood at ?1.330.0m excl. VAT.     Financial results   Business volumes    Total revenue amounted to ?299.2m (excl. VAT), down 8.8% vs. 2019. The impact of building sites interruptions in the Ile-de-France region, during transport strikes is estimated around ?15 million (excl. VAT) on Q1 revenue   Housing revenue amounted to ?272.2m (excluding VAT). It represents 91.0% of group revenues (vs. ?286.0m excl. VAT., i.e. 87.2% in 2019).   Revenue from the Apartments business was down -7.8% compared with 2019, and amounted   to ?245.9m (excl. VAT).   Commercial revenue amounted to ?25.2m (excl. VAT), compared with ?41.0m (excl. VAT) in 2019.   The other businesses generated revenue of ?1.8m (excl. VAT), compared with ?1.1m in 2019.     Profitability highlights    Gross margin for Q1 2020 came to ?57.1m, down compared to 2019. The gross margin ratio stood at 19.1%, down vs. Q1 2019 (20.2%).   Current operating expenses amounted to ?31.7m (10.6% of revenue), compared with ?35.6m for 2019 (10.9% of revenue).   Current operating profit came to ?25.4m, compared with ?30.6m in 2019. The current operating margin ratio was 8.5%, compared with 9.3% in 2019.   Attributable net income for 2020 was ?13.2m, down compared to February 2019 by 8.1%.     Financial structure and liquidity   Positive net cash stood at ?9.2m as of 29 February 2020 (excl. impact of IFRS 16) vs. positive net cash of ?56.0m at 30 November 2019. Cash assets (available cash and investment securities) amounted to ?162.5m, compared with ?208.1m at November 30, 2019.   The group's financing capacity was ?412.5m (?458.1m at November 30, 2019).   The working capital requirement amounted to ?215.6m (14.9% of revenue), compared with ?150.1m at November 30, 2019 (10.3% of revenue). The increase is due to delays incurred on fund calls on transactions in the Ile-de-France region, following transport strikes - excluding this impact, the working capital requirement would have stood in a range of 11% to 13%.       2020 outlook   With respect to the outlook for full-year 2020, in light of the current health crisis, Kaufman & Broad has decided to suspend its annual objectives announced at the end of January. Kaufman & Broad will propose new 2020 objectives as soon as the conducting of a forecast for the whole financial year will be appropriate in light of the general situation.   Kaufman & Broad will continue to monitor carefully the developments of the health crisis over the next weeks and will inform the market of its impact on its activities, if necessary.         This press release is available on the website www.kaufmanbroad.fr   Next regular publication date:   Tuesday, May 5, 2020: Shareholders' Meeting   Contacts Chief Financial Officer Bruno Coche 01 41 43 44 73 [e-mail]     Press Relations Media Relations: Hopscotch Capital: Violaine Danet             01 58 65 00 77 / k&[e-mail] Kaufman & Broad: Emmeline Cacitti 06 72 42 66 24 / [e-mail]             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 est l'un des premiers Développeurs-Constructeurs français par la combinaison de sa taille, de sa rentabilité et de la puissance de sa marque.   Disclaimer   Certain information included in this press release are not historical facts but are forward-looking statements. These forward-looking statements are based on current beliefs, expectations and assumptions, including, without limitation, assumptions regarding present and future business strategies and the environment in which Kaufman & Broad SA operates, which is significantly affected by the current health crisis. These forward-looking statements speak only as of the date of this press release. Actual results may be materially different from those expressed or implied by these forward-looking statements. Forward-looking statements and statements are not guarantees of future performances and are subjet to risks and uncertainties which are difficult to assess and generally outside of the control of Kaufman & Broad. In addition to the current health crisis, these risks and uncertainties include those discussed and identified under Chapter 1.2. "Facteurs de risques" of the 2018 registration document of Kaufman & Broad filed with the Autorité des marchés financiers (AMF) on 29 March 2019, available on the Company's website (www.kaufmanbroad.fr) and the AMF's website (www.amf-france.org). This press release includes only summary information and does not purport to be comprehensive.     Glossary    Backlog:in the case of sales before completion (VEFA), this covers orders for housing units that have not been delivered, and for which a notarized deed of sale has not yet been signed, and orders for housing units that have not been delivered for which a notarized deed of sale has been signed for the portion not yet recorded in revenue (in the case of a program for which an advance of 30% has been received, 30% of the revenue from a housing unit for which a notarized deal has been signed is recognized as revenue, while 70% is included in the backlog). The backlog is a summary at a given time, which enables the revenue yet to be recognized over the coming months to be estimated, thus supporting the Group's forecasts - with the proviso that there is an element of uncertainty in the transformation of the backlog into revenue, particularly for orders that have not yet been signed.   EBIT:corresponds to income from current operations income, ie 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: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.   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 of 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): 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.   Take-up period:the take-up period is the number of months required for the available housing units to be sold, if sales continue at the same rate as in previous months, or the number of housing units (available supply) per quarter divided by the orders for the previous quarter, and divided by three in turn.   Take-up rate:the take-up rate 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.   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..     NOTES     Financial data   Key consolidated data   ? thousands Q1 Q1   2020 2019 Restated*** Revenue 299,214 328,074   Of which housing 272,159 286,015   Of which Commercial Property 25,197 41,010   Of which other 1,858 1,049       Gross margin 57,098 66,172 Gross margin ratio (%) 19.1% 2.2% Current operating income 25,354 30,563 Current operating margin (%) 8,5% 9.3% Attributable net income 13,198 14,363 Attributable net earnings per share (?/share)** 0.60 0.66 ** Based on the number of shares that make up Kaufman & Broad S.A.'s share capital, i.e. 21,864,074 shares at November 30, 2018 and 22,088,023 shares at November 30, 2019 *** Restatement following the end of the capitalization of financial costs following the change in interpretation of the IAS23 standard and a reclassification of the CVAE expense from the operating expenses item to the income tax item.     Consolidated income statement*   ? thousands Q1 Q1   2020 2019 Restated*** Revenue 299,214 328,074 Cost of sales 242,116 261,902 Gross margin 57,098 66,172 Sales expenses -4,887 -7,597 Administrative expenses -13,351 -14,588 Technical and customer service expenses -5,386 -5,407 Development and program expenses -8,121 -8,017 Current operating income 25,354 30,563 Other non-recurring income and expenses 0 0 Operating income 25,354 30,563 Cost of net financial debt -2,579 -2,878 Other financial income and expense 0 0 Income tax -4,671 -10,234 Share of income (loss) of equity affiliates and joint ventures 190 964 Net income of the consolidated entity 18,294 18,416 Non-controlling equity interests (P&L) 5,095 4,054 Attributable net income 13,198 14,363 *Not approved by the Board of Directors and not audited. *** Restatement following the end of the capitalization of financial costs following the change in interpretation of the IAS23 standard and a reclassification of the CVAE expense from the operating expenses item to the income tax item.     Consolidated balance sheet*   ? thousands Feb. 29th, Nov. 30th,   2020 2019 Restated*** ASSETS     Goodwill 68,661 68,661 Intangible assets 91,378 91,209 Property, plant and equipment 5,298 5,976 Right of use IFRS 16 20,271 - Equity affiliates and joint ventures 8,527 5,929 Other non-current financial assets 1,890 1,756 Deferred tax assets 4,002 4,002 Non-current assets 200,028 177,533 Inventories 475,607 455,976 Accounts receivable 502,238 511,907 Other receivables 211,473 211,501 Cash and cash equivalents 162,541 208,102 Prepaid expenses 638 1,435 Current assets 1,352,498 1,388,921 TOTAL ASSETS 1,552,526 1,566,454   Feb. 29th, Nov. 30th,   2020 2019 Restated*** LIABILITIES     Share capital 5,743 5,743 Additional paid-in capital 276,753 198,527 Attributable net income 13,198 77,890 Attributable shareholders' equity 295,694 282,160 Non-controlling equity interests (balance sheet) 13,072 10,953 Shareholders' equity 308,766 293,113 Non-current provisions 38,715 37,706 Non-current financial liabilities (maturing in > 1 year) 148,979 148,900 IFRS 16 rental debt (maturing in > 1 year) 13,050 - Deferred tax liability 55,320 50,346 Non-current liabilities 256,063 236,952 Current provisions 2,651 2,529 Other current financial liabilities (maturing in < 1 year) 4,393 3,189 IFRS 16 rental debt (maturing in < 1 year) 6,344 - Accounts payable 877,865 907,498 Other payables 96,277 123,047 Prepaid income 167 126 Current liabilities 987,697 1,036,389 TOTAL LIABILITIES 1,552,526 1,566,454 * Not approved by the Board of Directors and not audited *** Restatement following the end of the capitalization of financial costs following the change in interpretation of the IAS23 standard and a reclassification of the CVAE expense from the operating expenses item to the income tax item.   Operational data     Housing Q1 Q1   2020 2019       Revenue (? million, excluding VAT) 272.2 286.0 ?  Of which apartments 245.9 266.7 ?  Of which single family homes in communities 26.3 19.3       Deliveries (EHUs) 1,480 1,473 ?  Of which apartments 1,372 1,408 ?  Of which single family homes in communities 108 65       Net orders (number) 1,482 1,771 ?  Of which apartments 1,440 1,675 ?  Of which single family homes in communities 42 96       Net orders (? million, including VAT) 326.5 357.4 ?  Of which apartments 313.9 325.5 ?  Of which single family homes in communities 12.6 31.8       Property supply at the end of the period (in number) 3,359 3,261       End-of-period backlog     ?  In value terms (? million, excluding VAT) 2,073.2 1,975.3 -         Of which apartments 1,978.2 1,846.6 -         Of which single family homes in communities 95.0 128.6 ?  In months of business 18.6 18.3       End-of-period land reserve (number) 33,429 30,900             Commercial Q1 Q1   2020 2019       Revenue (? million, excluding VAT) 25.2 41.0 Net orders (? million, including VAT) 1,075.0 113.8 End-of-period backlog (? million, excluding VAT) 1,330.0 270.0           Regulatory filing PDF file Document title: Q1 2020 RESULTS Document: https://eqs-cockpit.com/c/fncls.ssp?u=YMKJQDCVKS

1002495  19-March-2020 CET/CEST