07-12-2021 : H1 2021 Results

Press release

Paris, July 12, 2021

H1 2021 RESULTS

• Housing land portfolio of 35,000 units, i.e. approximately €7.9 billion, incl. VAT, in potential revenue
• Total backlog: €3.5 billion
• Sound financial structure
• • Financing capacity: €447.3 million
  • Positive net cash (excluding IFRS 16): €46.4 million
• 2021 guidance confirmed, suggesting that the 2021 dividend will be at least €1.85 per share

• Key sales data
  (H1 2021 vs H1 2020)
• • Total orders:
  • €609.2m incl. VAT
  • • Housing: €569.7m incl. VAT vs €872.0m incl. VAT
    • Commercial Property: €39.5m incl. VAT
  • Take-upperiod1 for Housing:

  4.0 months (stable) year-on-year

• Key financial data
  (H1 2021 vs H1 2020)
• • Total revenue: €605.8m vs €385.0m
  • 
    Of which Housing: €519.1m vs €352.3m
  • Gross margin: €104.7m vs €73.5m
  • EBIT margin*: 7.6% vs 3.2%
  • EBIT: €45.9m vs €12.3m
  • Attributable net income: €22.7m vs €2.1m
  • Net cash2:
  • 
    €46.4m vs €62.5m at end-2020
  • Financing capacity:
  • 
    €447.3m vs €465.2m at end-2020
• Key growth indicators
• • Total backlog
  • 
    €3,490.3m vs €3,788.7.1m at end-May. 2020
    Of which Housing: €2,289.9m
    (vs €2,464.2.2m)
  • Housing property portfolio:
  • 
    35,000 units vs 34,864 units at end-May
    2020

Kaufman & Broad SA today reported its results for the first half of the 2021 fiscal year (from December 1, 2020 to May 31, 2021). Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman & Broad, made the following comments:

"In Q2 2021, new project development remained on track and the Housing portfolio represented 35,000 units in volume terms, or approximately €7.9 billion, including VAT, of potential business.

However, as expected, sales were affected by the contraction in supply due to the more than 18-month decline in building permits granted. In contrast, as shorter take-up periods have shown, demand from both individual buyers and private and public institutional investors remained robust.

With Kalilog, Kaufman & Broad has launched a business focused on social housing across the entire country. The aim is to offer highly affordable housing units meeting Kaufman & Broad's strictest environmental standards. This portfolio currently comprises approximately 600 housing units.

Kaufman & Broad won the bid for the first real estate project to be awarded the Frugal3 label (the Malbec project in Bordeaux), demonstrating its ability to adapt to the local authorities' evolving expectations.

In response to high demand from international institutional investors for residential housing portfolios, Kaufman & Broad is developing portfolios of managed senior and student housing based on a unique developer / investor / operator model. These portfolios may be marketed based on historical operations.

With regard to the senior residence program, Kaufman & Broad and Banque des Territoires (Caisse des Dépôts) expect to finalize the creation of a joint venture by the end of 2021, which will develop a portfolio of about 10 senior residences for an investment of approximately €150 million over the next few years. These residences will be managed by Cosy Diem, a joint venture between Kaufman & Broad and Serenis, a major player in the "ageing well" market.

And finally, Kaufman & Broad confirms its ability to design commercial property projects that meet customers' new requirements for both location and use. The development of a total of 27,500 sq.m of office space in Marseille, to be used primarily by a major French group, a tenant under a lease-before-completion (BEFA),

1. Based on the first six months of the year
2. Based on net debt excluding IFRS 16 lease liabilities
3. The aim of the "Bâtiment frugal" label is to promote buildings that preserve existing natural spaces and fit into the surrounding area, make us of local industries, and take into account their occupants' quality of life, all while reducing the buildings' impact on the climate.
   * expressed as a percentage, it corresponds to current operating income, i.e. gross margin less current operating expenses divided by revenue

1/11	H1 2021 Results
	July 12, 2021

Overall, in the first half of the fiscal year, Kaufman & Broad was able to preserve its short-term financial balances, with positive net income of €22.7 million (a 10.6x increase from H1 2020), positive net cash of €46.4 million (excluding IFRS 16 liabilities) and financing capacity of €447.3 million, while maintaining strong momentum in preparing for the future.

Regarding the building permit obtained for the Gare d'Austerlitz project on December 14, 2020, two proceedings have been brought before the Paris Administrative Court of Appeals concerning this. The summary proceedings for the suspension of work was dismissed on July 6th. A ruling on an appeal of the work permit itself should be handed down in 2022. We therefore believe it would be best to assume that the contracts will take effect, at the earliest, in the second half of 2022.

Revenue for full-year 2021 is in line with our guidance, forecast at approximately €1.3 billion with an EBIT margin equivalent to the 2020 figure.

The earnings outlook for fiscal year 2021, the soundness of Kaufman & Broad's financial structure and its high backlog suggest that the dividend payable for fiscal year 2021 will be at least €1.85 per share.

The outlook as a whole is based on a stabilization of the current economic and health situation."

♦

✓

Sales activity

Housing

In H1 2021, housing orders in value terms totaled €569.7 million (incl. VAT), a 34.7% decrease compared with H1 2020. In volume terms, 2,780 units were ordered, a 23.5% decline compared with the same period in 2020.

Breakdown of the customer base

In H1 2021 as a whole, orders from buyers in value terms (incl. VAT) fell by 12% (first-time buyers) and 7% (second-time buyers) and accounted for 16% of sales compared with 11% in H1 2020. Orders from investors accounted for 37% of sales (29% for the Pinel incentive alone), up 13% from one half-year period to the next.

Block sales represented 47% of housing orders, i.e. €268.2 million. They were down by 54% compared with H1 2020, when they represented 67% of orders.

Take-up period and property supply

The take-up period for programs was 4.0 months in H1 2021, up from 3.1 months in H1 2020.

The property supply, 97% of which is located in high-demand,low-supply areas (A, Aa and B1), stood at 1,825 housing units at end-May 2021 (versus 1,850 housing units at end-May 2020, i.e. 98% in high-demand,low-supply areas).

• Commercial Property
  In H1 2021, the Commercial Property segment recorded net orders of €39.5 million (incl. VAT).

2/11	H1 2021 Results
	July 12, 2021

Kaufman & Broad currently has approximately 248,000 sq.m of commercial property projects being marketed or under consideration, of which 129,000 sq.m of office space and approximately 119,000 sq.m of logistics space.

It also currently has over 88,000 sq.m of office space under construction, along with more than 42,000 sq.m of logistics space. Lastly, it has around 98,000 sq.m of office space transactions to be finalized.

At end-May 2021, the commercial property backlog stood at €1,200.4 million.

• Leading indicators for sales and growth
  At May 31, 2021, the Housing backlog stood at €2,289.9 million (excl. VAT), i.e. 24.3 months of business. At the same date, Kaufman & Broad had 155 housing programs in the marketing phase, representing 1,876 housing units (compared with 156 programs representing 1,881 units at end- May 2020).
  The Group's total backlog is close to €3.5 billion, of which 39% of the revenue still to be recognized is based on land already acquired. Of the remainder to be acquired, 52% relates to projects for which a building permit was filed, was obtained or was under review, or was being cleared of any claims. Lastly, within the share of projects for which permits have only been filed, the A7/A8 Gare d'Austerlitz project alone represented nearly 29% of the Group's total backlog at May 31, 2021.
  The Housing property portfolio represents nearly 35,000 units. It is up 0.4% compared with the end of May 2020, corresponding to potential revenue of close to five years of business.

♦

✓

Financial results

Business volumes

Total revenue stood at €605.8 million (excl. VAT), up 57.4% compared with H1 2020, and was affected mainly by the sharp contraction in overall business for two months, from mid-March to mid-May.

Housing revenue was €519.1 million (excl. VAT), versus €352.3 million (excl. VAT) in H1 2020. This represents 85.7% of group revenue. Revenue from Apartments was up by 52.7% compared with H1 2020 and stood at €487.2 million (excl. VAT). Revenue from Single-family Homes in Communities amounted to €31.9 million (excl. VAT), versus €33.2 million (excl. VAT) in H1 2020.

• Profitability data
  Gross margin in H1 2021 was €104.7 million, compared with €73.5 million in H1 2020.

3/11	H1 2021 Results
	July 12, 2021

Current operating expenses totaled €58.7 million (9.7% of revenue), versus €61.2 million in H1 2020 (15.9% of revenue).

Current operating income (or EBIT) stood at €45.9 million, compared with €12.3 million in H1 2020. Current operating margin (or EBIT margin) was 7.6% versus 3.2% in H1 2020. Attributable net income for H1 2021 was €22.7 million versus €2.1 million in H1 2020.

• Financial structure and liquidity
  Net cash (excluding the impact of IFRS 16 lease liabilities) was €46.4 million at May 31, 2021, compared with net cash of €62.5 million at end-2020 and net debt of €78.6 million at May 31, 2020.
  Cash assets (available cash and investment securities) stood at €197.3 million, compared with €215.2 million at November 30, 2020.
  Financing capacity was €447.3 million (versus €465.2 million at November 30, 2020).
  Working capital requirement was €116.9 million, i.e. 8.4% of revenue over 12 months, compared with €122.1 million at November 30, 2020 (10.5% of revenue).

• 2021 outlook
  Revenue for full-year 2021 is forecast at approximately €1.3 billion with an EBIT margin equivalent to the 2020 figure.
  The earnings outlook for fiscal year 2021, the soundness of Kaufman & Broad's financial structure and its high backlog suggest that the dividend payable in first-half 2022 for fiscal year 2021 will be at least €1.85 per share.
  The outlook as a whole is based on a stabilization of the current economic and health situation.

4/11	H1 2021 Results
	July 12, 2021

This press release is available at www.kaufmanbroad.fr

• Next periodic disclosure date:
• • October 1, 2021: Results for the first nine months of 2021 (after market close)

Contacts

Chief Financial Officer	Press Relations
Bruno Coche	DGM Conseil
01 41 43 44 73	Thomas Roborel de Climens - [phone]
[e-mail]	[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. Its size, profitability and strong brand name have made Kaufman & Broad one of France's leading property developers and builders.

Kaufman & Broad's Universal Registration Document was filed with the Autorité des Marchés Financiers (French Financial Markets Authority, the "AMF") on March 31, 2021 under number D.21-039. It is available on the websites of the AMF (www.amf-france.org)and Kaufman & Broad (www.kaufmanbroad.fr). It contains a detailed description of Kaufman & Broad's operations, results and outlook, as well as the related risk factors. Kaufman & Broad notes in particular the risk factors described in Chapter 4 of the Universal Registration Document. Should one or more of these risks occur, the operations, assets, financial position, results or outlook of the Kaufman & Broad group, as well as the market price of Kaufman & Broad shares, could be materially adversely affected.

This press release does not, and shall not, constitute a public offer, nor an offer to sell or to subscribe, nor a solicitation to offer to purchase or to subscribe securities in any jurisdiction.

5/11	H1 2021 Results
	July 12, 2021