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Kaufman & Broad SA : 2016 Annual Results (Paris, January 30, 2016)

2016 Annual results

Press Release

Paris, January 30, 2017

2016 Annual Results

 

 

/EIN News/ --                  

  • Solid performance in 2016, boosted by the growth dynamics of the past three years and a buoyant market
    • Good business performance
    • Growth in financial results, in line with expectations
  • Good outlook for 2017
 

Key components of sales activity (2016 vs. 2015)

Housing orders
Volume: 8,017 units (+16.2%) Value: €1,539.6 million including VAT (+27.1%)

Orders in value *, including Commercial property:
€1,814.2 million including VAT (+32.8%)
Main financial highlights Revenues:
€1,238.0 million (+16.5%) Gross margin: €235.6 million (+16.2%)

Adjusted EBIT:
€108.7 million (+17.2%) Attributable net income:
€46.0 million (+15.7%) Net financial debt: €(85.1) million
vs. net cash position €27.7 million
at end-2015

 

Key growth indicators Total backlog:
€1,592.2 million (+25.7% vs. end-2015) Of which Housing units:
€1,360.2 million (+25.1% vs. end-2015)

Housing property portfolio:
24,314 lots (+28.2% vs. end-2015)  
Kaufman & Broad SA duly reviewed the unaudited results for fiscal 2016 (December 1, 2015 to November 30, 2016).

 

Commenting on these results, Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman & Broad, stated, in particular:

 

"The 2016 results continued to benefit from the strong growth dynamics initiated in 2014. For the third consecutive year, the group's indicators for sales and property development have risen.

 

Housing orders have thus increased, in both volume and value. The growth in volume was driven by favorable market conditions for first-time buyers (+33.4%), as well as investors (+58.4%). The significant increases in the land reserve (+28.2%) and backlog (+25.1%) attest to our ability to maintain the solid dynamics of our commercial offer.

 

Orders for commercial property increased significantly, to more than €274 million, with sustained activity in work and new constructions across the country.

 

At the beginning of 2017, the market for new housing remains buoyant. It is driven by attractive, well-balanced incentives available to investors as well as first-time home buyers. It is also boosted by the still-low interest rates, which may however not exclude a gradual recovery in the course of the year. All of these factors tend to suggest that the year's market will at least be equivalent to that of 2016 - therefore exceeding 120,000 housing units.

 

In that context, Kaufman & Broad's outlook for 2017 remains favorable. Revenues should increase by 8 to 10%, gross margin and adjusted EBIT should remain around 19% and 8.5% respectively, while net financial debt should remain around €100 million." 
  • Sales activities

 

 

  • Housing segment

For the whole of fiscal 2016, orders for housing totaled 8,017 units in volume, up 16.2% compared to the same period in 2015.

In value, housing orders totaled €1,539.6 million (including VAT), up 27.1% compared to the same period in 2015, due to an increase in orders in the regions and Île-de-France.

In 2016, 7,779 apartments were ordered for a total of €1,479.0 million (including VAT), representing a 16.9% increase in volume and a 27.8% rise in value.

Breakdown of the customer base

In 2016, the number of orders placed by investors grew by 58.4% compared to the same period in 2015. Moreover, the ongoing interest of first-time home buyers was reasserted with a 33.4% rise in their number. Managed accommodations orders fell by 13.8% in value.

  • Commercial property segment

For the fiscal year as a whole, the commercial property segment recorded orders totaling €274.6 million.

In June, Kaufman & Broad delivered Boursorama's new head-office building (around 9,000 sq.m), on the Trapeze in Boulogne-Billancourt. In July, EDF (SOFILO) entrusted Kaufman & Broad with the construction, under a property development contract, of the new headquarters of its Aquitaine sales branch in Bordeaux (around 5,000 sq.m). The group also launched the construction of the ORA building (around 26,000 sq.m) in the 17th arrondissement of Paris.

Several other operations are still underway, in particular: the construction of the SNI group's new headquarters in 13th arrondissement of Paris (around 23,000 sq.m), the administrative complex built in Saint Brieuc for the urban community (around 9,000 sq.m), as well as the Ilot G5 construction in the "Bassins à flot" district of Bordeaux (around 4,500 sq.m).

  • Leading indicators of sales and development activities

At November 30, 2016, the housing units backlog totaled €1,360.2 million (excluding VAT), i.e. more than 15 months of business. At the same date, Kaufman & Broad had 207 housing programs on the market representing 4,196 housing units, versus 162 programs and 3,092 housing units at end-2015.

The Housing portfolio totaled 24,314 lots, up 28.2% compared to end-2015. It represents potential revenue of nearly four years of business.

The group is planning to launch 26 new programs in Q12017, representing nearly 1,559 lots.

The commercial property backlog totaled €230.4 million at end-2016.


 

  • Financial results
  • Operating activities 

Total revenues amounted to €1,238.0 million (excluding VAT), up 16.5% compared to 2015.

Revenues from the Housing segment totaled €1,060.0 million (excluding VAT), compared to
€963.4 million (excluding VAT) in 2015. This represents 85.6% of the group's revenues.

Revenues from the Apartments business were up 11.5% to €1,017.7 million (excluding VAT). Revenues from Single-family homes in communities totaled €42.3 million (excluding VAT), versus €50.4 million (excluding VAT) in 2015.

Revenues from the Commercial property segment totaled €171.1 million (excluding VAT), compared to €93.9 million (excluding VAT) in 2015.

Other businesses generated revenues of €6.9 million (excluding VAT).

  • Profitability highlights 

The gross margin for 2016 totaled €235.6 million compared to €202.7 million in 2015. The gross margin rate came to 19.0%, unchanged from 2015.

Current operating expenses amounted to €134.3 million[1], i.e., 10.9% of revenues, versus €117.0 million in 2015 (11.0% of revenues).

Current operating profit totaled €101.3 million, compared to €85.7 million in 2015. The current operating margin rate rose to 8.2% from 8.1% in 2015.

The group's adjusted EBIT[2] amounted to €108.7 million in 2016 (vs. €92.7 million in 2015). The adjusted EBIT margin was 8.8% (vs. 8.7%).

Attributable net income totaled €46.0 million versus €39.8 million in 2015.

  • Financial structure and liquidity

At November 30, 2016, net financial debt was €85.1 million, compared to a positive net cash position of €27.7 million at end-November 2015.

Cash assets (available cash and investment securities) totaled €118.1 million, compared to
€169.4 million at November 30, 2015.

The working capital requirement totaled €129.2 million (10.4% of revenues), compared to €92.4 million at November 30, 2015 (8.7% of revenues).


 

  • Governance, shareholders and dividend

At its meeting of January 27, 2017, the Board of Directors of Kaufman & Broad SA, duly noted the resignation of Alexandre Dejoie as Director, at the close of the Board meeting. Kaufman & Broad thanked him warmly for his contribution to the Board's work. Following this departure, PAI Partners was left with only two Directors' seats.

At the same time, the Board of Directors appointed Jean-Louis Chaussade, Chairman & CEO of Suez Environnement, as Director.

At January 19, 2017, the FG8 holding company held 36.2% of the share capital of Kaufman & Broad SA At the same date, in line with the commitments made by the company's management, the Artimus Participation fund, representing 125 Kaufman & Broad managers and employees, held 6.7% of the company's capital. Including the 1.3% stake held by group employees through the company savings plan, the total stake held by all Kaufman & Broad staff was 8%. Another 6.5% stake was held by Predica.

The free float was 41%. Following this significant increase, on December 28, 2016, Kaufman & Broad shares were admitted to trading on the "Long-only" Deferred Settlement Service (SRD) of Euronext Paris.

As announced in 2016, a dividend of €1.85 per share will be paid out in 2017 in respect of fiscal 2016 (ended November 30, 2016), subject to the approval of the Company's shareholders at the General Meeting to be held on May 11 this year.

It will also be proposed to the Shareholders' Meeting of Kaufman & Broad SA, the right to receive this dividend either 100% in cash or 100% in shares. Upon completion of this transaction and in order to maintain the number of shares on a fully diluted basis, the Company will cancel as many treasury shares as will be created to satisfy the choice of Shareholders

Moreover, it is recalled that a pay-out ratio of 75% of earnings, net of exceptional items, will be proposed to the Shareholders' Meeting called to approve the financial statements for fiscal 2017 (ending November 30, 2017).

  • Outlook for 2017

The group estimates that in fiscal 2017 its revenues will increase by 8 to 10%, gross margin and adjusted EBIT will remain around 19% and 8.5% respectively, while net financial debt will remain close to €100 million.

 

This press release is available from the website www.kaufmanbroad.fr

 

 

  • Next regular publication date:
    • April 26, 2017: Q1- 2017 results (after market close)
    • May 11, 2017: Annual Shareholders' Meeting

Contacts

Chief Financial Officer

Bruno Coche

 

01.41.43.44 73

Infos-invest@ketb.com
Press Relations
Camille Petit

Burson-Marsteller

01.56.03.12 80

contact.presse@ketb.com

 

 

About Kaufman & Broad - For almost 50 years, Kaufman & Broad has been designing, building and selling single-family homes in communities, apartments and offices on behalf of third parties. Kaufman & Broad is a leading French property builder and developer measured by its size, earnings and the strength of its brand.

 

Kaufman & Broad's Registration Document, filed on March 9, 2016 with the French financial markets authority (the "AMF") under number D.16-0125 (the "Registration Document"), as well as the updated Registration Document filed with the AMF under number D.16-0125-A01 are available on the AMF website (www.amf-france.org) and on the Kaufman & Broad website (www.kaufmanbroad.fr). They contain a detailed description of Kaufman & Broad's business, results and outlook, as well as the associated risk factors. Kaufman & Broad particularly refers to the risk factors described in Section 1.2 of the Registration Document, as amended in the updated Registration Document. The materialization of one or more of these risks could have a significant negative impact on Kaufman & Broad's business, assets, financial position, results and outlook, as well as on the trading price of Kaufman & Broad shares.

 

This announcement does not, and shall not, in any circumstances constitute a public offering, nor an offer to sell or to subscribe, nor a solicitation to offer to purchase or to subscribe securities in any country.

 

 

  • Glossary 

Orders: measured in volume (Units) and in value, orders reflect the group's sales activity. Orders are recognized as 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, for Multi-occupancy housing programs that include mixed-use buildings (apartments/business premises/retail space/offices), all floor space is converted into housing equivalents.

Units: Units are used to define the number of housing units or equivalent housing units (for mixed programs) of any given program. The number of equivalent housing units is calculated as a ratio of the surface area by type (business premises/retail space/offices) to the average surface area of the housing units previously obtained.

EHU: EHUs (Equivalent Housing Units delivered) directly reflect sales. 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.

Take-up rate: the number of orders in relation to the average commercial offer for the period.

Commercial offer: the total inventory of housing units available for sale at the relevant date, i.e., all unordered housing units at such date (less the programs that have not entered the marketing phase).

Gross margin: corresponds to revenues less cost of sales. Cost of sales consists of the price of land, the related property costs and the construction costs.

Adjusted EBIT: corresponds to current operating income adjusted for the "IAS 23 revised" borrowing costs that have been capitalized and removed in the gross margin.

Backlog: also called an order book, is the summary which enables future revenues for the coming months to be forecast at any given moment.

Property portfolio: refers to all the land for which all commitments (contract of sale, etc.) have been signed.


 

APPENDICES

 

 

  • Financial data

 

Key consolidated data

 

in € millions Q4
2016
Fiscal 2016 Q4
2015
Fiscal 2015
Revenues 402.7   1,238.0   366.8   1,063.1  
of which Housing 367.5   1,060.0   342.9   963.4  
of which Commercial property 33.3   171.1   22.3   93.9  
of which Other 1.9   6.9   1.6   5.8  
Gross margin 77.3   235.6   70.5   202.7  
Gross margin rate (%) 19.2 % 19.0 % 19.2 % 19.1 %
Current operating income 35.5   101.3   38.4   85.7  
Current operating margin (%) 8.8 % 8.2 % 10.5 % 8.1 %
Adjusted EBIT ** 37.8   108.7   41.2   92.7  
Adjusted EBIT margin (%) 9.4 % 8.8 % 11.2 % 8.7 %
Attributable net income 18.3   46.0   20.3   39.8  
Attributable net earnings per share (€/share) * 0.88   2.21   0.94   1.84  
  •   Based on the number of shares that compose the share capital of Kaufman & Broad SA. On January 26, 2016, the Board of Directors of Kaufman & Broad decided to cancel 747,619 treasury shares, thereby reducing the number of Company shares from 21,584,658 to 20,839,037
  •   Adjusted EBIT corresponds to current operating income adjusted for the "IAS 23 revised" borrowing costs that have been capitalized and removed in the gross margin.

 

Consolidated income statement*

 

in € thousands Q4
2016
Fiscal 2016 Q4
2015
Fiscal 2015
Revenues 402,699   1,238,002   366,816   1,063,098  
Cost of sales (325,432 ) (1,002,397 ) (296,288 ) (860,397 )
Gross margin 77,267   235,605   70,527   202,701  
Selling expenses (11,562 ) (34,891 ) (9,785 ) (30,652 )
General administrative expenses (18,132 ) (58,214 ) (11,246 ) (50,313 )
Technical and customer service expenses (5,073 ) (19,477 ) (4,885 ) (18,310 )
Development and program expenses (7,035 ) (21,765 ) (6,248 ) (17,740 )
Current operating income 35,465   101,258   38,364   85,685  
Other non-recurring income and expenses -   -   831   826  
Operating income 35,465   101,258   39,195   86,511  
Cost of net financial debt (794 ) (3,203 ) (3,115 ) (4,470 )
Other income and expenses -   -   -   -  
Income tax (9,930 ) (30,365 ) (10,685 ) (24,267 )
Share of income (loss) of equity affiliates and joint vsentures (23 ) (211 ) 17   1,172  
Income (loss) attributable to shareholders 24,718   67,479   25,411   58,946  
Minority interests  6,439   21,445    5,115   19,167  
Attributable net income 18,279   46,034   20,297   39,779  
  •    Not approved by the Board of Directors and not audited.
     

 

Consolidated balance sheet*

 

in € thousands Nov. 30, 2016 Nov. 30, 2015
ASSETS    
Goodwill 68,661 68,511
Intangible Assets 87,570 86,605
Property, plant and equipment 7,449 4,663
Equity affiliates and joint ventures 5,634 5,513
Other non-current financial assets 2,504 1,247
Non-current assets 171,818 166,539
Inventories 371,381 329,664
Accounts receivable 375,669 331,428
Other receivables 159,772 136,421
Cash and cash equivalents 118,108 169,361
Prepaid expenses 1,345 649
Current assets 1,026,275 967,523
TOTAL ASSETS 1,198,093 1,134,062
   
EQUITY AND LIABILITIES    
Capital stock 5,418 5,612
Additional paid-in capital 79,119 167,458
Attributable net income 46,035 39,779
Attributable shareholders' equity 130,571 212,849
Minority interests 15,196 11,068
Shareholders' equity 145,767 223,917
Non-current provisions 23,229 22,334
Borrowings and other non-current financial liabilities
(> 1 year)
191,362 127,833
Deferred tax liabilities 45,471 40,268
Non-current liabilities 260,062 190,435
Current provisions 1,499 120
Other current financial liabilities (< 1 year) 11,841 13,840
Accounts payable 675,146 613,791
Other payables 97,382 85,412
Current tax 5,858 5,301
Deferred income 539 1,246
Current liabilities 792,264 719,710
TOTAL LIABILITIES 1,198,093 1,134,062
  •    Not approved by the Board of Directors and not audited.

 


 

  • Operational data

 

 

Housing Q4
2016
Fiscal 2016 Q4
2015
Fiscal 2015
         
Revenues (€ million, excluding VAT) 367.5 1,060.0 342.9 963.4
of which Apartments 357.1 1,017.7 331.6 913.0
of which Single-family homes in communities 10.4 42.3 11.4 50.4
         
Deliveries (EHUs) 2,301 6,545 2,164 5,961
of which Apartments 2,555 6,360 2,108 5,748
of which Single-family homes in communities 46 185 56 213
         
Net orders (number) 2,789 8,017 2,470 6,901
of which Apartments 2,686 7,779 2,392 6,656
of which Single-family homes in communities 103 238 78 245
         
Net orders (€ million, including VAT) 525.2 1,539.6 385.5 1,211.6
of which Apartments 499.9 1,479.0 369.9 1,157.0
of which Single-family homes in communities 25.3 60.6 15.6 54.6
         
Commercial offer at end of period (number) 4,196 3,092
         
Backlog at end of period        
In value (€ million, excluding VAT) 1,360.2 1,087.0
of which Apartments 1,312.3 1,039.4
of which Single-family homes in communities 47.9 47.5
In months of business 15.4 13.5
     
Land stock at end of period (number) 24,314 18,973

 

Commercial property Q4
2016
Fiscal 2016 Q4
2015
Fiscal 2015
         
Revenues (€ million, excluding VAT) 33.3 171.1 22.3 93.9
Net orders (€ million, including VAT) 23.3 274.6 13.4 154.4
Backlog at end of period (€ million, excluding VAT) 230.4 178.4

 

 

 




[1] Of which €1.1 million in fees for the re-IPO conducted in the 1st half of 2016

[2] Adjusted EBIT corresponds to current operating profit of €101.3 million adjusted for capitalized borrowing costs of
€7.4 million at November 30, 2016, compared to current operating profit of €85.7 million adjusted for capitalized borrowing costs of €7.0 million at November 30, 2015.


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