DJ Kaufman & Broad SA: H1 2021 Results
Kaufman & Broad SA
Kaufman & Broad SA: H1 2021 Results
12-Jul-2021 / 18:45 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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Press release
Paris, July 12, 2021
H1 2021 results
- Housing land portfolio of 35,000 units, i.e. approximately EUR7.9 billion, incl. VAT, in potential revenue
- Total backlog: EUR3.5 billion
- Sound financial structure
- Financing capacity: EUR447.3 million
- Positive net cash (excluding IFRS 16): EUR46.4 million
- 2021 guidance confirmed, suggesting that the 2021 dividend will be at least EUR1.85 per share
- Key sales data
(H1 2021 vs H1
2020)
- Total orders:
- EUR609.2m incl.
VAT
- Housing:
EUR569.7m incl.
VAT vs EUR872.0m
incl. VAT
- Commercial
Property:
EUR39.5m incl.
VAT
Kaufman & Broad SA today reported its results for the first half of the 2021 fiscal year (from
- Take-up period December 1, 2020 to May 31, 2021). Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman
[1] for & Broad, made the following comments:
Housing:
4.0 months (stable)
year-on-year "In Q2 2021, new project development remained on track and the Housing portfolio represented 35,000
units in volume terms, or approximately EUR7.9 billion, including VAT, of potential business.
- Key financial
data 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,
(H1 2021 vs H1 demand from both individual buyers and private and public institutional investors remained robust.
2020)
With Kalilog, Kaufman & Broad has launched a business focused on social housing across the entire
- Total revenue: country. The aim is to offer highly affordable housing units meeting Kaufman & Broad's strictest
EUR605.8m vs environmental standards. This portfolio currently comprises approximately 600 housing units.
EUR385.0m
Of which Housing:
EUR519.1m vs EUR352.3m Kaufman & Broad won the bid for the first real estate project to be awarded the Frugal[3] label
(the Malbec project in Bordeaux), demonstrating its ability to adapt to the local authorities'
- Gross margin: evolving expectations.
EUR104.7m vs
EUR73.5m
- EBIT margin*:
7.6% vs 3.2% In response to high demand from international institutional investors for residential housing
- EBIT: EUR45.9m vs portfolios, Kaufman & Broad is developing portfolios of managed senior and student housing based on
EUR12.3m a unique developer / investor / operator model. These portfolios may be marketed based on
- Attributable historical operations.
net income:
EUR22.7m vs EUR2.1m
- Net cash[2]:
With regard to the senior residence program, Kaufman & Broad and Banque des Territoires (Caisse des
EUR46.4m vs EUR62.5m at Dépôts) expect to finalize the creation of a joint venture by the end of 2021, which will develop a
end-2020 portfolio of about 10 senior residences for an investment of approximately EUR150 million over the
next few years. These residences will be managed by Cosy Diem, a joint venture between Kaufman &
- Financing Broad and Serenis, a major player in the "ageing well" market.
capacity:
EUR447.3m vs EUR465.2m
at end-2020 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
- Key growth office space in Marseille, to be used primarily by a major French group, a tenant under a
indicators lease-before-completion (BEFA),
- Total backlog
EUR3,490.3m vs
EUR3,788.7.1m at
end-May. 2020
Of which Housing:
EUR2,289.9m (vs
EUR2,464.2.2m)
- Housing
property
portfolio:
35,000 units vs
34,864 units at
end-May 2020
[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
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 EUR22.7 million (a 10.6x increase from H1 2020), positive net cash of EUR46.4 million (excluding IFRS 16 liabilities) and financing capacity of EUR447.3 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 EUR1.3 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 EUR1.85 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 EUR569.7 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. EUR268.2 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 EUR39.5 million (incl. VAT).
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 EUR1,200.4 million. - Leading indicators for sales and growth
At May 31, 2021, the Housing backlog stood at EUR2,289.9 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 EUR3.5 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 EUR605.8 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 EUR519.1 million (excl. VAT), versus EUR352.3 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 EUR487.2 million (excl. VAT). Revenue from Single-family Homes in Communities amounted to EUR31.9 million (excl. VAT), versus EUR33.2 million (excl. VAT) in H1 2020. - Profitability data
Gross margin in H1 2021 was EUR104.7 million, compared with EUR73.5 million in H1 2020.
Current operating expenses totaled EUR58.7 million (9.7% of revenue), versus EUR61.2 million in H1 2020 (15.9% of revenue).
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DJ Kaufman & Broad SA: H1 2021 Results -2-
Current operating income (or EBIT) stood at EUR45.9 million, compared with EUR12.3 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 EUR22.7 million versus EUR2.1 million in H1 2020. - Financial structure and liquidity
Net cash (excluding the impact of IFRS 16 lease liabilities) was EUR46.4 million at May 31, 2021, compared with net cash of EUR62.5 million at end-2020 and net debt of EUR78.6 million at May 31, 2020.
Cash assets (available cash and investment securities) stood at EUR197.3 million, compared with EUR215.2 million at November 30, 2020.
Financing capacity was EUR447.3 million (versus EUR465.2 million at November 30, 2020).
Working capital requirement was EUR116.9 million, i.e. 8.4% of revenue over 12 months, compared with EUR122.1 million at November 30, 2020 (10.5% of revenue). - 2021 outlook
Revenue for full-year 2021 is forecast at approximately EUR1.3 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 EUR1.85 per share.
The outlook as a whole is based on a stabilization of the current economic and health situation.
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
Press Relations
DGM Conseil
Thomas Roborel de Climens - +33 6 14 50 15 84
thomasdeclimens@dgm-conseil.fr
Chief Financial Officer
Kaufman & Broad: Emmeline Cacitti
Bruno Coche
06 72 42 66 24 / ecacitti@ketb.com
01 41 43 44 73
Infos-invest@ketb.com
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. - Glossary
Backlog (order book): in the case of sales before completion (VEFA), the backlog 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 and for which a notarized deed of sale has been signed for the portion not yet recorded in revenue (in the case of a program that is 30% complete, 30% of the revenue from a housing unit for which a notarized deed has been signed is recognized as revenue, while 70% is included in the backlog). The backlog is a summary established at a given time, making it possible to estimate the amount of revenue yet to be recognized over the coming months and thus upholding the group's forecasts - with the proviso that there is an element of uncertainty in the conversion of the backlog into revenue, particularly for orders for which a deed of sale has not yet been signed.
Lease-before-completion (BEFA): a lease-before-completion involves a customer leasing a building before it is built or redeveloped.
Working Capital Requirement (WCR): WCR results from deferrals of cash flow: inflows and outflows relating to operating expenditures and revenues necessary for the design, production and marketing of real estate projects. WCR can thus be simply expressed as current assets (inventory + accounts receivable + other operating receivables + advances received + deferred income) minus current liabilities (accounts payable + tax and social security liabilities + other operating liabilities + prepaid expenses). The amount of WCR will depend in particular on the length of the operating cycle, the extent and duration of the work-in-process inventory carried, the number of projects initiated, and the payment terms granted by suppliers and delivery schedules granted to customers.
Free cash flow: free cash flow is equal to cash flow less net operating investments for the period.
Cash flow: cash flow after cost of financial debt and taxes is equal to consolidated net income adjusted for the group's share of the income of equity affiliates and joint ventures, the income from discontinued operations, and estimated income and expenses.
Financing capacity: corresponds to cash assets plus lines of credit not yet drawn.
Senior loans (lines of credit): banks use senior debt to fund LBO (leveraged buyout) transactions. LBO financing by banks is risky in the bank credit market. It consists of loans repayable by installments and/or, most frequently, "bullet repayment" type loans, but also lines of credit to finance the working capital requirements and growth policies of companies involved in this type of acquisition. Senior debt is debt that enjoys specific guarantees, the repayment of which has priority over other so-called subordinated debt. It is therefore "priority debt."
Take-up period: the inventory take-up period is the number of months required for available housing units to be sold if sales continue at the same pace as in previous months, i.e. housing units outstanding (available supply) per quarter divided by the number of orders per quarter ended and with orders in turn divided by three.
Dividend: the dividend is the share of a company's annual net profit distributed to shareholders. Its amount is proposed by the Board of Directors and is subject to approval at the Shareholders' Meeting. It is payable within a maximum period of nine months after the end of the fiscal year.
EBIT: corresponds to current operating income, i.e. gross margin less current operating expenses.
Gross financial debt or financial debt: gross financial debt consists of long-term and short-term financial liabilities, financial hedging instruments relating to liabilities constituting gross financial debt, and the interest accrued on balance sheet items constituting gross financial debt.
Net debt or net financial debt: a company's net debt or net financial debt is the balance between its gross financial liabilities (or gross financial debt) on the one hand, and the available cash and financial investments constituting its "cash assets" on the other. It represents the company's creditor or debtor position with respect to third parties outside the operating cycle.
EHU: 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: this refers to 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 yet entered the marketing phase).
Property portfolio: This consists of all land for development for which a commitment (deed or promise of sale) has been signed.
Debt (or gearing) ratio: ratio of a company's net debt (or net financial debt) to its consolidated shareholders' equity. It is a measure of the risk to the company's financial structure.
Orders: measured in volume terms (units) and value terms; orders reflect the group's sales activity. Orders are recognized in revenue based on the time necessary to "convert" 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.
Orders (in value): this figure represents the value of the real property as expressed in order contracts signed, including VAT, for a given period. It is net of cancellations recorded during that period.
Land reserve: This includes land for development (also called the "property portfolio"), i.e. land for which a deed or promise of sale has been signed, as well as land under review, i.e. land for which a deed or promise of sale has not yet been signed.
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