Press release
Paris, January 30, 2018
2017 Annual Results
- 2017: another year of increased sales performance and higher financial results
- Increase in Housing Unit orders: 9,027 units, + 16.3% in value terms
- 12.3% increase in revenues, and 28.4% increase in attributable net income
- Increase in the proposed dividend to €2.10 per share
-
- The outlook for 2018 looks favorable, once again
Of which Housing Units: €1,790.1 million including VAT (+16.3%) In volume terms: 9,027 units, (+12.6%)
(-1.2 months) Key financial data (2017 compared with 2016) Revenues: €1,390.8 million (+12.3%) Of which Housing: €1,213.7 million (+14.5%) Gross margin: €269.1 million (+14.2%)
€1,670.2 million (+22.8%)
| Kaufman & Broad SA announced its unaudited results for the 2017 financial year (from December 1, 2016 to November 30, 2017) today. Nordine Hachemi, Chair and Chief Executive Officer of Kaufman & Broad, made the following comments: "The 2017 results are in keeping with the strong like-for-like growth momentum that began four years ago. Housing Unit orders increased by 16.3% in value terms, while the overall Backlog (including Commercial Property) increased by 16%. The Housing property portfolio (+14.2%) increased in the same proportions as Housing Unit orders, thus maintaining our growth potential. Furthermore, the marketing period was shortened once again, and now amounts to around 5 months. Kaufman & Broad has set up a joint-venture in order to jointly develop a portfolio of housing for senior citizens with SERENIS, a senior accommodation and healthcare provider. This initiative strengthens the Group's commitment to the promising managed housing sector. The Commercial Property segment recorded orders amounting to €144.3 million, including VAT, over the fiscal year. The quality of our programs, combined with our price management, has enabled us to benefit from marketing periods that are significantly lower than those of the market, and to increase our orders by 68% in terms of volume over the past four years. The property portfolio expanded by 81% over the same period. This has resulted in tight control over our working capital and our margins, which is reflected in a decrease in net debt and an increase in equity capital. The capital increase resulting from the offer reserved for the employees raised the percentage of the share capital held by the group's employees to almost 14%. By strengthening their position as the largest shareholder in Kaufman & Broad, our employees are demonstrating their commitment and their trust. The market is expected to amount to around 130,000 orders in 2017, in line with our expectations. For 2018, we are planning on a level of orders comparable to the level in 2017 for Kaufman & Broad, in a market estimated at between 125,000 and 130,000 housing units. Against this backdrop, and on the basis of stable anticipated interest rates, Kaufman & Broad believes that the increase in its revenues should range between 8 and 10% over the 2018 fiscal year as a whole. The gross margin ratio is expected to remain around 19%, while the adjusted EBIT ratio is expected to be between 8.5 and 9%. The Board of Directors will propose the payment of a dividend of €2.10 per share to the General Meeting of Shareholders, including an option for payment in cash, shares, or in cash and shares. |
Sales activities
- Housing segment
Orders for housing units in value terms amounted to €1,790.1 million (including VAT) for the 2017 fiscal year as a whole, or an increase of 16.3% compared with 2016.
In value terms, orders for housing units amounted to 9,027 housing units, or an increase of 12.6% compared with 2016.
The marketing period for projects was 5.1 months, or a decrease of 1.2 months compared with 2016 (6.3 months).
The sales offering, 94% of which is located in areas where there is a shortfall (A, Abis and B1), amounted to 3,835 housing units at the end of November 2017 (4,196 housing units at the end of 2016).
Breakdown of the customer base
Orders from first-time buyers accounted for 14% of sales in volume terms, while those from
second-time buyers accounted for 6%. Orders from investors accounted for 43% of sales (32% just for the Pinel Scheme), while block sales accounted for 37%.
- Commercial Property segment
In 2017 the Commercial Property segment recorded net orders of €144.3 million including VAT.
In February, Kaufman & Broad was the winning bidder in a consultation process organized by EPA Bordeaux Euratlantique, to build a 27,000 sq.m office property complex below the
Saint-Jean TGV Station. In May, Kaufman & Broad was selected following a limited consultation process in the La Défense District, to carry out a project, ultimately enabling around 30,000 sq.m of floor area to be developed.
Furthermore, Kaufman & Broad signed two off-plan agreements for the realization of logistic platforms: one in Châtres (36,000 sq.m) with Groupama GAN REIM, for the French Army, and one in Montbartier (72,000 sq.m) with INVESCO, for Easydis (Casino group).
Kaufman & Broad is commercializing or having under study around 150,000 sq.m of office space and 210,000 sqm of logistic plateforms.
Otherwise, more than 50,000 sq.m of office space are currently under construction (SNI Paris 13th , ORA Paris 17th , EDF Bordeaux).
The Commercial Property backlog amounted to €174.7 million (excluding VAT) at the end of November 2017.
- Forward-looking indicators for the sales and development activity
The Housing backlog amounted to €1,670.2 million (excluding VAT), i.e. 16.5 months of business at November 30, 2017. Kaufman and Broad had 218 housing programs on the market at the same date, which represent 3,835 housing units, compared with 207 programs representing 4,196 housing units at the end of November 2016.
The Housing property portfolio amounted to 27,775 units, and increased by 14.2 % compared with the portfolio at the end of 2016. The portfolio corresponds to potential revenues for around 4 years of business, and was stable compared with November 30, 2016 (4 years).
The Group is planning to launch 17 new programs in the 1st quarter of 2018, including 3 in the
Île-de-France Region, which represent 137 units, and 14 programs in the French Regions representing 985 units.
- Financial results
- Business volumes
Total revenues amounted to €1,390.8 million (excluding VAT), an increase of 12.3 % compared with 2016.
Housing revenues amounted to €1,213.7 million (excluding VAT), compared with €1,060.0 million (excluding VAT) in 2016. They accounted for 87.3% of the Group's revenues.
Revenues from the Apartments business were up 14.9% compared with 2016, and amounted to €1,169.1 million (excluding VAT).
The Commercial Property segment's revenues amounted to €165.3 million (excluding VAT), compared with €171.1 million (excluding VAT) in 2016.
The other businesses generated revenues of €11.8 million (excluding VAT).
- Profitability highlights
The gross margin for the 2017 fiscal year amounted to €269.1 million compared with €235.6 million in 2016. The gross margin ratio was 19.4%, or slightly higher than the level in 2016 (19.0%).
Current operating expenses amounted to €151.2 million (10.9% of revenues), compared with €134.3 million for 2016 (10.9% of revenues).
Income from current operations amounted to €118.0 million, compared with €101.3 million in 2016. The current operating margin ratio was 8.5% compared with 8.2% in 2016.
The Group's adjusted EBIT amounted to €126.1 million in 2017 (compared with €108.7 million in 2016). The adjusted EBIT margin was 9.1% (compared with 8.8% in 2016).
Attributable net income for the year 2017 amounted to €59.1 million compared with €46.0 million in 2016.
- Financial structure and liquidity
Financial debt amounted to €33.1 million at November 30, 2017, a decrease of €52 million compared with the end of 2016. Cash assets (available cash and investment securities) amounted to €221.1 million, compared with €118.1 million at November 30, 2016. The Group's financing capacity was €321.1 million (€218.1 million at November 30, 2016).
Working capital amounted to €147.6 million (10.6 % of revenues), compared with €129.2 million at November 30, 2016 (10.4% of revenues). The tight control on working capital primarily relies on the very short marketing period for the Group's programs.
- Offer reserved for the employees
The "KB Actions 2017" share ownership offer in the autumn of 2017 reserved for the Group's employees who are members of the savings plan met with great success, including a take-up rate of 65.4%; a total of 236,496 shares were subscribed via the "KB Actions 2017" Company Savings Plan, with a value of €7,357,390.56. The shares rank entirely pari passu with the existing shares, and are currently eligible for dividends.
The capital increase resulting from the offer increases the percentage of the share capital held by the Group's employees via the various shareholding systems to almost 14%.
Our employees are strengthening their position as the largest shareholder in Kaufman & Broad SA via this transaction, thereby demonstrating their commitment and their trust.
- 2017 dividend
Kaufman & Broad's Board of Directors will propose the payment of a dividend of €2.10 per share to the General Meeting of Shareholders on 3 May 2018, i.e. an increase of 13.5% compared with the dividend paid for 2016 (€1.85 per share). A proposal will also be made to this General Meeting to give Kaufman & Broad's shareholders the option to receive this dividend in cash, in shares, or in cash and shares.
- 2018 outlook
The Group believes that its revenue growth should range between 8 and 10% for the 2018 fiscal year. The gross margin ratio is expected to remain around 19%, while the adjusted EBIT ratio is expected to be between 8.5 and 9%.
This release is available on the www.kaufmanbroad.fr website
- Next regular publication date:
- April 11, 2018: Q1-2018 results (after market close)
- May 3, 2018: Annual General Meeting
-
Contacts
Chief Financial Officer
Bruno Coche
01 41 43 44 73
Media Relations:
Hopscotch Capital: Violaine Danet
01 58 65 00 77/ k&b@hopscotchcapital.fr
Kaufman & Broad: Emmeline Cacitti
06 72 42 66 24 / ecacitti@ketb.com
About Kaufman & Broad - Kaufman & Broad has been designing, building, and selling single-family homes in communities, apartments, and offices on behalf of third parties for 50 years. Kaufman & Broad is one of the leading French Property Development & Construction companies due to the combination of its size and profitability, and the strength of its brand.
The Kaufman & Broad Registration Document was filed with the French Financial Markets Authority ("AMF") under No. D.17.0286 on March 31, 2017. 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 prospects, as well as of the related risks factors. Kaufman & Broad specifically draws attention to the risk factors set out in Chapter 1.2 of the Registration Document. The materialization of one or several of these risks may 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 subscription offer, or as intended to seek a purchase or subscription order in any country.
- Glossary
Backlog: In the case of-Off-Plan Sales, 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 revenues (in the case of a program for which an advance of 30% has been received, 30% of the revenues from a housing unit for which a notarized deal has been signed is recognized as revenues, while 70% is included in the backlog). The backlog is a summary at a given time, which enables the revenues yet to be recognized over the coming months to be estimated, and so support the Group's forecasts - on the understanding that the turning of a percentage of the backlog into income remains uncertain, primarily for orders that have not yet been signed.
Off-plan lease (BEFA): an off-plan lease involves a customer leasing a building before it is even built or redeveloped.
Marketing period: the inventory marketing period is the number of months required for the available housing units to be sold, if sales continue at the same rate as for the previous units, or the number of housing units (available supply) per quarter divided by the orders for the previous quarter, and divided by three in turn.
Adjusted EBIT: corresponds to income from current operations restated for capitalized "IAS 23 revised" borrowing costs, which are deducted from the gross margin.
EHU: The EHUs (Equivalent Housing Units) delivered are a direct reflection of business volumes. The number of EHUs is obtained by multiplying (i) the number of housing units in a given program for which notarized sale 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: Gross margin corresponds to revenues less cost of sales. The cost of sales consists of the price of the land, and the related property costs (levies, etc.), the commissions paid to developers and to Kaufman & Broad's sales staff, the fees and commissions included in the mandates issued by Kaufman & Broad in order to sell the property programs, construction costs, and the borrowing costs that can be directly allocated to the development of programs.
Commercial offer: is represented by the total inventory of housing units available for sale at the relevant date, i.e. all housing units that have not been ordered on that (minus the sales tranches that have not been released for marketing).
Property portfolio: represents all of the land for which any commitment (contract for sale, etc.) has been signed.
Orders: measured in volume (Units) and in value terms; orders reflect the Group's sales activity. Their inclusion in revenues is conditional on the time required to turn an order into a signed and notarized deed, which is the triggering event for booking the income. In addition, in the case of multiple-dwelling programs that include mixed-use buildings (apartments, business premises, retail space, and offices), all of the floor space is converted into housing equivalents.
Land stock: This includes land to be developed (which is alternatively called "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 a promise of sale has not yet been signed.
Marketing period ratio: the marketing period ratio 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. NB: The inverse of the marketing period ratio (1/MPR) gives the expected timeframe (in months) for the marketing of a program, i.e. the marketing period. For instance, a marketing period ratio of 4.0% corresponds to an expected marketing period of 25 months.
Units: units are used to define the number of housing units or equivalent housing units (for mixed programs) in a given program. 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.
Off-plan sale (VEFA): an off-plan sale is an agreement via which the vendor transfers their rights to the land and their 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 vendor retains Project Management powers until the works are accepted.
APPENDICES
- Financial data
Key consolidated data
| In € million | Q4 2017 | Fiscal 2017 | Q4 2016 | Fiscal 2016 |
| Revenues | 442.9 | 1,390.8 | 402.7 | 1,238.0 |
| 397.9 | 1,213.7 | 367.5 | 1,060.0 |
| 42.4 | 165.3 | 33.3 | 171.1 |
| 2.6 | 11.8 | 1.9 | 6.9 |
| Gross margin | 87.4 | 269.1 | 77.3 | 235.6 |
| Gross margin ratio (%) | 19.7% | 19.4% | 19.2% | 19.0% |
| Current operating income | 42.6 | 118.0 | 35.5 | 101.3 |
| Current operating margin (%) | 9.6% | 8.5% | 8.8% | 8.2% |
| Adjusted EBIT* | 45.5 | 126.1 | 37.8 | 108.7 |
| Adjusted EBIT margin (%) | 10.3% | 9.1% | 9.4% | 8.8% |
| Attributable net income | 25.9 | 59.1 | 18.3 | 46.0 |
| Attributable net earnings per share (€/share)** | 1.23 | 2.81 | 0.88 | 2.21 |
* Adjusted EBIT corresponds to income from current operations 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 share capital, i.e. 20,837,039 shares at November 30, 2016, and 21,073,535 shares at November 30, 2017, following the issue of 236,496 shares for the capital increase reserved for employees' on November 30, 2017.
Consolidated income statement*
| € '000s | Q4 2017 | Fiscal 2017 | Q4 2016 | Fiscal 2016 |
| Revenues | 442,858 | 1,390,798 | 402,699 | 1,238,002 |
| Cost of sales | -355,488 | -1,121,666 | -325,432 | -1,002,397 |
| Gross margin | 87,370 | 269,132 | 77,267 | 235,605 |
| Selling expenses | -10,573 | -37,655 | -11,562 | -34,891 |
| Administrative expenses | -16,391 | -64,340 | -18,132 | -58,214 |
| Technical and after-sales service expenses | -5,538 | -20,582 | -5,073 | -19,477 |
| Development and program expenses | -12,293 | -28,599 | -7,035 | -21,765 |
| Income from current operations | 42,576 | 117,956 | 35,465 | 101,258 |
| Other non-recurring income and expenses | - | - | - | - |
| Operating income | 42,576 | 117,956 | 35,465 | 101,258 |
| Cost of net financial debt | -2,382 | -5,779 | -794 | -3,203 |
| Other financial income and expense | - | - | - | - |
| Income tax | -7,657 | -28,430 | -9,930 | -30,365 |
| Share of income (loss) of equity affiliates and joint ventures | 613 | 1,120 | -23 | -211 |
| Net income of the consolidated entity | 33,149 | 84,867 | 24,718 | 67,479 |
| Non-controlling interests | 7,232 | 25,749 | 6,439 | 21,445 |
| Attributable net income | 25,918 | 59,118 | 18,279 | 46,034 |
*Not approved by the Board of Directors and not audited.
Consolidated balance sheet
| € '000s | Nov 30, 2017 | Nov 30, 2016 |
| ASSETS | ||
| Goodwill | 68,661 | 68,661 |
| Intangible assets | 89,442 | 87,570 |
| Property, plant and equipment | 7,699 | 7,449 |
| Equity affiliates and joint ventures | 14,815 | 5,634 |
| Other non-current financial investments | 2,311 | 2,504 |
| Deferred tax assets | 4,227 | - |
| Non-current assets | 187,155 | 171,818 |
| Inventory | 384,882 | 371,381 |
| Trade receivables | 340,142 | 375,669 |
| Other receivables | 198,968 | 159,772 |
| Cash and cash equivalents | 221,065 | 118,108 |
| Prepaid expenses | 1,079 | 1,345 |
| Current assets | 1,146,136 | 1,026,275 |
| TOTAL ASSETS | 1,333,291 | 1,198,093 |
| LIABILITIES | ||
| Share capital | 5,479 | 5,418 |
| Additional paid-in capital | 132,670 | 79,119 |
| Attributable net income | 59,118 | 46,034 |
| Attributable equity capital | 197,268 | 130,571 |
| Non-controlling interests | 18,174 | 15,196 |
| Equity capital | 215,442 | 145,767 |
| Non-current provisions | 24,952 | 23,229 |
| Borrowings and other non-current financial liabilities (portion maturing in > 1 year) | 249,615 | 191,362 |
| Deferred tax liability | 60,105 | 45,471 |
Non-current liabilities | 334,672 | 260,062 |
| Current provisions | 1,191 | 1,499 |
| Other current financial liabilities (portion maturing in < 1 year) | 4,542 | 11,840 |
| Trade payables | 652,012 | 675,146 |
| Other payables | 125,177 | 97,382 |
| Current tax due to the Government | - | 5,858 |
| Prepaid income | 255 | 539 |
| Current liabilities | 783,177 | 792,264 |
| TOTAL EQUITY AND LIABILITIES | 1,333,291 | 1,198,093 |
*Not approved by the Board of Directors and not audited.
- Operating data
| Housing | Q4 2017 | Fiscal 2017 | Q4 2016 | Fiscal 2016 |
| Revenues (€ million, excluding VAT) | 397.9 | 1,213.7 | 367.5 | 1,060.0 |
| 381.5 | 1,169.1 | 357.1 | 1,017.7 |
| 16.4 | 44.6 | 10.3 | 42.3 |
| Deliveries (EHUs) | 2,591 | 7,843 | 2,301 | 6,545 |
| 2,503 | 7,619 | 2,255 | 6,360 |
| 88 | 224 | 46 | 185 |
| Net orders (number) | 3,148 | 9,027 | 2,789 | 8,017 |
| 3,043 | 8,712 | 2,686 | 7,779 |
| 105 | 315 | 103 | 238 |
| Net orders (€ million, including VAT) | 623.4 | 1,790.1 | 525.2 | 1,539.6 |
| 594.9 | 1,700.2 | 499.9 | 1,479.0 |
| 28.5 | 89.8 | 25.3 | 60.6 |
| End-of-period commercial offer (number) | 3,835 | 4,196 | ||
| End-of-period backlog | ||||
| 1,670.2 | 1,360.2 1,312.3 47.9 15.4 24,314 | ||
| 1,591.5 | |||
| 78.7 | |||
| 16.5 | |||
| End-of-period land bank (number) | 27,775 | |||
| Commercial property | Q4 2017 | Fiscal 2017 | Q4 2016 | Fiscal 2016 |
| Revenues (€ million, excluding VAT) | 42.4 | 165.3 | 33.3 | 171.1 |
| Net orders (€ million, including VAT) | 35.7 | 144.3 | 23.3 | 274.6 |
| End-of-period backlog (€ million, excluding VAT) | 174.7 | 230.4 | ||
