Kaufman & Broad : 2013 First Half Results

  Kaufman & Broad : 2013 First Half Results


Business Wire

PARIS -- July 11, 2013

Regulatory News:

Kaufman & Broad (Paris:KOF):

  *Business almost unchanged over the first half

       *Total revenues: €446.6 million (excl. VAT) vs €456.0 million (excl.
         VAT) in H12012
       *Increase in Housing orders in volume +4.0%

  *Gross margin rate still high, continued deleveraging

       *Gross margin rate: 19.2% vs 19.3% in H1 2012
       *Net financial debt: €40.6 million vs €81.2 million at November 30,

  *Continued positive outlook for future business

       *Property portfolio: 15,529 housing units, nearly three years of
       *Housing backlog in value: €1,069 million (excl. VAT), nearly 13
         months of business

  *Outlook for 2013 confirmed: continued solid financial performance in a
    challenging economy

Kaufman & Broad S.A. today announced its results for the first half of 2013
(from December 1, 2012 to May 31, 2013).

Key consolidated data

(€ million)           H1 2013  H1 2012  Change  Q2 2013  Q2 2012  Change
Revenues (excluding   446.6    456.0    -2.1%   241.6    240.7    +0.4%
Gross margin           85.6      87.8      -2.5%    46.3      46.3      -
Gross margin rate      19.2%     19.3%     -0.1pt   19.2%     19.3%     -0.1pt
Current operating      30.4      31.2      -2.6%    17.1      17.0      +0.8%
Current operating      6.8%      6.8%      -        7.1%      7.1%      -
Attributable net      17.3     19.3     -10.2%  9.0      10.3     -12.3%

Commenting on these results, Guy Nafilyan, Chairman of the Board of Kaufman &
Broad S.A., stated: “In the first half, Kaufman&Broad’s revenues remained
almost unchanged, in an economic environment that remains challenging. In the
second quarter, group revenues rose slightly compared to the same quarter of
the previous year.

Sales activity in turn remained steady, particularly in Île-de-France. Over
the entire first half, Housing orders were up 4.0% in volume. This positive
trend has increased since the beginning of the third quarter.

This performance can be attributed to Kaufman & Broad adjusting its commercial
offer to market conditions, with a steady increase since 2011 in orders placed
from first-time homebuyers and a strong increase in social housing orders.

Reflecting this strategy, the average price of the orders placed from
first-time homebuyers in the first half of 2013 was €182,000 (excl. VAT),
compared to €205,000 in 2011, i.e., a decline of 11%. Overall, the average
price of orders placed in the first half was down 6%. This decline was driven
by better control of land and construction costs.

In this context, the financial indicators remained solid: the gross margin
rate remained at high levels, and net financial debt continued to decline.
Debt has been cut in half compared to the end of November 2012.

The property portfolio remained high and represented nearly three years of
business. The Housing backlog represented nearly 13 months of business, a
level unchanged from the end of first quarter 2013.

As it announced early this year, Kaufman & Broad will continue in 2013 to
develop housing intended for first-time buyers eligible for the new
Zero-Interest Plus Loan, and for investors in the context of the new incentive
implemented in January 2013.

Kaufman & Broad will also continue to offer housing intended for students and
seniors who benefit from the “Censi-Bouvard” incentive, and housing for
investors as part of the new incentive to be established to develop
intermediate rental housing units that will benefit from a VAT rate of 10%.

In commercial real estate, Kaufman & Broad today is managing several projects
that represent nearly 63,000 sq.m of useable floor area for revenues of
approximately €400million, projects that are expected to be developed in

Over the entire fiscal year 2013, Kaufman & Broad maintained its objective to
keep its financial performance at levels close to those achieved in 2012 by
continuing to pay off its debt.”

  *Total revenues almost unchanged over the half, Housing revenues up in the
    second quarter

Revenues totaled €446.6 million (excl. VAT) in the first half of 2013, as
opposed to €456.0million (excl. VAT) in the first half of 2012.

Housing revenues totaled €436.6 million in the first half of 2013,
representing 97.8% of total revenues. Île-de-France alone represented 42.4% of
revenues. In the second quarter alone, Housing revenues were up 1.6%, from
€234.3 million to €237.9 million.

Apartments revenues totaled €421.1 million. Revenues from Single-family homes
in communities came in at €15.5 million.

Over the same period, Commercial property generated revenues of €6.0 million
and Showroom revenues totaled €3.4 million.

Deliveries during the first half of 2013 were 2,544 equivalent housing units
(EHUs), versus 2,427 in the first half of 2012, representing an increase of

  *Growth in volume of Housing orders and in commercial offer

In the first half of 2013, 2,595 housing units were ordered, compared to 2,496
in the first half of 2012, an increase of 4.0% in volume. Housing orders in
value were down 2.6% to €481.8 million (incl. VAT). This drop reflects the
decrease in the average price of housing orders, in line with Kaufman&
Broad’s strategy to adapt its offer to market conditions.

Orders in Île-de-France accounted for 49.1% in volume and 51.6% in value for
all housing orders, compared to 45.8% and 52.2% for the first half of 2012.

Over one year, the percentage of orders in value placed with second-time buyer
rose from 11% to 14%. During the same periods, orders from investors under the
“Scellier” / “Duflot” incentive declined from 23% to 20%.

Commercial offer was up: at May 31, 2013, it represented 3,541 housing units
versus 3,192units at May 31, 2012, i.e., an increase of 10.9%.

Office orders in value amounted to €11.0 million (incl. VAT) in the first half
of 2013.

  *Unchanged gross margin rate and current operating margin

The gross margin was €85.6 million, compared to €87.8 million in H1 2012. The
gross margin rate remained unchanged at 19.2%.

Current operating profit totaled €30.4 million in the first half of 2013,
representing 6.8% of revenues, a level equivalent to the level in the first
half of 2012. Current operating expenses remained unchanged at 12.4% of

The cost of net financial debt amounted to €0.1 million compared to €1.4
million in the first half of 2012 reflecting the decrease in average net debt
and the cost of debt.

Attributable net income totaled €17.3 million.

  *Continued deleveraging

At May 31, 2013, active cash flow (available cash and investment securities)
totaled €194.9 million, an increase of €41.2million compared to November 30,

Working capital requirements stood at €130.6 million at May 31, 2013 and
accounted for 12.8% of revenues based on a 12-month rolling period, versus
14.0% at end-November 2012.

Net financial debt has been cut by half compared to November 30, 2012 and
totaled €40.6 million. The continued deleveraging can be explained by good
control over working capital requirements resulting from the group’s selective
policy applied to the launching of new programs since the fourth quarter of

  *Continued positive outlook for future business

At May 31, 2013, the Housing property portfolio represented 15,529 lots,
including 6,161 in Île-de-France and 9,368 in the Regions, i.e. nearly three
years of business.

The Housing backlog amounted to €1,069.2 million Euros (excl. VAT). It
represents nearly 13 months of business.

At May 31, 2013, Kaufman & Broad had 175 housing programs on the market,  47
of which were in Île-de-France and 128 in the Regions, compared to 159
programs at May 31, 2012.

In the next quarter, the group expects to introduce 16 new programs
representing 684 housing units (2 new programs in Île-de-France, representing
78 housing units, and 14 new programs in the Regions, representing 606 housing

  *Next regular publication: third quarter 2013 results on October 1, 2013.


Backlog: a summary at any given moment, which enables a forecast of future
revenues for the coming months.
Commercial offer: the total inventory of properties available for sale as of
the date in question, i.e. all unordered housing units as of this date (less
the programs that have not entered the marketing phase).
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 the notarized sales deeds have been signed, by (ii)
the ratio between the group’s property expenses and construction expenses
incurred on the said program and the total expense budget for said program.
Gross margin: corresponds to revenues less cost of sales. Cost of sales
consists of the price of land parcels, the related property costs and
construction costs.
Orders: measured in volume (Units) and in value, orders reflect the group’s
commercial 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, for apartment
programs that include mixed-use buildings (apartments/business premises/retail
space/offices), all floor space is converted into housing equivalents.
Property portfolio: all real estate for which a deed or commitment to sell has
been signed.
Take-up rate: the number of orders in relation to the average commercial offer
for the period.
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.

For more than 40 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 in view of its size, earnings and power of its brand.

                            website: www.ketb.com

This document contains forward-looking information. This information is liable
to be affected by known or unknown factors that KBSA cannot easily control or
forecast, which may render the results materially different from those stated,
implied or projected by the company. These risks specifically include those
listed under “Risk Factors” in the Registration Document filed with the AMF
under number D.13-0247 on April 2, 2013.

                             Kaufman & Broad S.A.
                        Consolidated income statement*
                               (in € thousands)
                     * Approved by the Board of Directors

                                                       First half   First half
                                                       2013         2012
Revenues                                              446,555     456,018
Cost of sales                                          - 360,971    - 368,211
Gross margin                                           85,584       87,807
Selling expenses                                       - 14,439     - 14,091
General and administrative expenses                    - 31,735     - 31,011
Technical and customer service expenses                - 9,141      - 8,045
Other income and expenses                              98           - 3,470
Current operating profit                               30,369       31,190
Other non-recurring income and expenses                - 9          - 16
Operating income                                       30,360       31,174
Cost of net financial debt                             - 126        - 1,404
Other financial income and expenses                    -            850
Income tax (expenses)/income                           - 8,195      - 6,328
Share of income (loss) of equity affiliates and        373          64
joint ventures
Income (loss) attributable to shareholders             22,413       24,356
Minority interest                                     5,079       5,042
Attributable net income                               17,334      19,314
Earnings (loss) per share (€)*                        0.80        0.89

^(*) based on the number of shares comprising the share capital of Kaufman &
Broad .SA, i.e, 21584658 shares

                             Kaufman & Broad S.A.
                         Consolidated balance sheet*
                               (in € thousands)
                     * Approved by the Board of Directors

ASSETS                                           May 31, 2013  Nov. 30, 2012
Goodwill                                         68,511        68,511
Intangible assets                                 84,531         84,897
Property, plant and equipment                     5,396          5,604
Equity affiliates and joint ventures              7,342          4,373
Other non-current financial assets                994            1,262
Non-current assets                                166,774        164,647
Inventory                                         285,093        284,469
Accounts receivable                               251,094        268,189
Other receivables                                 140,227        180,141
Cash and cash equivalents                         194,940        153,763
Prepaid expenses                                  1,468          1,008
Current assets                                   872,822       887,570
TOTAL ASSETS                                     1,039,596     1,052,217
EQUITY AND LIABILITIES                           May 31, 2013  Nov. 30, 2012
Authorized capital                                5,612          5,612
Additional paid-in capital                        133,846        135,910
Interim dividends                                 -              - 48,455
Attributable net income                           17,334         47,624
Attributable shareholders’ equity                 156,793        140,691
Minority interest                                 10,523         8,420
Shareholders’ equity                              167,316        149,111
Non-current provisions                            25,425         24,510
Borrowings and other non-current financial        235,019        234,435
liabilities (> 1 year)
Deferred tax liabilities                          63,739         55,586
Non-current liabilities                           324,183        314,631
Current provisions                                244            1,000
Other current financial liabilities (< 1 year)    529            458
Accounts payable                                  475,159        473,624
Other payables                                    70,534         111,776
Deferred income                                   1,631          1,616
Current liabilities                              548,097       588,474
TOTAL EQUITY AND LIABILITIES                     1,039,596     1,052,217

                             Kaufman & Broad S.A.

                            Additional Information

                                           Single-family homes in communities
                                          H1 2013      H1 2012    H1 2011
Net orders (in units)                       133          97         12
Net orders (in € thousands, including       35,969        23,025      5,616
Backlog (in € thousands, excluding VAT)     69,489        37,768      34,483
Backlog (in months of business)*            28.7          13.5        4.3
Deliveries (in EHUs)                       75           36         143

                                           H1 2013  H1 2012    H1 2011
Net orders (in units)                        2,462    2,399      3,282
Net orders (in € thousands, including VAT)   445,832   471,584     680,310
Backlog (in € thousands, excluding VAT)      999,700   1,092,592   1,110,116
Backlog (in months of business)*             12.4      13.7        15.1
Deliveries (in EHUs)                        2,469    2,391      2,425

                                           Commercial property
                                           H1 2013  H1 2012  H1 2011
Net orders (in sq.m)                         3,639    5,334    11,489
Net orders (in € thousands, including VAT)   10,980    13,823    41,660
Backlog (in € thousands, excluding VAT)     33,885   44,402   23,745

*calculated in relation to revenues over a 12-month rolling period

                             Kaufman & Broad S.A.

                            Additional Information

                                           Single-family homes in communities
                                          Q2 2013      Q2 2012    Q2 2011
Net orders (in units)                       75           56         3
Net orders (in € thousands, including       21,026        14,993      1,491
Deliveries (in EHUs)                       36           21         67

                                           Q2 2013  Q2 2012  Q2 2011
Net orders (in units)                        1,437    1,409    2,207
Net orders (in € thousands, including VAT)   266,746   273,896   408,067
Deliveries (in EHUs)                        1,391    1,255    1,136

                                            Commercial property
                                           Q2 2013  Q2 2012  Q2 2011
Net orders (in sq.m)                         3,547    5,270    -
Net orders (in € thousands, including VAT)  10,821   13,687   -


Kaufman & Broad
Chief Finance Officer
Bruno Coche, + 33 1 41 43 44 73
Press Relations
Delphine Peyrat, + 33 6 38 81 40 00
Wise Conseil
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