Kaufman & Broad: 2013 Results

  Kaufman&Broad: 2013 Results

                 Good business resilience in a waning market

Business Wire

PARIS -- January 27, 2014

Regulatory News:

  *Main financial indicators of the group

       *Total revenues: €1,026 million (-0.4% vs. 2012)
       *Housing revenues: €968 million (-3.3% vs. 2012)
       *Gross margin: €197 million vs. €202 million in 2012 (-2.5%)
       *Housing gross margin: €189 million vs. €195 million in 2012 (-3.0%)
       *Attributable net income: €41 million vs. €48 million in 2012 (-14.2%)
       *Housing property portfolio: 15,200 lots (3 years of business)
       *Commercial property portfolio: 53,600 sq. m.

  *Limited drop in commercial activities over the entire fiscal year

       *Housing orders: -2.0% in volume, -9.6% in value
       *Housing backlog in value: -11.5% (12 months of business)

  *Stronger financial flexibility

       *Net financial debt: €50 million, a €31 million improvement
       *Borrowing power: €241 million (+16.7% vs. at end 2012)

The Kaufman&Broad S.A. (Paris:KOF) Board of Directors reviewed the results,
which have not yet been audited, for fiscal year 2013 (December 1, 2012 to
November 30, 2013).

It also noted the mutually agreed resignation of Guy Nafilyan from the office
of Chairman of the Board of Directors, which was announced last June. The
Board of Directors expressed its thanks to Guy Nafilyan for his commitment to
serving the company and for having transformed Kaufman&Broad into a brand
that sets a benchmark in the real estate market in France. It then appointed
Nordine Hachemi, previously General Manager and Deputy Chairman of the Board
of Directors of Kaufman&Broad S.A., as Chairman.

Commenting on these results, Nordine Hachemi stated: “In fiscal year 2013,
Kaufman&Broad was able to stabilize its revenues, and its gross margin fell
by only 2.5% in a waning market. At the same time, it continued to make
significant progress in reducing its debt.

Fiscal year 2014 is expected to be a mixed year. The historic low levels of
orders recorded in the market for the past two years will have an impact on
2014, while the launch of new commercial programs will be delayed because of
municipal elections in France.

Over the entire fiscal year 2014, Housing revenue is expected to be
substantially comparable to 2013 levels, while the housing gross margin is
expected to drop slightly.

However, in the second half of the year, sales activities could experience a
gradual upturn in orders in volume, reflecting the imbalance between a
continuously sustained demand driven by demographic growth and a historic
shortage of housing production, which has amplified in recent years. In this
context, Kaufman&Broad is planning to increase its commercial offer by
approximately 15% in 2014.

In support of this policy, Kaufman&Broad will intensify its growth efforts
in two major directions: developing its property portfolio in all of its
business activities and strengthening its marketing policy with institutional
investors and specifiers.”

  *Sales activities
  *Housing segment

During all of 2013, housing orders in volume fell 2.0% (5,379housing units
ordered versus 5,487 in 2012). In value, orders totaled €990.3 million
(including VAT), down 9.6% compared to 2012. Orders in Île-de-France accounted
for 46.1% in volume and 50.6% in value of total housing orders, compared to
45.5% and 46.2% for all of 2012.

In the fourth quarter of 2013, 1,436 housing units were ordered, for a 1.6%
drop compared to the fourth quarter of 2012. In value, orders totaled €246.1
million(including VAT) compared to €317.6 million (including VAT) in the same
quarter of 2012, for a decline of 22.5%, which can be partially attributed to
the relative weighting of the managed accommodation lots.

Apartments

In fiscal year 2013, 5,031 apartments were ordered versus 5,243 in 2012 (a
4.0% drop), which was more noticeable in the Regions than in Île-de-France. In
value, orders amounted to €884.7 million (including VAT), versus €1,040.3
million (including VAT) in 2012, for a 15.0% decrease.

As regards apartment orders, 46.1% in volume and 49.6% in value were made in
Île-de-France compared to, respectively, 45.2% and 45.7% in 2012. The
apartments share remains the largest in Kaufman&Broad orders since it
reached 82.0% in value and 93.2% in volume of its total orders compared to,
respectively, 93.7% and 95.6% in 2012.

More specifically, orders for managed accommodations grew 68.8% in volume and
72.0% in value (851 orders for €74.7 million (including VAT) in 2013 versus
504 orders for €43.4 million in 2012).

The group is developing a new offer of housing intended for people seeking an
environment in which everything is streamlined with services and facilities
and affordable charges.

Single-family homes in communities

During all of fiscal year 2013, orders for Single-family homes in communities
amounted to 348 units, versus 244 for all of 2012. The increase of 104 units
includes 28 orders in Île-de-France and 76 orders in the Regions.

In value, the orders amounted to €105.6 million (including VAT), compared to
€55.7 million (including VAT) in 2012, for an 89.7% increase.

Customer base structure

In 2013, the structure of the group’s customer base remained unchanged.
Traditionally catering to homebuyers, almost half of Kaufman&Broad orders
were made by first-time homebuyers (33%) and second-time homebuyers (14%),
which clearly indicate the reliability of the quality of its programs and
products.

The share of orders intended as investments in rental property was 34%
(including 23% under the “Scellier”and“Duflot” incentives) versus 33% in
2012. Block orders remained unchanged at 20%.

  *Commercial property segment

In the Commercial property segment, Kaufman&Broad’s strategy is still based
on a very selective choice of projects and the 100% pre-sale principle.

During fiscal year 2013, the group recorded Commercial property orders in the
amount of €87.5 million (including VAT), versus €13.8 million (including VAT)
in 2012. This includes the office building program “YOU”, with a surface area
of 9,300 sq. m., located in the EcoQuartier - Île Seguin - Rives de Seine in
Boulogne-Billancourt (Hauts-de-Seine) and purchased before completion (VEFA)
by Boursorama for its future headquarters.

Moreover, Kaufman&Broad will apply for building permits for two projects of
significant size in Paris, representing more than 46,000 sq. m. in office
space.

  *Advanced indicators of sales activity

As of November 30, 2013, total backlog amounted to €1,018.6 million (excluding
VAT), down 9.3% compared to the same period in 2012. The Housing
backlogtotaled €965.1 million (excluding VAT), which is equal to 12 months of
business.

As of the same date, Kaufman&Broad had 167 housing programs on the market,
of which 44 were in Île-de-France and 124 in the Regions, compared to 163
programs as of November 30, 2012.

The Housing property portfolio represented 15,213 lots, of which 5,401 were in
Île-de-France and 9,812 in the Regions, for potential revenues corresponding
to close to three years of business.

The regeneration of the property portfolio is an important aspect of
Kaufman&Broad’s strategy. This regeneration is done both with respect to
quantity and types of products. It relies on the ability of the group to
develop building complexes of significant size and mixed use (commercial,
hotels, housing, etc.).

Beyond Kaufman&Broad’s leadership in the sales offices network, its enhanced
marketing to private customers, particularly through the development of the
institutional investor and specifier channels, should enable it to take full
advantage of the strength of the Kaufman&Broad brand.

Over the next 12 months, more than 90 program launches are planned,
representing 6,626 housing units(including 37 launches in Île-de-France
representing 2,693 housing units and 54launches in the Regions representing
3,933 housing units).

  *Financial results
  *Business activities

Total revenues in fiscal year 2013 were €1,026.0 million (excluding VAT)
versus €1,030.0 million (excluding VAT) in 2012, down 0.4%. In the fourth
quarter alone, total revenues were €346.6 million (excluding VAT), down 2.2%
compared to the fourth quarter of 2012.

For the entire fiscal year, Housing revenues, which account for 94.3% of total
revenues, recorded a drop of 3.3% compared to 2012 to €967.5 million
(excluding VAT). Île-de-France’s share of those revenues was 44.2%, compared
to 45.5% in 2012.

Revenues for the Apartment segment were down 5.9%, to 919.3 million (excluding
VAT). It represents 95.0% of total revenues for the Housing business. Revenues
for the Single-family homes in communities segment was €48.2 million
(excluding VAT), compared to €23.9 million (excluding VAT) in 2012.

Revenues for the Commercial property business were €51.2 million (excluding
VAT) compared to €21.1 million (excluding VAT) in 2012. The Showroom business
generated revenues of €6.5 million (excluding VAT).

  *Elements of profitability

Gross margin was €196.8 million, compared to €202.1 million in 2012. As a
percentage of revenues, it totaled 19.2%, versus 19.6% in 2012. The Housing
gross margin rate remained unchanged at 19.5%.

In the fourth quarter 2013, gross margin was €66.5 million versus €71.6
million in the same quarter of 2012.

Current operating expenses amounted to €120.7 million, compared with €116.9
million in 2012. They represent 11.8% of revenues versus 11.3% in 2012.

Current operating income totaled €76.0 million for the year 2013, compared to
€85.3 million in 2012. In the fourth quarter alone, it totaled €30.7 million,
down 16.6% compared to the same period in 2012. The current operating margin
rate was, respectively, 7.4% in the entire fiscal year 2013 and 8.9% in the
fourth quarter alone.

The cost of net financial debt amounted to €2.8 million, compared to
€4.1million in 2012. This improvement may be explained for the most part by
the reduction in average net financial debt.

Attributable net income totaled €40.8 million, compared to €47.6 million in
2012. In the fourth quarter alone, it was down 13.7% to €17.1 million.

  *Financial structure and liquidity

Balance sheet elements

Net financial debt was €50.0 million, down 38.4% compared to November 30, 2012
when it was €81.2 million.

The gearing ratio (net debt to consolidated shareholders’ equity) was 26.6% as
of November 30, 2013, compared to 54.5% as of November 30, 2012, reflecting
both the decline in net debt of €31.2 million and the increase in
shareholders’ equity of €39.1 million.

Working capital requirements was down 12.2% compared to November 30, 2012
(€126.8 million vs. €144.4 million). It represents 12.4% of revenues, versus
14.0% as of November 30, 2012.

As of November 30, 2013, active cash flow (available cash and investment
securities) totaled €188.3 million, compared to €153.8million as of November
30, 2012.

Borrowing power

As of November 30, 2013, the group had €290.6 million in syndicated bank
credit facilities (including the Senior B and C lines drawn in the amount of
€237.7 million). The unused €52.9million of the RCF line that was added to
the €188.3 million in cash bring the group’s borrowing power as of
end-November 2013 to €241.2 million.

        This press release is available from the website www.ketb.com

  *Next regular publication dates:

April 9, 2014:First ^ quarter 2014 results (after market close)

April 11, 2014: Annual Shareholders’ Meeting

  *About Kaufman&Broad - 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.

Disclaimer - This document contains forward-looking information. This
information is liable to be affected by known or unknown factors that KBSA
cannot easily control or project, which may make 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.

  *Glossary

Orders: measured in volume (Units) and in value, orders reflect the group’s
commercial activity. Orders are recognized in revenue based on the time needed
for the “conversion” of an order into a signed and notarized deed, which is
the point at which income is generated. In addition, in apartment programs
that include mixed-use buildings (apartments/business premises/retail
space/offices), all floor space is converted into housing equivalents.

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 the notarized sales deeds have been signed by (ii)
the ratio between the group’s property expenses and construction expenses
incurred on this program and the total expense budget for this program.

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

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).

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.

Backlog: a summary at any given moment that enables a projection of future
revenues for the coming months.

Property portfolio: all real estate for which a deed or commitment to sell has
been signed.

APPENDICES

  *Financial data

Key consolidated data
In € millions                              Q4     Year     Q4     Year
                                           2013   2013     2012   2012
                                                              
Revenues
                                            346.6   1,026.0   354.4   1,030.0
-- of which Housing                         307.3   967.5     345.3   1,000.7
-- of which Showroom                        1.6     6.5       2.0     6.7
-- of which Commercial property             37.7    51.2      6.4     21.1
-- of which Other                           -       0.8       0.6     1.6
-- of which Île-de France housing           43.6%   44.2%     43.5%   45.5%
-- Of which Regions housing                 56.4%   55.8%     56.5%   54.5%
Gross margin                                66.5    196.8     71.6    202.1
Gross margin rate (%)                       19.2%   19.2%     20.2%   19.6%
Current operating profit                    30.7    76.0      36.8    85.3
Current operating margin (%)                8.9%    7.4%      10.4%   8.3%
Attributable net income                     17.1    40.8      19.8    47.6
Attributable net income per share          €0.79  €1.89    €0.92  €2.21
(€/share) *

* Based on the number of shares composing the capital of Kaufman&Broad .SA,
i.e., 21,584,658 shares

Consolidated income statement*
In € thousands                 Q4         Year       Q4         Year
                               2013       2013       2012       2012
                                                            
Revenues                        346,641     1,025,954   354,374     1,030,046
Cost of sales                   (280,131)   (829,185)   (282,738)   (827,912)
Gross margin                    66,510      196,769     71,636      202,134
Selling expenses                (9,092)     (30,619)    (7,896)     (29,242)
General and administrative      (18,222)    (65,058)    (18,190)    (62,935)
expenses
Technical and customer          (4,696)     (18,052)    (4,710)     (16,301)
service expenses
Other income and expenses       (3,760)     (7,011)     (3,996)     (8,375)
Current operating profit        30,740      76,030      36,844      85,281
Other non-recurring income      6           (1)         1,545       1,528
and expenses
Operating income                30,746      76,029      38,389      86,809
Cost of net financial debt      (2,027)     (2,807)     (1,342)     (4,121)
Other income and expenses                               (959)       (109)
Income tax (expenses)/income    (8,868)     (21,961)    (13,702)    (25,814)
Share of income (loss) of
equity affiliates and joint     288         642         (257)       (61)
ventures
Income (loss) attributable to   20,140      51,903      22,130      56,704
shareholders
Minority interest              3,079      11,055     2,349      9,080
Attributable net income        17,061     40,848     19,780     47,624

*Unaudited and not approved by the Board of Directors

Consolidated balance sheet*
In € thousands                                         Nov. 30,   Nov. 30,
                                                       2013       2012
ASSETS                                                           
Goodwill                                                68,511      68,511
Intangible assets                                       85,376      84,897
Property, plant and equipment                           4,713       5,604
Equity affiliates and joint ventures                    8,181       4,373
Other non-current financial assets                      20,139      1,262
Non-current assets                                      186,920     164,647
Inventories                                             324,963     284,469
Trade receivables                                       291,778     268,189
Other receivables                                       153,404     180,141
Cash and cash equivalents                               188,258     153,763
Prepaid expenses                                        867         1,008
Current assets                                         959,270    887,570
TOTAL ASSETS                                           1,146,190  1,052,217
                                                                
EQUITY AND LIABILITIES                                           
Capital stock                                           5,612       5,612
Additional paid-in capital                              130,932     135,910
Interim dividends                                       -           (48,455)
Attributable net income                                 40,847      47,624
Attributable shareholders’ equity                       177,391     140,691
Minority interest                                       10,811      8,420
Shareholders’ equity                                    188,202     149,111
Non-current provisions                                  33,422      24,510
Borrowings and other non-current financial              218,959     234,435
liabilities (> 1 year)
Deferred tax liabilities                                40,365      55,586
Non-current liabilities                                 292,746     314,631
Current provisions                                      1,724       1,000
Other current financial liabilities (< 1 year)          19,340      458
Accounts payable                                        550,233     473,624
Other liabilities                                       92,729      111,777
Deferred income                                         1,217       1,616
Current liabilities                                    665,242    588,475
TOTAL EQUITY AND LIABILITIES                           1,146,190  1,052,217

*Unaudited and not approved by the Board of Directors

  *Operational data


Housing                                      Q4     Year   Q4     Year
                                             2013   2013   2012   2012
                                                              
Revenues (€ millions)                         307.3   967.5   345.3   1,000.7
-- of which Apartments                        288.4   919.3   321.3   976.8
-- of which Single-family homes in            18.9    48.2    8.5     23.9
communities

Delivered EHUs                                1,937   5,839   2,072   5,669
-- of which Apartments                        1,844   5,606   2,230   5,567
-- of which Single-family homes in           93     233    42     102
communities
                                                              

Net orders (units)                            1,436   5,379   1,460   5,487
-- of which Apartments                        1,367   5,031   1,404   5,243
-- of which Single-family homes in            69      348     56      244
communities

Net orders (€M, including VAT)                246.1   990.3   317.6   1,096.0
-- of which Apartments                        218.6   884.7   301.6   1,040.3
-- of which Single-family homes in            27.5    105.6   16.1    55.7
communities
-- of which first-time homebuyers             30%     33%     29%     32%
-- of which other homebuyers                  10%     14%     18%     15%
-- of which investors / block                 60%     53%     53%     53%
-- of which Île-de France                     53.9%   50.6%   42.9%   46.2%
of which Regions                              46.1%   49.4%   57.1%   53.8%
Commercial offer at period end ^ (units)     3,550          3,222
                                                              
Backlog end of period
-- In value (€M, excluding VAT)               965.1           1,091.1
-- of which Apartments                        870.4           1,037.6
-- of which Single-family homes in            94.7            53.5
communities
-- In months of business                      12.0            13.1
Property portfolio end of period
-- Number of lots                             15,213          16,049
-- of which Île-de France                     5,401           6,188
-- of which Regions                           9,812           9,861
-- In years of business                      3              3

Commercial property                        Q4    Year  Q4    Year
                                           2013  2013  2012  2012
                                                         
Revenues (€ millions)                       37.7   51.2   6.4    21.1
Net orders (€M, including VAT)              76.0   87.5   -      13.8
Backlog end of period (€m, excluding VAT)  52.7         31.0

Contact:

Chief Finance Officer
Bruno Coche
+33 (1) 41 43 44 73
Infos-invest@ketb.com
Press Relations
Delphine Peyrat - Wise Conseil
+33 (6) 38 81 40 00
dpeyratstricker@wiseconseil.com
 
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