Kaufman & Broad SA: RESULTS FOR THE FIRST NINE MONTHS OF THE FINANCIAL YEAR 2023
Kaufman Broad SA
Kaufman Broad SA: RESULTS FOR THE FIRST NINE MONTHS OF THE FINANCIAL YEAR 2023
02-Oct-2023 / 18:17 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
S Press release
Press release
Paris, October 2, 2023
RESULTS FOR THE FIRST NINE MONTHS OF THE FINANCIAL YEAR 2023
Very strong financial structure Investment Grade rating confirmed by Fitch Confirmation of outlook 2023
Global Orders:
744.6 vs €913.2M incl. VAT
O/w housing: 720.1 vs: €883.5M incl. VAT
O/w Commercial Property: 24.5 vs €29.7M incl. VAT
Housing Take up period rate:6.3 vs. 5.4 months (9 months)
Main financial items (9 M 2023s 9 M 2022 unless otherwise specified)
Revenue :
1,083.9 Vs €885.8M
O/w housing: 663.1 vs. €763.2M
Gross margin : 193.6 vs. €155.0M EBIT margin(a): 8.0 % vs. 7.2% COI (EBIT) : 86.4 vs. €63.6M Attributable Net income :45.5 vs. €31.9M
Net cash (b ) : €201.2M vs. € (67.8 ) M at 30 Nov 2022 Financial capacity : €618.8M vs. €351M at 30 Nov 2022Main development indicators (end of Aug.2023 vs. end of Aug. 2022)
Global backlog : 2,690,4 Vs €3,314.8M
O/w housing: 2,048.5 vs. €2,266.1M
Housing land portfolio :
34,216 vs. 35,042 units at end August 2022
Kaufman Broad SA today announces its results for the first nine months of 2023 (from December 1 to August 31, 2023). Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman Broad, said:
" The commercial and financial results for the 3rd quarter of 2023 are consistent with those for the 1st half of 2023.
Housing orders were down 12.6% in volume terms over the first 9 months of the year, compared to an estimated decline of around 35.1 %(c) over the same period for the whole market.
In this context, Kaufman Broad continued to apply a rigorous strategy of adjustment to market conditions, including:
- focus on block sales to institutional investors,
- maintain a very high level of requirement in terms of Take up period rates.
Furthermore, the group still relies on a solid land reserve and an overall backlog of 2.7 billion euros representing approximately 2 years of activity.
The work of Austerlitz Operation A7/A8 continues to proceed according to schedule.
The financial structure remains very solid, as evidenced by Fitch's confirmation of Kaufman Broad SA's Investment Grade rating. The group's net cash (b) amounted to 201.2 million euros at August 31, 2023.
Kaufman Broad relies on its ability to adapt its offering to new market conditions, the high level of its Backlog and land portfolio as well as its balance sheet strength to seize opportunities and, beyond that, take full advantage of the recovery in a healthy market.
The group confirms its outlook for the whole of 2023:
- attributable net income is expected to increase by around 20%,
- the recurring operating income ratio is expected to be around 8%,
- revenue should grow by 6 to 10%,
- in addition, positive net cash(b) should be higher than €50 million(d) mentioned last July. ‘
Sales Activity
Housing Division
In the first nine months of 2023, housing orders in value amounted to €720.1 million (including VAT), compared to €883.5 million compared to the same period in 2022, down 18.5%. In volume terms, they stood at 3,245 housing units in 2023, down 12.6% from 3,714 in 2022.
The take up period rate was 6.3 months as of August 31, 2023 (on a nine-month basis), up 0.9 months from the same period in 2022 (5.4 months).
The commercial offer, with 90% of housing units located in tight areas (A, ABIS and B1), amounted to 2,287 units at the end of August 2023 (2,219 units at the end of August 2022).
Customer Breakdown
Orders in value (including VAT) for first time buyers accounted for 13% of sales in the first nine months of 2023, compared to 16% in the same period in 2022. First time buyers accounted for 5% of sales, compared with 11% in 2022.
Orders made to investors accounted for 16% of sales (of which 7% for Pinel’s scheme alone), compared with 38% in August 2022. Block sales accounted for 66% of orders in value (including VAT), compared with 35% over the same period in 2022.
Commercial Property
In the first nine months of 2023, the commercial property division recorded net orders of €24.5 million including VAT, compared with €29.7 million including VAT at the end of August 2022.
Kaufman Broad currently has 112,091 sq. m. of office space and approximately 178,145 sq. m. of logistics space on the market or under study. In addition, 120,361 sq. m of office space is currently under construction or in start-up in the coming months. Finally, nearly 20,410 sq. m. of office space remains to be signed.
Leading indicators of business activity and growth
As of August 31, 2023, housing Backlog stood at €2,048.5 million (excluding VAT) compared to €2266.1 million (excluding VAT) for the same period in 2022, i.e., 23.4 months of activity compared to 24.6 months of activity at the end of August 2022. On August 31, 2023, Kaufman Broad had 143 housing programs under marketing, representing 2,287 housing units (142 programs and 2,219 housing units in the same period in 2022).
The housing land portfolio 34,216 units was down 2.4% compared to the end of August 2022 (35,042 units). At the end of August 2023, it represented over 6 years of commercial activity.
In addition, 86% of the housing land portfolio is located in tight areas, representing 29,461 housing units at the end of August 2023.
In third quarter of 2023, the group plans to launch 56 new programs, including 12 in the Paris region representing 963 units and 44 in the regions representing 3,355 units.
For the first nine months of 2023, the Backlog of the Commercial property Division was €641.9 million excluding VAT compared to € 1,048.7 million excluding VAT for the same period in 2022.
Financial results
Activity
Total revenue at August 31, 2023, amounted to €1,083.9 million (excluding VAT), compared with €885.8 million in 2022.
Housing division revenue amounted to €663.1 million (excluding VAT), compared to €763.2 million (excluding VAT) in 2022. It represents 61.2% of the group's revenue.
Revenue from the Apartments business was €613.4 million (excluding VAT) (vs €713.7 million (excluding VAT) at end August 2022).
Revenue for the Commercial property Division was €410.7 million (excluding VAT), compared to €113.7 Million (excluding VAT) over the same period in 2022.
Other activities generated revenues of €10.1 million (excluding VAT) (including €5.5 million in revenues from the operation of student residences) compared to €8.8 million at August 31, 2022 (including €4.9 million in revenues from the operation of student residences).
Profitability data
Gross profit amounted to €193.6 million in the first nine months of 2023, compared to €155.0 million in the same period in 2022. The gross margin was 17.9% compared to 17.5% in 2022.
Recurring operating expenses amounted to €107.2 million (9.9% of revenue), compared to €91.4 million in the same period in 2022 (10.3% of revenue). Current operating income amounted to €86.4 million, compared to €63.6 million in 2022. Current operating income stood at 8.0%, compared with 7.2% in 2022.
At the end of August 2023, consolidated net income amounted to €57.1 million, compared with the same period in 2022 when it amounted to €45.3 million. Non-controlling interests (Minority interest) amounted to €11.6 million in the first nine months of 2023, compared with €13.4 million in 2022.
Attributable Net income was €45.5 million, compared with €31.9 million in 2022.
Financial structure and liquidity
The positive net cash position (excluding IFRS 16 debt and Neoresid put debt) at the end of August 2023 was €201.2 million, compared to a net financial debt of €67.8 million at the end of November 2022. Cash and cash equivalents amounted to €368.8 million at the end of August 2023, compared with €101.0 million at November 30, 2022. Financial capacity amounted to €618.8 million at August 31, 2023, compared with €351.0 million at the end of November 2022.
Working capital requirements amounted to €(62.7) million at the end of August 2023, or -4.1% of revenues, compared with €204.1 million at the end of August 2022 (or 16.0% of revenue) and €190.0 million at November 30, 2022 (or 14.5% of revenue).
Share buybacks
As part of its share buyback program, Kaufman Broad entered into an acquisition agreement on September 5, 2023 for a block of 1,251,000 shares of the Company held by Artimus Participations, a company bringing together managers and former managers of the Company, representing a total investment of €32.4 million.
Following the transaction, the repurchased shares were cancelled. This operation made it possible to readjust all of the Company's shareholders in the same proportions without hampering its investment capacity, while stabilising its shareholding
At the end of this transaction, group employees will remain key shareholders of the company, directly or indirectly, with 12.2% of the share capital and 14.6% of the voting rights.
Outlook 2023
The Group confirms its outlook for the whole of 2023:
attributable net income is expected to increase by around 20%, The recurring operating income (OCR) rate is expected to be around 8%, Revenue should grow by 6 to 10%, in addition, positive net cash(b) should be higher than €50 million(d) mentioned last July.
(B) Excluding IFRS 16 and Put Neoresid debt and considering the disbursement of 32.4 million euros for the purchase/cancellation of 1,251,000 shares on September 5, 2023.
This press release is available at www.corporate.kaufmanbroad.fr
Next periodic information date: Tuesday, 30 January 2024: Publication of 2023 Annual Results (after market)
Presentation of results for the period
Mr. Nordine HACHEMI, Chairman and Chief Executive Officer and Mr. Bruno Coche, Chief Financial Officer, will comment on the results of the period and answer questions at a conference call in French with simultaneous translation into English.
The presentation of the results will take place in French with simultaneous translation into English on:
Tuesday October 3, 2023 at 8.30 CET
Registration for the presentation of the results for the period must be made by request at:
To follow the live presentation at the web conference you will receive a link (in French or English) * To follow the live presentation at the conference by phone you will receive the number for the desired language (French or English)
* Activation of accesses from 8: 00, the connection requiring registration via a form
The Webcast media will be available ½ hour before the presentation starts at www.kaufmanbroad.fr/finance/publications-financieres/
Contacts
Chief Financial Officer
Bruno Coche - +33(1) 41 43 44 73/infos-invest@ketb.com
Press relations
Primatice : Thomas de Climens - +33(6) 78 12 97 95/thomasdeclimens@primatice.fr
Kaufman Broad: Emmeline Cacitti - +(33)6 72 42 66 24/ecacitti@ketb.com
About Kaufman Broad
For more than 50 years, Kaufman Broad has designed, developed, built and marketed apartments, single family homes, managed residences, shops, business premises and office buildings.
Kaufman Broad is one of the first French Builders and Builders by combining its size, profitability and the power of its brand.
Together, let us create a more virtuous city.
For more information: www.kaufmanbroad.fr
The Kaufman Broad Universal Registration Document was filed on March 31, 2023 with the AMF under number D.23-0210. 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 business, results and outlook as well as the associated risk factors. Kaufman Broad draws attention in particular to the risks described in Chapter 4 of the Universal Registration Document. The occurrence of one or more of these risks may have a material adverse effect on the Kaufman Broad Group's businesses, assets, financial position, results or outlook, as well as on the market price of Kaufman Broad shares.
This press release does not constitute and cannot be considered to constitute a public offer, an offer to sell or an offer to subscribe as intended to request a purchase or subscription order in any country.
GLOSSARY
Backlog or (order book ) : it covers, for Sales in the Future Completion Status (VEFA), undelivered reserved units for which the notarially signed deed of sale has not yet been signed and undelivered reserved units for which the notarially signed deed of sale has been signed up to the portion not yet taken into revenue (on a 30% advanced program, 30% of the revenue of a housing for which the notarially signed deed of sale has been recorded as revenue, 70% are included in the backlog). The backlog is a summary at a given point in time that makes it possible to estimate the revenue still to be recognised in the coming months and thus support the Group's forecasts - it being specified that there is an uncertain portion of the transformation of the backlog into revenue, particularly for bookings not yet recorded.
BEFA: the Bail in the Future Completion consists of a user renting a building even before it is built or restructured.
Working Capital Requirement (WCR): This arises from cash flow mismatches: disbursements and receipts corresponding to operating expenses and revenues required for the design, production and marketing of real estate programs. The resulting simplified expression for WCR is as follows: these are current assets (inventory + trade receivables + other operating receivables + advances received + prepaid income) less current liabilities (trade payables + tax and social security payables + other operating liabilities + prepaid expenses). The size of the WCR will depend in particular on the length of the operating cycle, the size and duration of storage of work-in-progress, the number of projects launched and the payment terms granted by suppliers or the profile of payment schedules granted to customers.
Free cash flow: free cash flow is equal to cash flow from operations less net operating investments
Of the year.
Operating cash flow: operating cash flow after finance costs and tax is equal to consolidated net income adjusted for the share in net income of associates, joint ventures and income from discontinued operations and calculated income and expenses.
Financial capacity: corresponds to cash and cash equivalents plus undrawn credit facilities
CDP : (formerly Carbon Disclosure Project): Measuring the environmental impact of companies.
Take up period: Take up period is the number of months it would take for available units to be sold if sales continued at the same rate as in previous months, i.e., the number of units outstanding (available supply) per quarter divided by the number of orders per quarter in the past divided by three.
Dividend The dividend is the portion of the Company's net annual profit distributed to shareholders. Its amount, proposed by the Board of Directors, is submitted to the shareholders for approval at the General Meeting. It is payable within a maximum of 9 months after the end of the financial year.
EBIT: The EBIT corresponds to the operating income for the period, calculated at the gross margin deducted by operating costs for the current period.
Gross financial debt or financial debt: gross financial debt consists of long term and short term financial liabilities, hedging financial instruments relating to liabilities constituting gross financial debt and accrued interest on the balance sheet items constituting gross financial debt.
Net debt or net financial debt: the net debt or net financial debt of a company is the balance of its gross financial debt (or gross financial debt), on the one hand, the available and financial investments forming its ‘Active cash’ on the other hand. It represents the credit or debit position of the company vis-à-vis third parties and outside the operating cycle.
Investment grade : investment grade means that a financial instrument or a company has a relatively low risk of default.
LEU: LEU (Equivalent units delivered) is a direct reflection of the business. The number of ‘LEU’ is equal to the product (I) the number of housing units in a given programme for which the notarially signed deed of sale has been signed and (II) the ratio of the amount of land expenditure and construction expenditure incurred by the group on the said programme to the total expenditure budget of the said programme.
Gross margin : corresponds to sales less cost of sales. The cost of sales includes the price of land, related land costs and construction costs.
Commercial offer : it is represented by the sum of the stock of available for sale housing on the date in question, that is, all the housing units not reserved on that date (net of unopened commercial tranches).
Land portfolio : This includes land to be developed. I.e. land for which a deed or a promise to sell has been signed, as well as land under study, i.e. land for which an deed or promise to sell has not yet been signed.
Gearing ratio: this is the ratio of net debt (or net financial debt) to consolidated equity. It measures the risk of the company’s financial structure.
Orders : measured in terms of volume (units or units) and value, they reflect the group's commercial activity. Their inclusion in revenues is conditional on the time required to transform an order into a notarized deed of sale, which generates the income statement. In addition, in multi-family housing programs including mixed-use buildings (apartments, business premises, shops, offices), all surfaces are converted into housing equivalents.
Orders (in value ) : they represent the value of real estate resulting from reservation contracts signed including all taxes for a given period. They are mentioned net of the withdrawals noted during the said period.
Managed residences : managed residences, or service residences, are real estate complexes consisting of housing (Homes or apartments) for residential use offering a minimum of services such as reception, supply of linen, cleaning and maintenance of housing as well as the provision of breakfast. There are several types of residences: Student residences are apartment complexes, mostly studios equipped with a kitchenette and furnished, located close to schools and universities and close to public transport; tourist residences, located in high potential tourist areas, offer in addition to the usual services of infrastructures such as swimming pools, sports grounds, sometimes saunas, hammams, whirlpool baths, children's club; business residences are an alternative to traditional hotels, consisting of studios (approximately 80%) and 2-rooms, located in the city center or near important business centers and systematically well served; finally, senior residences (including also residences for dependent or nondependent elderly people – “Ehpad”), which make it possible to anticipate the aging of the population, accommodating people from 55 years and beyond; their clientele is mixed: Tenants and owners.
CSR (Corporate Social Responsibility): corporate Social Responsibility (CSR) is the contribution of companies to the challenges of Sustainable Development. The approach consists of companies taking into account the social and environmental impacts of their activity in order to adopt the best possible practices and thus contribute to the improvement of society and the protection of the environment. CSR makes it possible to combine economic logic, social responsibility and eco-responsibility (definition of the Ministry of Ecology, Sustainable Development and Energy).
Sell-Through rate: The Sell-Through rate (Rst) represents the percentage of initial inventory that sells monthly on a real estate program (sales/month divided by initial inventory); i.e., monthly net reservations divided by the ratio of beginning-of-period inventory plus end-of-period inventory divided by two.
Ebit rate: expressed as a percentage, it corresponds to current operating income cad at gross margin less current operating expenses divided by sales
Cash and cash Equivalents : this corresponds to cash and cash equivalents on the asset side of the balance sheet, including all available cash and cash equivalents, marketable securities (short term investments and term deposits) and book balances.
Net cash: It corresponds to ‘negative’ net debt, or ‘negative’ net financial debt, as for the company the balance of cash and financial investments forming its ‘active cash’ is greater than the amount of its gross financial debts (or gross financial debt).
Units : units or Units are used to determine the number of dwellings or housing equivalents (for mixed programmes) of a given programme. The number of housing equivalent units is determined by relating the surface area by type (business premises, shops, offices) to the average surface area of the housing units previously obtained.
VEFA: sale in the Future of Completion is the contract whereby the seller immediately transfers to the purchaser its land rights as well as the ownership of the existing buildings. The future works become the property of the purchaser as they are executed; the purchaser is obliged to pay the price as the works progress. The seller retains the powers of the project owner until the work is accepted.
APPENDICES
Financial Data
Main consolidated data *
In thousands of euros
Q3
2023
9 M
2023
Q3
2022
9 M
2022
Revenue
235,073
1,083,922
311,368
885,753
of which Housing202,701
663,112
281,680
763,238
of which Commercial Property29,127
410,670
26,428
113,709
Other***3,245
10,140
3,260
8,806
Gross margin
51,921
193,582
55,447
155,007
Gross margin rate (%)
22.1%
17.9%
17.8%
17.5%
Recurring Operating Income (or EBIT)*
18,651
86,393
20,810
63,610
Operating Margin – EBIT (%)
7.9%
8.0%
6.7%
7.2%
Attributable net income (group share)
6,977
45,504
9,199
31,922
Attributable net income per share (€/share)**
0.33
2.16
0.43
1.50
* The EBIT corresponds to the operating income for the period, calculated at the gross margin deducted by operating costs (OCR) for the current period).
* *Based on the number of shares comprising the share capital of Kaufman Broad S.A, i.e. 21,313,023 shares at 31 August 2022 and 21,113,022 shares at 31 August 2023.
* * * including 5.5 million euros in revenues from the operation of student residences in the first nine months of 2023 and 4.9 million euros in the same period of 2022.
Consolidated income statement *
In thousands of euros
Q3
2023
9 M
2023
Q3
2022
9 M
2022
Revenue
235,073
1,083,922
311,368
885,753
cost of sales
-183,152
-890,340
-255,921
-730,746
Gross margin
51,921
193,582
55,447
155,007
Selling expenses
-257
-14,744
-6,535
-15,901
Administrative expenses
-17,180
-47,566
-14,660
-40,829
Technical charges and after sales services
-5,162
-16,455
-4,785
-16,781
Development and program expenses
-10,671
-28,423
-8,657
-17,886
Current Operational Income (COI)
18,651
86,393
20,810
63,610
Other non-recurring income and expenses
0
0
0
0
Operating income
18,651
86,393
20,810
63,610
Net Cost of Financial Debt
-3,991
-11,408
-4,242
-11,178
Other Financial Expenses and Income
0
0
0
0
Income tax
-3,686
-18,630
-2,372
-8,998
Share of income (loss) equity affiliates and joint ventures
143
776
-352
1,853
INCOME (LOSS) OF THE CONSOLIDATED GROUP
11,117
57,130
13,843
45,287
Non-controlling interests
4,139
11,626
4,644
13,365
Attributable net income
6,977
45,504
9,199
31,922
* Unaudited and not approved by the Board of Directors
Consolidated balance sheet *
In thousands of euros
August 31,
2023
November 30,
2022
68,661
68,661
Intangible assets
92,492
91,899
Property, plant and equipment
10,673
11,070
Right of use assets
37,607
40,196
Investment property
19,412
19,876
Equity affiliates and joint ventures
24,093
14,310
Other non-current financial assets
2,619
7,549
Deferred tax assets
4,281
4,281
Non-current assets
259,836
257,841
Inventories
449,210
447,134
Accounts receivable
395,311
511,535
Other receivables
175,773
192,585
Cash flow and cash equivalents
368,834
100,998
Prepaid expenses
952
972
Current assets
1,390,080
1,253,223
total Asset
1,649,917
1,511,063
August 31,
2023
November 30,
2022
LIABILITY
Share capital
5,488
5,618
Bonuses, Reserves, and Other
187,618
187,041
Attributable net income
45,504
49,008
Attributable shareholder's equity
238,610
241,667
Non-controlling interests
13,351
14,682
Shareholders' equity
251,961
256,350
Non-current provisions
31,153
31,365
Non-current financial debt
116,750
166,567
Long-term financial lease liabilities
34,280
36,254
Deferred tax liability
68,033
45,364
Non-current liability
250,215
279,549
Current provisions
772
1,477
Other current financial liabilities
54,481
5,825
Short-term financial lease liabilities
8,583
5,647
Accounts payable
965,183
842,063
Other liabilities
117,641
118,972
Prepaid income
1,081
1,180
Current liability
1,147,740
975,164
TOTAL LIABILITIES
1,649,917
1,511,063
* Unaudited and not approved by the Board of Directors
Operational data
Housing
Q3
2023
9 M
2023
Q3
2022
9 M
2022
Revenue (M€, excl. VAT)
202.1
663.1
281.7
763.2
of which Apartments185.0
613.4
252.0
713.7
of which single-family homes in communities17.1
49.7
29.7
49.5
Deliveries (EHUs)
936
3,083
1,493
4,103
of which Apartments883
2,923
1,401
3,931
of which single-family homes in communities53
160
92
172
Net orders (in number)
1,007
3,245
1,189
3,714
of which Apartments876
2,893
812
3,182
of which single-family homes in communities131
352
377
532
Net orders (M€, incl. VAT)
216.9
720.1
258.8
883.5
of which Apartments184.9
638.9
194.8
774.6
of which single-family homes in communities32.0
81.2
64.0
108.9
Housing commercial offer – end of period (number)
2,287
2,219
Backlog at end of period
In value (M€, HT)
2,048.5
2,266.1
of which Apartments1,828.8
2,082.0
of which single-family homes in communities219.8
184.1
In months of activity23.4
24.6
End-of-period land reserve (number)
34,216
35,042
Commercial
Q3
2023
9 M
2023
Q3
2022
9 M
2022
Revenue (M€, excl. VAT)
29.7
410.7
26.4
113.7
Net orders (M€, incl. VAT)
0
24.5
1.2
29.7
Backlog at the end of the period (M€, excl. VAT)
641.8
1,048.7
File: Kaufman & Broad SA : RESULTS FOR THE FIRST NINE MONTHS OF THE FINANCIAL YEAR 2023
1739595 02-Oct-2023 CET/CEST