Kaufman & Broad SA: 2020 Annual results
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Kaufman & Broad SA 2020 annual results
Housing orders in 2020 were 12.8% lower by value than in 2019 and amounted to €1,490.8 million (including VAT). By volume, 6,305 units were ordered, reflecting a 23.3% decrease compared with 2019. The program take-up period was 3.8 months in 2020, compared with 5.8 months in the previous year, reflecting a decrease of 2.0 months. Housing supply, with 95% of projects located in high-demand, low-supply areas (A, Abis and B1), totaled 1,999 units at end-2020 (3,990 units at end-2019). Breakdown of the customer base Orders from first-time buyers accounted for 6% of sales by value (excluding VAT) in 2020 and were lower than in 2019 (17%). Second-time buyers accounted for 5% of sales, versus 8% in 2019. Orders from investors accounted for 22% of sales (of which 17% under the Pinel incentive scheme alone). Lastly, block sales increased by 45% and their share of total orders increased to 67% by value (including VAT), compared with 40% in 2019.
The Commercial Property segment recorded net orders of €1,185.5 million (including VAT) in financial year 2020, corresponding to three office complexes, one logistics platform and two property development contracts. End of November 2020, Kaufman & Broad signed a sale-before-completion agreement for a 42,000 sq.m logistics platform in Beaucaire (Gard) on behalf of a buyer-user. Otherwise, Kaufman & Broad also announced a sale-before-completion agreement with La Caisse de Retraite du Personnel Navigant for a 13,000 sq.m office building in Puteaux (92). Kaufman & Broad currently has around 136,000 sq.m of office space and around 68,000 sq.m of logistics space under marketing or under study. It is also in the process of building close to 88,000 sq.m of office space and more than 36,000 sq.m of logistics space. Lastly, it has around 110,000 sq.m of office space transactions yet to finalize. Leading sales and development indicators The Housing backlog at the end of financial year 2020 amounted to €2,383.2 million (excluding VAT), the equivalent of 2.5 years of business. Kaufman & Broad had 147 housing programs on the market at that same date, representing 1,999 housing units (compared with 191 programs representing 3,990 housing units at the end of 2019). The Housing property portfolio represents 35,086 units. It was up 6.0% compared with end-2019 and corresponds to more than 4 years of sales activity. The Commercial Property backlog at the end of 2020 amounted to €1,248.0 million.
Total revenue amounted to €1,163.1 million (excluding VAT), down 21.0% compared with 2019. Housing revenue amounted to €963.3 million (excluding VAT), compared with €1,334.0 million (excluding VAT) in 2019. This represents 82.8% of group revenue. Revenue from the Apartments business reached €877.1 million (excluding VAT), compared with €1,232.4 million (excluding VAT) in 2019. Revenue from the Single-family Homes in Communities business totaled €86.1 million (excluding VAT), versus €101.6 million (excluding VAT) in 2019. Revenue in the Commercial Property segment amounted to €194.4 million (excluding VAT), compared with €130.4 million in 2019.
The gross margin for the 2020 financial year was €207.2 million, compared with €294.3 million in 2019. The gross margin ratio was 17.8%, which is lower than the 20.0% generated in 2019. Current operating expenses amounted to €127.0 million (10.9% of revenue), compared with €150.9 million in 2019 (10.2% of revenue). Current operating income reached €80.1 million, versus €143.4 million in 2019. The EBIT rate was 6.9%, compared with 9.7% in 2019. Consolidated net income amounted to €56.5 million in full-year 2020 (versus €95.5 million in 2019). Non-controlling equity interests totaled €16.4 million, compared with €17.6 million in 2019. Attributable net income was €40.1 million, versus €77.9 million in 2019.
During the public health crisis, Kaufman & Broad did not request deferral or suspension of payment of its tax and social security charges or apply for the government-backed bank loans introduced as one of the measures to support the economy. It did, on the other hand, extend its RCF (revolving credit facility) by one year, bringing its debt maturity to 4.2 years. After dividend payments and share buybacks as part of a share buyback plan amounting to a cumulative €56 million in financial year 2020, the group's financial debt at November 30, 2020 resulted in a positive net cash position (excluding IFRS 16 liabilities) of €62.5 million, compared with a positive net cash position of €56.0 million at end-November 2019. Cash assets (available cash and investment securities) amounted to €215.2m, versus €208.1m at November 30, 2019. The group's financing capacity was €465.2 million, compared with €458.1 million at end-November 2019. The group had recorded a sharp increase in its working capital requirement at end-May 2020 as work at most of its construction sites had to be halted or scaled back during the first lockdown; however, as announced back in July, it had returned to normal by the end of the financial year. It thus stood at €122.1 million (10.5% of revenue), compared with €150.1 million at November 30, 2019 (10.2% of revenue). The group's tight control over working capital primarily relies on the very short take-up period for its programs. As part of the authorization granted at the General Meeting of May 5, 2020, the Board of Directors of January 27, 2021 reduced its capital by canceling 375,000 treasury shares, for a total of value of € 12.5 million, thus bringing the number of shares making up the company's share capital from 22,088,023 to 21,713,023 shares.
Corporate Social Responsibility (CSR) has become a core principle underlying Kaufman & Broad's activity and the company has thus set up a CSR and Innovation Department reporting directly to the Chairman and Chief Executive Officer. Otherwise a CSR Committee of the Board of Directors has also been newly created. The CSR Committee's role is to oversee execution of the CSR plan in accordance with the company's strategy. It is worth noting that ESG criteria have formed an integral part of the compensation metrics applicable to Kaufman & Broad's Management since 2018.
Regarding Kaufman & Broad's residential commercial prospects for fiscal year 2021, the continued downward trend in the allocation of building permits observed since 2019 leads us to anticipate a level of reservations comparable to that of 2020. As announced last July, fiscal year 2021 sales are expected to be around 1.3 billion euros. Assuming that the administrative authorizations for Austerlitz's A7 / A8 project are purged in 2021, turnover could be increased to 1.6 billion euros. In the first case, the EBIT rate would be equivalent to that of 2020; in the second, it could return to a level comparable to that of previous years. All of these prospects are based on a stabilization of the current economic and social situation and an evolution of the health crisis that would not lead to new work stoppages during the year. This press release is available at www.kaufmanbroad.fr
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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. Kaufman & Broad is one of the leading French builder-developers due to the combination of its size and profitability, and the strength of its brand. Certain information included in this press release refers not to historical data but to forward-looking statements. These forward-looking statements are based on estimates, forecasts and assumptions, including assumptions about Kaufman & Broad's current and future strategy and about the economic environment in which Kaufman & Broad operates, which has been significantly affected by the current public health crisis. These forward-looking statements are only valid on the date of this press release. Actual results could differ materially from those expressed or implied by these forward-looking statements. Forward-looking statements and information are not guarantees of future performance and are subject to risks and uncertainties that are difficult to predict and generally beyond the control of Kaufman & Broad. Besides the current public health crisis, these risks and uncertainties include those identified and presented in Chapter 1.2 "Risk factors" of the Kaufman & Broad 2019 Universal Registration Document, which was filed with the French Financial Markets Authority (AMF) on March 31, 2020 under No. D.20-0231; it is available on the Company's website (www.kaufmanbroad.fr) and that of the AMF (www.amf-france.org). This press release includes only summarized information and does not purport to be complete. Backlog: a summary that, at any given moment, makes it possible to estimate revenue for the coming months. EBIT: corresponds to current operating income, i.e. gross margin less current operating expenses. 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. Financing capacity: corresponds to cash assets plus lines of credit not yet drawn. Gross margin: 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. Lease-before-completion (BEFA): a lease-before-completion agreement involves a customer leasing a building before it is built or redeveloped. Orders: measured in volume (units) and in 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. Property portfolio: represents all of the land for which any commitment (contract for sale, etc.) has been signed. Property supply: it is represented by 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). Sale before completion (VEFA): a contract whereby the seller immediately transfers to the buyer its land rights and ownership of existing buildings. The future structures will become the purchaser's property as and when they are completed: the purchaser is required to pay the price of these structures as the works progress. The seller retains the powers of the Project Owner until acceptance of the work. Take-up period: the inventory take-up period is the number of months required for the available housing units to be sold if sales are maintained 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. Take-up rate: the take-up rate represents the percentage of the initial inventory for a property program that is sold on a monthly basis (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. 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. NOTES
Key consolidated data
Consolidated income statement*
*Not approved by the Board of Directors and not audited. Consolidated balance sheet*
**Restated to take account of the change in interpretation of IAS 23 regarding the capitalization of financial expenses and the reclassification of the CVAE charge to income tax. Operational data*
Regulatory filing PDF file File: 2020 Annual results |
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1164195 28-Jan-2021 CET/CEST
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