Kaufman & Broad SA: RESULTS FOR THE 1ST HALF YEAR OF 2024
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Kaufman & Broad SA
S Press release Press release Paris, 2024 July 11th
Results for thE 1st half YEar of 2024
In the 1st half of 2024, home reservations amounted to €561.2M (including VAT), up 11.5% from €503.2M in 2023. In volume terms, they stood at 2,400 homes in 2024, up 7.2% from 2,238 in 2023.
The program’s take-up rate[1] was 4.1 months in 2024, 1st half year, down nearly 3 months from the same period in 2023 (7.0 months).
The commercial offer, with 97% of homes located in tight areas (A, ABIS and B1), amounted to 1,626 homes at 2024 May 31 (2,618 homes at the end of May 2023).
Customer Breakdown
Orders in value (including VAT) for first time buyers accounted for 17% of orders, compared to 12% over the same period in 2023. First time buyers accounted for 6% of orders, as in 2023. Orders made to investors accounted for 11% of orders (of which 5% for Pinel scheme alone), compared with 13% in May 2023 (of which 5% for Pinel scheme alone). Block sales accounted for 66% of orders in value (including VAT), compared with 70% over the same period in 2023.
As of 2024, May 31, the commercial property division recorded net orders of €21.7M (including VAT) compared to €24.5M (including VAT) for the same period in 2023.
Kaufman & Broad currently has 192,000 sq.m. of office space and approximately 107,200 sq.m. of logistics space on the market or under study. In addition, 119,500 sq.m of office space is currently under construction or in start-up in the coming months. Finally, the company has nearly 13,500 sq.m of office space to be completed in MOD (delegated project management as well as 12,670 sq.m of logistics space to be signed).
As of 2024, May 31, Housing Backlog stood at €2,090.0M (excluding VAT) compared to €2148.9M (excluding VAT) for the same period in 2023, i.e. 28.3 months of activity compared to 22.8 months of activity at the end of May 2023. In the 1st half of 2024, Kaufman & Broad had 123 residential programs under marketing, representing 1,626 housing units (145 programs and 2,618 housing units at the end of May 2023).
The Housing portfolio represents 33,003 units, down 4.9% compared to the end of November 2023 (34,694 units). At the end of may 2024, it represented over 6 years of commercial activity.
In addition, 89% of the housing portfolio is located in tight areas, representing 29,250 housing units as of 2024, May 31.
In the 3rd quarter of 2024, the group plans to launch 11 new programs for 593 units, of which 2 in the Paris region areas representing 109 units and 9 in the Regions areas representing 484 units.
At the end of May 2024, the Backlog of the Commercial property division was €583.4M euros excl. VAT compared to €665.1 M excl. VAT for the same period in 2023.
Total revenue amounted to €452.5M (excluding Vat), compared to €848.8M in the same period in 2023.
Housing revenue amounted to €389.6M (excluding VAT), compared to €461.0M (excluding VAT) in 2023. It represents 86.1% of the group's revenue.
Revenue from the Apartments business line was €356.3M (excl. VAT) (vs. €428.4M (excl. VAT) at the end of May 2023). Revenue for the Commercial property division was €54.4M (excl. Vat), compared to €381.0M (excl. Vat) over the same period in 2023. Other activities generated revenues of €8.5M (excl. VAT) (including €4.0M in revenues from the operation of student managed residences) compared to €6.9M (excl. VAT) (including €3.7M in revenues from the operation of student managed residences).
Gross profit amounted to €97.5M in the 1st half of 2024, compared with €141.7M in 2023. The gross margin was 21.6% compared to 16.7% in the same period of 2023.
Current operating expenses amounted to €63.0M (13.9% as of sales), compared to €73.9M in the same period in 2023 (8.7% as of sales). Current operating income amounted to €34.5M, compared to €67.7M in 2023. Current operating margin stood at 7.6%, compared with 8.0% in 2023. Operating profit amounted to €37.9M, compared to €67.7M in 2023.
At the end of May 2024, consolidated net income amounted to €27.9M, compared with the same period in 2023 when it amounted to €46.0M. non-controlling interests amounted to €6.8M in the 1st half of 2024 compared to €7.5M in 2023. Attributable net income was €21.1M, compared with €38.5M in 2023.
The positive net cash position (excluding IFRS 16 debt and Neoresid put debt) at 2024, May 31 was €224.9M, compared with a positive net cash position (excluding IFRS 16 debt and Neoresid put debt) of €101.7M at the end of May 2023 and €180.5M at the end of November 2023. Cash and cash equivalents amounted to €328.9M at 2024, May 31, compared with €267.1M at the end of May 2023 and €350.0M at 2023, November 30. Financial capacity amounted to €578.9M at 2024, May 31, compared with €517.1M at 2023, May 31 and €600.0M at the end of November 2023.
Working capital requirements amounted to €(138.9)M at 2024, May 31, or -13.7% of sales, compared with €24.7M at the end of May 2023 (or 1.6% of sales) and €(80.8)M at 2023, November 30, or -5.7% of sales.
As part of its Euro PP bond issue, Kaufman & Broad redeemed the first 7-year tranche of €50M (maturing in May 2024). Repayment was made in accordance with the documentation on 2024, May 17, using the company's excess cash. This private placement, which amounted to €150M at the time of subscription, also comprises an 8-year €100M tranche (maturing in May 2025).
In addition, a new five-year RCF facility of €200M was signed on 2024, July 10. It replaces and cancels the €250M of RCF credit facility that expired in January 2025.
The Kaufman & Broad Shareholders' Meeting held on 2024, May 6, chaired by Mr. Nordine Hachemi, appointed Mr. Yves Perrier as Director to replace Mr. Michel Giannuzzi. In addition, at the close of the Shareholders' Meeting of 2024, May 6, the Board of Directors coopted Mrs. Isabelle Bordry as Director to replace Mr. Yves Gabriel.
Kaufman & Broad and Banque des Territoires of the Territories have partnered to create an investment property in student managed residences. The operation of the residences will be carried out by Neoresid and the real estate company will be managed by the company 123 IM. 51% -owned by Kaufman & Broad and 49% -owned by Banque des Territoires, the purpose of SCI KetB Etudiants is to hold the walls of student residences, with the operation of residences being carried out by Neoresid, a subsidiary of Kaufman & Broad. In addition to the residences currently in the portfolio within SCI KetB Etudiants, the latter will be fueled by acquisitions of VEFA or by already existing residences with the objective of renovation and compliance with environmental standards. Several projects are identified and could be developed over the next few years based on the developer/operator/investor model implemented by Kaufman & Broad. The investment strategy will focus on cities with a strong actual or potential student presence, and where the current supply of managed residences and related services for students is reduced.
For the whole of 2024, the group's revenue is expected to be around €1.1 billion, the difference compared to 2023 being explained by the base effect of the Austerlitz operation. The Current operating income ratio is expected to be between 7% and 7.5%. The group is expected to maintain a positive net cash position(a ).
a) excluding IFRS 16 and Put Neoresid debt
This press release is available at www.corporate.kaufmanbroad.fr
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.
Leases in future state of completion (BEFA): Leases in future state of completion consists for a user to rent a building even before its construction or its restructuring.
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 after changes in working capital and tax paid less net capital expenditure for the year.
Operating cash flow or cash flow from operating activities is equal to cash flow from operating activities after working capital and tax paid.
Cash flow: Cash flow from operations after cost of debt and tax is equal to consolidated net income adjusted for the share of income from associates, joint ventures and operations in the process of disposal and calculated income and expenses.
Financial resources: corresponds to cash and cash equivalents plus undrawn credit lines at date
CDP : (formerly Carbon Disclosure Project): Measuring the environmental impact of companies.
Take-up rate : the take-up rate for inventories is the number of months required for available homes to be sold if sales continued at the same pace as in previous months, being the outstanding housing (available offer) per quarter divided by the orders per quarter elapsed themselves divided by the number of quarters of the period of orders considered.
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 (COI): The EBIT corresponds to the current operating income for the period, calculated at the gross margin deducted by operating expenses for the current period.
Gross financial debt or financial debt: The gross financial debt is composed of long-term and short-term financial liabilities, hedging financial instruments relating to liabilities composing the gross financial debt, and interest accrued on line items in the balance sheet which constitute the gross financial debt.
Net indebtedness or net financial debt: The net debt of a company is the balance of its gross financial debts on the one hand, and its cash 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.
EHU: the EHU (Equivalent Housing Units delivered) are a direct reflection of the activity. 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 revenues 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 housing available for sale on the date in question, i.e. all the housing units not reserved on that date (minus the unopened commercial units).
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.
Debt-to-equity ratio (or gearing): This is the ratio of net debt (or net financial debt) to the company's consolidated equity. It measures the risk of the company’s financial structure.
Orders: measured in volume (Units) and in value, they reflect the group’s commercial activity. Their inclusion in revenues is conditional on the time required to transform a reservation 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 the real estate from the signed reservation contracts including all taxes for a given period. They are mentioned net of the withdrawals noted during the said period.
Managed housing: Managed residences, or service residences, are real estate complexes made up of housing. (Houses 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 centre 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 (or OCR) rate: Expressed in percentages, corresponding to the operational income so far with operational costs to-date deducted from gross margin, divided by the turnover.
Cash and cash equivalents: This corresponds to cash and cash equivalents on the assets side of the balance sheet, i.e. all cash on hand (available banks and cashiers), marketable securities (short-term investments and term deposits) and reserve 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 define the number of dwellings or dwelling equivalent (for mixed programs) of a given program. 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.
Sale in the Future State of Completion (VEFA): The Sale in the Future State of Completion is the contract by which the seller transfers immediately to the purchaser his rights on the ground as well as the property of the existing constructions. 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
Primary consolidated data
* The EBIT corresponds to the Current operating income for the period, calculated at the gross margin deducted by operating expenses (OPEX) for the current period). * *Based on the number of shares comprising the share capital of Kaufman & Broad S.A, i.e. 19,862,022 shares at 31 May 2024 and 21,113,022 shares at 31 May 2023. * * * including 4.0 million euros in revenues from the operation of student residences at 31 May 2024 and 3.7 million euros at 31 May 2023.
Consolidated income statement
Consolidated balance Sheet
[1] Calculated over the six months Regulatory filing PDF file File: KBSA_PR S1 2024_VDEF_UK |
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1944705 11-Jul-2024 CET/CEST
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