Kaufman & Broad SA: RESULTS FOR THE FIRST NINE MONTHS FOR THE YEAR 2024
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Kaufman & Broad SA
S Press release Press release Paris, 30 September 2024
RESULTS FOR THE FIRST NINE MONTHS FOR THE YEAR 2024
Kaufman & Broad confirmed its guidance for the entire 2024 financial year. The group's revenue is expected to be around 1.1 billion euros, the difference compared to 2023 being explained by the base effect of the Austerlitz operation. The recurring operating income ratio is expected to be between 7% and 7.5%. The Group is expected to maintain a positive net cash position(a ). ‘
In the first nine months of 2024, housing orders in value amounted to 777.9 million euros (including VAT), compared to 720.1 million euros compared to the same period in 2023, an increase of 8.0%. In volume terms, they stood at 3,433 units in 2024, up 5.8% from 3,245 in 2023.
The housing take-up rate[1] was 3.6 months at 2024 August 31(over nine months), down nearly 3 months compared to the same period in 2023 (6.3 months).
The commercial offer, with 96 % of units located in high demanding areas (A, ABIS and B1), amounted to 1,355 units on 31 August 2024 (2,287 units at the end of August 2023).
Customer Breakdown
Orders in value (including VAT) for first time buyers accounted for 18% of sales, compared to 13% over the same period in 2023. First time buyers accounted for 6% of sales in 9 months of 2024, compared with 5% in 2023. Orders made to investors accounted for 15% of sales (of which 8% for Pinel alone), compared with 16% at the end of August 2023 (of which 7% for Pinel alone). Block sales accounted for 61% of orders in value (including VAT), compared with 66% over the same period in 2023.
As of 2024, August 31, the commercial division recorded net bookings of 21.0 million euros (including VAT) compared to 24.5 million euros (including VAT) for the same period in 2023.
Kaufman & Broad currently has 82,800 sq. M. of office space and approximately 192,000 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 37,000 sq. M of office and logistics space to be signed.
As of 2024, August 31, housing Backlog stood at 2050.0 million euros (including VAT) compared to 2048.5 million euros (including VAT) for the same period in 2023, i.e. 27.5 months of activity compared to 23.4 months of activity at the end of August 2023. As of 2024, August 31, Kaufman & Broad had 116 housing programmes under marketing, representing 1,355 housing units (143 programmes and 2,287 housing units as at the end of August 2023).
The land portfolio represents 30,347 units and is down 11.3% compared to the end of August 2023 (34,216 units). At the end of August 2024, it represented over 5 years of commercial activity. In addition, 89% of the housing portfolio is located in tight areas, representing 27,018 housing units as of 2024, August 31.
In the fourth quarter of 2024, the group plans to launch 37 new programmes for 2,201 units, of which 8 in the Paris region representing 395 units and 29 in the Regions representing 1,806 units.
For the first nine months of 2024, the Backlog of the Commercial property Division was 552.5 million euros excluding VAT compared to € 641.9 million excluding. VAT for the same period in 2023.
Total revenue amounted to 701.2 million euros (excluding VAT), compared to 1083.9 million euros in the same period in 2024.
Housing revenue amounted to 598.4 million euros (excluding VAT), compared to 663.1 million euros (excluding VAT) in 2023. It represents 85.3% of the group's revenue.
Revenue from the Apartments business was 549.0 million euros (excluding VAT) (vs. 613.4 million euros (excl. VAT) at end August 2023). Revenue for the Commercial property Division was 90.3 million euros (excluding VAT), compared to 410.7 million euros (excluding VAT) over the same period in 2023. Other activities generated revenues of 12.5 million euros (excluding VAT) (including 6.1 million euros in revenues from the operation of student residences) compared to 10.1 million euros (excluding VAT) (including 5.5 million euros in revenues from the operation of student residences).
On 2024, August 31, gross profit amounted to 146.2 million euros, compared with 193.6 million euros in the same period in 2023. The gross margin was 20.9% compared to 17.9% in the same period of 2023.
Current operating expenses amounted to 92.7 million euros (13.2% of sales), compared to 107.2 million euros in the same period in 2023 (9.9% of sales). Current operating income amounted to 53.5 million euros, compared to 86.4 million euros in 2023. Current operating income stood at 7.6%, compared with 8.0% in 2023. Underlying earnings amounted to 56.9 million euros, compared to 86.4 million euros in 2023.
At the end of August 2024, consolidated net income amounted to 40.0 million euros, compared with the same period in 2023 when it amounted to 57.1 million euros. Non-controlling interests amounted to 8.9 million euros in the first nine months of 2024, compared with 11.6 million euros in 2023. Attributable net income was 31.1 million euros, compared with 45.5 million euros in 2023.
The positive net cash position (excluding IFRS 16 debt and Neoresid put debt) on 2024, August 31 was 381.5 million euros, compared with a positive net cash position (excluding IFRS 16 debt and Neoresid put debt) of 201.2 million euros at the end of August 2023 and 180.5 million euros at the end of November 2023. Cash and cash equivalents amounted to 485.5 million euros on 2024, August 31 compared with 368.8 million euros at the end of August 2023 and 350.0 million euros at 2023, November 30. Financial capacity amounted to 685.5 million euros on 2024, August 31, compared with € 618.8 million at 2023, August 31 and 600.0 million euros at the end of 2023.
Last July, Kaufman & Broad set up a new 200 million euros syndicated loan agreement. With an initial maturity of 5 years, this loan replaces the 250 million euros RCF 2019 syndicated loan agreement maturing in January 2025. The implementation of this corporate line will allow the company to extend the maturity of its resources, while giving it flexibility of use according to needs and opportunities, in addition to its available cash.
Working capital requirements amounted to 291.6 million euros at 2024, August 31 or -28.4% of sales, compared with -62.7 million euros at the end of August 2023 (or -4.1% of sales) and 80.8 million euros at 2023, November 30 or -5.7% of sales.
Finally, the rating agency Fitch Ratings confirmed last August the ‘Investment Grade’ - ‘BBB-’ rating with stable outlook of Kaufman & Broad S.A. This rating has been constant since 2022. For Fitch Ratings, the confirmation of the rating reflects Kaufman & Broad's solid business and financial profile, which proves resilient during periods of weak demand. Fitch also points out that Kaufman & Broad continues to maintain a positive net cash position, which comfortably covers all future debt maturities.
Having expressed the wish of Sophie Lombard to terminate her duties as a director of the company, the Board of Directors took note of this resignation and coopted Michel Sirat as a new independent director. The members of the Board warmly thanked Sophie Lombard for her commitment and contribution to society throughout the years spent on the Board of Directors of Kaufman & Broad SA.
For the whole year of 2024, the group's revenue is expected to be around 1.1 billion euros, the difference compared to 2023 being explained by the base effect of the Austerlitz operation. The recurring 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.
Run off period : the run off period 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 reservations per quarter elapsed themselves divided by the number of quarters of the period of reservations 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: 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: 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.
HU: the HU (Housing Equivalent 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 center or near important business centers and systematically well served; finally, senior residences (including also residences for dependent or non-dependent 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*
(1) The EBIT corresponds to the operating income for the period, calculated at the gross margin deducted by operating costs (OCR) for the current period). (2) Based on the number of shares comprising the share capital of Kaufman & Broad S.A, i.e. 19,862,022 shares at 2024, August 31 and 21,113,022 shares at 2023, August 31. (3) including 6.1 million euros in revenues from the operation of student residences at 2024, August31 and 5.5 million euros at 2023, August 31.
Consolidated income statement*
* Information unaudited and not approved by the Board of Directors
Consolidated balance Sheet
* Information Unaudited and not approved by the Board of Directors
[1] Calculated over nine months Regulatory filing PDF file File: KBSA_PR 9M 2024_Vfinale_UK |
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1998887 30-Sep-2024 CET/CEST
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