2016 Annual results
Press Release
Paris, January 30, 2017
2016 Annual Results
- Solid performance in 2016, boosted by the growth dynamics of the past three years and a buoyant market
- Good business performance
- Growth in financial results, in line with expectations
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- Good outlook for 2017
vs. net cash position €27.7 million at end-2015
€1,360.2 million (+25.1% vs. end-2015)
| Kaufman & Broad SA duly reviewed the unaudited results for fiscal 2016 (December 1, 2015 to November 30, 2016). Commenting on these results, Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman & Broad, stated, in particular: "The 2016 results continued to benefit from the strong growth dynamics initiated in 2014. For the third consecutive year, the group's indicators for sales and property development have risen. Housing orders have thus increased, in both volume and value. The growth in volume was driven by favorable market conditions for first-time buyers (+33.4%), as well as investors (+58.4%). The significant increases in the land reserve (+28.2%) and backlog (+25.1%) attest to our ability to maintain the solid dynamics of our commercial offer. Orders for commercial property increased significantly, to more than €274 million, with sustained activity in work and new constructions across the country. At the beginning of 2017, the market for new housing remains buoyant. It is driven by attractive, well-balanced incentives available to investors as well as first-time home buyers. It is also boosted by the still-low interest rates, which may however not exclude a gradual recovery in the course of the year. All of these factors tend to suggest that the year's market will at least be equivalent to that of 2016 - therefore exceeding 120,000 housing units. In that context, Kaufman & Broad's outlook for 2017 remains favorable. Revenues should increase by 8 to 10%, gross margin and adjusted EBIT should remain around 19% and 8.5% respectively, while net financial debt should remain around €100 million." |
- Sales activities
- Housing segment
For the whole of fiscal 2016, orders for housing totaled 8,017 units in volume, up 16.2% compared to the same period in 2015.
In value, housing orders totaled €1,539.6 million (including VAT), up 27.1% compared to the same period in 2015, due to an increase in orders in the regions and Île-de-France.
In 2016, 7,779 apartments were ordered for a total of €1,479.0 million (including VAT), representing a 16.9% increase in volume and a 27.8% rise in value.
Breakdown of the customer base
In 2016, the number of orders placed by investors grew by 58.4% compared to the same period in 2015. Moreover, the ongoing interest of first-time home buyers was reasserted with a 33.4% rise in their number. Managed accommodations orders fell by 13.8% in value.
- Commercial property segment
For the fiscal year as a whole, the commercial property segment recorded orders totaling €274.6 million.
In June, Kaufman & Broad delivered Boursorama's new head-office building (around 9,000 sq.m), on the Trapeze in Boulogne-Billancourt. In July, EDF (SOFILO) entrusted Kaufman & Broad with the construction, under a property development contract, of the new headquarters of its Aquitaine sales branch in Bordeaux (around 5,000 sq.m). The group also launched the construction of the ORA building (around 26,000 sq.m) in the 17th arrondissement of Paris.
Several other operations are still underway, in particular: the construction of the SNI group's new headquarters in 13th arrondissement of Paris (around 23,000 sq.m), the administrative complex built in Saint Brieuc for the urban community (around 9,000 sq.m), as well as the Ilot G5 construction in the "Bassins à flot" district of Bordeaux (around 4,500 sq.m).
- Leading indicators of sales and development activities
At November 30, 2016, the housing units backlog totaled €1,360.2 million (excluding VAT), i.e. more than 15 months of business. At the same date, Kaufman & Broad had 207 housing programs on the market representing 4,196 housing units, versus 162 programs and 3,092 housing units at end-2015.
The Housing portfolio totaled 24,314 lots, up 28.2% compared to end-2015. It represents potential revenue of nearly four years of business.
The group is planning to launch 26 new programs in Q12017, representing nearly 1,559 lots.
The commercial property backlog totaled €230.4 million at end-2016.
- Financial results
- Operating activities
Total revenues amounted to €1,238.0 million (excluding VAT), up 16.5% compared to 2015.
Revenues from the Housing segment totaled €1,060.0 million (excluding VAT), compared to
€963.4 million (excluding VAT) in 2015. This represents 85.6% of the group's revenues.
Revenues from the Apartments business were up 11.5% to €1,017.7 million (excluding VAT). Revenues from Single-family homes in communities totaled €42.3 million (excluding VAT), versus €50.4 million (excluding VAT) in 2015.
Revenues from the Commercial property segment totaled €171.1 million (excluding VAT), compared to €93.9 million (excluding VAT) in 2015.
Other businesses generated revenues of €6.9 million (excluding VAT).
- Profitability highlights
The gross margin for 2016 totaled €235.6 million compared to €202.7 million in 2015. The gross margin rate came to 19.0%, unchanged from 2015.
Current operating expenses amounted to €134.3 million[1], i.e., 10.9% of revenues, versus €117.0 million in 2015 (11.0% of revenues).
Current operating profit totaled €101.3 million, compared to €85.7 million in 2015. The current operating margin rate rose to 8.2% from 8.1% in 2015.
The group's adjusted EBIT[2] amounted to €108.7 million in 2016 (vs. €92.7 million in 2015). The adjusted EBIT margin was 8.8% (vs. 8.7%).
Attributable net income totaled €46.0 million versus €39.8 million in 2015.
- Financial structure and liquidity
At November 30, 2016, net financial debt was €85.1 million, compared to a positive net cash position of €27.7 million at end-November 2015.
Cash assets (available cash and investment securities) totaled €118.1 million, compared to
€169.4 million at November 30, 2015.
The working capital requirement totaled €129.2 million (10.4% of revenues), compared to €92.4 million at November 30, 2015 (8.7% of revenues).
- Governance, shareholders and dividend
At its meeting of January 27, 2017, the Board of Directors of Kaufman & Broad SA, duly noted the resignation of Alexandre Dejoie as Director, at the close of the Board meeting. Kaufman & Broad thanked him warmly for his contribution to the Board's work. Following this departure, PAI Partners was left with only two Directors' seats.
At the same time, the Board of Directors appointed Jean-Louis Chaussade, Chairman & CEO of Suez Environnement, as Director.
At January 19, 2017, the FG8 holding company held 36.2% of the share capital of Kaufman & Broad SA At the same date, in line with the commitments made by the company's management, the Artimus Participation fund, representing 125 Kaufman & Broad managers and employees, held 6.7% of the company's capital. Including the 1.3% stake held by group employees through the company savings plan, the total stake held by all Kaufman & Broad staff was 8%. Another 6.5% stake was held by Predica.
The free float was 41%. Following this significant increase, on December 28, 2016, Kaufman & Broad shares were admitted to trading on the "Long-only" Deferred Settlement Service (SRD) of Euronext Paris.
As announced in 2016, a dividend of €1.85 per share will be paid out in 2017 in respect of fiscal 2016 (ended November 30, 2016), subject to the approval of the Company's shareholders at the General Meeting to be held on May 11 this year.
It will also be proposed to the Shareholders' Meeting of Kaufman & Broad SA, the right to receive this dividend either 100% in cash or 100% in shares. Upon completion of this transaction and in order to maintain the number of shares on a fully diluted basis, the Company will cancel as many treasury shares as will be created to satisfy the choice of Shareholders
Moreover, it is recalled that a pay-out ratio of 75% of earnings, net of exceptional items, will be proposed to the Shareholders' Meeting called to approve the financial statements for fiscal 2017 (ending November 30, 2017).
- Outlook for 2017
The group estimates that in fiscal 2017 its revenues will increase by 8 to 10%, gross margin and adjusted EBIT will remain around 19% and 8.5% respectively, while net financial debt will remain close to €100 million.
This press release is available from the website www.kaufmanbroad.fr
- Next regular publication date:
- April 26, 2017: Q1- 2017 results (after market close)
- May 11, 2017: Annual Shareholders' Meeting
-
Contacts
| Chief Financial Officer Bruno Coche 01.41.43.44 73 Infos-invest@ketb.com | Press Relations |
| Camille Petit Burson-Marsteller 01.56.03.12 80 contact.presse@ketb.com |
About Kaufman & Broad - For almost 50 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 measured by its size, earnings and the strength of its brand.
Kaufman & Broad's Registration Document, filed on March 9, 2016 with the French financial markets authority (the "AMF") under number D.16-0125 (the "Registration Document"), as well as the updated Registration Document filed with the AMF under number D.16-0125-A01 are available on the AMF website (www.amf-france.org) and on the Kaufman & Broad website (www.kaufmanbroad.fr). They contain a detailed description of Kaufman & Broad's business, results and outlook, as well as the associated risk factors. Kaufman & Broad particularly refers to the risk factors described in Section 1.2 of the Registration Document, as amended in the updated Registration Document. The materialization of one or more of these risks could have a significant negative impact on Kaufman & Broad's business, assets, financial position, results and outlook, as well as on the trading price of Kaufman & Broad shares.
This announcement does not, and shall not, in any circumstances constitute a public offering, nor an offer to sell or to subscribe, nor a solicitation to offer to purchase or to subscribe securities in any country.
- Glossary
Orders: measured in volume (Units) and in value, orders reflect the group's sales activity. Orders are recognized as revenue based on the time necessary for the "conversion" of an order into a signed and notarized deed, which is the point at which income is generated. In addition, for Multi-occupancy housing programs that include mixed-use buildings (apartments/business premises/retail space/offices), all floor space is converted into housing equivalents.
Units: 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 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.
Take-up rate: the number of orders in relation to the average commercial offer for the period.
Commercial offer: the total inventory of housing units available for sale at the relevant date, i.e., all unordered housing units at such 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, the related property costs and the construction costs.
Adjusted EBIT: corresponds to current operating income adjusted for the "IAS 23 revised" borrowing costs that have been capitalized and removed in the gross margin.
Backlog: also called an order book, is the summary which enables future revenues for the coming months to be forecast at any given moment.
Property portfolio: refers to all the land for which all commitments (contract of sale, etc.) have been signed.
APPENDICES
- Financial data
Key consolidated data
| in € millions | Q4 2016 | Fiscal 2016 | Q4 2015 | Fiscal 2015 |
| Revenues | 402.7 | 1,238.0 | 366.8 | 1,063.1 |
| 367.5 | 1,060.0 | 342.9 | 963.4 |
| 33.3 | 171.1 | 22.3 | 93.9 |
| 1.9 | 6.9 | 1.6 | 5.8 |
| Gross margin | 77.3 | 235.6 | 70.5 | 202.7 |
| Gross margin rate (%) | 19.2% | 19.0% | 19.2% | 19.1% |
| Current operating income | 35.5 | 101.3 | 38.4 | 85.7 |
| Current operating margin (%) | 8.8% | 8.2% | 10.5% | 8.1% |
| Adjusted EBIT ** | 37.8 | 108.7 | 41.2 | 92.7 |
| Adjusted EBIT margin (%) | 9.4% | 8.8% | 11.2% | 8.7% |
| Attributable net income | 18.3 | 46.0 | 20.3 | 39.8 |
| Attributable net earnings per share (€/share) * | 0.88 | 2.21 | 0.94 | 1.84 |
- Based on the number of shares that compose the share capital of Kaufman & Broad SA. On January 26, 2016, the Board of Directors of Kaufman & Broad decided to cancel 747,619 treasury shares, thereby reducing the number of Company shares from 21,584,658 to 20,839,037
- Adjusted EBIT corresponds to current operating income adjusted for the "IAS 23 revised" borrowing costs that have been capitalized and removed in the gross margin.
Consolidated income statement*
| in € thousands | Q4 2016 | Fiscal 2016 | Q4 2015 | Fiscal 2015 |
| Revenues | 402,699 | 1,238,002 | 366,816 | 1,063,098 |
| Cost of sales | (325,432) | (1,002,397) | (296,288) | (860,397) |
| Gross margin | 77,267 | 235,605 | 70,527 | 202,701 |
| Selling expenses | (11,562) | (34,891) | (9,785) | (30,652) |
| General administrative expenses | (18,132) | (58,214) | (11,246) | (50,313) |
| Technical and customer service expenses | (5,073) | (19,477) | (4,885) | (18,310) |
| Development and program expenses | (7,035) | (21,765) | (6,248) | (17,740) |
| Current operating income | 35,465 | 101,258 | 38,364 | 85,685 |
| Other non-recurring income and expenses | - | - | 831 | 826 |
| Operating income | 35,465 | 101,258 | 39,195 | 86,511 |
| Cost of net financial debt | (794) | (3,203) | (3,115) | (4,470) |
| Other income and expenses | - | - | - | - |
| Income tax | (9,930) | (30,365) | (10,685) | (24,267) |
| Share of income (loss) of equity affiliates and joint vsentures | (23) | (211) | 17 | 1,172 |
| Income (loss) attributable to shareholders | 24,718 | 67,479 | 25,411 | 58,946 |
| Minority interests | 6,439 | 21,445 | 5,115 | 19,167 |
| Attributable net income | 18,279 | 46,034 | 20,297 | 39,779 |
- Not approved by the Board of Directors and not audited.
Consolidated balance sheet*
| in € thousands | Nov. 30, 2016 | Nov. 30, 2015 |
| ASSETS | ||
| Goodwill | 68,661 | 68,511 |
| Intangible Assets | 87,570 | 86,605 |
| Property, plant and equipment | 7,449 | 4,663 |
| Equity affiliates and joint ventures | 5,634 | 5,513 |
| Other non-current financial assets | 2,504 | 1,247 |
| Non-current assets | 171,818 | 166,539 |
| Inventories | 371,381 | 329,664 |
| Accounts receivable | 375,669 | 331,428 |
| Other receivables | 159,772 | 136,421 |
| Cash and cash equivalents | 118,108 | 169,361 |
| Prepaid expenses | 1,345 | 649 |
| Current assets | 1,026,275 | 967,523 |
| TOTAL ASSETS | 1,198,093 | 1,134,062 |
| EQUITY AND LIABILITIES | ||
| Capital stock | 5,418 | 5,612 |
| Additional paid-in capital | 79,119 | 167,458 |
| Attributable net income | 46,035 | 39,779 |
| Attributable shareholders' equity | 130,571 | 212,849 |
| Minority interests | 15,196 | 11,068 |
| Shareholders' equity | 145,767 | 223,917 |
| Non-current provisions | 23,229 | 22,334 |
| Borrowings and other non-current financial liabilities (> 1 year) | 191,362 | 127,833 |
| Deferred tax liabilities | 45,471 | 40,268 |
Non-current liabilities | 260,062 | 190,435 |
| Current provisions | 1,499 | 120 |
| Other current financial liabilities (< 1 year) | 11,841 | 13,840 |
| Accounts payable | 675,146 | 613,791 |
| Other payables | 97,382 | 85,412 |
| Current tax | 5,858 | 5,301 |
| Deferred income | 539 | 1,246 |
| Current liabilities | 792,264 | 719,710 |
| TOTAL LIABILITIES | 1,198,093 | 1,134,062 |
- Not approved by the Board of Directors and not audited.
- Operational data
| Housing | Q4 2016 | Fiscal 2016 | Q4 2015 | Fiscal 2015 |
| Revenues (€ million, excluding VAT) | 367.5 | 1,060.0 | 342.9 | 963.4 |
| 357.1 | 1,017.7 | 331.6 | 913.0 |
| 10.4 | 42.3 | 11.4 | 50.4 |
| Deliveries (EHUs) | 2,301 | 6,545 | 2,164 | 5,961 |
| 2,555 | 6,360 | 2,108 | 5,748 |
| 46 | 185 | 56 | 213 |
| Net orders (number) | 2,789 | 8,017 | 2,470 | 6,901 |
| 2,686 | 7,779 | 2,392 | 6,656 |
| 103 | 238 | 78 | 245 |
| Net orders (€ million, including VAT) | 525.2 | 1,539.6 | 385.5 | 1,211.6 |
| 499.9 | 1,479.0 | 369.9 | 1,157.0 |
| 25.3 | 60.6 | 15.6 | 54.6 |
| Commercial offer at end of period (number) | 4,196 | 3,092 | ||
| Backlog at end of period | ||||
| 1,360.2 | 1,087.0 | ||
| 1,312.3 | 1,039.4 | ||
| 47.9 | 47.5 | ||
| 15.4 | 13.5 | ||
| Land stock at end of period (number) | 24,314 | 18,973 | ||
| Commercial property | Q4 2016 | Fiscal 2016 | Q4 2015 | Fiscal 2015 |
| Revenues (€ million, excluding VAT) | 33.3 | 171.1 | 22.3 | 93.9 |
| Net orders (€ million, including VAT) | 23.3 | 274.6 | 13.4 | 154.4 |
| Backlog at end of period (€ million, excluding VAT) | 230.4 | 178.4 | ||
[1] Of which €1.1 million in fees for the re-IPO conducted in the 1st half of 2016
[2] Adjusted EBIT corresponds to current operating profit of €101.3 million adjusted for capitalized borrowing costs of
€7.4 million at November 30, 2016, compared to current operating profit of €85.7 million adjusted for capitalized borrowing costs of €7.0 million at November 30, 2015.
