Kaufman & Broad SA — Interim / Quarterly Report 2014

Sep 30, 2014

Results for the first nine months of 2014

	Expanding our commercial offer
	and continued growth of our property portfolio
Key sales activity items  Housing orders: +0.2% in volume, +3.5% in value  New program take-up rate: 43.8% vs. 39.8% in Q3 2013	The Kaufman & Broad SA Board of Directors reviewed the results, which were not audited, for the 3rd quarter of fiscal year 2014 (June 1 to August 31, 2014) and Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman & Broad SA, made the following statement:
Key financial items  9-month revenues: €654.5 million vs. €679.3 million in 2013	"In the 3rd quarter, the Housing business posted a steady level of orders and a satisfactory take-up rate for new programs, which confirms that our commercial offer is well positioned.
 9-month gross margin: €122.5 million vs. €130.3 million in 2013	This offer should benefit from the opening of 30 new programs in the 4th quarter.
 9-month attributable net income: €19.5 million vs. €23.8 million in 2013	Furthermore, the increase in our Housing backlog and the significant growth of our property portfolio are confirmed.
 Net financial debt at August 31: €42.3 million vs. €50.0 million at end-November 2013	In the Commercial property business, an agreement to sell was signed for a 23,000 sq.m. office building in the Paris Rive Gauche Mixed Development Zone (ZAC); the conditions precedent related
Key growth indicators  Housing backlog at August 31:	to it are expected to be fulfilled by November 30.
€1,002.2 million vs. €965.1 million at end-November 2013  Housing property portfolio at August 31:	Also, the measures announced by the Government – if they become effective very quickly – could have a positive effect on our business activities.
19,550 lots vs. 15,205 lots at end-Nov. 2013	Based on these assumptions, Kaufman & Broad expects revenues very similar to those of 2013 and a slightly lower gross margin for the fiscal year as a whole."

Sales activity

Housing segment

In the first nine months of 2014, housing orders were up 0.2% in volume and totaled 3,950. In the 3 rd quarter of 2014 alone, 1,349 housing units were ordered, versus 1,348 in the 3rd quarter of 2013. In value, they increased 3.5% to €770 million (including VAT). Orders in Île-de-France accounted for 33.8% in volume and 38.7% in value of all housing orders, versus 46.7% and 49.5% for the first nine months of 2013 taken together.

The average take-up rate of new programs launched in the 3rd quarter of 2014 was 43.8%, compared with 39.8% in the 3rd quarter of 2013.

Apartments

Over the nine-month period, apartment orders totaled €728 million (including VAT) for 3,813 units, down 4.1% in volume and 9.3% in value compared to the same period in 2013.

Single-family homes in communities

Over the entire nine-month period in 2014, single-family homes in community orders totaled €42 million (including VAT), compared with €78.1 million (including VAT) in the first nine months of 2013.

Customer-base structure

In the first nine months of 2014, investors' orders in value rose 2 points to 33%. Orders from homebuyers were 41% (29% from first-time homebuyers and 12% from second-time homebuyers). Block orders totaled 26.3%.

Commercial property segment

Kaufman & Broad applied for three building permits for projects of significant size in Paris, whose Paris Rive Gauche Mixed Development Zone (ZAC), representing more than 54,000 sq.m. of office space.

It is anticipated that the conditions precedent related to the agreement to sell an office building, signed in august, in the Paris Rive Gauche Mixed Development Zone (ZAC) will be fulfilled by November 30, 2014.

Forward indicators of sales activity

At August 31, 2014, total backlog amounted to €1,045.8 million (excluding VAT), up 2.7% compared to November 30, 2013.

Housing backlog totaled €1,002.2 million (excluding VAT), or nearly 13 months of business. The Commercial property backlog totaled €43.2 million (excluding VAT).

At August 31, Kaufman & Broad had 165 housing programs on the market representing a total of 3,382 housing units, of which 1,295 were in Île-de-France and 2,087 were in the Regions.

The Housing property portfolio included 19,550 lots, of which 6,322 were in Île-de-France and 13,228 in the Regions, for potential revenues corresponding to more than three years of business and an increase of close to 30% compared with the total of 15,200 lots at end-November 2013.

In the 4th quarter of 2014, the group plans to launch 30 new programs, including 14 launches in Îlede-France representing 1,193 lots and 16 launches in the Regions representing 1,351 lots.

Financial results

Operating activities

Total revenues were €654.5 million (excluding VAT) in the first nine months of 2014, compared with €679.3 million (excluding VAT) in the same period of 2013. In the 3rd quarter of 2014, revenues totaled €227.9 million.

Housing revenues, which represent 96.0% of total revenues, amounted to €628.3 million (excluding VAT) versus €660.2 million (excluding VAT) in the first nine months of 2013. Just in the 3rd quarter, that figure was €218.3 million. Île-de-France's share of those revenues was 48.5% compared with 44.5% for the same period in 2013.

Nine-month revenues for the Apartment business totaled €569.4 million (excluding VAT) versus €630.9 million for the same period in 2013. Revenues for Single-family homes in communities was €58.8 million (excluding VAT) versus €29.3 million (excluding VAT) in 2013.

Commercial property revenues totaled €21.3 million (excluding VAT) compared with 13.5 in the first nine months of 2013. The other business activities generated revenues of €5.0 million (excluding VAT).

Profitability indicators

Gross margin for the first nine months of 2014 totaled €122.5 million compared with €130.3 million in 2013. This drop can be explained for the most part by the decline in revenues and, to a lesser degree, by the fact that older programs were brought to the market faster. The gross margin rate was 18.7% versus 19.2% for the same period in 2013.

Current operating expenses amounted to €84.0 million (12.8% of revenues) versus €85.0 million in 2013 (12.5% of revenues).

Nine-month current operating profit totaled €38.6 million compared with €45.3 million in 2013. The current operating marging was 5.9% versus 6.7% in 2013. Attributable net income was €19.4 million versus €23.8 million in 2013.

Financial structure and liquidity

At August 31, 2014, gross financial debt was €147.7 million, down by more than €90.0 million compared to November 30, 2013. Net financial debt was €42.3 million, down €7.7 million compared to November 30, 2013.

At August 31, 2014, active cash flow (available cash and investment securities) was €105.4 million, compared with €188.3 million at November 30, 2013.

Working capital requirements totaled €150.5 million (15.0% of revenues over 12 months rolling) compared with €141.7 million at August 31, 2013 (13.7%) and €126.8 million at November 30, 2013.

Gearing (the "net financial debt-to-consolidated equity" ratio) was 21.3% at August 31, 2014 versus 26.6% at November 30, 2013.

Next regular publication date: January 22, 2015: 2014 Annual Results (after market close)

Contacts
Chief Financial Officer	Press Relations
Bruno Coche	Delphine Peyrat - Wise Conseil
01 41 43 44 73	06 38 81 40 00
Infos-invest@ketb.com	dpeyratstricker@wiseconseil.com

About Kaufman & Broad - For more than 40 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 in view of its size, earnings and power of its brand.

Disclaimer - This document contains forward-looking information. This information is liable to be affected by known or unknown factors that KBSA cannot easily control or forecast which may render the results materially different from those stated, implied or projected by the company. These risks specifically include those listed under "Risk Factors" in the Registration Document filed with the AMF under number D.14-0121 on March 6, 2014.

Glossary

Orders: measured in volume (Units) and in value, orders reflect the group's commercial activity. Orders are recognized in 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 apartment programs that include mixed-use buildings (apartments/business premises/retail space/offices), all floor space is converted into housing equivalents.

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 the notarized sales deeds have been signed by (ii) the ratio between the group's property expenses and construction expenses incurred on the 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 properties available for sale as of the date in question, i.e., all unordered housing units as of this 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 parcels, the related property costs and construction costs.

Backlog: a summary at any given moment used for forecasting future revenues for the coming months.

Property portfolio: all real estate for which a deed or commitment to sell has been signed.

APPENDICES

Financial data

Q3 2014	9 month 2014	Q3 2013	9 month 2013
227,945	654,512	232,758	679,313
218,258	628,286	223,634	660,247
106,839	304,633	108,811	294,133
111,419	323,653	114,823	366,114
8,258	21,256	7,500	13,531
1,428	4,970	1,626	5,536
42,854	122,546	44,675	130,259
18.7%	18.7%	19.2%	19.2%
16,965	38,616	14,921	45,290
7.4%	5.9%	6.4%	6.7%
8,040	19,438	6,452	23,786
0.37	0.90	0.30	1.10

Key consolidated data

* Based on the number of shares composing the capital of Kaufman & Broad SA, i.e., 21,584,658 shares

Consolidated income statement*

in € thousands	Q3 2014	9 month 2014	Q3 2013	9 month 2013
Revenues	227,945	654,512	232,758	679,313
Cost of sales	(185,091)	(531,966)	(188,083)	(549,054)
Gross margin	42,854	122,546	44,945	130,259
Selling expenses	(6,400)	(19,541)	(7,088)	(21,527)
Administrative expenses	(12,515)	(38,057)	(14,244)	(37,162)
Technical and customer service expenses	(4,024)	(13,362)	(4,456)	(14,660)
Development and program expenses	(2,950)	(12,970)	(3,964)	(11,620)
Current operating income	16,965	38,616	14,921	45,290
Other non-recurring income and expenses	(3)	132	(2)	(7)
Operating income	16,962	38,748	14,922	45,282
Cost of net financial debt	25	406	(654)	(780)
Other income and expenses	-	-	-	-
Income tax	(5,786)	(11,926)	4,898	(13,093)
Share of income (loss) of equity affiliates and joint ventures	200	876	(20)	353
Income (loss) attributable to shareholders	11,403	28,106	9,349	31,762
Minority interests	3,363	8,668	2,897	7,976
Attributable net income	8,040	19,438	6,452	23,786

*Unaudited and not approved by the Board of Directors

in € thousands	August 31, 2014	November 30, 2013
ASSETS
Goodwill	68,511	68,511
Intangible Assets	84,598	85,376
Property, plant and equipment	5,700	4,713
Equity affiliates and joint ventures	7,172	8,181
Other non-current financial assets	9,784	20,139
Non-current assets	175,765	186,920
Inventories	320,892	324,963
Accounts receivable	232,743	291,778
Other receivables	141,182	153,404
Cash and cash equivalents	105,376	188,258
Prepaid expenses	1,146	867
Current assets	801,339	959,270
TOTAL ASSETS	977,104	1,146,190
EQUITY AND LIABILITIES
Capital stock	5,612	5,612
Additional paid-in capital	165,918	130,932
Attributable net income	19,439	40,847
Attributable shareholders' equity	190,969	177,391
Minority interests	7,727	10,811
Shareholders' equity	198,696	188,202
Non-current provisions	18,953	33,422
Borrowings and other non-current financial liabilities (> 1 year)	141,339	218,959
Deferred tax liabilities	51,856	40,365
Non-current liabilities	212,147	292,746
Current provisions	14,466	1,724
Other current financial liabilities (< 1 year)	6,373	19,340
Accounts payable	465,666	550,233
Other payables	78,131	92,729
Deferred income	1,624	1,217
Current liabilities	566,260	665,242
TOTAL EQUITY AND LIABILITIES	977,104	1,146,190

*Unaudited and not approved by the Board of Directors

Operational data

Housing	Q3 2014	9 month 2014	Q3 2013	9 month 2013
Revenues (€m, excluding VAT)	218.3	628.3	223.6	660.2
- of which Apartments	199.8	569.4	209.8	630.9
- of which Single-family homes in communities	18.4	58.8	13.8	29.3
Deliveries (EHUs)	1,343	3,813	1,218	3,762
- of which Apartments	1,269	3,589		?
- of which Single-family homes in communities	74	224	65	140
Net orders (number)	1,349	3,950	1,348	3,943
- of which Apartments	1,297	3,813	1,202	3,664
- of which Single-family homes in communities	52	137	146	279
- of which Île-de France	378	1,337	566	1,840
- of which Regions	971	2,613	782	2,103
Net orders (€m, including VAT)	244.8	770.0	262.4	744.2
- of which Apartments	230.6	728	220.3	666.1
- of which Single-family homes in communities	14.1	42	42.1	78.1
- of which Île-de France	83.2	298.1	119.9	368.3
- of which Regions	161.5	471.9	142.5	375.9
Commercial offer at period end (number)		3,382		3,379
Backlog at period end
- In value (€m, excluding VAT)	1,002.2			1,067.6
 of which Apartments		419.1		976.8
 of which Single-family homes in communities		583.1		90.8
- In months of business		12.9		12.7
Property portfolio at period end
- In number of lots		19,550		16,236
 of which Île-de France	6,322		6,028
 of which Regions	13,228		10,208
	Q3	9	Q3	9
Commercial property	2014	month	2013	month
		2014		2013
Revenues (€m, excluding VAT)	8.3	21.3	7.5	13.5
Net orders (€m, including VAT)	-	11.5	0.5	11.5
Backlog at period end (€m, excluding VAT)		43.2		26.9