Strong growth in housing orders: up 33% in euros



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Revenues up 13%
Operating income up 57%
Housing backlog up a sharp 65.4% in euros
(Paris – March 21. 2005) —Kaufman & Broad S.A. today announced financial results for the first quarter of fiscal 2005. which ended on February 28.

(in € millions) Q1 2005  Q1 2004  % change  
Net revenues 174.0 154.1 +12.9%
Gross margin 40.9  29.5  +39.0%  
Operating income 19.8  12.6  +57.0%  
Net income 5.5  4.4  +23.3%  
Gearing (Group. at Feb. 28) 73%  7%  NM  

Business Review
Net revenues amounted to €174.0 million in the first three months of fiscal 2005, compared with €154.1 million in the prior-year period. Housing revenues gained 13.8% to €167.9 million, while commercial property revenues totaled €1.6 million, versus €2.4 million in first-quarter 2004.

Sales of apartments amounted to €125.6 million, up 13.4%, while single-family homes contributed €42.4 million, up 15.1%.

Deliveries rose by 16.5% during the period to 1,051 equivalent home units (EHUs) from 902 in first-quarter 2004.

The commercial property business contributed 0.9% of net revenues for the period, versus 1.6% in first-quarter 2004.

Showroom revenues totaled €1.5 million.

The volume of housing orders surged43% during the quarter to 1,534 from 1,073 in the prior-year period. In terms of value, orders represented €291.0 million (including VAT), up 33% from €218.1 million in first-quarter 2004.

Apartment orders increased 52% in value and 60% in volume, while single-family home orders declined 16% in value and 26% in volume, due to postponed openings for several programs.

At the same time, sales in the regions continued to expand, and now account for 63.7% of orders in value terms, versus 46.5% in first-quarter 2004 and 43.5% in first-quarter 2003.
“We’re very satisfied with the overall level of orders in first-quarter 2005,” said Guy Nafilyan, Chairman and Chief Executive Officer of Kaufman & Broad S.A. “Orders were especially strong outside the Paris area, in a housing market still supported by attractive interest rates and the desire of the French people to generate additional resources for their retirement by investing in property .”



Financial Highlights
Gross margin rose 39% to €40.9 million. Gross margin as a percentage of revenues improved to 23.5%, from 19.1% in first-quarter 2004. This high level reflects the ramp-up of business in the regions outside Paris, which generate higher margins, as well as the delivery of a number of programs on especially advantageous terms.

First-quarter operating income totaled €19.8 million, while operating margin rose to 11.4% of revenues, compared to 8.2% at end-February 2004.

The decrease in net financial expense reflected the decline in capitalized interest due to faster sales and customer payments and the impact of €65 million in advance royalty payments to KB Home as well as the cost of financing 2004’s acquisitions.

Net income before amortization of goodwill amounted to €8.1 million, an increase of 32.6% from first-quarter 2004.

Net income rose by 23.3% during the quarter to €5.5 million.

The balance sheet remained solid, with shareholders’ equity rising 15.2% for the period to €216 million. Gearing stood at 73% following the €65-million advance royalty payment to KB Home and the financing of past acquisitions.

  
Outlook
Backlog rose to €731.7 million (net of VAT) at February 28, 2005, from €462.2 million the year before. Housing backlog ended the quarter up 62.1% in volume and 65.4% in euro terms; it represented 9.3 months of business, an increase of 0.7 months from first-quarter 2004.

As of February 28, 2005, Kaufman & Broad S.A. had 181 housing programs on the market, of which 61 in Ile-de-France and 120 in the other regions, for a total of 3,467 available EHUs.
Fifty-eight programs are scheduled for launch in the second quarter (versus 45 a year earlier): 19 in Ile-de-France totaling 1,233 EHUs and 39 in the other regions, representing 2,493 EHUs.

“Our gross margin and operating income were up sharply in the first quarter,” concluded Mr. Nafilyan. “The increase reflects in particular the ramp-up, in line with our strategy, of business in regions outside the Paris area where margins are higher. Given our substantial backlog, we are confirming our full-year objectives of a 15-20% increase in revenues, with gross margin comparable with 2004.”



Dividend
The Board of Directors of Kaufman & Broad S.A. met on Friday, March 18, 2005 to approve the accounts for fiscal 2004, which ended on November 30. It will ask shareholders at the Annual Meeting on May 3, 2005 to approve a dividend of €1.23 per share and the payment of an interim 2005 dividend in September of this year.

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For more than 30 years, Kaufman & Broad S.A. has been designing, building and selling single-family homes and apartments, as well as office properties on behalf of third parties. Its size, profitability and strong brand name have made Kaufman & Broad S.A. one of France’s leading developers and builders of homes.

Contacts Senior Vice President
Finance & Strategy Press Relations:  
Philippe Misteli  
+33 (0)1 41 43 44 73 – p.misteli@ketb.com Florence Ovide-Etienne
+33 (0)1 40 71 07 22  

www.ketb.com

Kaufman & Broad S.A.

Estimated Statement of Income
[NOT REVIEWED BY THE BOARD OF DIRECTORS]

(in thousands of euros)

  Q1 2005  Q1 2004  
Revenues  173,976  154,112  
Cost of sales  (133,048)  (124,659)  
Gross margin  40,928 29,453  
Selling expenses  (11,211)  (8,213)  
General and administrative expenses  (7,773)  (6,689)  
Other operating expenses  (2,111)  (1,920)  
Operating income  19,833 12,631  
Net financial expense  (2, 926)  (1,273)  
Income from fully consolidated companies before exceptional items and income taxes  16,907 11,358  
Net exceptional expense  (3,075)  (755)  
Income taxes  (3,752)  (2,811)  
Net income from fully consolidated companies  10,080 7,792  
Income (loss) from equity affiliates  794  (353)  
Goodwill amortization  (2,662)  (1,697)  
Net income before minority interest  8,212 5,742  
Minority interest  (2,750)  (1,312)  
Net income  5,462 4,430  

Kaufman & Broad S.A.
Estimated Balance Sheet
[Not reviewed by the board of directors]

(in thousands of euros)
Assets  Feb. 28, 2005  Nov. 30, 2004  
Goodwill  70,352  73,015  
Intangible assets  180  162  
Tangible assets  6,873  6,548  
Financial assets  4,165  4,076  
Shares in companies accounted for by the equity method  10,702  9,826  
Fixed assets  92,272  93,627
Inventories  333,197  311,265  
Accounts receivable  229,446  270,109  
Other receivables  85,922  101,124  
Cash and cash equivalents (with minority interests)  55,244  89,763  
Prepaid expenses  101,817  18,624  
Current assets  805,626 790,885
Total assets  897,898  884,512

Liabilities and Shareholders’ Equity  Feb. 28, 2005  Nov. 30, 2004  
Issued capital  5,681 5,681
Paid-in capital and reserves  204,904  165,339  
Consolidated net income  5,462  39,565  
Shareholders’ equity  216,047 210,585
Minority interests  8,986 8,111
Provisions for losses and charges  14,332  11,946  
Financial debt (Group) 1  208,843  160,510  
Financial debt (minority interests)  -  -  
Trade payables  322,499  357,380  
Other payables  125,297  135,074  
Deferred income  1,894  906  
Total liabilities and shareholders’ equity  897,898 884,512
1 Of which medium term borrowings  201,150 151,184

Kaufman & Broad S.A.

Additional Information

  Homes  
Q1 2005  Q1 2004  Q1 2003  
Net orders (in units)  156  212  168  
Net orders (in thousands of euros, including VAT)  50,444  59,726  44,217  
Backlog (in thousands of euros, excluding VAT)  98,922  73,993  68,446  
Backlog (in months of business)  6.8  5.3  4.4  
Deliveries (in EHUs)  168  173  146  

  Apartments  
Q1 2005  Q1 2004  Q1 2003  
Net orders (in units)  1,378  861  720  
Net orders (in thousands of euros, including VAT)  240,541  158,361  128,352  
Backlog (in thousands of euros, excluding VAT)  632,773  368,260  307,572  
Backlog (in months of business)  9.6  9.4  7.4  
Deliveries (in EHUs)  883  729  640  

  Commercial Property  
Q1 2005  Q1 2004  Q1 2003  
Net orders (in square-meters)  -  -  -  
Net orders (in thousands of euros, including VAT)  -  -  -  
Backlog (in thousands of euros, excluding VAT)  -  19,911  36,311  


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