INTERIM FINANCIAL REPORT

Transcription

1 INTERIM FINANCIAL REPORT _ 2012

2 The French language version of Kaufman & Broad SA s 2012 interim financial report was filed with the Autorité des marchés financiers (AMF) on July 27, 2012, in accordance with Articles and of the AMF General Regulations. Copies of this document are available on the websites of Kaufman & Broad SA ( and AMF ( A copy will be sent free of charge upon request to: Kaufman & Broad - Financial Communications, 127, avenue Charles de Gaulle Neuilly-sur-Seine Cedex

3 Table of contents 1. PERSONS RESPONSIBLE PERSON RESPONSIBLE FOR THIS DOCUMENT Statement by the person responsible for the document PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS Statutory auditors Alternate auditors PERSON RESPONSIBLE FOR FINANCIAL COMMUNICATIONS AND INVESTOR RELATIONS Information policy INFORMATION INCORPORATED BY REFERENCE 3 2. INTERIM MANAGEMENT REPORT GROUP BUSINESS Significant data Business indicators GROUP POSITION Key figures Commentaire sur les résultats Liquidity and capital resources OUTLOOK Market Kaufman & Broad Events after the balance-sheet date ADDITIONAL INFORMATION INFORMATION ON RELATED PARTIES FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Statement of consolidated comprehensive income Statement of consolidated financial position Statement of cash flow Statement of change in consolidated shareholders equity NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Significant events during the period (December 1, 2011 to May 31, 2012) Note 1 - Accounting methods and main valuation assumptions Note 2 - Segment information Statement of consolidated comprehensive income Statement of financial position - Assets Statement of financial position - Shareholders equity and liabilities Additional information REPORT BY THE STATUTORY AUDITORS CONCERNING THE INTERIM FINANCIAL INFORMATION Interim financial report. KAUFMAN & BROAD 1

4 1 Persons responsible 1.1. PERSON RESPONSIBLE FOR THIS DOCUMENT M. Guy Nafilyan Chairman and Chief Executive Officer of Kaufman & Broad SA Statement by the person responsible for the document I declare that, to the best of my knowledge, the condensed financial statements for the six-month period most recently ended have been prepared in accordance with applicable accounting standards and present fairly the assets, liabilities, financial position and profit or loss of the parent company and of all consolidated companies, and that the interim management report presented on pages 4 to 21 presents fairly the significant events that have occurred during the first six months of the fiscal year and their impact on the financial statements, the main related-party transactions, and the description of the main risks and uncertainties they may face in the second half of the year. Neuilly-sur-Seine, July 27, 2012 Chairman and Chief Executive Officer 1.2. PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS Statutory auditors ERNST & YOUNG Audit 1-2, place des Saisons Courbevoie - Paris - La Défense 1, France represented by Gilles Cohen, first appointed on April 9, 2009 until the Shareholders Meeting called to approve the financial statements for the year ending November 30, DELOITTE & ASSOCIÉS 185, avenue Charles de Gaulle Neuilly-sur-Seine Cedex, France represented by Joël Assayah, first appointed on April 9, 2009 until the Shareholders Meeting called to approve the financial statements for the year ending November 30, Alternate auditors AUDITEX Faubourg de l Arche -11, allée de l Arche Paris-La Défense Cedex, France first appointed on April 9, 2009, until the Shareholders Meeting called to approve the financial statements for the year ending November 30, B.E.A.S. 7-9, villa Houssay Neuilly-sur-Seine Cedex, France first appointed on April 9, 2009, until the Shareholders Meeting called to approve the financial statements for the year ending November 30, KAUFMAN & BROAD Interim financial report

5 PERSONS RESPONSIBLE PERSON RESPONSIBLE FOR FINANCIAL COMMUNICATIONS AND INVESTOR RELATIONS M. Bruno Coche Chief Finance Officer Kaufman & Broad SA 127, avenue Charles de Gaulle Neuilly-sur-Seine Cedex Telephone: +33 (1) Fax: +33 (1) infos-invest@ketb.com Website: Information policy The group s financial statements are reviewed twice yearly by the Statutory Auditors, who conduct a full audit of the annual results and a limited examination of the first-half results. Estimated financial results are published quarterly, according to the following timetable: April: first quarter results; July: first half results; September: third quarter results; January: annual results INFORMATION INCORPORATED BY REFERENCE None 2012 Interim financial report. KAUFMAN & BROAD 3

6 2 Interim management report 2.1. GROUP BUSINESS Significant data During the first quarter of 2012, the property development sector experienced a 14.4% decline in new home sales. This trend looks set to continue in the second quarter. Take-up has increased to 9.4 months for apartments and 11.1 months for single-family homes at the end of the first quarter. The new real estate market slowdown may be explained by the following factors: the significant reduction in tax benefits for investments for both home purchases and rentals: - the tax reductions of the Scellier incentive, which dropped from 18% in 2011 to 13% in 2012, have contributed to the withdrawal from the market by some investors, with a 39% decline in rental investment in the first quarter of 2011 (a 57% decline when compared to first quarter of 2010); - the low level of home ownership in new housing, which despite the refocusing of the Zero-interest Plus Loan ("Prêt à Taux Zéro Plus") was down 12% compared to the first quarter of Demand by first-time homebuyers remains low. the tightening of lending conditions by banks since the summer of 2011, combined with general economic conditions that are still unfavorable and uncertain, are hindering home ownership and the return of second-time homebuyers to the market; a still insufficient commercial offer of 79,000 housing units as of the first quarter of 2012; finally, prices continue to remain at high levels, due to scant inventory. The national average price per sq.m of apartments is around 3,800, up 1.7% compared to the first quarter of 2011 (there was an increase of 2.8% in Île-de-France). In an economic crisis where the real estate market is sluggish, Kaufman & Broad s first-half results show a downturn in terms of activity. The number of group housing orders was down 24.2% compared to the first half of During the first six months of the year, 2,496 housing units were ordered, compared to 3,294 orders for the same period in In terms of value, there was a decline of 27.9%, to million, compared to million in the first half of The total value of orders was million (including VAT), down 30.4% compared to the first half of 2011, when they totaled million (including VAT). Orders made with first-time homebuyers increased by 8% in number and accounted for 31% of group Housing orders 1, an increase of 10 points compared to the first half of This increase was not sufficient enough to offset the decline in orders by investors, in particular under the Scellier incentive, which totaled 33% in terms of the number of orders and 43% in value. During the first half of 2012, 2,720 housing units were offered for sale, compared with 4,325 during the comparable period of The group s commercial offer increased 7.5%, from 2,968 housing units available for sale as of May 31, 2011 to 3,192 as of May 31, The average take-up rate over 12 months rolling was 15.2%, compared to 21.4% at the end of the first half of The attrition rate (excluding project cancellations) in the first six months of 2012 stood at 22.8%, versus 19.6% for the same period in The average attrition rate over 12 months rolling was 27.4% at the end of May 2012, compared to 22.5% in May The group actively continued to regenerate the property portfolio. Today, it represents almost 16,700 housing units or more than three years of business. The Housing backlog totaled 1,130.4 million (excluding VAT), versus 1,144.6 million as of May 31, 2011, down 1.2%. Regarding the office property portfolio, Kaufman & Broad won two major competitions, one in May in Boulogne Billancourt and the other in June in the ZAC Seine Rive Gauche. Both of these programs will result in the construction of over 32,000 sq.m of net surface office area. They represent potential total revenues of 270 million (excluding VAT), or nearly three years of business. 1 JVT included. 4 KAUFMAN & BROAD Interim financial report

7 INTERIM MANAGEMENT REPORT Significant events of the period (December 1, 2011 to May 31, 2012) Early partial repayment of the Senior debt Following the double bidding process launched by Kaufman & Broad SA on July 26, 2011, which resulted in the early reimbursement in 2011 of a portion of its term debt under its Senior Credit Agreement in the amount of 50.8 million and the cancellation of part of the credit commitments that the company has as part of its revolving credit line under this agreement, on February 29, 2012, Kaufman & Broad SA repaid in advance an additional amount of 10 million on its term debt (see Note 21.3 of the Notes to the interim condensed consolidated financial statements). These transactions led to a net profit of 0.85 million, recognized in financial income. Moreover, under these agreements, Kaufman & Broad SA also made a prepayment of 17.9 million in late January Buyback of minority interests Moreover, the group purchased several minority interests over the first half of the year, through the acquisition of the equity interest of its associate Elgéa in a program in Île-de-France, Partim s interest in a program in Marseille, and a share of the equity interest of its associate HDI in a program in Toulon. The difference between the price paid and the corresponding reduction in minority interests amounts to million. In accordance with IAS 27R, this amount is offset in attributable shareholders equity Key financial data The following table presents key financial statement items and the main leading indicators for the group for the first two half-years of 2012 and 2011: (in thousands) May 31, 2012 May 31, 2011 Revenues 456, ,437 of which Housing 444, ,019 Gross margin 87,807 87,196 Current operating profit 31,190 32,651 Operating income 31,174 32,920 Income (loss) attributable to shareholders 24,356 19,646 Attributable net income 19,314 13,654 Earnings per share (in euro) Total orders (in value including VAT) 508, ,289 Total backlog (in value excluding VAT) 1,176,247 1,174,392 (in thousands) May 31, 2012 Nov. 30, 2011 Assets Non-current assets 164, ,428 Current assets 881, ,678 Total assets 1,045,342 1,034,106 Equity and liabilities Shareholders equity 172, ,846 Non-current liabilities 337, ,913 Current liabilities 534, ,347 Total equity and liabilities 1,045,342 1,034,106 Total revenues for the first half of 2012 totaled million, versus million in the first half of Housing revenues totaled million, compared to million in the same period of Île-de-France represents 44.0% of this segment, compared to 36.9% for the comparable period of Apartments revenues totaled million or 95.2% of total revenues, compared to million or 88.5% at May 31, Revenues from Single-family homes in communities came to 10.4 million and represent 2.3% of total revenues, compared to 35.0 million at May 31, 2011, representing 7.7% of total revenues. Revenues from commercial property segment totaled 7.9 million, compared to 12.1 million at May 31, The Showroom segment generated revenues of 2.8 million, up 22.6% over the first half of 2011, when it was 2.3 million Interim financial report. KAUFMAN & BROAD 5

8 2 INTERIM MANAGEMENT REPORT Group business The consolidated gross margin amounted to 87.8 million, up 0.7% compared to the first half of Gross margin was up 0.1 point, reaching 19.3% of revenues. Current operating income was down 4.5% from 32.7 million at May 31, 2011 to 31.2 million at May 31, This slight decline is explained by the increase of 2.1 million in operating expenses, which were partly offset by an increase of 0.5 million in the gross margin during the period. The cost of net financial debt totaled 1.4 million, a reduction of 5.9 compared to May 31, This was mainly due to the increase of 3.5 million in the capitalization of borrowing costs related to the application of IAS 23 to new programs since December 1, 2010 and the disappearance of the deferral costs of the balance of the termination of swaps amounting 1.8 million in the first half of Income attributable to shareholders totaled 24.4 million, compared to 19.6 million in the first half of The increase of 4.8 million is due to the 5.3 million increase in the income of consolidated companies, minus the increase of nearly 0.6 million in the share of income of equity affiliates. Attributable net income recorded an increase of 41.5% and reached 19.3 million. The amount of minority interests was down 15.9% from the first half of 2011, to 5.0 million. At May 31, 2012, total Kaufman & Broad assets amounted to 1,045.3 million, compared to 1,034.1 million at November 30, Shareholders equity was up 15.8 million from million at year-end 2011 to million at May 31, This increase results primarily from an increase in attributable shareholders equity. The amount of minority interests remained unchanged from November 30, The group s net debt totaled 33.6 million at May 31, 2012, down million from November 30, 2011, when it totaled million. Gearing (net debt to shareholders equity ratio) stood at 19.4% at May 31, 2012, versus 104.4% at November 30, 2011 and 54.6% at May 31, Business indicators The following table shows the group s development in terms of orders, programs being marketed and number of employees. Housing units Net orders (b) Housing Programs being Number of in inventory units offered marketed (d) employees at period-end (a) for sale (c) at May 31 May 31, ,192 2,496 2, May 31, ,968 3,294 4, (a) Sum of the inventory of housing units available for sale at May 31, i.e., all units that are not covered by orders and have not been delivered at the interim period-end. (b) Number of orders recorded during a given six-month period, i.e., the number of orders signed by customers during the six-month period less the number of canceled orders at the interim period-end. (c) Represented by the total number of homes available for sale when the marketing offer is launched for programs whose marketing launch took place during the relevant accounting period. (d) Number of programs that entered the marketing phase at the end of the period. 6 KAUFMAN & BROAD Interim financial report

9 INTERIM MANAGEMENT REPORT Order volume and backlog The following table shows the change in orders and backlog in volume and in value for the Housing segment for the first quarters of the two fiscal years 2012 and 2011: Net number Orders Deliveries Backlog Backlog Backlog in of orders (a) in value (in EHUs) (b) in volume in value months of (in (EHUs) (in business (c) thousands, thousands, incl. VAT) excl. VAT) Single-family homes in communities At May 31, st quarter 41 8, , nd quarter 56 14, , Total 97 23, At May 31, st quarter 9 4, , nd quarter 3 1, , Total 12 5, Apartments At May 31, st quarter ,689 1,136 6,462 1,090, nd quarter 1, ,896 1,255 6,616 1,092, Total 2, ,585 2, At May 31, st quarter 1, ,243 1,289 5, , nd quarter 2, ,067 1,136 6,602 1,110, Total 3, ,310 2, (a) Net number of orders recorded during the relevant period, i.e., the number of orders signed by customers during said period less the number of orders canceled at the end of the period. (b) Number of Equivalent Housing Units delivered, hereinafter EHUs is calculated by program and is equal to (i) the number of units of a given program for which a notarized sale deed has been signed, multiplied by (ii) the ratio between the land expenses and the construction costs incurred by the group for said program and the total budgeted costs for the program. Thus, a unit sold under a program in which 30% of the costs have been incurred would result in 0.3 EHU. (c) Backlog in months of business equals the product of (i) the ratio between the backlog at the end of month m and the sum of revenues (excluding VAT) of the 12 preceding months from m1 to m12, multiplied by (ii) 12 (i.e., the previous 12 months of business). Commercial property sq.m net Orders Backlog surface area in value in value reserved (in (in thousands, thousands, incl. VAT) excl. VAT) At May 31, st quarter ,723 2nd quarter - 13,687 44,402 Total - 13,823 - At May 31, st quarter - 41,910 35,926 2nd quarter - (251) 23,745 Total - 41, Orders A - Housing In the first six months of the fiscal year, housing orders were down 27.9% in value from million (including VAT) to million (including VAT). In number, 2,496 housing units were ordered, versus 3,294 during the same period in 2011 (-24.2%). The Housing segment represents 97.2% of total orders in value for the group, compared to 93.8% in the first half of Interim financial report. KAUFMAN & BROAD 7

10 2 INTERIM MANAGEMENT REPORT Group business The following table shows the number and share of housing units ordered by type in Île-de-France and in the Regions during the first half of 2012 and At May 31, Net number Orders Average Net number Orders Average of orders in value price of orders in value price (in (in (in (in thousands, thousands, thousands, thousands, incl. VAT) incl. VAT) incl. VAT) incl. VAT) Apartments Île-de-France 1, , , , Other Regions 1, , , , Total Apartments 2, , , , Single-family homes Île-de-France 38 8, , Other Regions 59 14, , Total Single-family homes 97 23, , Total Housing 2, , , , Commercial property 1 13, ,660 - Other ,704 - Total 2, ,847-3, ,289 - Apartments In first half 2012, 2,399 apartments were ordered, for a value of million (including VAT). Compared to the first half of 2011, orders for apartments fell by 26.9% in volume and 30.7% in value. The drop was primarily due to lower orders for apartments in the Regions, -42.0% in volume and -45.5% in value. For its part, Île-de-France experienced an increase of 5.2% in volume and a drop of 8.5% in value. Orders for apartments took place at a rate of 53.9% in volume and 47.1% in value in the Regions, respectively, versus 68.0% and 59.9% in the first half of The share of apartments remains the largest share of group orders since it reached 92.7% of its total orders in value versus 93.0% in the same period of In terms of quantity, it stood at 96.0% during the first half of 2012 versus 98.4% in The average price for apartment orders fell by 5.2% over the first half of 2011, reaching 196,600 on average per lot. The average price in Île-de-France was down 13.0% and down 6.1% in the Regions. Single-family homes in communities Orders in value of single-family homes in communities have quadrupled compared to the first half of 2011, reaching 23.0 million. In terms of quantity, they amount to 97 units, compared to 12 in the same period of This increase was observed both in Île-de-France and the Regions, in respective amounts of 5.9 million and 11.5 million. However, this activity remains in contained volumes, and therefore cannot offset the decline in apartment orders. It represents only 4.5% of total orders in value for the group in the first half of 2012, compared to 0.8% in the first half KAUFMAN & BROAD Interim financial report

11 INTERIM MANAGEMENT REPORT 2 Orders by geographic area At May 31, Net number Orders Average Net number Orders Average of orders (in price of orders (in price thousands, (in thousands, (in incl. VAT) thousands, incl. VAT) thousands, incl. VAT) incl. VAT) Île-de-France 1, ,288-1, ,554 - Housing 1, , , , Commercial property Other (a) ,112 - West , ,094 - Housing , , Commercial property Other (a) Southwest , ,194 - Housing , , Commercial property - 13, Other (a) ,651 - Southeast , ,386 - Housing , , Commercial property ,660 - Other (a) Rhône-Alpes , ,827 - Housing , , Commercial property Other (a) Other Regions 5 1, ,234 - Housing 5 1, , Commercial property Other (a) Total group 2, ,847-3, ,289 - (a) Land and building lots. Housing 2, , , , Commercial property 1 13, ,660 - Other (a) ,704 - Geographically, the Housing segment in Île-de-France recorded a decline of 6.2% in value but was up 8.1% in volume. This phenomenon reflects a decrease in the average price of housing orders in Île-de-France of 13.3%, to 226 thousand per lot versus 261 thousand in the first half of Housing orders in the Regions were down 39.5% in volume and 42.4% in value. The average price in the Regions recorded a decline of 4.8%, to 175 thousand per lot versus 184 thousand in the same period of Île-de-France remains the group s largest market as it accounts for 52.2% in value and 45.8% in volume of Housing orders, compared to 40.2% in value and 32.1% in volume in the first half of The Southeast (Montpellier-Marseille-Toulon-Nice) constitutes 17.2% of total orders compared to 15.5% for the Southwest (Toulouse-Bayonne-Bordeaux) and 10.1% for the West (Nantes-Rennes). Rhône-Alpes (Lyon-Grenoble-Annecy) contributes 4.7% and the other Regions (Lille, Rouen and Strasbourg) 0.2%. Within the space of one year, changes in housing orders in volume in Île-de-France differed from the Regions. Île-de-France recorded an increase of 8.1% while the Regions experienced a decline of 39.5% over the same period. This is explained by the larger decline in the number of homes for which marketing was begun in the Regions than in Île-de-France, respectively 85.3% and 22.8%. During the first half of 2012, marketing began for 1,012 in Île-de-France versus 1,243 in the first half of In the Regions, the number of units for which marketing was begun was 1,850, compared with 3,428 launches in the first half of B - Commercial property Commercial property experienced a decline in orders of 66.8% in value compared to the first half of During the first half of 2012, the group recorded net orders accounting for 13.8 million (including VAT), most of which were located in Toulouse Interim financial report. KAUFMAN & BROAD 9

12 2 INTERIM MANAGEMENT REPORT Group business Backlog At May 31, 2012, the group s total backlog amounted to 1,176.2 million (excluding VAT), versus 1,174.4 million (excluding VAT) at May 31, 2011, an increase of 0.2%. The Housing backlog totaled 1,130.4 million (excluding VAT), compared to 1,144.6 million (excluding VAT) at the end of the first half of 2011, a decrease of 1.2%. In volume, it experienced an increase of 0.7%, reaching 6,795 housing units. Apartments The Apartments backlog totaled 1,092.6 million, an increase of 1.6% compared with the end of May 2011, when it totaled 1,110.1 million. In number, it stood at 6,616 units, compared with 6,602 units at May 31, 2011, an increase of 0.2%. Compared to the same period of 2011, the Apartments backlog rose for Île-de-France, but fell for the Regions, respectively +10.7% and -9.9% in value. Single-family homes in communities The Single-family homes in communities backlog totaled 37.8 million for 179 units, an increase of 23.4% in number and 9.5% in value over one year. This increase is explained by the strong rise in backlog in the Regions from 45 units at the end of May 2011 to 124 units at the end of May Conversely, Île-de-France recorded a decline of 45.0% in number and 47.5% in value, totaling 55 units for 11.7 million at May 31, Backlog by geographic area At May 31, Backlog Backlog Average Backlog Backlog Average in number in value price in number in value price (in units (in (in (in units (in (in or EHUs) thousands, thousands, or EHUs) thousands, thousands, excl. VAT) excl. VAT) excl. VAT) excl. VAT) Île-de-France 2, ,470-2, ,556 - Housing 2, , , , Commercial property Other (a) ,412 - West , ,389 - Housing , , Commercial property Other (a) Southwest 1, ,656-1, ,572 - Housing 1, , , , Commercial property - 11, Other (a) 13 1, ,960 - Southeast 1, ,689-1, ,607 - Housing 1, , , , Commercial property 5 9, ,298 - Other (a) Rhône-Alpes , ,871 - Housing , , Commercial property Other (a) Other Regions 93 36, ,397 - Housing 93 13, , Commercial property - 23, Other (a) Total group 6,815 1,176,247-6,803 1,174,392 - (a) Land and building lots. Housing 6,795 1,130, ,747 1,144, Commercial property 5 44, ,745 - Other (a) 15 1, ,048 - The Housing backlog in the Regions recorded at the end of the first half of 2012 a decrease of 3.1% in number and 7.6% in value compared to the end of the first half of Île-de-France, on the contrary, had an increase of 7.7% in number and 7.9% in value. The share of the Regions in the Housing backlog remains high, accounting for 62.2% in number and 55.0% in value at May 31, 2012, versus 64.6% in number and 58.8% in value at May 31, At the end of the first half of 2012, the Southeast accounted for 27.3% of Housing backlog in value, followed by the Southwest 10 KAUFMAN & BROAD Interim financial report

13 INTERIM MANAGEMENT REPORT 2 with 14.3% and 6.6% for Rhône-Alpes. Finally, the West accounted for 5.6% and the Regions for 1.2%. Île-de-France s share amounted to 45.0% in value, versus 41.2% at the end of the first half of In number, the share was 37.8% versus 35.4% at the end of May The Housing backlog at May 31, 2012 should easily cover projected Housing business for 2012 and early 2013 as it represents 13.7 months of business GROUP POSITION Key figures The group s consolidated financial statements at May 31, 2012 show a net profit of 19.3 million, compared to 13.7 million from the first half of The increase in net income reflects the sharp reduction in the cost of net debt of 5.9 million compared to the first half of Furthermore, the strict control has continued, allowing operating expenses to remain in line with the group s activity. At May 31, 2012, they represent 12.4% of sales, versus 12.0% at May 31, Operating income totaled 31.2 million, compared to 32.9 million in the first half of Income attributable to shareholders totaled 24.4 million, compared to 19.6 million at May 31, Management review and analysis Consolidated income statement (in thousands) May 31, 2012 May 31, 2011 Revenues 456, ,437 Cost of sales (368,211) (367,241) Gross margin 87,807 87,196 Selling expenses (14,091) (12,815) General and administrative expenses (31,011) (30,319) Technical expenses and customer service (8,045) (7,831) Other expenses (4,068) (3,969) Other income Current operating income 31,190 32,651 Other non-recurring income - 1,095 Other non-recurring expenses (16) (826) Operating income 31,174 32,920 Financial expenses (2,571) (9,335) Financial income 1,167 2,071 Cost of net financial debt (1,404) (7,264) Other financial expenses (150) - Other financial income 1,000 - Pre-tax income of consolidated companies 30,620 25,656 Income tax (expense)/income (6,328) (6,659) Net income of consolidated companies 24,292 18,997 Share of income (loss) of equity affiliates and joint ventures Income (loss) attributable to shareholders 24,356 19,646 Minority interest 5,042 5,992 Attributable net income 19,314 13,654 Number of shares comprising capital 21,584,658 21,584,658 Earnings per share Interim financial report. KAUFMAN & BROAD 11

14 2 INTERIM MANAGEMENT REPORT Group position Revenues and gross margin by activity The following table shows a breakdown of the number of Equivalent Housing Units (EHUs) delivered, revenues and gross margin by product line and geographic market for the first six months of fiscal 2012 and 2011: At May 31, (in thousands) Deliveries Revenues Gross Deliveries Revenues Gross (EHUs) margin (b) (EHUs) margin (b) Apartments Île-de-France ,972 39, ,413 28,553 Other Regions 1, ,191 43,567 1, ,628 49,031 Total Apartments 2, ,163 82,924 2, ,041 77,584 Single-family homes Île-de-France 12 2,802 1, ,997 4,240 Other Regions 24 7, , Total Single-family homes 36 10,375 1, ,977 4,477 Total Housing units 2, ,538 84,783 2, ,018 82,061 of which Île-de-France ,775 40, ,410 32,793 of which Other Regions 1, ,764 44,159 1, ,608 49,268 Commercial property 5 7,871 2, ,097 3,615 Other (a) ,057 1,046 Showroom - 2, , Total 2, ,018 87,807 2, ,437 87,196 (a) Corresponds primarily to sales of undeveloped plots and external fees (project management contracts). (b) Revised IAS 23 Borrowing Costs : since December 1, 2009, the group prospectively applies this standard, which requires the capitalization of borrowing costs directly attributable to the acquisition and production of qualifying assets. The amount included in the gross margin at May 31, 2012 was 4.5 million, or 5.2% of the gross margin, compared with 1.9 million, or 2.1% of the gross margin at May 31, Deliveries (EHUs) The number of Equivalent Housing Units (EHUs) delivered was down 5.5% from 2,568 to 2,427 housing units in the first half of The number of apartments delivered was down 1.4% from the first half of The share of apartments in the number of housing units delivered remains at a high level, however, going from 94.4% to 98.5% at the end of May The number of single-family homes in communities delivered cannot be compared to the first half of 2011, which is explained by the decline in commercial activity of this business since the third quarter of In the first half of 2012, 36 single-family homes in communities were delivered, compared to 143 in the same period of By geographic area, the share of the Regions in the number of housing units delivered was down compared to May 31, 2011 when it was 67.8%, but it remains high at 59.1%. The housing units delivered in the Regions were down 17.5% from the first half of 2011, reaching 1,435 units delivered. As for Île-de-France, it accounts 40.9% delivered total housing units delivered, compared to 32.2% in 2011, a 19.8% increase over one year, or 992 housing units delivered in the first half of Commercial real estate activity and other activities were lower, each representing 0.2% of deliveries in the first half of 2012 versus 0.3% and 1.1% in the first half of Revenues Total revenues for the first half of 2012 totaled million (excluding VAT), up 0.3% over the first half of This increase was mainly attributable to the Housing segment, whose sales were up 1.7%, to million compared to million in the first half of Apartments activity Revenues from Apartments increased 8.0% from million to million in the first half of The share of apartments in total revenues went from 88.5% to 95.2% in the first half of Revenues from apartments in Île-de-France totaled million, up 41.5% compared to the same period of 2011, when it totaled million. In the Regions, revenues from apartments were down 9.2% to million at May 31, Single-family homes in communities activity Single-family homes in communities revenues were down 70.3% from 35.0 million to 10.4 million in the first half of Activity in Île-de-France fell 88.8% to 2.8 million, compared to 25.0 million in the first half of In a similar vein, the Regions recorded a decline of 24.1% from 10.0 million to 7.6 million in the first half of The share of single-family homes in communities in total revenues went from 7.7% to 2.3% at May 31, The share of Île-de-France in this activity declined to the benefit of the Regions. In the first half of 2012, it totaled 27.0% versus 71.5% in the same period of KAUFMAN & BROAD Interim financial report

15 INTERIM MANAGEMENT REPORT 2 Commercial property Revenues from commercial property were 7.9 million at May 31, 2012, to which two programs contributed for the most part, one of which is located in Marseille - Curtel for 6.5 million and the other in Paris 14th - Le Passage for 1.2 million. Compared with revenues from the same period of 2011, they were down 34.9%. Other activities Revenues from other activities (building lots, sub-contractor fees and Showroom) were down 32.2% from 5.3 million to 3.6 million Gross margin In the first half of 2012, the gross margin totaled 87.8 million, up 0.7% compared to the first half of The gross margin stood at 19.3%, unchanged from the same period in 2011, when it was at 19.2%. This level is close to its standard of around 20%. The Housing gross margin totaled 84.8 million, up 3.3% compared to 82.1 million in the first half of The Housing gross margin rate was up 0.3 point, reaching 19.1% for the first half of In Île-de-France, the gross margin rate reached a high level of 20.8% versus 20.3% in the first half of In the Regions, the gross margin rate stood at 17.8% versus 17.9% in Single-family homes in communities activity The gross margin for the Single-family homes in communities segmenthas fallen more than half compared to the first half of 2011, to 1.9 million. The gross margin rate nonetheless increased by 5.1 points from 12.8% in the first half of 2011 to 17.9% over the same period in This increase is attributable to Île-de-France, whose gross margin rate reached 45.2% versus 17.0% in The gross margin rate in the Regions also increased by 5.4 points, reaching 7.8% in the first half of Commercial property The gross margin of the Commercial property amounted to 2.2 million, compared with 3.6 million for the first half of This accounted for 28.2% of revenues versus 29.9% for the same period in Other activities Gross margin of the other activities declined over the period, coming in at 0.8 million versus 1.5 million at the end of first half Apartments activity The Apartments activity generated a gross margin of 82.9 million, an increase of 6.9%. This increase of 5.3 million was from the increase of 10.8 million in Île-de-France and offset by the decline of 5.5 million in the Regions. In Île-de-France, the gross margin went from 20.9% to 20.4% in the first half of In the Regions, it amounted to 18.1%, compared to 18.5% in the first half of The overall gross margin rate from this activity amounted to 19.1%, versus 19.3% in the first half of Interim financial report. KAUFMAN & BROAD 13

16 2 INTERIM MANAGEMENT REPORT Group position Revenues and gross margin by geographic area At May 31, (in thousands) Deliveries Revenues Gross Deliveries Revenues Gross (EHUs) margin (b) (EHUs) margin (b) Île-de-France ,279 41, ,142 33,131 Housing ,775 40, ,411 32,793 Commercial property Other (a) 2 2, , West ,270 4, ,616 4,376 Housing ,019 4, ,152 4,094 Commercial property Other (a) Southwest ,326 11, ,903 20,453 Housing ,346 11, ,552 19,883 Commercial property Other (a) - (20) , Southeast ,859 20, ,783 20,913 Housing ,341 18, ,174 17,368 Commercial property 4 6,529 1,899-11,099 3,280 Other (a) , Rhône-Alpes ,513 9, ,966 9,980 Housing ,513 9, ,966 9,980 Commercial property Other (a) Other Regions 22 4, ,028 (1,655) Housing 22 3, ,764 (2,058) Commercial property - 1, Other (a) Corporate Overall total 2, ,018 87,807 2, ,437 87,196 (a) Corresponds primarily to sales of undeveloped plots and external fees (project management contracts). (b) Revised IAS 23 Borrowing Costs : since December 1, 2009, the group prospectively applies this standard, which requires the capitalization of borrowing costs directly attributable to the acquisition and production of qualifying assets. The amount included in the gross margin at May 31, 2012 was 4.5 million, or 5.2% of the gross margin, compared with 1.9 million, or 2.1% of gross margin, at May 31, Revenues Île-de-France accounted for 43.5% of revenues. The Southeast (Marseille-Toulon-Nice-Montpellier) and Southwest (Toulouse- Bayonne-Bordeaux) are the two main contributors after Île-de-France, with respectively 26.1% and 13.2% in revenues for the first half of However, their development over the period did not go in the same direction as Île-de-France and the Southeast showed an increase respectively of 21.5% and 3.6% versus a decline of 37.7% for the Southwest. The West (Nantes-Rennes) increased by 11.7% over the period, raising its share to 5.5% of revenues at May 31, Rhône-Alpes (Lyon-Grenoble-Annecy) contributed 10.6% of revenues of the first half of 2012, down 0.9% over the same period of With regard to the other regions (Rouen- Strasbourg-Lille), their revenues were down 40.6% over the period, representing only 1.0% of total revenues for the group. This decrease is explained by the fact that the group withdrew from Strasbourg and Lille since the housing crisis in 2008 and gradually reduced activity in Rouen Gross margin Île-de-France contributed 46.8% to the group s total gross margin for the first six months of The Southeast was the second-largest contributor with 23.0% and the Southwest accounted for 13.3% of its share in gross margin. Rhône-Alpes and the West respectively contributed 11.1% and 4.7% of the gross margin of the first half of The 0.7% increase in the gross margin over the period was due mainly to the increase of 24.0% that took place in Île-de-France. The Southwest, Southeast, West and Rhône-Alpes experienced a decline in the gross margin compared to the same period of The Other Regions had a positive gross margin in the first half of 2012, of nearly 1.0 million. 14 KAUFMAN & BROAD Interim financial report

17 INTERIM MANAGEMENT REPORT Current operating profit - Operating margin Current operating profit stood at 31.2 million compared with 32.7 million for the first half of Operating expenses totaled 56.6 million, representing 12.4% of revenues, compared with 54.5 million in the first half of 2011, or 12.0% of revenues. Selling expenses amounted to 14.1 million compared with 12.8 million for the first half of the previous year, an increase of 10.0%. This increase comes mainly from advertising expenses related to ongoing programs and programs launched in the first half of Administrative expenses amounted to 31.0 million, compared to 30.3 million at May 31, 2011, an increase of 2.3%, which is mainly attributable to the increase in Wages and social welfare expenses related to workforce growth and the item Taxes related to higher activity. Technical expenses totaled 8.0 million versus 7.8 million for the first half of The 2.7% increase over the period is mainly explained by higher wages and social welfare expenses, which are related to workforce growth. Other expenses amounted to 4.1 million, compared to 4.0 million at May 31, The increase is primarily related to the item Expenses on discontinued programs following the discontinuation of programs that have been appealed or do not meet group profitability criteria. The amount of other income totaled 0.6 million, compared to 0.4 million in the first half of Cost of net financial debt - Other financial income and expenses At May 31, 2012, the cost of net financial debt amounted to 1.4 million, compared to 7.3 million at May 31, The decrease of 5.9 million of the cost of net financial debt is due primarily to an increase of 3.5 million in the capitalization of financial costs related to the application of IAS 23 to new programs since December 1, 2010 and the disappearance of deferral costs of the termination balance for swaps, which totaled 1.8 million in the first half of Other financial income totaled 0.85 million and was the result of the repurchase of 10 million of Senior debt that occurred during the first quarter of The amount of the capitalization of financial costs related to the implementation of IAS 23 is 6.5 million at May 31, 2012 versus 3.0 million at May 31, Net income The group generated a tax burden of 6.3 million in the first half of 2012, compared to 6.7 million in the first half of Minority interest was down 15.9% from 6.0 million to 5.0 million in the first half of Attributable net income came in at 19.3 million, compared with 13.7 million in the prior half-year period, an increase of 41.5% Other non-current income and expenses - Operating income The amount of other non-current income and expenses for the first half of 2012 is not significant, compared to the first half of 2011, when it totaled 0.3 million. Accordingly, operating income is close to current operating income, which totals 31.2 million, compared to 32.9 million in the first half of Interim financial report. KAUFMAN & BROAD 15

18 2 INTERIM MANAGEMENT REPORT Group position Income by operating segment May 31, 2012 Île-de- West Southwest Southeast Rhône- Other Corporate Total (in thousands) France Alpes Regions Revenues 198,279 25,270 60, ,859 48,513 4, ,018 Gross margin 41,089 4,118 11,687 20,155 9, ,807 Direct operating expenses excluding estimated expenses (16,725) (2,846) (7,823) (11,082) (4,195) (1,149) (12,797) (56,617) Share of Corporate rebilling excluding financial costs (4,329) (828) (2,907) (2,992) (1,380) (3,61) 12,797 - Total current operating expenses and charge-back to Corporate (21,054) (3,675) (10,730) (14,074) (5,575) (1,510) - (56,617) Current operating income 20, ,081 4,195 (523) - 31,190 Other non-recurring income and expenses 1 - (6) (10) (1) (1) - (16) Operating income 20, ,071 4,194 (524) - 31,174 Cost of net financial debt and other 4, (974) (7,881) (554) Reallocation of cost of net financial debt (2,774) (522) (1,637) (1,915) (816) (218) 7,881 - Pre-tax profit (loss) of consolidated companies 22, ,070 4,370 (1,716) - 30,620 Income tax (expenses)/income (6,261) (390) (1,015) 659 (1) (6,328) Share of income (loss) of equity affiliates and joint ventures (60) 119 (33) (1) Income (loss) attributable to shareholders 15, ,679 3,391 (1,057) 2 24,356 Attributable net income 14, ,507 2,685 (1,054) 2 19,314 Minority interest 1, , ,042 May 31, 2011 Île-de- West Southwest Southeast Rhône- Other Corporate Total (in thousands) France Alpes Regions Revenues 163,142 22,616 96, ,783 48,966 8, ,437 Gross margin 33,131 4,376 20,453 20,913 9,980 (1,656) - 87,196 Direct operating expenses excluding estimated expenses (15,733) (2,516) (6,988) (11, 015) (4,210) (1,519) (12,565) (54,545) Share of Corporate rebilling excluding financial costs (3,897) (956) (3,101) (2,750) (1,469) (396) 12,569 - Total current operating expenses and charge-back to Corporate (19,630) (3,473) (10,088) (13,765) (5,679) (1,914) - (54,545) Current operating income 13, ,365 7,148 4,301 (3,571) 4 32,651 Other non-recurring income and expenses (432) (675) 269 Operating income 13, ,993 7,305 4,587 (4,003) (671) 32,920 Cost of net financial debt and other 3, (837) (11,397) (7,264) Reallocation of cost of net financial debt (3,632) (799) (2,627) (2,741) (1,313) (286) 11,397) - Pre-tax profit (loss) of consolidated companies 13, ,366 5,140 3,778 (5,125) (671) 25,656 Income tax (expenses)/income (4,435) (158) (1,708) (1,028) (1,108) 1,778 - (6,659) Share of income (loss) of equity affiliates and joint ventures Income (loss) attributable to shareholders 9, ,636 4,123 3,110 (3,347) (667) 19,646 Attributable net income 8, ,629 2,354 2,299 (3,346) (667) 13,654 Minority interest ,007 1, (1) - 5, KAUFMAN & BROAD Interim financial report

19 INTERIM MANAGEMENT REPORT Liquidity and capital resources Comments on cash flow performance The group s net cash flow was down 38.4 million, from million at May 31, 2011 to million at May 31, The statement of cash flows for the first six months of 2012 and 2011 is as follows: (in thousands) May 31, 2012 May 31, 2011 Cash flow from operating activities 141, ,073 Cash flow from investing activities 4,957 (3,871) Free cash flow 146, ,202 Cash flow from financing activities (43,265) (21,500) Increase (decrease) in cash 103, ,702 Cash at beginning of the period 138, ,695 Cash at end of the period 242, ,397 Cash flow from operating activities Cash flow from operations totaled million. It consists of 35.8 million in cash flow from operations before taxes and financial debt costs and improvement of Working Capital Requirements from operations (WCR) of million. Changes in WCR (excluding current taxes) of million over the period were mainly due the following: an increase in inventory of 3.6 million, a drop in receivables of 60.6 million, a decrease in payables of 30.2 million, a decrease in other operating assets and liabilities of 18.6 million. Cash flow from investing activities Cash flow from investing activities amounted to nearly 5.0 million at May 31, It corresponds to: 1.7 million to acquisitions of tangible and intangible assets, 6.8 million mainly related to a repayment on the Seniors Health loan of 17.1 million, flow with affiliates and joint ventures for million. These transactions, which were related to operations and investing activities, resulted in the generation of positive free cash flow of million at May 31, Cash flow from financing activities Cash flow related to financing activities came to million. It mainly consists of: dividends paid to minority shareholders on their share of earnings for 2012 in the amount of 4.9 million; the amount of the repurchase of minority interests do not give control of 1.4 million; the buyback of treasury shares net of resales for 2.9 million; repayment of borrowings in the amount of 28.0 million; net financial interest paid in the amount of 5.9 million Net debt Gross financial debt totaled million at the end of the first half of 2012, compared to million at November 30, 2011 and million at May 31, Interim financial report. KAUFMAN & BROAD 17

20 2 INTERIM MANAGEMENT REPORT Group position Change in net financial debt Net financial debt Gearing M % 100% 75% 104.4% % 50 M % 19.4% 0 November 30, 2011 May 31, November 30, 2011 May 31, 2012 Net financial debt means gross financial debt less cash and cash equivalents. It totaled 33.6 million, compared to million at November 30, 2011 and 67.7 million at May 31, Gearing (net financial debt to consolidated shareholders equity ratio) was 19.4% at May 31, 2012, versus 104.4% at November 30, This reflects a decline in net debt of million since the November 30, 2011 year-end, as well as an increase in shareholders equity of 15.8 million Main changes in net financial debt (in thousands) May 31, 2012 Nov. 30, 2011 Syndicated bank credit line 277, ,642 Other borrowings Utilized credit facilities Issuance expenses (5,094) (6,061) Fair value of derivatives 2,190 2,484 Gross financial debt 275, ,621 - of which non-current 274, ,284 - of which current 1,467 19,337 The change in gross financial debt between November 30, 2011 and May 31, 2012 represented a reduction of debt of 27.1 million. This reduction in gross financial debt is primarily due to: repayment in the first quarter of nearly 28 million in Senior debt, the amortization of the arrangement and renegotiation fees of the syndicated loan in the amount of nearly 1 million. Gross borrowings at May 31, 2012 (in thousands) Gross financial debt at Nov. 30, ,621 Repayment of syndicated credit facilities (Senior B and C) (27,975) Change in other borrowings (13) Change in derivative instruments (294) Change in issue costs 967 Change in credit facilities 250 Gross financial debt at May 31, ,556 Change in gross financial debt at May 31, 2012 (27,065) 18 KAUFMAN & BROAD Interim financial report

21 INTERIM MANAGEMENT REPORT 2 The following table shows the group s financial structure at May 31, 2012 since the last fiscal year and changes in the maturity of its debt: (in millions) May 31, 2012 Nov. 30, 2011 Shareholders equity Total debt* Debt due within one year Debt due between one and five years Debt due beyond five years - - Average maturity 3.6 years 4.1 years * of which: Bond issuance expenses (5.1) (6.1) Hedging Instruments Bilateral credit lines Senior B and C lines RCF (a) - - (a) The RCF line totaled million not drawn down, in addition to the million in cash, making the group s financial capacity million OUTLOOK Market The year 2012 may be marked by a sharp decline in both number of sales and rate of construction. Indeed, the new home market is highly correlated to the economic and social environment. It is supported in part by fiscal measures by the government, whose main program, the Scellier incentive, will end this year. The economy in 2012 remains difficult, weakening the real estate market, which was characterized in the first half of 2012 by the following: Uncertainties in economic conditions Upward revision of growth prospects, but at a rate that remains low (0.6% according to the OECD for 2012), Decline in the labor market: the unemployment rate reached 10% in the first quarter for 2012, Consumer confidence down, Eroded purchasing power as a result of rising prices and limits on salary increases, Tighter lending conditions by banks. Uncertainties about the real estate market Strong reduction of tax benefits for rental investment: the Scellier incentive went from 22% to 13% and will be eliminated no later than December 31, 2012 according to the Housing Minister, Refocusing on new housing and reducing the proportion of loan and repayment periods for the PTZ +, Anticipating the continued decline in sales in 2012, to 80,000 units against 103,300 in Positive elements Commercial offer for housing still weak and insufficient, at 79,000 homes at the end of the first quarter, High demand for housing, Physical inventory (units completed and unsold) low, at 3,000 apartments at the end of the first quarter, Government measures to support housing always effective, Favorable interest rate: 3.3% over 15 years Kaufman & Broad Risks and uncertainties The risks run by the group that could have a significantly adverse impact on its operations, results, financial position and outlook are described in the 2011 Registration Document filed with the AMF on March 30, 2012 under number D The nature and level of risk described in this document have not changed significantly during the half-year Interim financial report. KAUFMAN & BROAD 19

22 2 INTERIM MANAGEMENT REPORT Outlook Outlook Financial indicators remain strong, be they the gross margin, which stabilized at a high level, or net income, which rose by 41.5%, or net debt, which decreased significantly. The renewal of the property portfolio continued favorably. This now accounts for nearly three years of activity. The Housing backlog in value is stabilized at a high level, more than 1.1 billion. In an overall environment that remains challenging, but where housing supply is still inadequate with an extremely low level of physical inventory, the strategy of Kaufman & Broad is to strengthen its business, which is focused on first-time buyers supported by the Zero-interest Plus Loan program, and to accelerate its new lines of development, such as senior living facilities, student residences, affordable housing and commercial property. In this context and in light of the policy announced by the government, Kaufman & Broad has decided for to further develop programs for first-time homebuyers and, to a lesser extent, investors. In this perspective, the group will emphasize: development of operations at controlled prices, such as the one launched in Cavaillon (Vaucluse), at a selling price of 2,600/sq.m parking included, and which had very positive commercial results (30% of program reserved at opening), development of program carried out in ANRU (urban renewal) areas, which have a 7% VAT. Furthermore, in line with the announcements made by the government, Kaufman & Broad will continue to develop programs including social housing. In the first half of 2012, block sales of social housing represented 12% of orders. Moreover, Kaufman & Broad will actively pursue the development of managed products that still enjoy tax benefits in 2013, for students and senior citizens, customers who represent an extremely deep market. In the field of offices, the group will similarly continue the proactive policy initiated several months ago, and which is already reflected in significant potential for the next three years. Finally, the financial performance achieved during the past three years gave the group good momentum to face 2012 with confidence. Kaufman & Broad has restored its financial capacity, and its net debt is fully controlled, with a maturity of 3.6 years. This situation will make it possible for us to study any external growth opportunity in a market that should be consolidating. These elements, combined with a high backlog, should allow Kaufman & Broad to maintain good financial performance in Events after the balance-sheet date No significant event occurred since the closing date of the interim consolidated financial statements. 20 KAUFMAN & BROAD Interim financial report

23 INTERIM MANAGEMENT REPORT Additional information. Information on related parties ADDITIONAL INFORMATION H H H Single-family homes in communities Net orders (in units) Net orders (in thousands, including VAT) 23,025 5,616 61,039 Backlog (in thousands, excluding VAT) 37,768 34,483 91,578 Backlog (in months of business) (a) Deliveries (in EHUs) Apartments Net orders (in units) 2,399 3,282 3,061 Net orders (in thousands, including VAT) 471, , ,968 Backlog (in thousands, excluding VAT) 1,092,592 1,110, ,296 Backlog (in months of business) (a) Deliveries (in EHUs) 2,391 2,425 1,946 Commercial property Net orders (in thousands, including VAT) 13,823 41,660 - Backlog (in thousands, excluding VAT) 44,402 23,745 - (a) Calculated in relation to 12-month rolling revenues INFORMATION ON RELATED PARTIES Note 31 Additional Information of section Related-party transactions of the 2011 Registration Document describes the current and regulated agreements entered into by Kaufman & Broad. Relationships with related parties, including the terms and conditions of executive compensation, were unchanged from the 2011 fiscal year and no transaction that was unusual in nature or amount took place during the period Interim financial report. KAUFMAN & BROAD 21

24 3 Financial statements 3.1. CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated interim financial statements at May 31, 2012 have been formatted for the purposes of the financial report; the non-reformatted consolidated interim financial statements that were may be consulted at the registered offices Statement of consolidated comprehensive income Consolidated income statement (in thousands) Note May 31, 2012 May 31, 2011 Revenues (3) 456, ,437 Cost of sales (368,211) (367,241) Gross margin (3) 87,807 87,196 Selling expenses (4) (14,091) (12,815) General and administrative expenses (5) (31,011) (30,319) Technical expenses and customer service (6) (8,045) (7,831) Other expenses (7) (4,068) (3,969) Other income (7) Current operating income 31,190 32,651 Other non-recurring income (8) - 1,095 Other non-recurring expenses (8) (16) (826) Operating income 31,174 32,920 Financial expenses (2,571) (9,335) Financial income 1,167 2,071 Cost of net financial debt (9) (1,404) (7,264) Other financial expenses (10) (150) - Other financial income (10) 1,000 - Pre-tax profit (loss) of consolidated companies 30,620 25,656 Income tax (expenses)/income (11) (6,328) (6,659) Net income of consolidated companies 24,292 18,997 Share of income (loss) of equity affiliates and joint ventures Income (loss) attributable to shareholders 24,356 19,646 Minority interest 5,042 5,992 Attributable net income 19,314 13,654 Average number of shares 21,511,964 21,360,708 Earnings per share Diluted earnings per share KAUFMAN & BROAD Interim financial report

25 FINANCIAL STATEMENTS 3 Consolidated net comprehensive income (in thousands) May 31, 2012 May 31, 2011 Income (loss) attributable to shareholders 24,356 19,646 Change in the gross value of derivative instruments 294 3,392 Tax impact on derivative instruments (104) (1,168) Deferral of fair value of swaps unwound at the end of ,812 Tax impact on the swaps unwound at the end of (580) Change in actuarial gains and losses - - Tax effect on actuarial gains and losses - - Total gains and losses recognized directly in equity 190 3,456 Consolidated net comprehensive income 24,546 23,102 Attributable 19,504 17,110 Minority interest 5,042 5, Interim financial report. KAUFMAN & BROAD 23

26 3 FINANCIAL STATEMENTS Consolidated financial statements Statement of consolidated financial position Assets (in thousands) Note May 31, 2012 Nov. 30, 2011 Goodwill (12) 68,511 68,511 Intangible assets 83,789 83,010 Property, plant and equipment 5,527 5,883 Equity affiliates and joint ventures (13) 3,639 3,473 Other non-current financial assets (13) 2,588 2,551 Non-current assets 164, ,428 Inventories (14) 240, ,556 Accounts receivable (15) 245, ,673 Other receivables (15) 110, ,260 Other financial receivables (15) 4,828 11,535 Current tax (16) 36,879 36,971 Cash and cash equivalents (17) 242, ,878 Prepaid expenses (15) 1, Current assets 881, ,678 Total assets 1,045,342 1,034,106 Liabilities and shareholders equity (in thousands) Note May 31, 2012 Nov. 30, 2011 Capital stock (18) 5,612 5,612 Reserves related to capital Attributable reserves 157, ,001 Other reserves (12,605) (12,274) Treasury shares (6,332) (4,455) Attributable net income 19,314 47,513 Attributable shareholders equity 164, ,376 Minority interest (18.3) 8,509 8,470 Shareholders equity 172, ,846 Provisions (20) 22,672 24,424 Borrowings and other non-current financial liabilities (21) 274, ,284 Deferred taxes (16) 41,164 35,205 Non-current liabilities 337, ,913 Other current financial liabilities (21) 1,467 19,337 Accounts payable 439, ,668 Other liabilities 91, ,985 Deferred income 1,827 1,357 Current liabilities 534, ,347 Total liabilities & shareholders equity 1,045,342 1,034, KAUFMAN & BROAD Interim financial report

27 FINANCIAL STATEMENTS Statement of cash flow (in thousands) Note May 31, 2012 May 31, 2011 Consolidated net income 24,356 19,646 Share of income (loss) of equity affiliates and joint ventures (64) (649) Estimated income and expenses 4,626 1,198 Cash flow after cost of financial debt and tax 28,918 20,195 Cost of net financial debt (9) 1,404 7,264 Other financial expenses (income) (10) (850) - Tax liability (income) (11) 6,328 6,659 Cash flow before cost of financial debt and tax 35,800 34,118 Tax (paid)/received (107) (2,043) Change in operating working capital requirements (22) 105, ,998 Cash flow from operating activities (A) 141, ,073 Investing activities Acquisition of tangible and intangible assets (net of disposals) (1,718) (3,001) Acquisition of financial assets (net of disposals) 6,777 (423) Cash flow with equity affiliates and joint ventures (102) (29) Change in the scope of consolidation (a) - (418) Cash flow from investing activities (B) 4,957 (3,871) Free cash flow 146, ,202 Financing activities Distributions to minority interests (4,945) (11,367) Buyback of minority interests (1,449) (2,609) Buyback of treasury shares, net of resales (2,946) - Loan repayments (21.3) (27,988) - Net financial interest paid (5,937) (7,524) Other net financial income received - - Cash flow from financing activities (C) (43,265) (21,500) Increase (decrease) in cash (A + B + C) 103, ,702 Cash at beginning of the period 138, ,695 Cash at end of the period 242, ,397 Increase (decrease) in cash 103, ,702 Cash and cash equivalents (17) 242, ,262 Credit facilities (21) (783) (3,521) Interest accrued on cash and cash equivalents Cash at end of the period 242, ,397 (a) Acquisition of ASA Immo Interim financial report. KAUFMAN & BROAD 25

28 3 FINANCIAL STATEMENTS Consolidated financial statements Statement of change in consolidated shareholders equity (in thousands) Number Capital Reserves Attributable Other Treasury Attributable Attributable Minority Total of shares related reserves reserves shares income shareholders interest shareholders to capital equity equity At December 1, ,584,658 5, ,467 (13,914) (3,438) 18, ,769 11, ,554 Allocation of profit or loss , (18,063) Actuarial gains (losses) Change in hedging reserves , ,455-3,455 Gains and losses recognized directly in shareholders equity , ,455-3,455 Net income at May 31, ,654 13,654 5,992 19,646 Consolidated net comprehensive income ,455-13,654 17,109 5,992 23,101 Treasury share transactions (999) (304) - (304) Share-based payments Minority interest buybacks (3,635) (3,635) - (3,635) Total transactions with shareholders (3,635) (360) (3,300) - (3,300) Distributions (11,367) (11,367) At May 31, ,584,658 5, ,895 (10,819) (2,743) 13, ,578 6, ,988 At November 30, ,584,658 5, ,001 (12,274) (4,455) 47, ,376 8, ,846 Allocation of profit or loss , (47,513) Actuarial gains (losses) Change in hedging reserves for the period Gains and losses recognized directly in shareholders equity Net income at May 31, ,314 19,314 5,042 24,356 Consolidated net comprehensive income ,314 19,504 5,042 24,546 Treasury share transactions (795) (1,877) - (2,672) - (2,672) Share-based payments Minority interest buybacks (1,391) (1,391) - (1,391) Total transactions with shareholders (1,391) (521) (1,877) - (3,789) - (3,789) Distributions (5,003) (5,003) At May 31, ,584,658 5, ,123 (12,605) (6,332) 19, ,091 8, , KAUFMAN & BROAD Interim financial report

29 FINANCIAL STATEMENTS NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Significant events during the period (December 1, 2011 to May 31, 2012) Early partial repayment of the Senior debt Following the double bidding process launched by Kaufman & Broad SA on July 26, 2011 that resulted in the early repayment in 2011 of a portion of its long-term debt under the Senior Facilities Agreement totaling 50.8 million and the cancellation of part of the credit commitments that the company has under its revolving credit line under that same agreement, Kaufman & Broad SA repaid early an additional amount of 10 million of its long-term debt on February 29, 2012 (see Note 21.3). This transaction resulted in a net profit of 0.85 million, recognized in financial income Buyback of minority interest The group purchased several minority interest over the first half of the year through the acquisition of the equity interest of its associate Elgéa in a program in Île-de-France, Partim s interest in a program in Marseille, and a share of the equity interest of its associate HDI in a program in Toulon, for a total investment of 1.4 million with a satisfactory return. In accordance with IAS 27R, the impact of 1.4 million from these transactions has been recognized in shareholders equity. Moreover, under these agreements, Kaufman & Broad SA made a prepayment of 17.9 million in late January Note 1 - Accounting methods and main valuation assumptions Pursuant to EU Regulation 1606/2002 of July 19, 2002, the Kaufman & Broad group prepared its consolidated financial statements at May 31, 2012 in accordance with the standards and interpretations published by the International Accounting Standards Board (IASB) as adopted by the European Union and mandatory at the period-end date of these financial statements. These standards, which are available on the European Commission website ( / ec.europa.eu / internal_market / accounting / ias_en.htm) include international accounting standards (IAS and IFRS) and IFRIC (International Financial Reporting Interpretations Committee) interpretations. The interim condensed consolidated financial statements for the period ended May 31, 2012 have been prepared in accordance with IAS 34 Interim Financial Reporting, which allows for the presentation of a selection of notes. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year 2011 (available on the Kaufman & Broad website, The group has no seasonal activity that would require the presentation of financial information for the 12-month period ending on the date of the interim financial reporting. The interim condensed consolidated financial statements and the accompanying notes are denominated in euros. The condensed consolidated financial statements at May 31, 2012 were approved by the Board of Directors on July 11, Standards and interpretations The accounting principles used to prepare the interim condensed consolidated financial statements at May 31, 2012 are identical to those used for the fiscal year ended November 30, 2011 and presented in the 2011 Registration Document, with the exception of the first application of standards set forth in paragraph that must be applied for the fiscal year beginning on December 1, Standards and interpretations that must be applied to the fiscal year beginning on December 1, 2011 No new standard or interpretation whose application is mandatory for the fiscal year beginning on December 1, 2011 had any impact on the Kaufman & Broad group s financial statements. IAS 24 revised - Related Party Disclosures (applicable to annual periods beginning on or after January 1, 2011); IFRS improvements, May 2010 (applicable to annual periods beginning on or after January 1, 2011); Amendment to IFRS 7 - Disclosures: transfer of financial assets (applicable to annual periods beginning on or after July 1, 2011); Amendment to IFRIC 14 - Prepayment of a minimum funding requirement (applicable to annual periods beginning on or after January 1, 2011) Interim financial report. KAUFMAN & BROAD 27

30 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements Standards and interpretations effective after the balance-sheet date Subject to final adoption by the European Union, the standards, amendments to standards, and interpretations published by the IASB and listed hereunder must be applied after June 30, 2012: IFRS 9 - Financial Instruments : Classification and measurement (applicable to annual periods beginning on or after January 1, 2015); IFRS 10 - Consolidated Financial Statements (applicable to annual periods beginning on or after January 1, 2013); IFRS 11 - Joint Arrangements (applicable to annual periods beginning on or after January 1, 2013); IFRS 12 - Disclosure of Interests in Other Entities (applicable to annual periods beginning on or after January 1, 2013); IFRS 13 - Fair Value Measurement (applicable to annual periods beginning on or after January 1, 2013); IAS 28 revised - Investments in Associates and Joint Ventures (applicable to annual periods beginning on or after January 1, 2013); IAS 19 revised - Employee Benefits (applicable to annual periods beginning on or after January 1, 2013); Amendment to IAS 12 - Deferred Tax : Recovery of underlying assets (applicable to annual periods beginning on or after January 1, 2012); Amendment to IAS 1 - Presentation of items of other income and expenses directly recognized in equity (applicable to annual periods beginning on or after July 1, 2012); Amendment to IAS 32 - Offsetting of financial assets and liabilities (applicable to annual periods beginning on or after January 1, 2014); Amendment to IFRS 7 - Disclosures: Offsetting of financial assets and liabilities (applicable to annual periods beginning on or after (applicable to annual periods beginning on or after January 1, 2013); Amendments to IFRS 1: Government Grants (applicable to annual periods beginning on or after January 1, 2013); Improvements to IFRS 2012: annual improvements to various standards (published by the IASB on May 17, 2012) (applicable to annual periods beginning on or after January 1, 2013); The group has not adopted any of these new standards or interpretations early and is currently assessing the impacts resulting from the first application of these new texts Use of estimates and assumptions In order to prepare the group s financial statements, the management of Kaufman & Broad is required to make estimates and assumptions for items in the financial statements which cannot be accurately valued. These estimates and assumptions are made based on past experience and from the expected changes in the markets in which the group operates, or other factors deemed reasonable considering the circumstances. These assessments have an effect on the amounts of the income and expenses and on the book value of the assets and liabilities. With respect to the preparation of the interim condensed consolidated financial statements, the significant judgments made by management in applying the group s accounting methods and the key sources of uncertainty regarding estimates are identical to those described in the consolidated financial statements for the year ended November 30, KAUFMAN & BROAD Interim financial report

31 FINANCIAL STATEMENTS Note 2 - Segment information The segment information reported corresponds to the organization of the internal reports intended for group management, which is the major operational decision-maker Income by operating segment May 31, 2012 (in thousands) Île-de-France West Southwest Southeast Revenues 198,279 25,270 60, ,859 Gross margin 41,089 4,118 11,687 20,155 Selling expenses (5,544) (715) (2,581) (3,143) General and administrative expenses (6,302) (1,218) (3,721) (3,971) Technical expenses and customer service (3,353) (447) (1,157) (1,927) Other expenses (1,610) (460) (594) (2,078) Other operating income 85 (6) Reallocation of portion of corporate reinvoicing (4,329) (828) (2,907) (2,992) Current operating income 20, ,081 Other non-recurring income and expenses 1 - (6) (10) Operating income 20, ,071 Cost of net financial debt 4, Reallocation of cost of net financial debt (2,774) (522) (1,637) (1,915) Pre-tax profit (loss) of consolidated companies 22, ,070 Income tax (expenses)/income (6,261) (390) Share of income (loss) of equity affiliates and joint ventures (60) 119 (33) (1) Income (loss) attributable to shareholders 15, ,679 Attributable net income 14, ,507 Minority interest 1, ,172 Rhône- Other Head Grand May 31, 2012 (in thousands) Alpes Regions office total Revenues 48,513 4, ,018 Gross margin 9, ,807 Selling expenses (981) (40) (1,087) (14,091) General and administrative expenses (1,994) (928) (12,876) (31,011) Technical expenses and customer service (604) (224) (333) (8,045) Other expenses (650) 43 1,282 (4,068) Other operating income Reallocation of portion of corporate reinvoicing (1,380) (361) 12,797 - Current operating income 4,195 (523) - 31,190 Other non-recurring income and expenses (1) (1) - (16) Operating income 4,194 (524) - 31,174 Cost of net financial debt 992 (974) (7,881) (554) Reallocation of cost of net financial debt (816) (218) 7,881 - Pre-tax profit (loss) of consolidated companies 4,370 (1,716) - 30,620 Income tax (expenses)/income (1,015) 659 (1) (6,328) Share of income (loss) of equity affiliates and joint ventures Income (loss) attributable to shareholders 3,391 (1,057) 2 24,356 Attributable net income 2,685 (1,057) 2 19,314 Minority interest , Interim financial report. KAUFMAN & BROAD 29

32 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements May 31, 2011 (in thousands) Île-de-France West Southwest Southeast Revenues 163,142 22,616 96, ,783 Gross margin 33,131 4,376 20,453 20,913 Selling expenses (4,288) (846) (1,433) (3,726) General and administrative expenses (5,403) (1,150) (3,991) (3,443) Technical expenses and customer service (3,303) (448) (908) (1,764) Other expenses (2,749) (76) (716) (2,121) Other operating income Reallocation of portion of corporate reinvoicing (3,897) (956) (3,101) (2,750) Current operating income 13, ,365 7,148 Other non-recurring income and expenses Operating income 13, ,993 7,305 Cost of net financial debt 3, Reallocation of cost of net financial debt (3,632) (799) (2,627) (2,741) Pre-tax profit (loss) of consolidated companies 13, ,366 5,140 Income tax (expenses)/income (4,435) (158) (1,708) (1,028) Share of income (loss) of equity affiliates and joint ventures (22) 11 Income (loss) attributable to shareholders 9, ,636 4,123 Attributable net income 8, ,629 2,354 Minority interest ,007 1,769 Rhône- Other Head Grand May 31, 2011 (in thousands) Alpes Regions office total Revenues 48,966 8, ,437 Gross margin 9,980 (1,657) - 87,196 Selling expenses (1,240) (122) (1,160) (12,815) General and administrative expenses (1,727) (791) (13,814) (30,319) Technical expenses and customer service (549) (539) (320) (7,831) Other expenses (753) (71) 2,517 (3,969) Other operating income Reallocation of portion of corporate reinvoicing (1,469) (396) 12,569 - Current operating income 4,301 (3,571) 4 32,651 Other non-recurring income and expenses 286 (432) (675) 269 Operating income 4,587 (4,003) (671) 32,920 Cost of net financial debt 504 (837) (11,397) (7,264) Reallocation of cost of net financial debt (1,313) (285) 11,397 - Pre-tax profit (loss) of consolidated companies 3,778 (5,125) (671) 25,656 Income tax (expenses)/income (1,108) 1,778 - (6,659) Share of income (loss) of equity affiliates and joint ventures Income (loss) attributable to shareholders 3,110 (3,347) (667) 19,646 Attributable net income 2,299 (3,346) (667) 13,654 Minority interest 811 (1) - 5,992 The reinvoicing portions of corporate expenses (including the cost of net financial debt) are reallocated on the basis of the relative proportion of each segment in the group total. This share is assessed on the basis of the activity (measured in delivered Equivalent Housing Units - EHUs) and the employees projected in the budget for the relevant year. In addition, the income tax is calculated on the basis of a theoretical tax for each of the segments based on their net income before taxes. The impacts related to the permanent differences included in the calculation of the income tax are reallocated using the key described above. 30 KAUFMAN & BROAD Interim financial report

33 FINANCIAL STATEMENTS Inventory breakdown by operating segment (in thousands) May 31, 2012 May 31, 2011 Île-de-France 54,668 35,075 West 17,702 12,003 Southwest 62,530 54,074 Southeast 94,840 60,977 Rhône-Alpes 8,102 12,480 Other 2,963 4,994 Head office - - Total 240, ,603 Information on other asset and liability segment items is not provided in this segment breakdown since these items are managed either at program level or group level. Furthermore, this information is not provided to the principal operating decision-makers Statement of consolidated comprehensive income Note 3 - Revenues and gross margin (in thousands) May 31, 2012 May 31, 2011 Revenues Gross Revenues Gross margin margin Total Apartments 434,163 82, ,041 77,584 Total Single-family homes in communities 10,375 1,859 34,977 4,477 Total Housing 444,538 84, ,018 82,061 Commercial property 7,871 2,223 12,097 3,615 Land & fees ,057 1,046 Showroom 2, , Grand total 456,018 87, ,437 87,196 The group does not provide services other than those under the delegate general contract agreement and there was no significant exchange of goods or services at May 31, Note 4 - Selling expenses (in thousands) May 31, 2012 May 31, 2011 Salaries and payroll taxes 3,663 3,538 Advertising expenses and cost of the model areas 9,090 8,403 Rents and rental expenses Fees 7 5 Temporary employees Recruitment costs Vehicle expenses - Travel Telephone - Electricity (EDF) - Minor maintenance Taxes Other expenses Total selling expenses 14,091 12,815 Selling expenses totaled 14.1 million, versus 12.8 million at May 31, This 10% increase is mainly due to advertising expenses related to increased communication about ongoing programs and those launched in the first half of Interim financial report. KAUFMAN & BROAD 31

34 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements Note 5 - General and administrative expenses (in thousands) May 31, 2012 May 31, 2011 Salaries and payroll taxes 17,952 17,060 Rents and rental expenses 3,060 2,836 Fees 2,326 2,390 Financial reporting costs Taxes 2,842 2,301 Recruitment costs Temporary employees Assurance Internet Vehicle expenses - Travel 1,222 1,214 Information Systems Telephone - Electricity (EDF) - Minor maintenance 1,249 1,334 Other expenses 1,093 1,618 Total general and administrative expenses 31,011 30,319 Administrative expenses amounted to 31.0 million versus 30.3 million at May 31, 2011, a rise of 2.28% primarily due to the increase in the items Salaries and payroll taxes (related to the expanding workforce) and Taxes. Note 6 - Technical and customer service expenses (in thousands) May 31, 2012 May 31, 2011 Salaries and payroll taxes 7,176 6,653 Fees Taxes Recruitment costs Temporary employees Vehicle expenses - Travel Telephone - Electricity (EDF) - Minor maintenance Other expenses 6 11 Technical expenses and customer service 8,045 7,831 Technical and customer service expenses amounted to 8.0 million versus 7.8 million at May 31, 2011, up 2.7%. This was primarily due to the increase in salaries and payroll taxes related to the expanding workforce. Note 7 - Other income and expenses (in thousands) May 31, 2012 May 31, 2011 Fees Expenses for discontinued programs 2, Amortization, depreciation and provision expenses (net of reversals) (122) 720 Bank fees Other expenses 991 1,672 Total other expenses 4,068 3,969 Sale of services (597) (389) Total other income (597) (389) Other expenses amounted to 4.1 million, versus 4.0 million at May 31, 2011, an increase mainly due to the item Expenses on discontinued programs following the discontinuation of programs that were subject to appeal or do not meet group profitability criteria. All of the depreciation allowance was recognized as other expenses. 32 KAUFMAN & BROAD Interim financial report

35 FINANCIAL STATEMENTS 3 (in thousands) May 31, 2012 May 31, 2011 Increases on intangible assets Increase on property, plant and equipment Total amortization expense 1,289 1,511 Note 8 - Other non-recurring income and expenses (in thousands) May 31, 2012 May 31, 2011 Other provisions Cost of the job protection plan NAV of sold assets - 33 Land depreciation provisions - - Total other non-current expenses - 1,095 Land depreciation provisions Impairment of goodwill - - Other fees and costs 7 5 Accelerated amortization of fixed assets 2 42 Risk on associated litigation 7 - NAV of sold assets - - Total other non-current expenses Note 9 - Cost of net financial debt (in thousands) May 31, 2012 May 31, 2011 Financial expenses 2,571 9,335 Financial income (1,167) (2,071) Cost of net financial debt 1,404 7,264 The cost of net financial debt stood at 1.4 million, a reduction of 5.9 million compared to May 31, 2011, and was mainly due to the 3.5 million increase in the capitalization of borrowing costs related to the gradual application of IAS 23 to new programs since December 1, 2010 and reduced financial expenses due to lower average financial debt. Moreover, the group no longer supports the Expense to defer the termination balance for swaps, which totaled 1.8 million in the first half of Note Financial expenses (in thousands) May 31, 2012 May 31, 2011 Interest expenses on syndicated loans 5,478 7,008 Expense to defer the termination balance - 1,813 Interest expense on swaps 1,673 1,404 Expenses for deferral of the origination fees for syndicated lines 817 1,186 Capitalization of financial expenses (6,493) (2,972) Other 1, Financial expenses 2,571 9,335 Financial expenses are mainly due to the use of syndicated credit facilities amounting to 287 million on average over the first half of 2012, versus 356 million in the first half of Through the application of the total effective interest rate, financial expenses include amortization of the 0.8 million syndicated loan origination fees. The annualized percentage rate covering the interest on this debt, and taking into account amortization of the 0.8 million incurred in issue fees, is 4.908% Interim financial report. KAUFMAN & BROAD 33

36 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements Note Financial income (in thousands) May 31, 2012 May 31, 2011 Capital gain on sale of money-market SICAVs and certificates of deposit Interest on Seniors Santé loan Other income from cash and cash equivalents 315 1,111 Financial income 1,167 2,071 Other income from cash and cash equivalents consist primarily of income from hedging instruments totaling 0.3 million. Note 10. Other financial income and expenses Other financial expenses (in thousands) May 31, 2012 May 31, 2011 Expenses to defer origination fees on syndicated loans Trading commission - - Total other financial expenses Other financial income (in thousands) May 31, 2012 May 31, 2011 Financial income related to prepayment of the Senior B loan (1,000) - Financial income tied to waiver of the use of a portion of the RCF line - - Total other financial income (1,000) - Following the prepayment of the Senior B loan that occurred in 2012 (see Note Significant events during the period ), additional amortization of origination fees on the Senior B loan was recorded in Other financial expenses for 0.15 million and financial income totaling 1.0 million was recorded on May 31, Note 11 - Tax burden Note Breakdown of the tax liability The share of net income of affiliates is shown on a pre-tax basis. The corresponding tax liabilities are included in the group s tax liability. Tax is calculated on attributable net income. (in thousands) May 31, 2012 May 31, 2011 Current tax expense (income) 97 (2,575) Surcharges - - Provision/expense for tax risk Tax liability (income) on bonus shares - 90 Deferred taxes 6,131 8,420 Total liability/(income) for the period 6,328 6,659 Tax losses recorded by the group as of May 31, 2012 totaled 7.3 million. 34 KAUFMAN & BROAD Interim financial report

37 FINANCIAL STATEMENTS 3 Note Tax proof Deferred tax is calculated on the basis of statutory tax rates, i.e., 34.43% for 2011 and the following years. The reconciliation between the group s theoretical tax and the effective tax liability is as follows: (in thousands) May 31, 2012 May 31, 2011 Pre-tax profit (loss) of consolidated companies 30,620 25,656 Applicable tax rate 34.43% 34.43% Theoretical tax liability/(income) 10,518 8,833 Tax on share of profit (loss) of equity affiliates Tax reversals on minority interests (1,736) (2,063) Correction following tax audit Impact of permanent differences (2,576) (1,058) Group tax liability/(income) 6,328 6,659 Permanent differences include tax savings related to the activity of the group s Belgian subsidiary totaling 0.8 million for Moreover, Kaufman & Broad SA as parent company of the consolidated group recorded a tax savings of 2.4 million related to the crediting of interest on thin capitalization, deduction of which was deferred for previous years. The share of the income (loss) of equity affiliates is presented before taxes in the income statement due to their fiscally transparent nature. The corresponding tax liabilities are included in the group s tax liability. In addition, the group s tax liability does not include the portion for minority interests as the subsidiaries in question are also fiscally transparent. The balance sheet tax items are described in Note Statement of financial position - Assets Note 12 - Non-current assets The group conducted a review at May 31, 2012 of impairment indicators relating to goodwill and non-current assets. No impairment indicators were identified at May 31, The conclusions expressed at November 30, 2011 therefore remain valid. Note 13 - Non-current financial assets (in thousands) May 31, 2012 Nov. 30, 2011 Equity affiliates and joint ventures 3,639 3,473 Security deposits and bonds 2,588 2,551 Non-current financial assets 6,227 6,024 Note 14 - Inventories (in thousands) May 31, 2012 Nov. 30, 2011 Gross Write-downs Net Gross Write-downs Net New projects 22,912 (1,033) 21,879 17,882 (559) 17,323 Current programs 221,389 (2,463) 218, ,878 (2,645) 218,233 Total 244,301 (3,496) 240, ,760 (3,204) 235,556 The change in write-downs can be broken down as follows: (in thousands) Nov. 30, Expenses Reversals May 31, New projects 559 1,137 (663) 1,033 Current programs 2, (259) 2,463 Total 3,204 1,214 (922) 3, Interim financial report. KAUFMAN & BROAD 35

38 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements Note 15 - Accounts receivable and other receivables (in thousands) Note May 31, 2012 Nov. 30, 2011 Gross Write-downs Net Gross Write-downs Net Accounts receivable (15.1) 246,432 (1,324) 245, ,423 (1,750) 305,673 Government - VAT (15.2) 87,615 (167) 87, , ,189 Government - Current tax (16) 36,879-36,879 36,971-36,971 Advances and down payments 2,041-2, Current equity affiliates accounts (15.3) 11,435-11,435 10,644-10,644 Other financial receivables (15.4) 4,828-4,828 11,535-11,535 Receivables from civil-law notaries 3,473-3,473 7,712-7,712 Other 10,058 (4,052) 6,006 8,856 (3,770) 5,086 Prepaid expenses 1,261-1, Total 404,022 (5,543) 398, ,764 (5,520) 496,244 All trade and other receivables, excluding the current tax receivable, mature in less than one year. Change in impairment (in thousands) Nov. 30, Expenses Reversals May 31, Accounts receivable 1, (529) 1,324 Other receivables 3, (12) 4,219 Total 5, (541) 5,543 During the period, there were no significant impairment provisions for trade and other receivables. Note Accounts receivable The difference between net accounts receivable ( million) and the amount of cash calls outstanding ( 78.9 million) net of provisions, i.e., million, corresponds to the lag time between the contractual calls for funds and the program percentage-of-completion revenues recognized. Receivables corresponding to that difference are posted exclusive of tax. The civil-law notary drafting the deed of sales is generally required to ensure that the financing of the sale is closed upon the execution of the deed. Therefore, provisions for trade receivables are rare. Receivables beyond 90 days essentially include late payment on cash calls on lots not yet delivered to buyers. Receivables in relation to which the group believes there is a risk of non-collection are provisioned in the amount of 1.3 million. According to our standard terms of payment, calls for funds are payable immediately upon receipt. As of May 31, 2012, the calls for funds by age were as follows: between 0 and 30 days between 30 and 60 days between 60 and 90 days more than 90 days Total cash calls 65.3 million 5.9 million 2.3 million 5.4 million 78.9 million Note Government - VAT At May 31, 2012, the VAT item included the VAT deductible on recorded supplier invoices, amounting to 13.8 million ( 41.7 million at November 30, 2011), the VAT recognized on unreceived invoices associated with the recognition of expenses on a program percentage-of-completion basis, amounting to 46.2 million ( 45.7 million at November 30, 2011), and VAT credits amounting to 27.6 million ( 29.8 million at November 30, 2011). Note Current equity affiliates accounts This item reflects the portion of the loss allocated to minority equity affiliates and not settled as of May 31, 2012 on fully consolidated operations. A provision was recorded in the amount of 10.0 million to cover the risk associated with defaulting equity affiliates (see Note 20.1). Note Other financial receivables Other financial receivables represent the portion due in less than one year on the loan granted to Seniors Santé. In the first half of 2012, 6.7 million of the portion due in less than one year as of November 30, 2011 ( 11.5 million) was repaid. The due date for the repayment scheduled for June 30, 2012 of 4.8 million was converted into three maturities: 1 million in early July 2012, 1.5 million in mid-july 2012, and the balance due on November 30, KAUFMAN & BROAD Interim financial report

39 FINANCIAL STATEMENTS 3 Note 16 - Current and deferred taxes The assets and liabilities of current and differed taxes are as follows: (in thousands) May 31, 2012 Nov. 30, 2011 Current tax 36,879 36,971 Deferred tax liabilities (41,164) (35,205) Deferred tax assets - - Balance at the end of the period (4,285) 1,766 The decline in the real estate market since 2008 had resulted in a significant decrease in the margin and the share of income related to percentage of completion, resulting in loss from the group s tax consolidation in 2009 and In accordance with the recommendations by the tax authorities, the tax treatment as an expense during the period of advertising costs and marketing fees resulted in the recognition of a tax loss carried forward of 93 million at November 30, The group s tax consolidation in the first half of 2012 resulted in a loss of 7.3 million, bringing the group s tax losses to 101 million. The current tax receivable at May 31, 2012 of 36.9 million includes the carry back receivable of 36.1 million recorded for 2009 and 2010, as well as receivables related to tax credits for sponsorships of 0.3 million and prepayments of 0.5 million spread over several non-consolidated subsidiaries at November 30, Deferred taxes changed as follows: (in thousands) May 31, 2012 Nov. 30, 2011 Balance at the beginning of the period of deferred tax assets/(liabilities) (35,205) (8,857) Recognized in net earnings - (expense)/income (a) (6,131) (25,645) Recognized in equity (104) (835) Other changes (b) Balance at the end of the period of deferred tax assets/(liabilities) (41,164) (35,205) (a) This expense at November 30, 2011 included the impairment of previously recognized assets in the amount of 4.2 million (see Note 11.2). (b) Other changes mainly correspond to a reclassification of current and deferred tax. Note 17 - Cash and cash equivalents The Kaufman & Broad group s cash and cash equivalents break down as follows: (net amount in thousands) May 31, 2012 Nov. 30, 2011 Banks and cash on hand (a) 30,681 57,820 Short-term investments (b) 209,076 78,190 Order balances (c) 2,247 2,868 Cash and cash equivalents 242, ,878 (a) In accordance with the provisions of the Construction and Housing Code, payment of any sum owed by program companies to their equity affiliates may only be made strictly within the limits of the amounts freely available to the program companies based on the percentage of completion of building operations. (b) Short-term investments comprised SICAV money-market funds and certificates of deposit. (c) Order balances were 2.2 million at May 31, They represented 5% of deposits paid by clients when the order contract is signed into a blocked bank account. They will be released and therefore available once the signature of the deed of sale has been notarized Interim financial report. KAUFMAN & BROAD 37

40 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements Statement of financial position - Shareholders equity and liabilities Note 18 - Shareholders equity As of May 31, 2012, Kaufman & Broad s capital stock amounted to 5,612,011.08, subdivided into 21,584,658 shares of common stock each with a par value of At May 31, 2012, the average weighted number of outstanding shares was 21,511,964. Note Treasury shares At May 31, 2012, the group held 417,171 treasury shares, including 13,485 shares under the liquidity contract. At November 30, 2011, the group held 278,109 shares none of which under a liquidity agreement. Over the first half of the year, the group acquired treasury shares worth a total of 2.9 million. Note Dividends Note Minority interest As of May 31, 2012, minority interest posted to the balance sheet in the amount of 8.5 million pertained to 133 companies. The total amount of debtor minority interest amounted to 2.4 million. At November 30, 2011, minority interest posted to the balance sheet in the amount of 8.5 million pertained to 140 companies. The total amount of minority interest amounted to 2.6 million. At May 31, 2012, the amount of 1.4 million was recognized for the buyback of minority interest. The difference between the price paid and the corresponding reduction in minority interest was recognized as group shareholders equity. Pursuant to agreements signed with its banking partners in early 2009, Kaufman & Broad agreed not to distribute dividends for the years 2009, 2010 and Note 19 - Share-based payments Under the bonus share plan of January 20, 2010, 55,000 bonus shares were definitively allotted on January 21, 2012 at the end of the vesting period and were delivered. Under the authority of the Shareholders Meeting of April 9, 2009, the Board of Directors, at its meeting of January 17, 2012, granted 20,000 additional bonus shares. The bonus share plans generated an expense of 274,000 over the year, recognized through equity and detailed below: (in thousands) Jan. 20, 2010 plan Feb. 17, 2011 plan Jan. 17, 2012 plan Total Initial valuation ,934 Expense for the fiscal year Note 20 - Provisions The provisions can be analyzed as follows: (in thousands) Note Nov. 30, Expenses Reversals Reversals May 31, 2011 used unused 2012 Provisions for retirement indemnities 2,088 - (90) - 1,998 Provisions for associated risks (20.1) 10, (523) 10,037 Provision for tax risk (20.2) 4, (768) 3,258 Provisions for restructuring (20.3) Provision for expenses Provisions for industrial relations risks (20.3) 2, (792) (24) 2,608 Provisions for other risks (20.4) 5, (592) (925) 4,445 Provisions 24,424 1,961 (1,474) (2,239) 22, KAUFMAN & BROAD Interim financial report

41 FINANCIAL STATEMENTS 3 Note Provisions for associated risks This provision of 10.0 million covers the risk associated with defaulting affiliates, with 6.4 million representing the risk relating to a partner as the result of a dispute. Note Provisions for tax risks Following an audit of the accounts for fiscal years 2005 to 2008, a proposed correction was sent to Kaufman & Broad SA on July 13, 2010 by France s National and International Tax Audit Directorate (DVNI) in respect of Kaufman & Broad s operations in Belgium. The amount of the correction was 7.6 million, including 2.4 million in interest and penalties. Kaufman & Broad SA responded with comments to the DVNI with regard to the proposed correction in September of 2010; the DVNI adhered to its position. The company filed an appeal with a higher authority, following which the DVNI informed it that it wished to continue with the correction procedure. The matter was referred to the Departmental Commission on Direct and Turnover Taxes in May The latter was supposed to meet prior to the end of fiscal year In light of how the procedure has evolved, Kaufman & Broad SA recognized a provision for risks in the amount of 3 million at November 30, Note Provisions for restructuring and employee risks A provision for restructuring charges had been recognized in the financial statements at November 30, 2008 primarily to meet the company s employee commitments. This provision was 0.3 million at May 31, 2012, reflecting the balance on outstanding expenses as well as expenses incurred during fiscal year 2009 for labor disputes related to the employment protection plan. The provision for disputes with former employees of the group is 1 million. A provision in the amount of 1.6 million covers URSSAF assessments reported to GIE Kaufman & Broad and dealing mainly with unpaid contributions for travel allowances, in the amount of the risk estimated by the company, insofar as a portion of the documentation to be provided must allow the amount of the assessment to be reduced. Note Provisions for other risks The provision for commercial and legal risks essentially covers ongoing disputes with customers or suppliers of delivered projects, amounting to 4.4 million. Note 21 - Borrowings and other financial liabilities Note Gross financial debt by type Gross financial debt represents: long-term and short-term financial liabilities; hedging instruments related to liabilities comprising the gross financial debt; interest accrued on balance sheet items that constitute gross financial debt. (in thousands) May 31, 2012 Nov. 30, 2011 Syndicated bank credit line 277, ,642 Other borrowings Utilized credit facilities Issuance expenses (5,094) (6,061) Fair value of derivatives 2,190 2,484 Gross financial debt 275, ,621 - of which non-current 274, ,284 - of which current 1,467 19,337 At May 31, 2012, the group had drawn down million of the syndicated bank credit line, as against million at November 30, The Senior Facilities Agreement, as it results from the agreement signed by the Company and its lenders on January 23, 2009 and from the supplemental agreements signed on June 30, 2009 and November 25, 2009, stipulates that: 1.1. Keeping the B (200 million) and C (201.5 million) credit lines and the revolving credit line (175 million) as is : with unchanged amounts, interest rates and maturity. The supplemental agreement signed on November 25, 2009 provides for mandatory partial accelerated repayment of the facilities granted to the company during the 2010 fiscal year; 1.2. Supplemental Agreement No. 6, signed on July 25, 2011, provides that the company may start repaying a portion of its fixed term debt under the Senior Facilities Agreement in amounts less than the face amount of said debt, this discount taking the form of waivers of receivables granted by the relevant lenders, in accordance with specific terms and conditions, in particular that the principal amount could not exceed 70 million and the repayments needed to take place on one or more occasions by February 29, 2012 at the latest. In this context, partial repayments were made during 2011 in the amount of 50.8 million and in the first quarter of 2012 in the amount of 10 million, for a total amount of 60.8 million Interim financial report. KAUFMAN & BROAD 39

42 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements 1.3. Supplemental Agreement No. 7, signed on July 25, 2011, allows the company to cancel wholly or partially commitments under the renewable line of credit of certain lenders wishing to withdraw from said credit line before its final expiration, in return for payment by these lenders of a cancellation commission according to specific terms and conditions, primarily that the principal amount is not to exceed 75 million and that cancellations may be made on one or more occasions without limit and no later than February 29, As such, there was a partial cancellation of 72.1 million during the 2011 fiscal year Moreover, as part of the implementation of these agreements, Kaufman & Broad SA made an additional repayment of 17.9 million in late January Adjustment of financial ratios: In the following accounting quarters until the expiration of the agreement in 2016, the group will be required to comply with three ratios, calculated on a consolidated basis, with levels defined as follows: Ratios May 2012 Aug Nov.2012 May 2013 Nov.2013 Nov.2014 Nov.2015 May 2016 Debt ratio < 5.80 < 5.60 < 5.10 < 4.50 < 3.70 < 3.00 < 2.00 < 1.50 Net financial expenses cover ratio > 1.50 > 1.70 > 1.80 > 2.10 > 2.50 > 3.50 > 4.50 > 5.00 Minimum cash flow level (in millions) Suspension of dividend distribution for at least three fiscal years: the company will not be able to distribute dividends during the 2011 fiscal year, and from fiscal year 2012 will only be able to distribute dividends if the debt ratio is equal to or less than Restriction related to acquisitions and in particular to the acquisition of stakes which could be made by the group, with the requirement to obtain the unanimous agreement of all lenders for any financing of such acquisitions through debt. Supplemental Agreement No. 5, signed on March 10, 2010, modified the financial definitions of EBITDA, cash flow and net cash interest stipulated by the Senior Facilities Agreement in order to neutralize the effects of IAS 23 (Borrowing Costs) on these ratios and to ensure for the financial parties the same protection they received under the contract before the application of this standard. Details of covenant at May 31, 2012 Ratios at May 31, 2012 Threshold May 2012 Debt ratio < Net financial expenses cover ratio > Minimum cash flow level (in millions) Details of covenant at November 30, 2011 Ratios at Nov. 30, 2011 Threshold Nov Debt ratio < Net financial expenses cover ratio > Minimum cash flow level (in millions) Note Maturity table (in thousands) May 31, 2012 Maturity Maturity Maturity < 1 year > 1 year and > 5 years < 5 years Syndicated line (a) 277, ,667 - Credit facilities utilized Other borrowings Issuance expenses (5,094) (1,516) (3,578) - Fair value of derivatives 2,190 2, Gross financial debt 275,556 1, ,089 - (a) The syndicated bank credit lines set up in 2007 mature on July 10, 2014 for the RCF line ( million), July 10, 2015 for the Senior B line ( 141 million), and July 10, 2016 for the Senior C line ( million). 40 KAUFMAN & BROAD Interim financial report

43 FINANCIAL STATEMENTS 3 Note Change in gross financial debt (in thousands) Gross financial debt at November 30, ,621 Repayment of Senior B and C borrowings (27,975) Change in other borrowings (13) Change in the fair value of derivative instruments (294) Deferral of issue costs 967 Change in credit facilities 250 Gross financial debt at May 31, ,556 Following the double bidding process launched by Kaufman & Broad SA on July 26, 2011 that resulted in the early repayment in 2011 of a portion of its long-term debt under its Senior Facilities Agreement totaling 50.8 million and the cancellation of part of the credit commitments that the company has under its revolving credit line under that same agreement, Kaufman & Broad SA repaid early an additional amount of 10 million of its long-term debt on February 29, Moreover, under these agreements, Kaufman & Broad SA made a prepayment of 17.9 million in late January Note Main elements constituting net financial debt Net financial debt is comprised of the gross financial debt, as defined above, less the net cash position. The balance sheet items contributing to net financial debt are as follows: (in thousands) May 31, 2012 Nov. 30, 2011 Gross financial debt 275, ,621 Cash and cash equivalents 242, ,878 Net financial debt 33, , Additional information Note 22 - Notes to the statement of cash flow Details of the Change in Operating Working Capital Requirements (in thousands) Nov. 30, Change Change Other May 31, 2011 in WCR in scope Changes (a) 2012 Inventories 235,556 3,576-1, ,805 Accounts receivable 305,673 (60,565) ,108 Accounts payable (409,668) (30,151) - 11 (439,808) Other operating assets and liabilities 36,723 (18,601) ,122 Operating working capital requirement (Statement of cash flow) 168,284 (105,741) - 1,684 64,227 Current taxes 36,971 (92) ,879 Working capital requirement 205,255 (105,833) - 1, ,106 (a) Other changes correspond primarily to the impact of storage or retrieval of financial expenses. The change in operating working capital requirement (excluding current taxes) over the period amounted to million compared to November 30, This improvement is mainly due to lower percentage-of-completion receivables in view of the good rate of technical progress. Note 23 - Off-balance sheet commitments As of May 31, 2012, Management considered that, to the best of its knowledge, there was no commitment likely to have a material impact on the Kaufman & Broad group s current or future financial position, except as indicated in this note. Covenant details are provided in Note 21 of these notes Interim financial report. KAUFMAN & BROAD 41

44 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements Note Commitments given Guarantees and bonds given All items detailed below are related to the normal course of our operations. (in thousands) May 31, 2012 Nov. 30, 2011 Performance bonds (a) 120, ,873 Hoguet Act guarantees (b) Reservation indemnities (c) 8,908 9,144 Other guarantees given (d) 58,870 51,935 Guarantees and bonds given 188, ,172 (a) Financial performance bonds are given to customers in sales before completion (VEFA sales). Kaufman & Broad asks a financial institution, mutual guarantee institution or insurance company to issue a guarantee of completion in favor of the Kaufman & Broad customers. Such guarantees are issued separately for each transaction. In consideration for such guarantees, Kaufman & Broad typically gives such financial institutions or insurance companies a mortgage commitment and a non-assignment of shares undertaking if the program is funded by a special-purpose entity. Performance bonds are shown on the balance sheet in the amount of the risk incurred by the financial institution issuing such guarantees. Such risk is valued, for each transaction, as follows: program s forecast production cost less the part financed by the group and the amount of sales signed as of the closing date. This valuation thus does not take into account orders made as of the closing date or the percentage of completion of construction on lots not sold. Performance bonds are valued internally each month and are then updated on the basis of the figures communicated by the financial institution on the basis of its own reports to Banque de France or to the Insurance Control Commission. (b) The Hoguet Act guarantees are required from companies intending to operate as a real estate agent. This purely ad-hoc operation does not form part of the group s strategy. (c) Order indemnities are bank guarantees given in lieu and in place of security deposits in connection with land acquisition commitments. (d) These other guarantees principally cover acquisitions of land and matters related to roads and infrastructure. Pledges and liens Kaufman & Broad SA granted liens to guarantee its financing commitments established in July The table below features annual data at November 30, Type of pledge/lien Start Final Amount Total balance % balance sheet total date maturity of assets (b) sheet item Kaufman & Broad SA date Nov. 30, 2011 Pledge of financial instrument account - 100% of Kaufman & Broad Homes SAS shares held by the company 07/11/2007 (a) 10,450,195 10,450,195 2% Pledge of the credit balance in the Kaufman & Broad SA bank accounts 07/11/2007 (a) 256, ,785 0% Framework agreement for the assignment of intra-group receivables from Kaufman & Broad SA s subsidiaries, in particular Kaufman & Broad Financement SNC 07/11/2007 (a) 0 0 0% Pledge of 100% of the Kaufman & Broad Europe S.A. shares 11/09/2007 (a) 262,436, ,436,879 49% Total 273,143, ,143,859 51% (a) These pledges are intended to be maintained until full payment of the amounts and fees owed by the Company as borrower and guarantor under the Senior Facilities Agreement and ancillary agreements. (b) Net book value in the statutory financial statements as of November 30, At May 31, 2012, other commitments had not changed substantially compared with November 30, Note Commitments received Unutilized syndicated lines of credit (in thousands) May 31, 2012 Nov. 30, 2011 Unutilized RCF line (a) 102, ,900 (a) Maturing in July KAUFMAN & BROAD Interim financial report

45 FINANCIAL STATEMENTS 3 Pledges and liens As a guarantee of the 15.8 million loan granted to Seniors Santé, the Kaufman & Broad group benefits from (i) payment delegations for payments to be made, subject to certain conditions, by Korian as part of that company s acquisition of shareholdings in some of the Seniors Santé subsidiaries, and (ii) pledges pertaining to a number of financial securities accounts in which shares of some Seniors Santé subsidiaries are registered. Under a memorandum of understanding, Kaufman & Broad SA stood surety for one of its partners, limited to 4 million excluding VAT and provision of a first-demand bank guarantee, in respect of commitments made by two of its subsidiaries in the aforementioned memorandum of understanding. In exchange, this partner s main shareholder stood surety for the commitments of its subsidiary towards joint ventures for the same amount plus its own provision of a first-demand bank guarantee. Note Contingent assets and liabilities The dispute that originated in 1996 concerning the Roissy Park development and in which a subsidiary of Kaufman & Broad SA had been added as a party in the faulty workmanship and various defects claim did not change significantly over the period. No provision was recognized for this proceeding, the updated amount of which totals 6.5 million, excluding any late penalties, as the remedies of Kaufman & Broad appear to be preserved. Note 24 - Exposure to market risks and financial instruments Note Interest-rate risk management The policy for managing interest rate risk is intended to limit and control fluctuations in interest rates and their impact on net earnings and cash flow, so that the total cost of the debt remains acceptable. To achieve this objective, the group hedges its variable-rate loan interest flows with interest-rate swaps. The latter are derivatives serving to hedge cash flows. They are marked to market on the balance sheet. Under the Senior Facilities Agreement, the group also agreed to keep hedges in place in the amount of 50% of borrowings. Interest-rate hedges are made by way of instruments listed on organized markets or over-the-counter with high-quality counterparties. Type Direction Notional Fixed rate Expiration date Type Market value in millions at May 31, 2012 of euros in % of the fair value EUR 1M fixed rate swap % Nov. 30, Nov. 30, 2012 Hedge (0.86%) EUR 1M fixed rate swap % Nov. 30, Nov. 30, 2012 Hedge (0.86%) EUR 1M fixed rate swap % Nov. 30, Nov. 30, 2012 Hedge (0.91%) The fair value of these derivatives was provided by a specialized third-party company. The change in the hedging reserve net of tax at May 31, 2012 was - 1,436 thousand. Note Counterparty risk management The counterparty risks incurred by the Kaufman and Broad group primarily concern suppliers and subcontractors, receivables from customers and bank counterparties. Because of the large number of suppliers and subcontractors, their insolvency is unlikely to have any material impact on operations. The Kaufman and Broad group considers that the counterparty risk on accounts receivable is very limited because of the large number of customers and the fact that sales are signed exclusively in the presence of notary, generally after financing for the property acquisition has been obtained. Customer-related credit risks are managed by the agencies under the oversight of corporate headquarters. Due to the nature of its business, the group s exposure to customer default risks is low. Aging receivables are reviewed monthly. The Kaufman & Broad group invests its cash and cash equivalents and its investment securities with top-tier financial institutions. It enters into interest rate agreements with leading financial institutions Interim financial report. KAUFMAN & BROAD 43

46 3 FINANCIAL STATEMENTS Notes to the interim condensed consolidated financial statements Note Liquidity risk management The table below shows the group s contractual obligations for payment of interest, repayment of financial debts, derivatives excluded, and the derivatives with their positive or negative fair values. The variable rate interest payments were calculated on the basis of the latest interest rates known prior to May 31, (in thousands) Book value Less than 1 year 1 to 5 years More than 5 years May 31, 2012 Interest Repayments Interest Repayments Interest Repayments Syndicated lines of credit 277,667 12,919-39, , Credit facilities and other borrowings Total 278,460 12, , , Note 25 - Counterparty risk management The objectives of the group in terms of capital management are to maintain the ability of the group to continue as a going concern and be profitable for its shareholders and also to maintain an optimal capital structure in order to limit the cost of capital. For the calculation of its debt ratio the group divides its net financial debt by total shareholders equity. Net financial debt as of May 31, 2012 totaled 33.6 million. As of May 31, 2012, the debt ratio was 19% compared with 104% at November 30, Note 26 - Related parties Relationships with related parties, including the terms and conditions of executive compensation, were unchanged from 2011 and no transaction that was unusual in nature or amount took place during the period. Note 27 - Events after the balance-sheet date There have been no significant events since May 31, KAUFMAN & BROAD Interim financial report

47 4 Report by the Statutory Auditors concerning the interim financial information Period from December 1, 2011 to May 31, 2012 To the Shareholders, In compliance with the audit engagement entrusted to us by your Shareholders Meeting and in accordance with Article L III of the French Monetary and Financial Code, we have: conducted a limited review of the interim condensed consolidated financial statements of Kaufman & Broad SA for the period December 1, 2011 to May 31, 2012, as attached hereto; verified the information provided in the interim management report. These interim condensed consolidated financial statements are the responsibility of your Board of Directors. Our responsibility is to express an opinion on these financial statements, based on our review. 1. Opinion on the financial statements We conducted our limited review in accordance with auditing standards applicable in France. A limited review essentially consists of meeting with management members in charge of accounting and financial information and implementing analytical procedures. This work is less extensive than that required for an audit conducted in accordance with auditing standards applicable in France. Consequently, the assurance that the financial statements, overall, are free of material misstatement obtained as a result of this limited review is moderate and less than would be the case with an audit. Based on our limited review, we found no material misstatements likely to question the compliance of the interim condensed consolidated financial statements with IAS 34, the IFRS benchmark standard adopted by the European Union with respect to interim financial reporting. 2. Specific verification We have also verified the information provided in the interim management report which commented on the interim condensed consolidated financial statements to which our limited review pertained. We have no matters to report concerning the fair presentation of this information and its consistency with the interim condensed consolidated financial statements. Neuilly-sur-Seine and Paris-La Défense, July 18, 2012 The Statutory Auditors DELOITTE & ASSOCIÉS Joël Assayah ERNST & YOUNG Audit Gilles Cohen 2012 Interim financial report. KAUFMAN & BROAD 45

48 Crédits photos : Kaufman & Broad 2012 KAUFMAN & BROAD S.A. 127 avenue Charles de Gaulle Neuilly-sur-Seine cedex Ket B.com