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Kaufman & Broad Report and Accounts 2009

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REFERENCE DOCUMENT

2009

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MESSAGE FROM THE CHAIRMAN

5 INFORMATION CONCERNING

THE GROUP’S BUSINESS

6

1.1. The Kaufman & Broad Group 7

1.2. Risk Factors 29

1.3. Litigation 42

1.4. Investment Policy 42

1.5. Main Subsidiaries and Affiliates 43

1.6. Sustainable Development 43

BUSINESS AND FINANCIAL REVIEW

OF THE GROUP

52

2.1. Key Performance Indicators of the Kaufman & Broad Group 53

2.2. Main Income Statement Items 61

2.3. Management’s Discussion and Analysis 65

2.4. Liquidity and Sources of Funds 67

CORPORATE GOVERNANCE

69

3.1. Members of the Company’s Administrative and Management Bodies 70

3.2. Directors’ Interests 86

3.3. Incentive Programs 91

HOLDINGS, FINANCIAL REPORT AND RESULTS

FOR THE PERIOD ENDED NOVEMBER 30, 2009

98

4.1. Consolidated Financial Statements 99

4.2. Individual Financial Statements 147

4.3. Report of the Chairman of the Board of Directors 165

4.4. Reports of the Statutory Auditors 182

4.5. Information on Related Parties 188

GENERAL INFORMATION CONCERNING THE

COMPANY AND ITS CAPITAL

190

5.1. General Information Concerning the Company 192

5.2. General Information Concerning the Capital 194

5.3. Ownership and Voting Rights 200

5.4. The Market for the Company’s Shares 205

5.5. The Market for Other Financial Instruments Issued by the Company 207

5.6. Dividends 207

RECENT TRENDS AND OUTLOOK

208

6.1. Outlook 209

PERSON RESPONSIBLE FOR THE REGISTRATION

DOCUMENT AND PERSONS RESPONSIBLE FOR

THE AUDIT OF THE FINANCIAL STATEMENTS

210

7.1. Person Responsible for the Registration Document 211

7.2. Declaration by the Person Responsible for the Registration Document 211 7.3. Persons Responsible for the Audit of the Financial Statements 211 7.4. Person Responsible for Financial Communications and Investor Relations 212

7.5. Information Incorporated by Reference 212

APPENDICES

213

Appendix 1 213 Appendix 2 216 Appendix 3 217 Appendix 4 218 Appendix 5 226 Appendix 6 227 Appendix 7 227

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INFORMATION CONCERNING THE GROUP’S BUSINESS

The Kaufman & Broad Group

Dear Shareholders,

2009 was a year of transition. The housing market, supported by government measures designed for first-time buyers and investors, showed positive signs while the commercial real estate market continued to deteriorate.

2010 should be a better year, despite an economic and social context that continues to be difficult. Kaufman & Broad approaches 2010 with a great deal of determination and a desire to resume growth in the major cities of France and to consolidate its financial position.

GUY NAFILYAN, Chairman and Chief Executive Officer

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1.1. The Kaufman & Broad Group

7

1.1.1. History 8

1.1.2. Main Characteristics of the Business 9

1.1.3. Main Ofﬁces 28

1.2. Risk Factors

29

1.2.1. Risks Related to the Current Economic Crisis 29

1.2.2. Market Risks 30

1.2.3. Legal Risks 35

1.2.4. Industrial, Economic and Environmental Risks 40

1.2.5. Insurance 41

1.2.6. Other Risks 42

1.3. Litigation

42 1.4. Investment Policy

42

1.4.1. Research and Development 42

1.4.2. Principal Investments Made 43

1.4.3. Principal Future Investments 43

1.5. Main Subsidiaries and Affiliates

43 1.6. Sustainable Development

43

1.6.1. Environmental Information 43 1.6.2. Employees 47

INFORMATION

CONCERNING THE

GROUP’S BUSINESS

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For more than forty years, Kaufman & Broad and its subsidiaries (together, the “Group” or “Kaufman & Broad”) have been developing and building communities of single-family homes in communities (grouped home) and apartment units, corporate, tourist and student accommodations, as well as commercial property in France.

Since its founding in 1968, Kaufman & Broad has built nearly 75,500 housing units and 480,000 square meters of commercial space in France.

Kaufman & Broad is one of the leading home builders (single-family homes in communities and apartment units) in France. Historically, its principal market is the Île-de-France region. Today, over 60% of its housing orders are in the other Regions. From its founding and until July 10, 2007, Kaufman & Broad was a subsidiary of KB Home, one of the leading builders-developers of single-family homes in the US. KB Home was one of the leading players in the US housing market to understand the importance of a strong brand name and the effect of size, and to turn these factors into essential elements of its strategy. This strategy has helped establish Kaufman & Broad as one of the leaders in this industry.

Kaufman & Broad is involved in all stages of the real estate development process, from land acquisition to home sales; it participates in project design, files building permits, and provides customer service. Construction is carried out by a general contractor or separate specialized contractors. Kaufman & Broad is a developer-builder whose policy is:

•not to purchase land for speculative investment, but to buy only the land necessary for the development of its business;

•not to anticipate, in its land acquisitions, any significant increases in real estate prices, but instead to concentrate on the design and quality of its products;

•to review the financing plans of its customers to ensure their ability to finance their purchases;

1.1. The Kaufman & Broad Group

The Group designs its products for homebuyers and for private and public investors (public housing operators, land corporations, etc.). The Group markets its single-family homes under the Kaufman & Broad name and its apartments under the Kaufman & Broad brand (or, as applicable, under the brand Résidences Bernard Teillaud in Grenoble and Malardeau in Toulouse).

Kaufman & Broad offers its customers the possibility of moving into a home that is ready for immediate occupancy, which they have personalized by using the wide range of options offered. Since 1998, Kaufman & Broad has operated showrooms (or “Design Spaces”) where customers can see, select and purchase the options offered for the Group’s designs. Finally, over the last few years, the Group has expanded construction of tourist, corporate, and student accommodations.

Since July 10, 2007, the majority holder of Kaufman & Broad SA has been Financière Gaillon 8, a company that is ultimately controlled by funds managed by PAI partners (PAI). On that date, PAI effectively acquired the stake owned by KB Home and additional stock from Guy Nafilyan (Chairman and Chief Executive Officer of Kaufman & Broad SA), which gave it controlling interest of 50.28% in the capital. At the end of the simplified public tender offer filed by Financière Gaillon 8 pursuant to Articles 234-2 and 233-1, 2° of the AMF General Regulations, PAI held 6,499,921 additional shares of Group stock. KB Home no longer holds any of the capital and, as of August 31, 2007, Financière Gaillon 8 held 17,701,681 shares representing the same number of Kaufman & Broad voting rights, i.e., 79.46% of the capital.

The change in PAI’s interest since 2007 is presented in detail in Section 5.3.1. “Shareholders of the Company as of November 30, 2009 and Three-year Change.”

PAI is one the leading European Private Equity players. It manages and advises dedicated LBO funds with an aggregate

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1.1.1. HISTORY

1.1.1.1.Milestones

Kaufman & Broad SA was founded in 1968 and has been listed for trading on NYSE Euronext since February 2000.

Creation of KB Home in Detroit

Creation de Kaufman & Broad SA in France

Delivery of the first home in the Paris region

Acquisition of SMCI

Kaufman & Broad listed for trading on Paris Stock Exchange. Acquisition of Frank Arthur, Sefima, First Promotion and Sopra Promotion

Acquisition of Foncier Investissement and the Avantis group

Acquisition of Lotibat

Acquisition of Bati Service, creation of the Appartment and Office division

Acquisition of Park Acquisition of Résidences Bernard Teillaud Acquisition of Euro Immobilier Acquisition of a stake in the (Seniors Santé) group. Acquisition of a majority stake in Kaufman & Broad by PAI Partners

KB Home listed for trading on the New York Stock Exchange

1957 1961 1985 1999 2001 2003 2007 2005 2004 2000 1997 1970 1968 1.1.1.2.Background

In 1968, the Company began by developing communities of single-family homes in France and delivered its first home in 1970 in the Paris region. The Group began operations in Lyon and Marseille in 1972, then in Frankfurt and Brussels in 1973, before withdrawing from these markets and refocusing its activities in the Île-de-France region as of 1983.

1.1.1.3.Acquisition Strategy

In the second half of the 1980s, Kaufman & Broad initiated a policy of organic growth and acquisitions, with the acquisition of Bati Service in 1985, a company that builds communities of single-family homes designed primarily for first-time buyers. In 1995, the Group then acquired the business and certain assets of Bréguet, its primary competitor, a company specializing in the construction of communities of single-family homes, for a total of €11 million.

In August 1997, Kaufman & Broad acquired from CDR the

companies) and related liabilities of Société de Missions et de Coordinations Immobilières (SMCI) and CFP-SMCI, which specializes in the construction of apartments in major French cities (Paris, Marseille, Lyon, Strasbourg, Rouen and Besançon). This acquisition was made for a total net amount of €2 million including the take-over of assets and assumption of liabilities.

In the second half of 1999, Kaufman & Broad acquired Park and its subsidiaries (SNC Park Promotion, SNC Park Rénovation and the SCIs holding their apartment programs), a specialist in the construction of apartment units in the Île-de-France region, for a total price of approximately €15.5 million. Four acquisitions were made in 2000, two of which (Frank Arthur Promotion in January and Sefima in July) specialize in the construction of apartment units in Paris and the inner suburbs, which were purchased to strengthen the Group’s market share in the Île-de-France region. The two other companies purchased by Kaufman & Broad in 2000 (First

Promotion in July and Sopra Promotion in November) illustrate

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the company’s external growth policy, which is to enter new high-potential regional markets by acquiring existing and experienced local companies. These four acquisitions represented a total investment of €45 million.

In August 2001, Kaufman & Broad acquired Progesti SA (the Résidences Bernard Teillaud group), a leading developer and builder in the Grenoble region. The total price of this investment was €32.0 million, including a variable portion calculated on the basis of the company’s actual results from 2002 to 2005, which totaled €16.3 million.

In October 2003, Kaufman & Broad acquired Euro Immobilier, a Toulouse-based developer with programs in the Midi-Pyrénées and Gironde regions. The shares in the company were purchased for €3.2 million. This acquisition price included a €3.6 million variable supplement based on Euro Immobilier’s actual earnings between 2003 and 2006.

During the fiscal year ended November 30, 2004, Kaufman & Broad completed two acquisitions of major developers, located primarily in southwestern France, more specifically in the Midi-Pyrénées and Aquitaine regions. The Avantis group, the first of these acquisitions, was acquired during the first half of 2004. The shares of this company were acquired for €9.7 million in May 2004, while control was taken as of March 1, 2004. Then, in June 2004, Société de Développement et de Participation (Foncier Investissement – Malardeau) was acquired by the Kaufman & Broad Group for €15.6 million. In June 2005, Kaufman & Broad purchased 15 housing programs in the Toulouse region, previously developed under the Lotibat brand, with control assumed as of June 1, 2005, for €4.7 million.

Finally, in June 2007, Kaufman & Broad acquired 33.34% of Beaulieu Patrimoine SAS (renamed Seniors Santé), a nursing home operator for seniors requiring long-term care. At the time of that acquisition, Kaufman & Broad agreed to subscribe to a bond issue convertible to shares for €15 million within 9 months. This bond was issued on March 4, 2008 and Kaufman & Broad subscribed to the issue of 3,273,454 convertible bonds for a total amount of €15 million at the nominal rate of 4% maturing on June 30, 2010. These bonds will be paid gradually depending on the draw requests from Seniors Santé. On November 30, 2008, Kaufman & Broad paid €13.350 million on this €15 million bond. The details of this acquisition are presented in Section 1.4.2, “Principal Investments made.” In addition, as part of its efforts to refocus its operations, Kaufman & Broad is planning to sell its minority interest in Seniors Santé within 12 months.

1.1.2. MAIN

CHARACTERISTICS OF

THE BUSINESS

1.1.2.1.Markets

1.1.2.1.1.Macroeconomic and Sectoral Indicators The market for new housing is influenced by a number of factors, including economic growth (GDP), unemployment rates, fluctuations in interest rates and real estate prices, as well as the inventory of housing and the commercial offer. The following graphs illustrate the respective changes in the various macroeconomic indicators since 1991.

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MONTHLY CHANGE IN THE INSEE FRENCH CONSUMER CONFIDENCE INDEX SINCE 2000

(AS A PERCENTAGE)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 -60 -50 -40 -30 -20 -10 0 10 20 30 Source: INSEE

FRENCH INTEREST RATES SINCE 2000 (AS A PERCENTAGE)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 1 2 3 4 5 6 7 8 9

Source: Banque de France TME (Average 10-year government bond rate).

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The following graphs show the respective changes in unemployment rates and available apartment inventory in France since 2000.

UNEMPLOYMENT IN FRANCE SINCE 2000 (AS A PERCENTAGE)

7 7.5 8 8.5 9 9.5 10 10.5 11 11.5 Source: INSEE * Provisional Q2 2000 Q4 2000 Q2 2001 Q4 2001 Q2 2002 Q4 2002 Q2 2003 Q4 2003 Q2 2004 Q4 2004 Q2 2005 Q4 2005 Q2 2006 Q4 2006 Q2 2007 Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009* 120,000

AVAILABLE APARTMENT INVENTORY IN FRANCE (NUMBER OF UNITS)

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In the fourth quarter of 2009, the inventory of apartment units in France declined after five consecutive quarters of significant increases.

In fact, apartment sales were 76.5% higher than sales in the fourth quarter of 2008. The increase in sales varied from 61.9% to 83.8% depending on the size of the apartment unit. In 2009, 93,100 units in apartment buildings were sold, up from 68,500 in 2008 (+ 35.8%).

1.1.2.1.2.Tax Incentives

The market for new housing has benefited from various tax incentives for more than twenty years: the Quilès-Méhaignerie law from 1984 to 1997, the Périssol law from 1996 to August 1999, the Besson law from January 1, 1999 and the Lienemann law as from January 1, 2002. Since April 3, 2003, the Robien law has replaced the Besson Act and is more favorable to investors. It relaxed and cut back certain requirements of the Besson Act that preceded it.

In January 2006, in its review of the bill on “a national commitment to housing”, the French National Assembly passed the so-called “Borloo Populaire” law. It is so named because, unlike the “Robien” law, it imposes certain income-related requirements.

In 2007, the tax incentives were expanded and households using credit to finance their home were allowed to deduct 40% of the interest paid (excluding closing and insurance costs) from their income tax in the first year and 20% over the four years following the acquisition of their primary residence (Sarkozy law).

In December 2008, a new law, known as the “Scellier” Act, was passed, which gives taxpayers who acquire a new home or a home sold before completion (VEFA) between January 1, 2009 and December 31, 2012, subject to various conditions, a reduction on their income tax of 25% to 37% of the cost of the purchase, spreading over a period of 9 to 15 years. We believe that this new tax incentive plan could have a favorable impact on the new housing market, but it is not possible to quantify its effects precisely (see the details under “Tax incentives that may influence the new housing market” in Section 1.2.3.6. The chart below summarizes the sequence of the various tax incentives affecting the housing market for more than twenty years:

Quilès-Méhaignerie Besson de Robien

Périssol Sarkozy 2008 2009 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1984 2010

Lienemann Borloo populaire

Scellier

Nouveau de Robien

1.1.2.1.3.Market Volume

The following table shows the net number of orders for single-family homes in communities and new apartment units in France since 2000.

CHANGE IN NET ORDERS FOR SINGLE-FAMILY HOMES IN COMMUNITIES AND NEW

APARTMENT UNITS SINCE 2000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Single-family homes in communities 12,573 13,786 14,326 15,701 16,566 18,526 16,518 16,800 10,900 13,200 Apartments 62,610 66,368 71,105 87,555 95,657 102,966 109,744 110,400 68,500 93,100 TOTAL 75,183 80,154 85,431 103,256 112,223 121,492 126,262 127,200 79,400 106,300

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CHANGE IN NET ORDERS FOR SINGLE-FAMILY HOMES IN COMMUNITIES AND NEW

APARTMENT UNITS (BASE 100 IN 2000)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 20 40 60 80 100 120 140 160 180 Homes Apartments 1.1.2.1.4.Single-family Homes

The French market for single-family homes in communities represented 10,900 orders in 2008 and 13,200 orders for 2009.

CHANGE IN ORDERS, INVENTORY AND AVERAGE PRICE OF SINGLE-FAMILY HOMES IN

COMMUNITIES SINCE 2000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Orders 12,573 13,786 14,326 15,701 16,566 18,526 16,518 16,800 10,900 13,200

Accumulated inventory 8,020 8,980 8,599 6,381 7,843 8,085 11,097 14,300 15,600 10,600

Average price 154,280 159,600 171,800 187,900 200,100 218,200 242,000 244,800 225,500 244,100 Source: French Ministry of Housing, Study of New Housing Sales (ECLN).

CHANGE IN THE MARKET FOR SINGLE-FAMILY HOMES IN COMMUNITIES (BASE 100 IN 2000)

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The Île-de-France, Provence-Alpes-Côte d’Azur and Midi-Pyrénées regions are the largest markets for communities of single-family homes in France.

Orders 2003 2004 2005 2006 2007 2008 2009

Île-de-France 3,302 2,675 3,035 2,784 2,251 1,702 2,057

Provence-Alpes-Côte d’Azur region 1,154 1,092 1,410 1,538 1,768 998 1,652

Midi-Pyrénées 1,216 1,025 1,030 849 1,259 625 594

Source: French Ministry of Housing, Study of New Housing Sales (ECLN).

1.1.2.1.5.Apartments

The new apartment market in France represented 68,500 orders in 2008 and 93,100 orders for 2009.

CHANGE IN ORDERS, INVENTORY AND AVERAGE PRICE/SQ.M FOR APARTMENTS

SINCE 2000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Orders 62,610 66,368 71,105 87,555 95,657 102,966 109,744 110,400 68,500 993,100 Accumulated inventory 44,297 43,043 39,510 31,071 32,076 44,801 67,851 88,342 95,100 558,400 Average price in euros/m2 _2,025 _2,114 _2,245 _2,357 _2,560 _2,850 _3,073 _3,279 _3,313 _3,451

CHANGE IN THE APARTMENT MARKET (BASE 100 IN 2000)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 20 40 60 80 100 120 140 160

180 Orders Inventory Average prices

The Île-de-France, Rhône-Alpes, Provence-Alpes-Côte d’Azur, and Midi-Pyrénées regions are the biggest markets for new apartments in France.

Orders 2003 2004 2005 2006 2007 2008 2009

Île-de-France 18,482 19,113 18,321 17,362 18,614 12,506 16,670

Provence-Alpes-Côte d’Azur region 9,955 9,486 11,120 13,339 13,671 9,359 13,190

Midi-Pyrénées 6,668 7,506 7,421 8,615 7,350 4,086 4,335

Rhône-Alpes 15,058 15,103 15,383 16,080 16,777 11,144 16,204

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1.1.2.1.6.Principal Competitors

In addition to the local and regional developers who are well positioned in their geographic markets, Kaufman & Broad competes with major national companies, which operate in the Group’s markets.

The following table shows the number of orders of the principal players in the new housing market in France:

Market operators 2009 2008 2007 2006

Nexity(1) _10,808 _7,307 _10,919 _10,553

Bouygues Immobilier (2) _10,740 _7,726 _11,093 _10,209

Akerys(5) _8,252(a) _10,534(b) _8,081 _10,941

Icade Capri(3) _5,402 _3,380 _4,884 _4,465

Kaufman & Broad 4,799 4,892 8,192 8,374

Cogedim(4) _4,345 _2,417 _3,270 _3,233

Promogim 2,637 3,878 3,880 3,707

BNP Paribas / Meunier 3,369 3,509

Eiffage Immobilier 1,508 3,204 3,179

Crédit Agricole Immobilier 3,145 NA

Source: Innovapresse for 2006 and 2007. (1) Source: Nexity regulatory information (AR, 2009) (2) Source: Press release of March 10, 2010 – 2009 Earnings (3) Source: Annual Report 2009 – Annual Report 2008 (4) Source: Altarea / Cogedim Business Review 2009 (5) Source: Akerys Annual Report 2009 – 2008 (a)

: Akerys Annual Report 2008 – 2007 (b)

1.1.2.2.Operational Organization of the Group 1.1.2.2.1.Knowledge of Local Markets

Since it began operations in France, Kaufman & Broad has come to believe that in-depth knowledge of local markets is necessary in order to (i) acquire the best sites under the best possible terms, (ii) design products adapted to demand by anticipating changing demand, and (iii) effectively manage its relationships with local authorities, construction companies and subcontractors.

development and project management department, a technical department, a sales department and, in some cases, a “Design Space” showroom. They also benefit from the Group’s centralized resources in the corporate divisions: finance, information systems, legal services, marketing, web-based communications, human resources, financial control and internal audit.

The Company provides its subsidiaries and regional divisions with various administrative and management services, including consulting in:

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LILLE ROUEN PARIS NANTES STRASBOURG LYON BORDEAUX GRENOBLE TOULOUSE BAYONNE MONTPELLIER MARSEILLE NICE TOULON

The principal subsidiaries of the Company (Kaufman & Broad Homes, Kaufman & Broad Développement, SMCI Développement, Kaufman & Broad Participations, Kaufman & Broad Nantes, Kaufman & Broad Normandie, Kaufman & Broad Nord, Kaufman & Broad Alsace, Kaufman & Broad Rhône-Alpes, Résidences Bernard Teillaud, Kaufman & Broad Côte d’Azur, Kaufman & Broad Méditerranée, Kaufman & Broad Languedoc-Roussillon, Kaufman & Broad Midi-Pyrénées, Kaufman & Broad Pyrénées-Atlantiques, and Kaufman & Broad Aquitaine) supply the real estate subsidiaries with services in development, management, sales and marketing and technical assistance. As consideration for such services, the companies providing them receive a fee in line with signed agreements. These agreements generally provide for compensation equal to 4.8% (excluding tax) of revenues ex-tax for management and administrative, legal, financial and accounting services, 5.5% (excluding tax) of revenues ex-tax for marketing and brand use, and 3% (excluding tax) of the technical cost (excluding tax) for technical management assistance services.

1.1.2.2.3.Geographic Presence

Kaufman & Broad’s strategy is to develop business in geographic areas with strong growth potential. This objective has expanded Kaufman & Broad's presence and market share in the Regions. Currently, the Île-de-France area account for 31% of the Group’s total revenues while the other Regions contribute 69%.

Kaufman & Broad intends to continue to develop its operations in the major economic regions in which it still sees strong growth potential: Bayonne, Bordeaux, Grenoble, Lyon, Marseille, Montpellier, Nantes, Nice, Rouen, Toulon and Toulouse, and particularly the Île-de-France region.

The map below shows the Group’s regional presence throughout France.

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GUY NAFILYAN

Chairman Chief Executive Officer

Nord & Alsace Normandy

Marketing

Real Estate Committee Commitment Committee (A) Management Committee (B) LAURENT SERBANNE (A*) Corporate Real Estate

PATRICK ZAMO (A*, B) MARC NAFILYAN (A*, B)

Senior Vice Presidents Île-de-France CYRIL DOUCET Île-de-France (sector 1) VINCENT LHERMITTE Île-de-France (sector 2) FRÉDÉRIC BOURG Île-de-France (sector 3)

WILLIAM TRUCHY (A*, B)

Senior Vice President West, Rhône-Alpes

Southeast Region

JACQUES RUBIO (A*, B)

Senior Vice President Southwest JEAN-FRANÇOIS DEMARIS (B) Human Resources CHRISTIAN DELAPIERRE Single-family Home Sales and Development

BRUNO COCHE (A, B) Finance CHRISTOPHE DURETETE (A*) Loire-Atlantique/ Bretagne STÉPHANE GRESS (A*) Côte d’Azur Provence FRÉDÉRIC MARCHAL (A*) Rhône-Alpes MARC SPEISSER (A*) Mediterranean BÉATRICE MORTIER (A*) Languedoc Roussillon Midi Pyrénées Aquitaine Pyrénées-Atlantiques KAUFMAN & BROAD ORGANIZATION

A* = Members of their Regional Real Estate Committees.

The distribution of EHUs (equivalent housing units delivered) between Île-de-France and the other Regions can be analyzed as follows:

Equivalent housing units delivered

Share of number of housing units 2009 2008

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1.1.2.3.Products and Marketing

Kaufman & Broad has maintained a strong focus on marketing and customer service since its founding. This strategy is reflected not only in the design of its innovative products, but also in its brand awareness campaigns.

For instance, in its programs for communities of single-family homes, Kaufman & Broad works to create houses with harmonious architecture and functional interior design (large living room, separation of day-time and night-time areas, master bedroom suites, extensions or models that can be upgraded to suit changing needs, etc.). Kaufman & Broad also focuses on the landscaping of its projects. In the same way, in its apartment programs, Kaufman & Broad focuses on architecture integrated within urban sites. It may use leading French architects, and works for functional interior design to optimize available space.

Kaufman & Broad has built its sales approach around a dynamic marketing strategy. To market its products, in certain cases it uses model homes or apartments decorated by professional architects and designers. This approach is also seen in the standardized design of its sales offices.

Finally, the Group regularly conducts market research to identify the expectations of future homebuyers and carefully tracks its competitors’ design trends in order to provide innovative solutions that effectively meet customer expectations. Kaufman & Broad SA held rights to use the Kaufman & Broad brands and logo and the KB Home expertise under a Licensing Agreement. Following the acquisition by Financière Gaillon 8 of the controlling interest in the Company on July 10, 2007, Kaufman & Broad SA now holds the Kaufman & Broad brands and logos for the European Economic Area and Switzerland through its Kaufman & Broad Europe SA subsidiary (the details of this transaction are provided in Section 1.1.2.13.1. “Kaufman & Broad Brand”).

1.1.2.3.1.Customers

Reflecting its historical positioning in the real estate market, Kaufman & Broad believes that a significant part of its orders in 2009 were placed by first- and second-time buyers. The sale

of primary residences is the core business of the Group. The portion of sales for rental property is estimated at approximately 57% in 2009 and block sales at 18%.

1.1.2.3.2.Buyers of Primary Residences

The market for first-time buyers consists of homebuyers making their first purchase of property. The typical first-time buyer is a 25- to 35-year-old couple, with or without a child, with household income of approximately €3,000 to €4,000 per month. The first-time buyer generally purchases an apartment with an average of 60 m2 of living space or a single-family home with 85 square meters of living space, at a price (all taxes included) ranging from €190,000 to €250,000. To finance their home, first-time buyers today may be eligible for a 0% loan, the Pass-Foncier benefit, or a 1% employer loan.

The market for second-time buyers consists of purchasers who already own a home and who buy after selling their home. The typical second-time buyer is a 35- to 60-year-old couple with one or more children. The monthly household income for these buyers is generally €4,000 to €6,800. Second-time buyers typically purchase a home with 80 to 180 square meters of living space.

Kaufman & Broad believes that first and second-time buyers of primary residences offer strong growth potential.

Furthermore, many customers remain loyal to the Kaufman & Broad products and the Group; first-time buyers often come back to Kaufman & Broad when purchasing their second home.

In 2009, the sale price (all taxes included) for the single-family homes sold by Kaufman & Broad range from €120,950 to €828,000 and the living areas offered range from 60 to 192 square meters of living space, depending on the project (See Section 2.1.3. “Tracking of indicators”).

The average sale price of single-family homes in 2009 was €335,630 in the Île-de-France region and €299,260 in the other Regions.

In 2009, the sale price (all taxes included) for apartment units ranged from €2,460 to €8,880 per square meter in the

Île-de-Apartments 2009 2008

Île-de-France 9.3% 11.1%

Lyon region 1.6% 3.0%

Marseille region 12.3% 4.8%

Toulouse region 3.4% 14.5%

Total apartments – France 5.6% 7.5%

Housing Units 2009 2008

Total housing units – France 5.8% 7.8%

Source: Kaufman & Broad and ECLN.

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France region and started at €1,440 per square meter in the other Regions.

In the Île-de-France region, the average sale price for apartment units (including parking space) ordered by Kaufman & Broad customers was €202,600, all taxes included. In the other Regions, the average sale price for apartments (including parking space) ordered from Kaufman & Broad in 2009 was €190,500, all taxes included.

The following tables show the change in the average price, all taxes included, and in the average living space (excluding land) for single-family homes and the average price of the apartments delivered by the Group since 1998.

AVERAGE PRICE OF SINGLE-FAMILY HOMES DELIVERED (EHU) BY THE GROUP SINCE 1998

(in euros, incl. VAT) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Île-de-France 182,000 214,500 244,000 225,000 217,000 264,000 269,000 302,700 306,900 319,900 307,400 335,630

Average area

of homes in sq. m 105 112 125 120 130 128 122 113 111 107 110 113

AVERAGE PRICE OF APARTMENT UNITS DELIVERED (EHU) BY THE GROUP SINCE 1998

(in euros, incl. VAT) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Île-de-France 195,000 206,300 229,300 215,600 226,300 238,900 231,300 248,600 252,600 249,900 241,900 208,500

Other Regions 92,500 108,400 116,000 129,000 133,000 148,000 144,500 152,600 171,600 185,900 188,000 197,300

1.1.2.3.6.Single-family Homes

For over 40 years, the Group has developed and marketed the concept of communities of single-family homes in France. Particular attention has been paid to the selection of the sites. In the Île-de-France region, the sites are usually located in the middle or outer suburbs of Paris and in the inner suburbs in the Lyon, Marseille, and Toulouse Regions.

Each community, depending on its size, has three to twelve different home models, with an average size of between 40 to

1.1.2.3.3.Individual Investors

Most of the Group’s programs, notably in the outer suburbs of Paris and in the Regions (with the exception of downtown projects) were eligible in 2009 for the Borloo, Robien and Scellier tax incentives. Kaufman & Broad estimates that individual investors buying through agents, specialized networks, and its sale offices generated 54% of its sales in 2009.

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1.1.2.3.8.Commercial Property

In its commercial property business, Kaufman & Broad pays particular attention to the key priorities of investors by focusing on maximum return on investment and providing future users with a high-performing, high-end product.

In the past, Kaufman & Broad had a large commercial property business, an activity that contributed to its solid reputation in the Île-de-France region. Today, the Group operates this business either on behalf of third parties (project management contracts and real estate promotion contracts), or under a strict policy of not purchasing land until the entire program has been presold (Sales before Completion known as VEFA sales). 1.1.2.4.Sales Methods

1.1.2.4.1.Sales Team

Kaufman & Broad sells its housing units through its own sales teams and specialized networks.

As of November 30, 2009, these teams consisted of 159 people, including 104 sales representatives with an average of 6.5 years with the Group. The majority of the sales personnel earn a fixed salary plus a sales commission paid monthly. Kaufman & Broad believes that its sales force, made up of real estate professionals who receive ongoing training and are very familiar with the Group’s products and code of conduct, produces highly effective results. This sales force also ensures that the Group owns its list of customers and prospects. There are separate dedicated teams who market single-family homes and apartment units in the Group’s sales offices. For sales of apartments to institutional investors, the Group relies on its Sales and Marketing Department and the Regional divisions, which manage relationships with this customer base. In addition, Kaufman & Broad has dedicated sales managers in each Region who sell to individual investors (products eligible for tax incentives under the Borloo, Robien and Scellier Acts). The Group uses specialized networks, such as: banks, financial advisors and other specialists to sell certain products, in particular programs that may be eligible for tax incentives. The Group enters into sales and marketing agreements with these specialized networks on a project basis, and a commission is paid when the deed of sale is signed. Kaufman & Broad also occasionally sells its products to foreign buyers. These transactions are carried out in partnership with international real estate agents for specific programs. In addition, Kaufman & Broad participates in international real estate trade shows.

1.1.2.4.2.Sales Offices

Kaufman & Broad focuses on the design of its sales offices because it believes that potential customers often associate the quality of a real estate development project with the quality and appearance of the sales office. In order to benefit from its brand recognition and strong reputation, the Kaufman & Broad sales offices are very similar in design for its various programs.

•living rooms and dining rooms with bow windows at the rear;

•a laundry room;

•a double garage attached to the house;

•large attics that can be converted or expanded;

•an extra room that can be used for a specific purpose, Internet use for example.

Each single-family home is delivered with a private planted yard with a lawn.

All of the Group’s communities of single-family homes are landscaped by landscape architects. Trees, shrubs and hedges are chosen with care and spread throughout the community, both in common areas and in the private yards of each home, to give a green and welcoming aspect to the community. Roofs adapted to the site and the region give the communities a degree of diversity.

In the Île-de-France region, the Group’s communities of single-family homes are generally:

•Detached or semi-detached homes that range in size from 80 to 130 square meters designed primarily for first-time buyers;

•Single-family homes in communities inspired by a more American style of architecture and interior design, with living space generally ranging from 120 to 180 square meters and designed primarily for second-time buyers.

In the Regions, the Group markets communities of single-family homes with products designed for both first and second-time buyers, at prices price ranging from €120,950 to €828,000.

1.1.2.3.7.Apartments

When developing its apartment programs, Kaufman & Broad is very careful in selecting sites.

In the Île-de-France region, the sites are primarily in the city of Paris, and in the inner, outer and far suburbs. In Bayonne, Bordeaux, Grenoble, Lille, Lyon, Marseille, Montpellier, Nantes, Nice, Rouen, Strasbourg, Toulon and Toulouse, apartments are also located in the city center or the inner suburbs.

Kaufman & Broad pays particular attention to the architecture of its buildings, the design of communal areas (entry hall, stair landings, yards and green spaces) and the optimization of space.

In the Île-de-France region, the Group markets apartments intended primarily for second-time buyers in the inner Paris suburbs and for first-time buyers or investors in the middle and outer Paris suburbs.

In the other Regions, the Group offers its apartment programs under the Kaufman & Broad brand (or, as applicable, under the Résidences Bernard Teillaud brand in Grenoble).

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The Group’s regional sales offices have a national charter, which stipulates the architecture and decor for these offices. Most of the Group’s programs have their own sales office, on-site or in the immediate area. In some cases, marketing is performed by independent or multi-program sales teams without a sales office. The Group’s policy is to open its sales offices every day for all developments with more than 100 homes.

When the size of a program justifies it, the Group builds decorated show homes or model apartments, with the same focus on presentation and design quality.

1.1.2.4.3.Design Spaces

As part of its strategy to offer customers a broad range of services and the possibility of personalizing their homes prior to delivery, Kaufman & Broad opened a showroom in Saint-Ouen, near Paris in October 1998. In light of the success of that showroom, since 2002 the Group has opened showrooms in Lyon, Marseille, Nice, and a Design Space in Toulouse. In March 2005, Kaufman & Broad set up its showroom for the Île-de-France region at the Group’s headquarters in Neuilly-sur-Seine. Today, the Design Spaces present a large number of options (carpeting, tiles, hardwood flooring, fireplaces, walk-in closets or storage options, bathrooms, kitchens, etc.). For Kaufman & Broad customers, these spaces truly bring together the sales and technical departments.

1.1.2.4.4.Website

Kaufman & Broad has a website (www.ketb.com) where potential customers can view all its programs (home descriptions, three-dimensional home displays, availability, sale price and services offered). In 2009, nearly 1.2 million hits were recorded and approximately 950 sales were initiated on the website. The site also provides financial information about the Group in both French and English and regulatory information in French.

If possible, the sales process (order contracts) begins when the building permit is filed, even before the purchase of the land.

The normal timeframe for completing a typical development (completion of roads, infrastructure networks and construction) of single-family homes is approximately 12 months. An apartment program generally takes an average of 18 months, excluding the time needed first to organize project financing. As of November 30, 2009, the Group had 155 programs open for marketing, down from 278 as of November 30, 2008.

1.1.2.5.2.Commercial Property

The Group’s commercial property activities are ordinarily carried out on behalf of third parties or sold before completion to a final user or an identified final investor. In its restructuring and renovation projects, the Group is awarded a Delegated Contracting Owner Contracts (in this, the Group does not advance any funds for construction and is compensated only by a fee) or a real estate promotion contract (the Group designs and builds the project on behalf of an owner investor at a fixed price, which includes its fees). In the case of a sale before completion, the Group designs the real estate project with the assistance of outside architects, signs a purchase option (promesse de vente) and immediately seeks a tenant or user and a final investor. The land or the building is not purchased until this search is successful.

1.1.2.6.Purchase of Land 1.1.2.6.1.Selection of Land

Kaufman & Broad’s strategy is to buy only the land necessary for the development of its business and never to purchase land for speculative investment.

The land purchased by the Group over the last three fiscal years (including land purchased by the companies acquired in the year of acquisition) represented a total investment of €49.8

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schools, stores and cinemas, green spaces and sports facilities (golf courses, swimming pools, etc.);

•quality: the site must meet quality standards for soil and exposure;

•investment criteria: generally, the sites should allow the construction, in the case of single-family homes, of communities of 15 to 90 houses and, in the case of apartment buildings, developments of 10 to 200 units, and offer in each case a minimum projected gross margin of 20%. Kaufman & Broad reviews the quality of the land parcels. A soil survey of the site considered for purchase, which generally includes a study of pollution and previous land use, is systematically conducted by a specialized firm.

For each program of single-family homes, a survey of roads and other networks is generally conducted to determine the amount of the improvement work necessary to define the total cost of land development. Since its inception, Kaufman & Broad has had its own team specializing in roads and other networks. This team prepares the overall site plan and monitors the development of the land.

1.1.2.6.2.Approval by the Real Estate Committee The Real Estate Committee confirms the strategic and financial relevance of the projects under consideration and the estimated budget for preliminary expenses (up to the filing of a building permit request), authorizes the signature of a purchase option (generally unilateral) and authorizes payment of “earnest money”.

The Committee members are the Chairman and Chief Executive Officer, the Chief Finance Officer, and the Managing Director of the Region concerned.

The file presented by the Regional Managing Director to the members of the Committee generally includes the following information:

•a presentation of the land and the immediate environment (location within the community, distance to stores, public networks and service);

•the nature of the legal commitments under consideration (type of purchase option or planned company acquisition, form and amount of the earnest money deposit);

•a market survey conducted to analyze the local market, infrastructures, the price of new and existing housing in the area, the number of projects in progress and under development in the area, in order to recommend an average sales price for the housing units in the project planned;

•a technical and architectural feasibility study;

•a provisional marketing plan by distribution channel;

•a projected construction schedule;

•a balance sheet and cash flow projection based on the tentative sale prices indicated in the market survey;

•the projected amount of expenses prior to obtaining building permits.

Since 2008, Kaufman & Broad’s Management has implemented a special procedure governing the signing of a bilateral purchase option or a provisional sale agreement by a regional department prior to the approval of a project by the Real Estate Committee. This change in the decision-making process for commitments made by the Group gives the regional divisions, in special circumstances, the possibility of reacting more quickly to sellers when there are competing offers on property lots. The signature of these options by the regional division must be governed by conditions precedent to allow Kaufman & Broad to be released from the commitment within three months after signature without having to pay any indemnity to the seller: these conditions precedent are related to applying for building permits and/or a earnest money deposit paid by the Group. Under this process, the regional divisions must obtain from headquarters a delegation of authority to sign for each option, they must also present the corresponding projects to the members of the Real Estate Committee before the expiration of the conditions precedent, and obtain their agreement to continue their survey, deliver a deposit to the seller and have the preliminary budget expenses approved prior to filing a building permit request.

1.1.2.6.3.Project Management and Development Costs If the project is approved by the Real Estate Committee, a purchase option, which is generally unilateral, may be signed, subject to the condition precedent of obtaining the final building permit and normal practices (conditions related to release of the location, obtaining building and demolition permits free of any objection from a third party, and conditions relating to the nature of the soil, the presence of pollution or classified installations as defined by the French Environmental Code and the absence of archeological requirements).

This option specifies the following:

•the sale price for the land;

•the conditions for completing the purchase: obtaining the permits required in order to build a minimum number of square meters or, for single-family homes, a minimum number of homes;

•the deadline for exercising the purchase option, which must be compatible with the time limits necessary to obtain the required administrative permits free of objections from third parties, or an administrative withdrawal.

In certain cases, the Group signs undertakings to purchase shares in companies which own land parcels. In addition to the conditions precedent described above, this type of agreement includes conditions relating to the completion of accounting,

financial and legal audits.

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1.1.2.6.4.Commitment Committee

Since the 2nd quarter of 2008, after the signature of the sale option and prior to filing the building permit application, the members of the Real Estate Committee have been meeting as a Commitment Committee to approve the strategy of operations (particularly the commercial and technical aspects), validate the updated budget of the operation to be considered as a reference budget, approve the type and structure of the operation, authorize the filing of the building permit application, and authorize the launch of the request for tenders (RFT) and the marketing and sales tools. These decisions constitute an authorization granted to the Director of the agency in question to continue the analysis of the real estate development project. The information presented to the members of the Committee is an update of the file initially submitted to the Real Estate Committee.

A building permit application is then filed with the mayor’s office in the town in which the work will be performed. Kaufman & Broad’s teams monitor the processing of the permit applications with the engineering services departments of the towns concerned. The normal time frame for receiving a building permit is generally three to five months, plus the time for objections from third parties, which runs for two months from the posting of the building permit at the construction site, as well as the timeframe during which the mayor’s office can withdraw a building permit. Third parties (associations and neighbors) may challenge building and demolition permits on the grounds that they do not comply with local urban planning regulations, such as zoning plans and development plans for urban development zones (ZACs), or with the French Urban Planning Code.

If a complaint is filed, the Group has three options:

•abandon the project and invoke the non-achievement of the condition precedent to obtaining a clear building permit as stipulated in the option to purchase the land;

around 40%. In some circumstances, however, such as the expiration date of the purchase option, the Group may acquire land before this pre-sale rate has been reached.

As an exception to the rule, the members of the Real Estate Committee may authorize an acquisition when not all the conditions listed above have been met, for example, without the target pre-sale rate or without obtaining all administrative authorizations without objection.

If the projected financial budgets on which the Commitment Committee has based its decision cannot be met, the definitive acquisition of the property in question is again submitted to the members of the Committee for approval.

Any real estate purchase request made by a regional division is in the form of a file, which includes the following information:

•a memorandum on the administrative status of the land relative to marketing;

•updated budget;

•provisional cash flow plan;

•percentage of completion of the file;

•updated statements of orders by distribution channel with a comparison to the targets of the Commitment Committee;

•comment from the Agency Director on the order rate if the latter is below 40%;

•official draft of the legal instrument.

1.1.2.7.Land development and Monitoring of the Construction Process

1.1.2.7.1.Single-family Homes in Communities The majority of land purchased by Kaufman & Broad for its single-family homes programs is not yet improved. Prior to the final acquisition of land, a team of road and other infrastructure

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to begin on each phase depending on the pace of sales. Delivery of homes in phases also provides great flexibility because it allows the Group to vary the types of homes by category of design in accordance with customer preferences. If a decision to make a change is made, the Group files an application for the corresponding amended building permit.

1.1.2.7.2.Apartment Units and Commercial Property As a general rule, construction of apartment units does not usually begin until a pre-sale rate of approximately 40% of the total development project value is attained.

On the other hand, land is purchased and construction work on commercial property does not generally begin until the entire development has been pre-sold.

For its apartment and commercial property operations, Kaufman & Broad generally does not act as general contractor (except on a regional basis), but instead uses outside architects and/or general contractors who, working together with the Group, prepare the architectural plans and timetable for the program and monitor the quality and execution of the construction process.

1.1.2.7.3.Monitoring Budgets

Every quarter, the budgets for all the property programs are reviewed and updated by the operational players concerned (real estate, technical, and salespeople) in the agency under the responsibility of the relevant regional management controller and are validated by the Agency Director. Financial balance sheets are presented quarterly by each Regional Director concerned to the Finance Department and to the Regional Managing Director.

1.1.2.8.Sales

In order to limit its financial exposure, Kaufman & Broad generally begins the pre-sale process for its projects prior to completing the purchase of the land.

When possible, the pre-sale process begins when the application for a building permit is filed. Once the cost of the program has been determined and the construction phases set, order contracts can be offered to customers.

Under French consumer protection legislation (the Neiertz Act), and the French Solidarity and Urban Renewal Act, the sales administration department sends customers a copy of the order contract signed at the sales office, by registered mail with return receipt requested. Customers then have seven calendar days from the date of receipt of the contract during which they can reconsider and withdraw. If they do not withdraw, the sale covered by the order is subject only to the usual conditions of obtaining the related loans and insurance.

1.1.2.8.1.Customer Assistance during the Sales Process If customers request it and based on the items they provide, the Group’s sales team assists customers to obtain financing for an acquisition.This initial analysis gives the Group an approximate assessment of the financial capacity of each buyer and thereby limits the risks of triggering the cancellation clause in sale contracts when financing is not obtained. As part of its strategy to enhance customer service, Kaufman & Broad usually offers loans at rates negotiated with top-tier banks. A financial advisor may also be present at the sales office when a significant program is launched.

The Group’s sales and marketing department generally assists customers throughout the process until the signature of the

Land search

Real Estate Committee project review

and approval

Final acquisition of land after approval by the Commitment Committee Signature of a preliminary

sale agreement with suspensive conditions

Commitment Committee’s authorization to continue

work on the project

Building permit request submitted

Project follow-up Building permit obtained

Pre-marketing • Offices: 100% • Housing: about 40%

Technical and financial project review Internal & external

studies

Risk Analysis and Control

The diagram below summarizes the Group’s business model described above:

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final deed of sale. It helps customers prepare the administrative and financial paperwork, and in particular, their loan and insurance applications. The department ensures that drafts of the contract are sent to the customer within the required time period (at least one month prior to the scheduled signature date, as required under French law) and that notices for the notarized signing of the contracts are sent out at the appropriate time.

1.1.2.8.2.Form of Sales and Payment Schedule

Since September 1, 1999 the Group has marketed all of its programs under the system of “sales before completion” (VEFA, vente en état futur d’achèvement) contracts, like most of its competitors. With the VEFA contract, the legislature has given real estate promoters the option to call for payments from customers as the work is completed, according to a schedule defined by law, giving customers a Performance Bond (GFA). Calls may not exceed 35% of the price upon completion of the foundation work, 70% at boxing up and 95% upon completion of the building. The balance is due on delivery. The VEFA agreement transfers to the buyer the title to the land and building as the building is completed.

Under VEFA sales, funds are called for most single-family home programs on the following schedule: a 5% deposit at the time of the order paid into an escrow account if the final deed of sale is signed within a year of the order, 30% upon completion of the foundations, 35% after boxing up and 30% on delivery of the keys to the home. Kaufman & Broad may modify this payment structure in favor of the customer under periodic promotions designed to increase the rate of sales of certain programs.

For apartment projects, funds are called in most cases according to the following schedule: a 5% deposit at the order paid into an escrow account if the final deed of sale is signed within a year of the order, 25% at the start of construction work, 5% upon completion of foundation work, 20% upon

order account. This amount is held in escrow until the final signature of the sale contract, at which time the Group definitively acquires the funds. This amount is returned to the customer if (i) the sale contract is not signed within the time specified in the order, (ii) the loan or loans stipulated in the order contract are not obtained by the customer, or the amount of the loans obtained is 10% less than projected amounts in the order agreement, (iii) any of the fittings described in the order contract cannot be delivered, or (iv) the building (or the part of the building) covered by the order declines in value in terms of consistency or quality of planned work, as determined by an expert, by more than 10%.

1.1.2.9.Customer Service

With its commitment to customer satisfaction, Kaufman & Broad has created a customer service department responsible for answering any questions customers may have, both about the features of their home or any defects that may exist. This service is now available from the delivery of the home and the department assists customers by providing information on using their home, moving in or general inquiries.

When a defect is discovered in a home, the customer service department contacts the construction company responsible and ensures a rapid response. Similarly, if the (one-year} “performance warranty” (garantie de parfait achèvement), the two-year “correct operational warranty” (garantie de bon

fonctionnement) or the ten-year warranty (garantie décennale)

are applicable, the customer service department helps customers contact the relevant construction or insurance companies (for a description of such warranties and guaranties, see Section 1.2.5, “Insurance”).

To ensure and continuously improve customer satisfaction, Kaufman & Broad has introduced, over time, a system of satisfaction questionnaires given to customers upon delivery of their homes. The questionnaire gives the Group feedback from customers, both on the general quality of its products and

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SINGLE-FAMILY HOMES

BREAKDOWN OF ORDERS BY QUARTER

Over the year, the Group’s business, as reflected in orders, is as follows:

1.1.2.10.1.Housing Business

APARTMENTS

BREAKDOWN OF ORDERS BY QUARTER

2008

-1,5 10% 15% 20% 25% 30% 35% 40%

2009

0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008

-1,5 10% 15% 20% 25% 30% 35% 40%

2009

0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

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1.1.2.11.Program Financing

When Financière Gaillon 8 acquired a majority interest in the Company on July 10, 2007, it terminated the syndicated line of credit established in 2002 and totaling €300 million in February 2006. A redemption offer for the €150 million bond maturing on July 29, 2009 was also established.

These resources were refinanced on July 11, 2007 as part of the acquisition by Financière Gaillon 8 of a stake in the Company through new lines of credit described in Section 4.1.1.5. “New financing structure” then restructured on January 23, 2009 and other amendments (See Section 4.1.3.2. Note 20).

The Group’s main banks are, in alphabetical order, BECM (Crédit Mutuel), BCME (Crédit Mutuel de Bretagne), Caisse Nationale des Caisses d’Epargne, Crédit Agricole, Calyon, Crédit Mutuel de Bretagne, Crédit Foncier, HSBC, Merrill Lynch, Natixis, and Société Générale.

In a VEFA sale before completion contract, French law stipulates that customers must receive a performance bond at the signature of the contract. This bond can either be issued by the project itself (intrinsic guarantee) or take the form of a bank guarantee (extrinsic guarantee).

For all its programs, the Group generally uses the extrinsic guarantee system by obtaining a bank bond transaction-by-transaction from the banks mentioned above and from certain insurance companies. This method accelerates the signature of sale contracts and facilitates the calls for funds.

In the past, the Group has used intrinsic guarantees (issued directly by Kaufman & Broad) for its single-family home programs. With an intrinsic guarantee, no performance bond is required, but the pace of calls for funds from customers is slower.

1.1.2.12. Builders and Suppliers

The Group’s policy is to choose all of its contractors and

initiated a national purchasing policy for finishing work to streamline the services delivered to customers and optimize the related costs. This policy was continued in 2009. For its single-family home projects, the Group uses separate contractors since most general contractors do not build single-family homes or do so only at prices higher than those of trade contractors. Generally, apartment and office building developments are also executed by separate trade contractors, with a small portion entrusted to general contractors.

Architects, design firms and land surveyors are selected through bidding procedures or private agreements. These parties are chosen on the basis of their technical skills, financial bid, organization and the quality of prior work.

1.1.2.13.Intellectual Property 1.1.2.13.1.Kaufman & Broad Brand

Until July 10, 2007, Kaufman & Broad SA held an exclusive license to use the Kaufman & Broad trademark and logo in continental Europe and the United Kingdom under a licensing agreement signed with KB Home (the “Licensing Agreement”). Under this agreement, it also held an exclusive license to know-how under the same conditions as the license to use the Kaufman & Broad brand. The know-how licensed to the Group under this agreement was the expertise developed by KB Home in the design, marketing and sale of real estate development programs.

On October 12, 2004, Kaufman & Broad SA signed an amendment to the Licensing Agreement, providing for payment in advance to KB Home of all future royalties for the use of the Kaufman & Broad trademark, logo and know-how. The payment in full was set at €85 million. The Licensing Agreement was terminated on July 10, 2007 in consideration for the payment by KB Home to Kaufman & Broad SA of the sum of €80,421,998, corresponding to the repayment of the

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France for three years (See Section 3.2.6. “Transactions with Companies that Have Directors in Common with the Company or Other Group Companies”).

1.1.2.13.2.Other Brands

The Group owns the other brands used in its operations, including Bréguet, SMCI, Park, Frank Arthur, Sefima, First, Sopra, Résidences Bernard Teillaud, Avantis, and Malardeau.

1.1.3. MAIN OFFICES

The Group rents from third-party lessor offices in Neuilly-sur-Seine, Lyon, Marseille, Toulon, Rouen, Strasbourg, Lille, Toulouse, Montpellier, Nice, Grenoble, Bordeaux, Nantes, and Bayonne. These offices are generally occupied under nine-year commercial leases. Kaufman & Broad owns its own premises via the real estate company Immobilière Acto (Grenoble). For the companies that were part of the Group on November 30, 2009, the rental expense and annual tenant expenses totaled €5.5 million (excluding tax), compared with €6.6 million (excluding tax) in 2008 (see Section 4.1.3. “Income Statement", Note 6 “General and Administrative Expenses”).