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RBA
RBA
RBA - RBA Holdings Limited - Condensed Audited Financial Statements For The
Year Ended 31 December 2008
RBA Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1999/009701/06)
Share Code: RBA
ISIN Code: ZAE000104154
RBA Holdings Limited ("RBA" or "the group")
CONDENSED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
In accordance with the Listings Requirements of the JSE Limited, the
directors of RBA Holdings Limited hereby publish the group`s unqualified
audited annual financial statements for the year ended 31 December 2008.
Correction to Trading Statement:
Shareholders are referred to the trading statement issued by the company on
Friday, 20 March 2009 in terms of which it was announced that the Headline
Earnings per share is expected to decrease by between 20% and 40%, while
Headline Earnings per share taking into account the effect of Circular
08/2007 - Headline Earnings was expected to decrease by between 70% and 90%
from those of the corresponding previous period. It should be noted that the
decline in Headline Earnings referred to the decline in Normalised Earnings,
as described below, while Headline Earnings will always take into account the
effect of Circular 08/2007.
Consolidated Balance Sheet
Year Ended Year Ended
31 December 31 December
2008 2007 Audited
Audited
R`000 R`000
Assets
Non-Current Assets 126 506 64 628
Investment properties 78 650 24 282
Property, plant and equipment 18 806 5 508
Intangible assets 400 -
Goodwill 4 793 231
Investments in associates 8 018 9 779
Stands held for trading 8 504 8 256
Deposits for land and stand 5 835 13 572
allocations
Loans to RBA employees share 1 500 3 000
trust
Current Assets 113 173 79 223
Stands held for trading 54 724 22 182
Inventory 1 984 970
Construction contracts in 25 618 36 137
progress
Prepayments and other 14 359 6 642
receivables
Deposits for land and stand 15 448 10 961
allocations
Cash and cash equivalents 1 040 2 331
Total assets 239 679 143 851
Equity and liabilities 105 688 85 166
Share capital 28 396 28 396
Revaluation reserve 2 600 -
Retained income 76 199 53 514
Minority interest (1 507) 3 256
Liabilities
Non-current liabilities 55 925 22 827
Borrowings 53 334 14 662
Finance lease obligation 1 671 1 731
Deferred tax 920 6 434
Current liabilities 78 066 35 858
Current portion of borrowings 30 663 19 225
Finance lease obligation 216 2 097
Taxation payable 6 808 3 628
Trade and other payables 18 101 6 615
Provisions 1 457 508
Construction contracts in 3 038 3 785
progress
Bank overdraft 17 783 -
Total equity and liabilities 239 679 143 851
Number of shares in issue 310 000 000 310 000 000
Net asset value per share 34.09 27.47
(cents)
Tangible net asset value per 32.42 27.40
share (cents)
Consolidated Income Statement
31 31 %
December December Change
2008 2007
Audited Audited
R`000 R`000
Revenue 190 460 244 046 (22%)
Cost of sales (123 770) (156 218)
Gross profit 66 690 87 828
Other income 26 644 7 211
Operating costs (58 342) (39 317)
Provision for bad debts (2 864) -
Operating profit 32 128 55 722 (43%)
Investment Income 772 580
Impairment - loan to RBA (1 500) -
employees share trust
Impairment of goodwill (1 753) -
Finance costs (5 294) (2 085)
Profit before taxation 24 353 54 217
Taxation (3 962) (15 769)
Profit for the period 20 391 38 448
Profit/(Loss) from associate (716) 324
companies
Minority interest - 3 010 (2 652)
(profit)/loss
Net profit for the period 22 685 36 120 (37%)
Reconciliation of headline
earnings
Profit attributable to 22 685 36 120
ordinary shareholders
Adjusted for profit on - (142)
disposal of property, plant
and equipment
Impairment - loan to RBA 1 500 -
employees share trust
Impairment of goodwill 1 753
Fair value adjustment of - (1 324)
office building
25 938 34 654
Normalised earnings
attributable to ordinary
shareholders
Fair value adjustment of (21 530) (2 653)
investment properties
Headline earnings 4 408 32 001
attributable to ordinary
shareholders
310 000 288 383
Weighted average number of 000 562
shares in issue
Basic earnings per share 7.32 12.52 (42%)
(cents)
Normalised earnings per share 8.37 12.02 (30%)
(cents)
Headline earnings per share 1.42 11.10
(cents)
Consolidated Cash Flow Statement
31 December 31 December
2008 2007
Audited Audited
R`000 R`000
Cash flows from operating 17 629 (14 551)
activities
Cash generated from operations 27 467 1 970
Interest received 772 580
Interest paid (4 313) (2 085)
Taxation paid (6 297) (15 016)
Cash flows from investing (82 875) (26 088)
activities
Acquisition of property, plant (3 567) (3 523)
and equipment
Proceeds on disposal of 182 600
property, plant and equipment
Acquisition of investment (41 504) (1 204)
property
Deposits paid for land and (18 194)
stand allocations
Purchase of non current land (32 792) (3 606)
for trading
Business combinations (5 194) (161)
Cash flows from financing 46 175 43 011
activities
Loans raised 48 172 16 482
Proceeds on share issue - 28 394
Shareholder`s loans (repaid) / - (1 865)
raised
Dividend paid by subsidiary (1 997) -
Cash flows for the period (19 071) 2 375
Cash and cash equivalents at 2 328 (47)
beginning of period
Cash and cash equivalents at (16 743) 2 328
end of period
Segment Report
Gauteng Region Limpopo Region Consolidated
R`000 R`000
31 31 31 31 31 31
Decembe Decembe Decembe Decembe Decembe Decembe
r 2008 r 2007 r 2008 r 2007 r 2008 r 2007
Audited Audited Audited Audited Audited Audited
R`000 R`000 R`000 R`000 R`000 R`000
Revenue 167 991 225 630 22 469 18 416 190 460 244 046
Profit 20 704 36 498 1 981 (378) 22 685 36 120
Total 236 227 134 967 3 452 8 884 239 679 143 851
assets
Total 132 628 49 908 1 363 8 775 133 991 58 683
liabiliti
es
Consolidated Statement of Changes in Equity
Share Share Revaluation Accumulated Minority Total
capital premium Reserve profit interest R`000
R`000 R`000 R`000 R`000 R`000
Balance at 1 - - 17 394 604 18
1 January 000
2007
Profit for - - - 36 120 2 652 38
the year 772
Share issue 1 29 999 - - - 30
000
Share issue - (1 606) - - - (1
costs 606)
Balance at 2 28 393 - 53 514 3 256 85
31 December 166
2007
Profit for - - - 22 685 (4 763) 17
the year 922
Revaluation - - 2 600 - - 2 600
of office
building
Balance at 2 28 393 2 600 76 199 (1 507) 105
31 December 688
2008
OVERVIEW
Established in 1997, RBA Holdings is a supplier of bank funded affordable
homes in Gauteng and Polokwane. Our business model encompasses the complete
property development process viz. the acquisition of land, town planning,
project management of services installation, marketing and construction of
quality affordable homes.
REVIEW OF 2008 RESULTS
Trading conditions were difficult during 2008 due to economic conditions
putting pressure on banks` ability to finance our clients through traditional
home loans. This resulted in a slowdown of production and revenue was down
22% in comparison with the previous financial year.
The revenue number was further below expectation due to delays in commencing
with construction in the Braamfischerville Ext 14 project area in the south
west of Johannesburg. The unfortunate delay of township establishment and
infrastructure servicing of the project was outside of the group`s control.
Mineral prospecting rights were attached to the project which needed to be
waived by the holder before the residential housing development could
commence. Revenues on this project are expected to realise during the second
half of 2009.
The group maintained its gross profit margin at between 35% and 36% in
difficult trading conditions. This despite our clients purchasing smaller
homes as their home loan affordability levels have decreased.
A strategic decision was taken by the group at the end of 2007 to gear up the
business operationally for anticipated future growth. The increase of 43% in
group operating expenses was due to the following:
- The strengthening of the senior management tier within the group.
- Increasing capacity at an operational level.
- Aggressive marketing campaigns to ensure acceptable sales levels
are maintained during difficult trading periods.
- Siweziwe Property Holdings (Pty) Ltd, previously an associated
company was consolidated in the group results for the first time in
2008.
Given the weaker than anticipated results no bonuses were paid to any group
executives or senior management.
Other income includes revaluations of our long term rental unit property
portfolio to market value.
The group achieved an attributable profit of R 22.7 million for the year.
The net asset value of the group increased to 34.09 cents (2007 - 27.47
cents) per share.
Stands held for trading consist of land available for residential housing
development. In accordance with IFRS this inventory was not revalued to
market value. At 31 December 2008 its market value based on external
valuations obtained, exceeded book value by R 40 million. It is the view of
the directors that this factor should be taken into account when considering
the real net asset value of the group.
The ratio of Current Assets to Current Liabilities reduced from 2.2:1 to
1.45:1 due to a portion of our rental unit property portfolio being funded
from our bank overdraft, this will rectify itself on the imminent securing of
longer term debt.
During the year the group completed 782 homes (2007 - 929) and handed them
over to clients for occupation.
Description of normalised earings:
The directors believe normalised earnings more accurately reflect operational
performance of the group. Headline earnings are adjusted to take into account
the non operational requirements set out in the SAICA Circular 08/07 -
Headline Earnings (issued February 2008) in terms of which all amounts and
adjustments relating to items of investment properties are excluded in
headline earnings. However the directors are of the view that the
revaluations of the rental portfolio of R 21.5 million, should be taken into
account when determining the normalised earnings for the group of 8,37 cents
per share.
PROSPECTS
While the operating results for the period were disappointing and the general
meltdown of financial markets across the world will slow the growth of the
South African economy, the directors believe that with the shortage of
housing in South Africa, the long term prospects for the group remain
positive.
The directors believe that the first half of 2009 will be a challenging
period and earnings for this period will be under pressure.
As at 31 December 2008 the group had 410 approved sales (2007 - 516) that
were awaiting registration at the deeds office. Construction would commence
immediately after registration.
With the interest rate cycle in a downward phase the securing of traditional
home loans should improve as our clients` affordability in terms of banks
lending criteria improves. The provision of home loans to RBA`s segment of
the residential housing market is still a focal point of the major commercial
banks with lower deposit requirements.
The second half of 2009 should reflect a much improved financial performance.
The group`s strategy of introducing higher density housing developments,
thereby reducing the land cost per unit, is bearing fruit with a lower cost
product on offer to potential clients.
The group`s initiative of growing its rental unit property portfolio is
progressing. Apart from adding annuity income, the capital appreciation on
the units has smoothed the earnings volatility associated with the housing
market cycle. The introduction of rental units allows RBA access to a future
client base that may qualify for home loans.
DIVIDENDS
In line with RBA`s growth strategy no dividend has been declared. The
dividend policy of RBA will be reviewed annually in light of RBA`s cash flow,
gearing and capital requirements.
SUBSEQUENT EVENTS
The directors are not aware of any matter or circumstance arising since the
end of the period, which significantly affects the financial position of the
group or the results of its operations as presented in these results.
BASIS OF PREPARATION
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards and the Companies Act of South
Africa, 1973. The accounting policies used to prepare these financial
statements are consistent with those applied at the previous financial year
end.
AUDIT REPORT
The annual financial statements have been audited by RBA`s Auditors, Logista
Johannesburg Registered Accountants and Auditors. The auditor`s unqualified
audit report is available for inspection at the Company`s registered office.
APPRECIATION
The group recognises the value of its management teams and staff and thanks
them for their loyalty and work ethic during a difficult trading period. We
also thank our business partners, advisers, clients and shareholders for
their support and faith in the group.
By order of the Board
24 March 2009
D K Wentzel J L Mortimer
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Executive directors: D K Wentzel; J L Mortimer; B A Stegmann; R F Eksteen; D
F Esterhuyse; G S Warren
Non-executive directors: L Theron, L A Thondi
Company Secretary: K M Linstrom
Registration number: 1999/009701/06
Registered address: Nedbank Building, Cnr Biccard & Jorissen Street,
Braamfontein, 2017
Postal address: P.O Box 30885, Braamfontein, 2017
Telephone: 011 483 5000
Facsimile: 086 516 0873
Web address: www.rbaholdings.co.za
Transfer secretaries: Computershare Investor Services (Pty) Limited
Auditors: Logista Johannesburg Registered Accountants and Auditors
Designated Adviser: Exchange Sponsors (2008) (Pty) Limited
Date: 24/03/2009 14:50:02 Produced by the JSE SENS Department.
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