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RBA
RBA
RBA - RBA Holdings Limited - Abridged audited annual financial statements for
the year ended 31 December 2009
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")
ABRIDGED AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2009
In accordance with the Listings Requirements of the JSE Limited, the directors
of RBA Holdings Limited hereby publish the group`s abridged audited annual
financial statements for the year ended 31 December 2009.
Consolidated Statement of Financial Position
Year Ended Year Ended
31 Dec 09 31 Dec 08
Audited Audited
R`000 R`000
Assets
Non-Current Assets 156 587 126 506
Investment properties 111 860 78 650
Property, plant and equipment 17 326 18 806
Intangible assets - 400
Goodwill 4 694 4 793
Investments in associates 6 994 8 018
Stands held for trading 10 374 8 504
Deferred tax 272 -
Deposits - land and stand 3 973 5 835
allocations
Loans to RBA employees share trust 1 094 1 500
Current Assets 107 070 113 173
Stands held for trading 75 803 55 731
Inventory 793 979
Construction contracts in progress 4 029 25 618
Prepayments and other receivables 9 927 14 235
Deposits - land and stand 14 472 15 570
allocations
Cash and cash equivalents 2 046 1 040
Total assets 263 657 239 679
Equity and liabilities 66 085 105 688
Share capital 28 396 28 396
Revaluation reserve 2 600 2 600
Retained income 42 251 76 199
Minority interest (7 162) (1 507)
Liabilities
Non-current liabilities 92 933 55 925
Borrowings 89 707 53 334
Finance lease obligation 163 1 671
Loans from directors 3 063 -
Deferred tax - 920
Current liabilities 104 639 78 066
Current portion of borrowings 36 158 30 663
Finance lease obligation 562 216
Taxation payable 6 490 6 808
Trade and other payables 33 710 18 101
Provisions 822 1 457
Construction contracts in progress 851 3 038
Bank overdraft 26 046 17 783
Total equity and liabilities 263 657 239 679
Number of shares in issue 310 000 310 000
000 000
Net asset value per share (cents) 21.32 34.09
Tangible net asset value per share 19.80 32.42
(cents)
Consolidated Statement of Comprehensive Income
31 Dec 2009 31 Dec 2008
Audited Audited
R`000 R`000
Revenue 84 048 190 460
Cost of sales (58 999) (123 770)
Gross profit 25 049 66 690
Other income 1 292 1 608
Operating costs (56 791) (61 206)
Operating profit/(loss) (30 450) 7 092
Investment Income 150 772
Impairment - loan to RBA employees (407) (1 500)
share trust
Impairment of goodwill (100) (1 752)
Fair value adjustments 1 945 25 035
Profit/(Loss) from associate (487) (716)
companies
Finance costs (11 652) (5 294)
Profit/(Loss) before taxation (41 001) 23 637
Taxation 1 398 (3 962)
Profit/(Loss) for the period (39 603) 19 675
Minority interest - loss 5 655 3 010
Net profit/(loss) for the period (33 948) 22 685
Reconciliation of headline (loss) /
earnings
Profit/(loss) attributable to (33 948) 22 685
ordinary shareholders
Adjusted for profit on disposal of (374) -
property, plant and equipment
Impairment - loan to RBA employees 407 1 500
share trust
Impairment of goodwill 100 1 753
(33 815) 25 938
Normalised (loss) / earnings
attributable to ordinary
shareholders
Fair value adjustment of investment (2 380) (21 530)
properties
Headline earnings (loss) / (36 195) 4 408
attributable to ordinary
shareholders
310 000 000 310 000 000
Weighted average number of shares
in issue
Basic (loss) / earnings per share (10.95) 7.32
(cents)
Normalised (loss) / earnings per (10.91) 8.37
share (cents)
Headline (loss) / earnings per (11.68) 1.42
share (cents)
Consolidated Statement of Cash Flows
31 Dec 31 Dec 2008
2009 Audited
Audited R`000
R`000
Cash flows from operating (1 347) 18 635
activities
Cash generated from operations 10 268 28 473
Interest received 150 772
Interest paid (11 651) (4 313)
Taxation paid (114) (6 297)
Cash flows from investing (49 245) (83 880)
activities
Acquisition of property, plant and (714) (3 567)
equipment
Proceeds on disposal of property, 745 182
plant and equipment
Acquisition of investment property (30 832) (41 504)
Movement in investments in 538 -
associates
Movement deposits - land and stand 2 959 -
allocations
Movement of non-current land for (21 941) (33 797)
trading
Business combinations - (5 194)
Cash flows from financing 43 335 46 174
activities
Loans raised 40 272 48 171
Loans from directors 3 063 -
Dividend paid by subsidiary - (1 997)
Cash flows for the period (7 257) (19 071)
(16 743) 2 328
Cash and cash equivalents at
beginning of period
(24 000) (16 743)
Cash and cash equivalents at end of
period
Segment Report
Property Sectional title Consolidated
development housing rentals
activities R`000
R`000
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2009 2008 2009 2008 2009 2008
Audited Audited Audited Audited Audited Audited
R`000 R`000 R`000 R`000 R`000 R`000
Revenue 82 628 190 460 1 420 - 84 048 190 460
Profit/(L (32 22 685 (1 493) - (33 22 685
oss) 455) 948)
Total 193 743 239 679 69 914 - 263 657 239 679
assets
Total 153 274 133 991 44 398 - 197 672 133 991
liabiliti
es
Consolidated Statement of Changes in Equity
Share Share Revaluati Accum Minorit TotalR`
capita premium on profitR` y 000
l R`000 Reserve 000 interes
R`000 R`000 t
R`000
Balance at 2 28 393 - 53 514 3 256 85 166
1 Jan 2008
Profit for - - - 22 685 (4 763) 17 922
the year
Revaluatio - - 2 600 - - 2 600
n of
office
building
Balance at 2 28 393 2 600 76 199 (1 507) 105 688
31 Dec
2008
Loss for - - - (33 948) (5 655) (39
the year 603)
Balance at 2 28 393 2 600 42 251 (7 162) 66 085
31 Dec
2009
OVERVIEW
Established in 1997, RBA 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, sale/rental and construction
of quality affordable homes.
REVIEW OF 2009 RESULTS
The 2009 financial year was an extremely difficult trading period for the
property development and construction industry in general, RBA was no
exception. The recession slowed the growth of the South African economy and
the tightening by banks of lending in 2008 and 2009 severely impacted on our
clients` ability to secure home loans. This resulted in a slowdown in sales
and delivery of clients` homes and revenue was down 56% in comparison with the
previous financial year.
Group operating expenses were down 7.2% from 2008 as a result of cost cutting
measures implemented.
Given the poor results no bonuses were paid to any group executives or senior
management.
Fair value adjustments of R1,9 million relate to revaluations of our long term
rental unit property portfolio to market value.
The group achieved an attributable loss of R33,9 million (2008: R22,6 million
profit) for the period. The net asset value of the group at 31 December 2009
was 22.04 cents (2008 - 34.09 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 2009 its market value based on external valuations
obtained, exceeded book value by R 45 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, which will then amount to approximately 36 cents per
share.
During the year the group completed 266 homes (2008 - 782) and handed them
over to clients for occupation.
The group`s cash reserves were under pressure during 2009 due to the decrease
in revenues generated. The sale of a 24% stake in our Protea Glen rental
project to International Housing Solutions resulted in cash inflows of R10
million during December 2009 and R7,1 million in March 2010. This along with a
cash inflow of R8,5 million in February 2010 from the refinancing of 165 Cosmo
City stands has brought the group`s cash flow back to a manageable level.
Description of normalised earnings
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 should
be taken into account when determining the normalised earnings for the group.
BUSINESS REVIEW
Land
The group has secured 4 453 residential 1 stands and 4 486 residential 3
(sectional title) opportunities at various stages in the township
establishment process.
Sales
As at 31 December 2009 the group had 374 approved sales (2008 - 410) that were
awaiting registration at the deeds office. Construction would commence
immediately after registration. The infrastructure servicing of the
Braamfischerville site (173 approved sales at 31 December 2009) is well under
way.
Rentals
A big success of the 2009 financial year was the successful completion and
letting of 176 sectional title units in Protea Glen, Soweto. As at 31 December
2009 the first phase consisting of 100 units was fully tenanted.
Marketing
In our target markets the RBA brand remains a trusted supplier of affordable
homes. An increase in marketing spend is anticipated in 2010 to boost our
sales pipeline and improve brand awareness.
Administration
The time delays between submission of a potential sale to ultimate approval of
finance are improving as bank`s willingness to lend to our clients improves.
No problems are being experienced with registrations of mortgage bonds and
transfer of stands at the deeds office.
Production
Our construction teams are performing well. Production levels are anticipated
to increase over the coming months as our approved sales are registered. No
problems are being experienced with plan approvals, council connections and
NHBRC enrolments.
Human resources
Staff turnover remains low and we are committed to ensuring that RBA remains
an employer of choice.
Green Policy
The group is committed to operating our business in an environmentally
friendly manner. A dedicated committee has recently been established to
develop and monitor our "green policies."
PROSPECTS
While the operating results for the period were extremely disappointing the
directors believe that the financial recovery of the group is underway.
Recent months have seen a continued relaxing by banks of their lending
criteria. This along with an improvement in the affordability of mortgage
loans due to lower interest rates and an improvement in clients` disposable
income levels have resulted in a continued improvement in monthly sales.
Although natural attrition in the workforce has taken place, the group has
retained its sales, administration and production capacity through this
difficult period and is well placed to take full advantage of the anticipated
recovery in the affordable housing market.
The unprecedented events of the last 18 months have caused a shakeout in the
property development sector and competition has reduced.
The directors believe that the medium to long term prospects for the groups
remain positive due to the following factors:
* The historic shortage of housing in South Africa remains a problem;
* The group has sufficient land available to meet forecasted demand;
* The group has the production capacity to meet forecasted demand;
* A recovery from the economic downturn is underway; and
* The provision of home loans to RBA`s segment of the residential housing
market is still a focal point of the major commercial banks.
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 Board of RBA Holdings Limited during 2009 took the strategic decision to
streamline the group structure into four operating companies with a view to
decreasing costs and increasing efficiencies. The Board of RBA Holdings
Limited approved that the structure be simplified as follows with effect from
1 January 2010:
- RBA Holdings Limited will remain the holding company;
- Land procurement will remain housed in Ground Base (Pty) Limited ("Ground
Base");
- All sales activities will be housed in Gemini Moon Trading 314 (Pty)
Limited, which is in the process of changing its name to RBA Homes (Pty)
Limited ("RBA Homes");
- All development activities will be housed in RBA Developments
(Johannesburg) (Pty) Limited ("RBA Developments");
- All construction activities will be housed in RBA Building Projects (Pty)
Limited ("RBA Projects").
The resultant shareholdings of RBA Holdings Limited in the abovementioned
operating companies are as follows:
- Ground Base - 87%
- RBA Homes - 51%
- RBA Developments - 93.5 %
- RBA Projects - 51%
In line with the rationale behind the restructuring and streamlining of the
RBA group, Daniel Esterhuyse and George Warren have assumed strategic
positions on the boards of RBA Homes and RBA Developments respectively and
resigned from the board of RBA Holdings Limited on 28 February 2010.
Richard Eksteen resigned as board member of RBA Holdings Limited on 28
February 2010 to pursue other interests.
The Board of RBA Holdings Limited now consists of three executive and two
independent non-executive directors. This restructuring of the board confirms
RBA`s commitment to increase the corporate governance regime in the company,
in line with the guidelines of King III.
The directors are not aware of any other matters or circumstances 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 suppliers, business partners, advisors, clients and
shareholders for their support and faith in the group.
By order of the Board
26 March 2010
D K Wentzel J L Mortimer
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Executive directors: D K Wentzel, J L Mortimer, B A Stegmann
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: 26/03/2010 17:16:02 Produced by the JSE SENS Department.
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