| Wed 30 Mar 2011, 7:30 | | RBA - RBA Holdings Limited - Audited provisional annual financial statements for |
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RBA
RBA
RBA - RBA Holdings Limited - Audited provisional annual financial statements for
the year ended 31 December 2010 and restated results for the years ended 31
December 2009 and 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")
AUDITED PROVISIONAL ANNUAL FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2010 AND RESTATED RESULTS FOR THE YEARS ENDED
31 DECEMBER 2009 AND 31 DECEMBER 2008
The audited condensed annual results for the year ending 31 December 2010
as well as the restated annual results for the years ending 31 December 2009
and 31 December 2008, are presented below.
Consolidated Statement of Financial Position
Year Year Year
Ended Ended Ended
31 Dec 10 31 Dec 09 31 Dec 08
Audited Restated Restated
R`000 R`000 R`000
Assets
164 663 167 123 136 543
Non-current assets
Investment properties 115 227 114 449 78 650
Property, plant and equipment 13 984 17 326 18 806
Intangible assets - - 400
Goodwill 7 603 4 694 4 793
Investments in associates - 8 242 9 267
Stands held for trading 8 433 10 374 8 504
Deferred tax 11 088 6 971 8 788
Deposits - land and stand 5 328 3 973 5 835
allocations
Loans to RBA employees share 3 000 1 094 1 500
trust
139 512 107 339 114 314
Current assets
Stands held for trading 103 611 75 803 55 731
Deposits - land and stand 2 305 14 472 15 570
allocations
Current tax receivable 94 326 1 139
Inventory 913 793 979
Construction contracts in 12 264 4 029 25 618
progress
Prepayments and other 14 490 9 870 14 237
receivables
Cash and cash equivalents 5 835 2 046 1 040
Total assets 304 175 274 462 250 857
Equity and liabilities 45 815 72 547 108 951
Equity
Share capital 29 386 28 396 28 396
Revaluation reserve 2 543 2 543 2 600
Retained income 21 760 48 769 79 462
Minority interest (7 874) (7 161) (1 507)
Liabilities
Non-current liabilities 132 525 93 887 62 699
Borrowings 123 311 88 678 53 334
Finance lease obligation 58 163 1 671
Deferred tax 9 156 5 046 7 694
Current liabilities 125 835 108 028 79 207
Current portion of borrowings 41 493 36 158 30 663
Finance lease obligation 180 562 216
Taxation payable 6 613 6 816 7 947
Trade and other payables 46 302 33 710 18 101
Provisions 290 822 1 457
Construction contracts in 2 929 851 3 039
progress
Loans from directors 3 562 3 063 -
Bank overdraft 24 466 26 046 17 784
Total equity and liabilities 304 175 274 462 250 857
Number of shares in issue 316 600 310 000 310 000
000 000 000
Net asset value per share 14.47 23.40 35.15
(cents)
Tangible net asset value per 12.07 21.89 33.47
share (cents)
Consolidated Statement of Comprehensive Income
31 Dec 31 Dec 31 Dec
2010 2009 2008
Audited Audited Audited
R`000 R`000 R`000
Revenue 108 573 84 048 191 009
Cost of sales (70 532) (59 000) (123 770)
Gross profit 38 041 25 048 67 239
Other income 1 379 1 292 1 059
Operating costs (53 843) (56 848) (61 206)
Operating profit/(loss) (14 423) (30 508) 7 092
Investment Income 471 150 772
Impairment - loan to RBA 1 907 (407) (1 500)
employees share trust
Impairment of goodwill - (100) (1 752)
Fair value adjustments 2 733 4 534 25 035
Loss from associate companies (49) (487) (716)
Finance costs (14 015) (10 622) (5 294)
Profit/(Loss) before taxation (23 376) (37 440) 23 637
Taxation 1 378 1 035 (1 947)
Profit/(Loss) for the period (21 998) (36 405) 21 690
Minority interest - loss 10 609 5 655 3 010
Net profit/(loss) for the period (11 389) (30 750) 24 700
Reconciliation of headline
(loss) / earnings
Profit/(loss) attributable to (11 389) (30 750) 24 700
ordinary shareholders
Adjusted for profit on disposal 467 (374) -
of property, plant and equipment
Impairment - loan to RBA (1 907) 407 1 500
employees share trust
Impairment of goodwill - 100 1 753
(12 829) (30 617) 27 953
Normalised (loss) / earnings
attributable to ordinary
shareholders
(2 350)
Fair value adjustment of (4 968) (25 035)
investment properties
Headline earnings (loss) / (15 179) (35 585) 2 918
attributable to ordinary
shareholders
310 307 310 000 310 000
Weighted average number of 397 000 000
shares in issue
Basic (loss) / earnings per (3.67) (9.92) 7.97
share (cents)
Normalised (loss) / earnings per (4.13) (9.88) 9.02
share (cents)
Headline (loss) / earnings per (4.89) (11.48) 0.94
share (cents)
Consolidated Statement of Cash Flows
31 Dec 31 Dec 31 Dec 2008
2010 2009 Audited
Audited Audited R`000
R`000 R`000
Cash flows from operating (25 059) (1 347) 18 635
activities
Cash generated from (used in) (11 499) 9 239 28 473
operations
Interest received 471 150 772
Interest paid (14 015) (10 622) (4 313)
Taxation paid (16) (114) (6 297)
Cash flows from investing (9 458) (49 244) (83 880)
activities
Acquisition of property, plant and (672) (714) (3 567)
equipment
Proceeds on disposal of property, 2 309 745 182
plant and equipment
Purchase of other intangible asset - - (400)
Acquisition of investment property 1 954 (61 139) (41 504)
Sale of investment property - 28 146 -
Movement in investments in - 537 -
associates
Movement deposits - land and stand 10 814 2 959 -
allocations
Transfer of current property to - 2 164 -
investment property
Movement of land for trading (25 867) (21 941) (33 797)
Business combinations 2 004 - (4 794)
Purchase of RBA Holdings Ltd share - (1) -
incentive
Cash flows from financing 39 886 43 334 46 174
activities
Proceeds on share issue 990 - -
Loans raised 38 941 41 433 48 171
Loans from directors 499 3 063 -
Movements in finance lease (487) (1 162) -
obligations
Realisation of revaluation (57) - -
Dividend paid by subsidiary - - (1 997)
Cash flows for the period 5 369 (7 257) (19 071)
(24 000) (16 743) 2 328
Cash and cash equivalents at
beginning of period
(18 631) (24 000) (16 743)
Cash and cash equivalents at end of
period
Segment Report
Property development Sectional title Consolidated
activities housing rentals
R`000 R`000 R`000
31 Dec 31 Dec 31 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2010 2009 Dec 2010 2009 2008 2010 2009 2008
Audited Audite 2008 Audite Audited Audite Audited Audite Audite
R`000 d Audit d R`000 d R`000 d d
R`000 ed R`000 R`000 R`000 R`000
R`000
Revenue 102 804 82 749 191 5 769 1 299 - 108 573 84 048 191
009 009
Cost of (70 (59 (123 - - - (70 (59 (123
sale 532) 000) 770) 532) 000) 770)
Gross 32 272 23 749 67 5 769 1 299 - 38 041 25 048 67 239
profit 239
Operati (51 (56 (61 (2 (786) - (53 (56 (61
ng 569) 062) 206) 274) 843) 848) 206)
Expense
s
Revalua - - 25 2 733 4 534 - 2 733 4 534 25 035
tion 035
Finance (8 754) (8 (5 (5 (1 747) - (14 (10 (5
cost 875) 294) 261) 015) 622) 294)
Profit( (24 (38 23 968 712 - (23 (37 23 637
Loss) 344) 152) 637 376) 440)
before
tax
Total 232 769 206 250 71 406 67 568 - 304 175 274 250
assets 894 857 462 857
Total 205 380 169 141 52 980 32 627 - 258 360 201 141
liabili 288 906 915 906
ties
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 3 28 393 2 600 79 462 (1 507) 108 951
01 Jan
2009
Loss for - - (57) (30 692) (5 655) (36
the year 404)
Balance at 3 28 393 2 543 48 770 (7 162) 72 547
01 Jan
2010
Loss for - - - (11 389) (10 (21
the year 609) 998)
Issue of - 990 - - - 990
shares
Change in - - - (12 711) 12 692 (19)
shareholdi
ng
Business - - - (2 910) (2 795) (5 705)
combinatio
ns
Balance at 3 29 383 2 543 21 760 (7 874) 45 815
31 Dec
2010
RESTATEMENT
The restatement of the 2009 and 2008 annual results relates to auditors`
recommended journal entries that were affected on subsidiary level, but not
included in the consolidation of the group financial statements. The subsidiary
level journal entries are as follows:
Fair value adjustment to Investment Properties
Deferred tax asset and liability
Realisation of revaluation reserve
Reversal of finance costs
Additional operating expenses
A further restatement was required for the movement in the loan account on
subsidiary level that was incorrectly capatalised to the investment account.
The above restatements had the following effect on the 2008 and 2009 Statements
of Comprehensive Income:
R`000 31 Dec 08 31 Dec 09
Profit / (Loss) for the period as previously 19 675 (39 603)
reported
Deferred taxation 2 2 015 (362)
Fair Value adjustment of Investment Property - 2 589
1
Reversal of Finance Cost 4 - 1 029
Additional operating expenses 5 - (57)
Restated profit / (loss) for the period 21 689 (36 404)
The above restatements had the following effect on the Statements of Financial
Position:
R`000 31 Dec 08 31 Dec 09
Investments in associates as previously 8 018 6 994
reported
Loan movements incorrectly capatalised 1 248 1 248
Restated investments in associates 9 267 8 242
Deferred taxation as previously reported 6 774 5 319
Deferred taxation 2 2 015 1 652
Restated deferred taxation 8 789 6 971
Investment property as previously reported 111 860
Fair Value adjustment of Investment Property 2 589
1
Restated deferred taxation 114 449
Trade and other receivables as previously 9 927
reported
Additional operating expenses 5 (57)
Restated trade and receivables 9 870
Reserves as previously reported 2 600
Restatement adjustments 3 (57)
Restated reserves 2 543
Retained income as previously reported 76 199 42 251
Restatement adjustments 3 263 6 519
Restated retained income 79 462 48 770
Other financial liabilities as previously 89 707
reported
Reversal of Finance Cost 4 (1 029)
Restated other financial liabilities 88 678
OVERVIEW
Established in 1997, RBA is a supplier of affordable homes in Gauteng, Polokwane
and Kwa-Zulu Natal. The business focuses on 3 distinct areas:
Supplier of traditional bank funded homes
Building of a rental portfolio
Providing housing to mining groups
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 2010 RESULTS
The 2010 financial year was once again a difficult economic and trading period
for the property development and construction industry in general.
RBA is happy to announce an increase in revenue of 29% compared to the prior
reporting period. There was a significant recovery during the second half of
2010 primarily due to our pipeline of sold houses starting to register and sales
being maintained, together with the impact of the increasing number of home
loans being approved by the banks.
6 months ended 6 months ended Total
31 December 2010 30 June 2010
R`000 R`000 R`000
Revenue 73 009 35 564 108 573
Gross profit 23 629 14 412 38 041
Loss (1 010) (10 379) (11 389)
attributable for
the period
Cost saving measures continued. The group`s operating expenses from property
development activities reduced by 7.9% against the 2009 financial year. It is to
be noted that 2009 operating costs from property development activities
represented a reduction of 8.5% against the 2008 financial year.
Given the fact that losses were recorded in 2010, no bonuses were paid to any
group executives or senior management.
Fair value adjustments of R2,7 million relate to revaluations of our long term
rental unit property portfolio to market value.
The group achieved an attributable loss of R11,4 million (2009: R30,7 million
loss, 2008: R24,7 million profit) for the period. The net asset value of the
group at 31 December 2010 was 14.47 cents (2009 - 23.40 cents, 2008 - 35.15
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 2010 its market value based on external valuations
obtained, exceeded book value by R 33 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 25 cents per
share. When considering RBA`s level of gearing, this additional value should
also be taken into consideration.
The Board of RBA Holdings took the strategic decision to streamline the group
structure into four operating companies with a view to increasing efficiencies.
Consequently the structure was simplified as follows with effect from 1 January
2010 (the equity holding by RBA Holdings is shown in brackets):
RBA Holdings remained the holding company;
Land procurement is housed in Ground Base (Pty) Limited (87%);
Sales activities are housed in RBA Homes (Pty) Limited (51%);
Development activities are housed in RBA Developments (Johannesburg) (Pty)
Limited (93.5%);
Construction activities are housed in RBA Building Projects (Pty) Limited (51%).
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 5 997 stands zoned as residential 1 (freehold) and 3 416
opportunities zoned as residential 3 (sectional title) at various stages in the
township establishment process.
Sales
As at 31 December 2010 the group had 394 approved sales (2009 - 374) that were
awaiting registration at the deeds office. Construction would commence
immediately after registration.
Rentals
As at 31 December 2010 our 176 sectional title units in Protea Glen, Soweto were
fully tenanted. Our strategy to roll out more projects of this nature has been
hampered by the difficulty in securing long term funding for the next projects.
Expectations are that our next project will commence during the 2nd half of
2011.
Marketing
In our target markets the RBA brand remains a trusted supplier of affordable
homes. Marketing spend will be increased in 2011 as the market recovery
continues. This will continue to boost our sales pipeline and improve brand
awareness.
Administration
The time delays between submission of a potential sale to ultimate approval of
finance continues to improve as banks` willingness to lend to our clients gains
momentum. No problems are being experienced with registrations of mortgage bonds
and transfer of stands at the deeds office. Obtaining clearance certificates
from local authorities continues to be a challenge for RBA and the entire
industry. During the 2010 period the group transferred a total of 443 stands to
clients.
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. As the cashflow position of the group improves, additional resources
will be allocated towards improving and monitoring our "green policies."
PROSPECTS
The 2nd half of 2010 reflected a significantly improved performance and this
trend has continued into 2011.
Indications are that the appetite of banks towards lending in the residential
property sector will continue to improve. This along with an improvement in our
clients` disposable income levels has resulted in a continued improvement in
monthly sales.
Even though operations have been streamlined and costs have been reduced the
group has retained its sales, administration and production capacity through
this difficult period and is well positioned to take full advantage of increased
demand in the affordable housing market.
The economic events of the past 3 years have resulted in reduced competition in
the property development sector and RBA is well placed to capitalise on an
improving market.
The cashflow position of the group will remain under pressure but will improve
as our pipeline of approved sales is unwound.
The directors believe that the medium to long term prospects for the group
remain positive due to the following factors:
The historic shortage of housing in South Africa remains a problem;
The group has the production capacity to meet forecasted demand;
Government intervention in creating employment in the economy will result in a
larger client base that can be accessed; 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.
RBA has secured strategically placed pockets of land in Gauteng, Polokwane and
Kwazulu Natal which, together with the aforementioned factors, support its
growth strategy.
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
Following on the consolidation of its subsidiaries into four major operating
subsidiaries effective 1 January 2010, RBA Holdings has absorbed the minority
interests in these companies and effective 1 January 2011 the shareholding of
RBA Holdings Limited is as follows:
RBA Homes- 100%
RBA Developments - 100%
Groundbase - 100%
RBA Building Projects - 82%
RBA has also appointed Francois le Roux and Hein Herbst as the chief operating
officers of RBA Developments and RBA Building Projects respectively. Their
primary role is to maximize operational output in these companies.
In keeping with its commitment to adhere to the corporate governance principles
in King III, David Wentzel has stepped down as chairman of the Board and Leon
Theron, previously an independent non executive director of RBA, has been
appointed by the Board as an independent non-executive chairman effective 23
March 2011. David Wentzel continues to fulfill the role of chief executive
officer of RBA.
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 as amended. 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 CA
(SA) Inc. Registered 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 two years. We also thank
our bankers, suppliers, business partners, advisors, clients and shareholders
for their support and faith in the group.
By order of the Board
30 March 2011
D K Wentzel J L Mortimer
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non-executive Chairman: L Theron
Executive directors: D K Wentzel, J L Mortimer, B A Stegmann
Non-executive director: L A Tondi
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 CA (SA) Inc. Chartered Accountants and Registered Auditors
Designated Adviser: Exchange Sponsors (2008) (Pty) Limited
Date: 30/03/2011 07:30:01 Produced by the JSE SENS Department.
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