| Mon 26 Sep 2011, 7:05 | | RBA - RBA Holdings Limited - Abridged interim financial statements for the six |
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RBA
RBA
RBA - RBA Holdings Limited - Abridged interim financial statements for the six
month period ended 30 June 2011
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 INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD
ENDED 30 JUNE 2011
Highlights
* Revenue up 133%
* Operating profit - R4,6 million
* Equivalent houses completed - 268
Consolidated Statement of Financial Position
Period Period Year
Ended Ended Ended
30 June 30 June 31 Dec 10
11 10
R`000 R`000 R`000
Assets
155 191 160 939 164 663
Non-current assets
Investment properties 108 600 115 462 115 227
Property, plant and equipment 13 854 16 708 13 984
Goodwill 7 603 4 694 7 603
Stands held for trading 8 604 9 377 8 433
Deferred tax 12 453 9 431 11 088
Deposits - land and stand 4 077 4 173 5 328
allocations
Loans to RBA employees share - 1 094 3 000
trust
Current assets 144 248 108 088 139 512
Stands held for trading 106 756 77 131 103 611
Deposits - land and stand 2 664 11 596 2 305
allocations
Inventory 828 309 913
Construction contracts in 15 534 5 050 12 264
progress
Prepayments and other 16 003 11 442 14 584
receivables
Cash and cash equivalents 2 463 2 560 5 835
Total assets 299 439 269 027 304 175
Equity and liabilities
Equity 43 190 46 106 45 815
Share capital 30 346 28 396 29 386
Revaluation reserve 2 543 2 600 2 543
Retained income 10 506 29 179 21 760
Minority interest (205) (14 069) (7 874)
Liabilities
Non-current liabilities 130 317 113 654 132 525
Borrowings 119 783 107 855 123 311
Finance lease obligation 19 309 58
Deferred tax 10 515 5 490 9 156
Current liabilities 125 932 109 267 125 835
Current portion of borrowings 39 271 32 102 41 493
Finance lease obligation 90 275 180
Taxation payable 5 100 7 080 6 613
Trade and other payables 48 958 38 632 46 302
Provisions 750 636 290
Construction contracts in 1 773 731 2 929
progress
Loans from directors 3 895 3 385 3 562
Bank overdraft 26 095 26 426 24 466
Total equity and liabilities 299 439 269 027 304 175
Number of shares in issue 340 000 310 000 316 600
000 000 000
Net asset value per share 12.59 14.87 14.47
(cents)
Tangible net asset value per 10.38 13.36 12.07
share (cents)
Consolidated Statement of Comprehensive Income
Period Period Year Ended
Ended Ended 31 Dec 10
30 June 11 30 June 10 R`000
R`000 R`000
Revenue 82 937 35 564 108 573
Cost of sales (49 947) (21 152) (70 532)
Gross profit 32 990 14 412 38 041
Other income 72 3 015 1 379
Operating costs (28 410) (26 626) (53 843)
Operating profit/(loss) 4 652 (9 199) (14 423)
Investment Income 164 - 471
Impairment - loan to RBA - - 1 907
employees share trust
Loss on sale of Non-Current (1 508) - -
Assets
Fair value adjustments - - 2 733
Loss from associate companies (11) (26) (49)
Finance costs (6 700) (7 834) (14 015)
Loss before taxation (3 403) (17 059) (23 376)
Taxation (183) 2 568 1 378
Loss for the period (3 586) (14 491) (21 998)
Minority interest - loss 1 188 4 112 10 609
Loss for the period (2 398) (10 379) (11 389)
Reconciliation of headline
(loss) / earnings
Loss attributable to ordinary (2 398) (10 379) (11 389)
shareholders
Adjusted for loss on disposal of 1 508 - 467
property, plant and equipment
Impairment - loan to RBA - - (1 907)
employees share trust
(890) (10 379) (12 829)
Normalised loss attributable to
ordinary shareholders
- (2 350)
Fair value adjustment of (2 733)
investment properties
Headline loss attributable to (890) (13 112) (15 179)
ordinary shareholders
338 586 310 000 310 307
Weighted average number of 740 000 397
shares in issue
Basic (loss) / earnings per (0.71) (3.35) (3.67)
share (cents)
Normalised (loss) / earnings per (0.26) (3.35) (4.13)
share (cents)
Headline (loss) / earnings per (0.26) (4.23) (4.89)
share (cents)
Consolidated Statement of Cash Flows
Period Period Year Ended
Ended Ended 31 Dec 10
30 June 11 30 June 10 R`000
R`000 R`000
Cash flows from operating (5 860) (18 599) (25 059)
activities
Cash generated from /(used in) 2 380 (8 582) (11 499)
operations
Interest received 164 44 471
Interest paid (6 700) (10 195) (14 015)
Taxation paid (1 704) 134 (16)
Cash flows from investing 2 444 4 459 (9 458)
activities
Acquisition of property, plant and (241) (96) (672)
equipment
Proceeds on disposal of property, - 38 2 309
plant and equipment
Acquisition of investment property (12) (3 602) (4 661)
Sale of investment property 5 132 - 6 615
Movement in investments in - 7 995 -
associates
Movement deposits - land and stand 892 2 677 10 814
allocations
Movement of land for trading (3 316) 2 935 (25 867)
Business combinations (11) (5 488) 2 004
(1 585) 14 273 39 886
Cash flows from financing
activities
Proceeds on share issue 3 960 - 990
Loans raised/(repaid) (5 751) 14 091 38 884
Loans from directors 334 322 499
Movements in finance lease (128) (140) (487)
obligations
(5 001) 133 5 369
Cash flows for the period
(18 631) (24 000) (24 000)
Cash and cash equivalents at
beginning of period
(23 632) (23 867) (18 631)
Cash and cash equivalents at end of
period
Segment Report
Property development Sectional title Consolidated
activities housing rentals
R`000 R`000 R`000
30 30 31 Dec 30 30 31 Dec 30 June 30 31 Dec
June June 2010 June June 2010 2011 June 2010
2011 2010 R`000 2011 2010 R`000 R`000 2010 R`000
R`000 R`000 R`000 R`000 R`000
Revenue 79 474 33 258 102 804 3 463 2 306 5 769 82 937 35 564 108
573
Cost of (49 (21 (70 - - - (49 (21 (70
sale 947) 152) 532) 947) 152) 532)
Gross 29 527 12 106 32 272 3 463 2 306 5 769 32 990 14 412 38 041
profit
Operati (26 (25 (51 (1 (888) (2 (28 (26 (53
ng 645) 738) 569) 765) 274) 410) 626) 843)
Expense
s
Revalua - - - - - 2 733 - - 2 733
tion
Finance (4 (5 (8 754) (2 (2 (5 (6 700) (7 (14
cost 161) 260) 539) 574) 261) 834) 015)
Profit( (2 (15 (24 (841) (1 968 (3 403) (17 (23
Loss) 562) 903) 344) 156) 059) 376)
before
tax
Total 231 200 232 769 71 433 68 455 71 406 302 439 269 304
assets 006 572 027 175
Total 203 171 205 380 52 900 51 571 52 980 256 249 222 258
liabili 349 350 921 360
ties
Consolidated Statement of Changes in Equity
Share Share Revaluati Accum Minority Total
capital premium on profit interest R`000
R`000 R`000 reserve R`000 R`000
R`000
Balance at 3 28 393 2 543 48 770 (7 162) 72 547
01 Jan
2010
Loss for - - (11 389) (10 609) (21 998)
the year
Issue of - 990 - - - 990
shares
Change in - - - (15 621) 9 897 (5 724)
shareholdi
ng
Balance at 3 29 383 2 543 21 760 (7 874) 45 815
01 Jan
2011
Loss for - - - (2 398) (1 188) (3 586)
the year
Issue of - 3 963 3 963
shares
Change in - - - (8 858) 8 858 -
shareholdi
ng
Balance at 3 33 346 2 543 10 506 (205) 46 190
30 June
2011
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
In the segment report above, the results for the housing for mining groups has
been included under the property development activities. The reason therefore is
that these business focus areas are fundamentally similar.
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 2011 INTERIM RESULTS
The results for the period confirm the financial recovery that RBA is
experiencing. Market conditions remain difficult for the residential property
development industry in general. The supply of bank home loans remains tight and
household indebtedness is still at high levels. Demand for affordable housing
though remains robust and indications are that this sector is showing strong
signs of recovery.
RBA is happy to announce an increase in revenue of 133% compared to the prior
reporting period. The gross profit percentage achieved from property development
activities was 37,2% (2010 - 36,4%). The improved gross profit can be
attributable to increases in the profit realised through the stand component of
our housing packages. RBA historically relied on stand allocations from external
developers and since listing in 2007 RBA started to develop its own land with
improved margins available to the group.
The group`s operating expenses from property development activities increased
marginally by 3% against the prior comparative period, mainly attributable to
increased marketing spend and inflationary pressures during the period.
No revaluations of our long term rental unit property portfolio to market value
were recorded during the period.
The group achieved an attributable loss of R2,398 million (2010: R10,379 million
loss) for the period. The net asset value of the group at 30 June 2011 was 12.59
cents (2010 - 14.87 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 30 June 2011 its market value based on external valuations, exceeded
book value by R 30 million. This factor should be taken into account when
considering the real net asset value of the group and when considering RBA`s
level of gearing.
During the period 26,400,000 ordinary shares were issued to public shareholders
at an issue price of 15 cents per share raising R3,960 million for the group.
During the 2010 financial year RBA Holdings consolidated all group companies
into four major operating entities. The next step was to absorb the minority
interests in these companies and effective 1 January 2011 the shareholding of
RBA Holdings Limited in its major subsidiaries is as follows:
* RBA Homes- 100%
* RBA Developments - 100%
* Groundbase - 100%
* RBA Building Projects - 82%
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
Key operating indicators
30 June 31 Dec 2010
2011 12 months
6 months
Bonds approved awaiting 431 394
registration
Submitted deals awaiting bond 353 351
approval
Deals registered in the period 215 468
Houses under construction 215 269
Equivalent houses completed 268 379
Note: equivalent houses completed takes into account houses under construction
at the beginning of the period, registrations during the period and houses under
construction at the end of the period and determines the number of equivalent
houses actual completed during the period.
Corporate Governance
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, was 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.
Land
The group has secured 4 968 stands zoned as residential 1 (freehold) and 2 657
opportunities zoned as residential 3 (sectional title) at various stages in the
township establishment process.
Sales
As at 30 June 2011 the group had 431 approved sales (2010 - 469) that were
awaiting registration at the deeds office. Construction would commence
immediately after registration.
Rentals
Our rental portfolio consisting of 176 sectional title units in Protea Glen,
Soweto remains well managed. Construction on the next rental project consisting
of 152 units will commence in October 2011. National Housing Finance Corporation
Ltd has committed funding to the value of R39 million to this project.
Marketing
In our target markets the RBA brand remains a trusted supplier of affordable
homes. Marketing spend during the period was increased; this translated into
improved monthly sales and improved brand awareness.
Administration
No problems are being experienced with the deeds office. Obtaining clearance
certificates from local authorities continues to be a challenge for the entire
industry. During the 6 month period the group transferred a total of 215 stands
to clients. The group anticipates that 700 stands will be transferred to clients
for the 2011 financial year.
Production
Our construction teams performed well given the increased production levels. No
problems are being experienced with plan approvals, council connections and
NHBRC enrolments. The group had 215 houses under construction at 30 June 2011.
Human capital
Staff turnover remains low and we are committed to ensuring that RBA remains an
employer of choice. At 30 June 2011 the workforce consisted of 221 employees.
Green Policy
The group is committed to operating our business in an environmentally friendly
manner. Additional resources are being allocated towards improving and
monitoring our "green policies."
PROSPECTS
The financial recovery of the group is underway and the directors anticipate a
further improved second half of 2011.
Improved screening of client`s applications before submission to the banks has
resulted in improved strike rates of approved home loans. Indications are that
the appetite of banks towards lending in the affordable housing sector will
continue to improve.
The cash flow position of the group remains under pressure but is gradually
improving as our pipeline of approved sales is unwound.
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 land, sales, administration and production capacity to
meet forecasted demand;
* Recent economic events have resulted in reduced competition in the
affordable housing market;
* 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.
DIVIDENDS
No dividends were declared during the period. The dividend policy of RBA will be
reviewed annually in light of RBA`s cash flow, gearing and capital requirements.
SUBSEQUENT EVENT
The group`s transactional banking facilities have been restructure with our bank
overdraft facilities of R25 million at 30 June 2011 being restructured as
followed:
* R5 million current overdraft
* R20 million converted to longer term loans
STRENGHTENING OF THE BOARD
With the objective of strengthening the board, RBA is proud to announce the
appointment of Kutoane Kutoane, Mpho Hlahla and Lyndon Kan as independent non-
executive directors effective 1 September 2011.
Kutoane Kutoane has an MA in International Financial Economics, has more than 20
years` experience in the field of development finance and is currently CEO of
the Gauteng Partnership Fund ("GPF"). The GPF`s mandate is to invest public
funds alongside commercial funds in the financing of affordable housing projects
in Gauteng.
Mpho Hlahla is a qualified and registered town and regional planner with 20
years experience in various aspects of the built environment, such as town and
regional planning, transportation planning, property management and development
and project management. She serves on the boards of a number of entities.
Lyndon Kan has a BSc in Building Science and is currently managing director of
Guma Property Holdings. Before that he held various senior positions in Absa
Bank and Standard Bank.
Leon Theron, chairperson of the board, has resigned as chairperson of the Audit
Committee and the Risk Committee. Leon continues to serve on the Audit Committee
and chairs the Remuneration Committee.
Kutoane Kutoane was appointed as chairperson of the Risk Committee and a member
of the Audit Committee.
Mpho Hlala was appointed as the chairperson of the Social and Ethics Committee
as well as a member of the Risk Committee.
Lyndon Kan was appointed as chairperson of the Audit Committee and member of the
Remuneration Committee.
GROUP CHIEF OPERATING OFFICER
Bernard Stegmann has been appointed as chief operating officer of the group
effective 21 September 2011. Bernard will take full responsibility for the
operations of the group`s sales, land development and construction activities.
BASIS OF PREPARATION
The consolidated interim financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) and IAS 34: Interim
Financial Reporting. The accounting policies used in the preparation of these
results are consistent in all material respects with those used in the annual
financial statements for the year ended 31 December 2010.
The consolidated interim financial statements have not been audited or reviewed
by the group`s auditors.
APPRECIATION
The group recognises the value of its management teams and staff and thanks them
for their loyalty and work ethic. 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
26 September 2011
L Theron D K Wentzel
Chairman Chief Executive Officer
CORPORATE INFORMATION
Independent non-executive Chairman: L Theron
Executive directors: D K Wentzel, J L Mortimer, B A Stegmann
Independent non-executive directors: K O Kutoane, L B Kan, M A Hlahla
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: 26/09/2011 07:05:02 Produced by the JSE SENS Department.
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