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RBA
RBA
RBA - RBA Holdings Limited - Audited Provisional Annual Financial Statements
for the year ended 31 December 2011 and Audited Restated Results for the
years ended 31 December 2010 and 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")
AUDITED PROVISIONAL ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31
DECEMBER 2011 AND AUDITED RESTATED RESULTS FOR THE YEARS ENDED 31 DECEMBER
2010 AND 31 DECEMBER 2009
Highlights:
* Revenue up 62%;
* Gross profit up 90%;
* Operating profit of R14,2 million;
* HEPS up to 2.16 cents per share;
* Cash generated for the year of R16,5 million.
The audited condensed provisional annual results for the year ending 31
December 2011 as well as the restated audited annual results for the years
ending 31 December 2010 and 31 December 2009, are presented below.
Consolidated Statement of Financial Position
31-Dec-11 31-Dec-10 31-Dec-09
Audited Restated Restated
R`000 R`000 R`000
Assets
NonCurrent Assets 197,204 161,664 163,120
Investment property 13,613 45,528 47,527
Investment property - Rental 123,143 69,699 66,921
Portfolio
Property, plant and equipment 13,700 13,985 17,326
Goodwill 7,603 7,603 4,694
Investments in associates - - 5,333
Stands held for trading 17,430 8,433 10,374
Deferred tax 17,748 11,088 6,971
Deposits for land and stand 3,967 5,328 3,973
allocations
Current Assets 99,939 139,513 107,340
Inventories 1,245 912 793
Stands held for trading 58,052 103,611 75,803
Construction contracts and 7,688 12,264 4,029
receivables
Trade and other receivables 21,166 14,586 10,197
Deposits for land and stand 9,118 2,305 14,473
allocations
Cash and cash equivalents 2,670 5,835 2,046
Total Assets 297,143 301,177 270,460
Equity and Liabilities
Equity 52,221 42,816 68,545
Share capital 30,346 26,386 25,396
Reserves 2,543 2,543 2,543
Retained income 16,889 21,761 47,767
Noncontrolling interest 2,442 (7,874) (7,162)
Liabilities
NonCurrent Liabilities 159,036 132,526 93,887
Financial liabilities 78,300 74,674 50,517
Financial liabilities - Rental 74,766 48,637 38,161
Portfolio
Finance lease obligation 7 58 163
Deferred tax 5,963 9,157 5,046
Current Liabilities 85,886 125,834 108,028
Other financial liabilities 17,413 41,493 36,158
Current tax payable 5,325 6,613 6,816
Finance lease obligation 44 180 562
Trade and other payables 53,483 46,592 34,532
Construction contracts in progress 521 2,929 851
Loans from directors 4,347 3,562 3,063
Bank overdraft 4,754 24,466 26,046
Total Equity and Liabilities 297,143 301,177 270,460
Shares in issue - Excl share 340,000,000 313,600,000 307,000,000
incentive scheme
Net asset value per share (cents) 15.36 13.65 22.32
Net tangible asset value per share 13.12 11.23 20.80
(cents)
Consolidated Statement of Comprehensive Income
31-Dec-11 31-Dec- 31-Dec-09
10
Audited Restated Restated
R`000 R`000 R`000
Revenue 175,962 84,048
108,573
Cost of sales
(103,724) (70,532) (57,970)
Gross profit 72,238 26,078
38,041
Other income 452 1,292
1,379
Operating expenses
(58,521) (53,892) (57,336)
Operating profit/(loss) 14,169
(14,471) (29,965)
Investment revenue 150
(369) 471
Impairment of Goodwill -
- (100)
Fair value adjustments 709 4,534
2,733
Loss on sale of non-current assets -
(2,664) -
Finance costs
(15,503) (14,015) (11,652)
Loss before taxation
(3,658) (25,282) (37,033)
Taxation 9,103 1,035
1,378
Total comprehensive Profit/(Loss) 5,445
(23,905) (35,998)
Profit/(Loss) profit attributable to
:
RBA Holdings Ltd 3,986
(13,296) (30,343)
Noncontrolling interest 1,459
(10,609) (5,655)
5,445
(23,905) (35,998)
Reconciliation of headline
(loss) / earnings
Profit/(loss) attributable to 3,986 (13,296) (30,343)
ordinary shareholders
Profit on disposal of 2,664 467 (374)
property, plant and equipment
Impairment of goodwill - - 100
Normalised 6,650 (12,829) (30,617)
Profit/(loss)attributable to
ordinary shareholders
Fair value adjustment of 648 (2,350) (4,534)
investment properties
Headline profit/(loss) to 7,298 (15,179) (35,150)
ordinary shareholders
Weighted average number of 337,878,022 307,307,397 307,000,000
shares in issue
Basic earnings/(loss)per share 1.18 (4.33) (9.88)
(cents)
1.97 (4.17) (9.97)
Normalised earnings/(loss)per
share (cents)
2.16 (4.94) (11.45)
Headline earnings/(loss) per
share (cents)
Consolidated Statement of Cash Flows
31 Dec 31 Dec 31 Dec
2011 2010 2009
Audited Restated Restated
R`000 R`000 R`000
Cash flows from operating 17,525 (38,165) (18,166)
activities
Cash generated from (used in) 35,436 (24,605) (6,550)
operations
Interest received (369) 471 150
Interest paid (15,503) (14,015) (11,652)
Taxation paid (2,040) (16) (114)
Cash flows from investing 11,843 3,591 (32,425)
activities
Acquisition of property, plant and (378) (672) (714)
equipment
Proceeds on disposal of property, - 2,309 745
plant and equipment
Acquisition of investment property (8,049) (4,661) (61,139)
Sale of investment property 20,270 6,615 28,146
Movement in investments in - - 537
associates
Cash flows from financing (12,822) 39,943 43,334
activities
Proceeds on share issue 3,960 990 -
Loans raised/(repaid) (17,379) 38,941 41,433
Loans from directors 785 499 3,063
Movements in finance lease (187) (487) (1,162)
obligations
Cash flows for the year 16,546 5,369 (7,257)
(18,631) (24,000) (16,743)
Cash and cash equivalents at
beginning of year
(2,084) (18,631) (24,000)
Cash and cash equivalents at end of
year
Segmental Report
Property Development Rental Portfolio
31-Dec-11 31-Dec- 31-Dec- 31-Dec- 31-Dec-10 31-Dec-09
R`000 10 09 11 R`000 R`000
R`000 R`000 R`000
Revenue 166,222 102,804 82,749 9,740 5,769 1,299
Cost of Sales (103,724) (70,532) (57,970) - - -
Gross Profit 62,498 32,272 24,779 9,740 5,769 1,299
Operating (54,212) (51,617) (56,549) (4,309) (2,274) (786)
Expenses
Loss on sale (2,664) - - - - -
of non-
current
assets
Revaluation - - - 709 2,733 4,534
Finance cost (10,348) (8,754) (9,905) (5,155) (5,261) (1,747)
Profit/(Loss) (3,934) (26,250) (37,744) 276 968 712
before tax
Total assets 176,360 229,770 202,892 120,784 71,406 67,568
Total 165,873 205,380 169,288 52,980 32,627
liabilities 79,049
Table continued
Consolidated
31-Dec-09 31-Dec-11 31-Dec-10 31-Dec-09
R`000 R`000 R`000 R`000
Revenue 1,299 175,962 108,573 84,048
Cost of Sales - (103,724) (70,532) (57,970)
Gross Profit 1,299 72,238 38,041 26,078
Operating (786) (58,521) (53,891) (57,335)
Expenses
Loss on sale - (2,664) - -
of non-current
assets
Revaluation 4,534 709 2,733 4,534
Finance cost (1,747) (15,503) (14,015) (11,652)
Profit/(Loss) 712 (3,658) (25,282) (37,032)
before tax
Total assets 67,568 297,143 301,176 270,460
Total 32,627 244,923 258,360 201,915
liabilities
Consolidated Statement of Changes in Equity
Share Share Reval Accum Minority Total
capital premium reserve profit interest R`000
R`000 R`000 R`000 R`000 R`000
Balance at 01 Jan 3 25,393 2,543 47,767 (7,162) 68,544
2010
Loss for the year - - - (13,296 (10,609) (23,905)
)
Issue of shares - 990 - - - 990
Change in - - - (12,710 12,692 (18)
shareholding )
Business - - - - (2,795) (2,795)
combinations
Balance at 01 Jan 3 26,383 2,543 21,761 (7,874) 42,815
2011
Income for the - - - 3,986 1,459 5,445
year
Issue of shares - 3,960 - - - 3,960
Change in - - - (8,858) 8,858 -
shareholding
Balance at 31 Dec 3 30,342 2,543 16,889 2,442 52,221
2011
RESTATEMENT
The JSE Limited ("JSE") has commenced a process to pro-actively monitor
annual financial statements ("AFS") of companies listed on the JSE. The
integrity of financial information is a critical element of a well
functioning market and the review process will contribute to the production
of quality AFS. The 2010 AFS of RBA were selected for review.
The review identified an amount of R2, 909, 271 reflected in the statement of
changes in equity that represents an error in the accounting treatment of
investment in associates in the prior years. In 2006 loans were extended to
associate companies and the associates made losses. RBA accounted for its
share of the losses in profit or loss. The losses eliminated the initial
loans and RBA continued to account for its share of the losses in the 2006
and 2007 financial years. In terms of IFRS the recognition of these losses
should have been limited to the initial loans made. Management and the
auditors at the time were of the opinion that the correct accounting
treatment was being applied. The associates became subsidiary companies in
the 2010 financial year and have now been fully consolidated. The review also
identified that the employee share trust was not consolidated in the AFS as
required by IFRS SIC 12 `Consolidation Special Purpose Entities`. In addition
the review identified items relating to the presentation of the 2010 and 2009
statement of cash flows.
The audited restatement of the 2010 and 2009 annual results relates to the
items identified by the JSE review.
The above restatements had the following effect on the 2010, 2009 and 2008
Statements of Comprehensive Income:
R`000 Nett 31-Dec- 31-Dec-09 31-Dec-
10 08
Profit / (Loss) as previously
reported (21,998) (36,405) 21,689
Impairment - RBA employees -
share trust (1,907) 407 1,500
Restated profit / (loss) for
the year (23,905) (35,998) 23,189
The above restatements had the following effect on the Statements of
Financial Position:
R`000 31-Dec-10 31-Dec-09
Loan to employee share trust as 3,000 1,095
previously reported
Consolidation of Loan to employee share (3,000) (1,095)
trust
Restated Loan to employee share trust - -
Investment in associates as previously - 8,242
reported
Correction investment in associates - (2,909)
Restated investment in associates - 5,333
Equity as previously reported 45,816 72,547
Consolidation of Loan to employee share (3,000) (3,000)
trust - share capital
Consolidation of Loan to employee share - 1,907
trust - retained income
Correction investment in associates - (2,909)
Restated equity 42,816 68,545
The above restatements had the following effect on the Statement of Cash
Flows:
31-Dec-10 31-Dec-10 31-Dec-09 31-Dec-09
Restated previously Restated previously
reported reported
R`000 R`000 R`000 R`000
Cash flows from operating (38,165) (25,059) (18,166) (1,347)
activities
Cash generated from (used (24,605) (11,499) (6,550) (10,268)
in) operations
Interest received 471 471 150 150
Interest paid (14,015) (14,015) (11,652) (11,652)
Taxation paid (16) (16) (114) (114)
Cash flows from investing 3,591 (9,458) (32,425) (49,244)
activities
Acquisition of property, (672) (672) (714) (714)
plant and equipment
Proceeds on disposal of 2,309 2,309 745 745
property, plant and
equipment
Acquisition of investment (4,661) 1,954 (61,139) (61,139)
property
Sale of investment property 6,615 - 28,146 28,146
Transfer of current property - - - 2,164
to investment property
Business combinations - 2,004 - -
Movement in stands held for - (25,867) - (21,941)
trading
Deposits for land - 10,813 - 2,959
allocations
Movement in investments in - - 537 537
associates
Cash flows from financing 39,943 39,886 43,334 43,334
activities
Proceeds on share issue 990 990 - -
Loans raised/(repaid) 38,941 38,941 41,433 41,433
Realisation of revaluation - (57) - -
Loans from directors 499 499 3,063 3,063
Movements in finance lease (487) (487) (1,162) (1,162)
obligations
Cash flows for the year 5,369 5,369 (7,257) (7,257)
Cash and cash equivalents at (24,000) (16,743) (16,743)
beginning of year (24,000)
(18,631) (18,631) (24,000) (24,000)
Cash and cash equivalents at
end of year
The directors are satisfied with the outcome of the JSE review and thank the
JSE for the productive manner in which the review was handled. The items
identified by the JSE relating to disclosure in the notes to the 2010 AFS
will be remedied as part of RBA`s 2011 AFS included in the group`s integrated
report.
OVERVIEW
Established in 1997, RBA is a supplier of affordable homes in Gauteng,
Polokwane and Kwa-Zulu Natal. The business focuses on 2 distinct areas:
* Supplier of homes to individual end users and mining groups
* Building of a rental portfolio
In the segment report above, the results of 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 RESULTS
The results for the 2011 financial year reflect a substantial improvement in
the group`s profitability and financial position despite the fact that market
conditions were challenging for the residential property development
industry.
RBA is pleased to announce an increase in revenue of 62% compared to the
prior reporting period. HEPS for the period increased to 2.16 cents per share
(2010 - loss 4.94 cents per share).
The group`s operating expenses from property development activities increased
by 5% against the prior comparative period, mainly attributable to increased
marketing spend and inflationary pressures during the period.
No bonuses were paid to any group executives or senior management.
The group achieved an attributable profit of R3,9 million (2010: R13,3
million loss, 2009: R30,3 million loss) for the year. The net asset value of
the group at 31 December 2011 was 15,36 cents (2010 - 13,65 cents, 2009 -
22,32 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 2011 its market value based on external
valuations obtained, exceeded book value by approximately R 20 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. When considering RBA`s
level of gearing, this additional value should also be taken into
consideration.
During the year 26,400,000 shares were issued to public shareholders at 15
cents per share, raising R3,9 million. 15,693,775 shares were issued to the
management share incentive scheme and 3,000,000 shares previously held by the
scheme were cancelled.
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
SNAP SHOT OF WORK IN PROGRESS AT THE As at As at As at
PARTICULAR POINT IN TIME 31-Dec- 30-Jun- 31-Dec-
10 11 11
Deals submitted at banks awaiting bond 351 353 325
approval
Deals approved by banks awaiting 394 431 379
registration
Individual houses under construction 269 215 191
(excluding houses ready for occupation)
Equivalent houses under construction 184 131 161
As at 31 December 2011, RBA was awaiting responses in respect of 325
applications for end user finance that had been submitted to various
financial institutions. Based on recent strike rate`s of deals submitted that
are ultimately approved for end user finance, it is anticipated that 30% of
these applications will be approved.
As at 31 December 2011, 379 bond applications were approved and were awaiting
registration. 160 of these deals are in project areas that are currently
being serviced and will register in the second six months of 2012.
Although sales activities have increased, the work in progress figures
remained stable year on year due to the fact that efficiencies have been
introduced to ensure that work in progress translates into registrations and
ultimately completed houses in a shorter period of time.
DATA ILLUSTRATIVE OF THE GROUP`S 12 6 months 12
PERFORMANCE DURING THE RELEVANT TIME months ending months
PERIOD ending 30-Jun- ending
31-Dec- 11 31-Dec-
10 11
Deals registered 468 215 590
Equivalent houses completed * 379 268 613
* "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. It represents the number of
equivalent houses actually completed during the period.
The key indicator of improvement in the group`s performance year on year is
demonstrated by the data reflecting the "Equivalent houses completed" during
the 12 month period ended 31 December 2011 which amounts to 613 houses as
opposed to 379 houses for the period ending 31 December 2010.
Corporate Governance
In keeping with its commitment to adhere to the corporate governance
principles in King III, David Wentzel 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.
With the objective of strengthening the board, Kutoane Kutoane, Mpho Hlahla
and Lyndon Kan were appointed as independent non-executive directors
effective 1 September 2011.
Land
The group has secured 4629 stands zoned as residential 1 (freehold) and 2657
opportunities zoned as residential 3 (sectional title) at various stages in
the township establishment process.
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 148 units commenced 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. Since inception RBA has built in excess of 7,900 homes. Anticipated
marketing strategies in 2012 will boost our sales pipeline and continue to
improve brand awareness.
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 191 houses under construction at 31
December 2011.
Human capital
Staff turnover remains low and we are committed to ensuring that RBA remains
an employer of choice. At 31 December 2011 the workforce consisted of 219
employees.
Health and Safety
The group has maintained its exceptional safety record and was fatality and
serious injury free during the 2011 period.
Green Policy
The group is committed to operating our business in an environmentally
friendly manner. A social and ethics committee was established in 2011 and is
tasked with, amongst other matters, improving and monitoring our "green
policies".
PROSPECTS
The financial recovery of the group continues and the directors anticipate a
further improved 2012 financial year.
Indications are that the appetite of banks towards lending in the affordable
housing sector will remain at current levels.
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;
* Government has recently announced new criteria for individuals to
qualify for housing subsidies. People earning up to R15,000 a month will
now qualify for housing subsidies;
* Government has recently announced an initiative to provide a R1 billion
fund that National Housing Finance Corporation will manage. The
intention with this fund is to assist end users in securing home loans.
* Indications are that household indebtedness is slowly reducing, which
broadens the potential client base RBA can access;
* The group has the land, sales, administration and production capacity to
meet forecasted demand; and
* The affordable housing market is a focal point of the major commercial
banks.
DIVIDENDS
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. 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 the year. 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
19 March 2012
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: 19/03/2012 07:30:01 Produced by the JSE SENS Department.
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