Wrap Text
Reviewed condensed provisional results for the year ended 31 December 2012
RBA Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1999/009701/06)
Share Code: RBA ISIN Code: ZAE000104154
("RBA" or "the group")
REVIEWED CONDENSED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
Headlines:
- Revenue up 29%;
- Operating profit down from R14,2 million to R8,3 million;
- HEPS loss of 0.88 cents;
- Change in company strategy aimed at deleveraging balance sheet
reflected in post year-end sale of 148 rental units.
The reviewed condensed provisional annual results for the year ending
31 December 2012 are presented below.
Condensed Consolidated Statement of Financial Position
31-Dec-12 31-Dec-11
Reviewed Audited
R'000 R'000
Assets
Non-Current Assets 144,154 197,204
Investment property 11,431 13,613
Investment property - Rental Portfolio 74,881 123,143
Property, plant and equipment 14,467 13,700
Goodwill 1,530 7,603
Stands held for trading 15,766 17,430
Deferred tax 22,112 17,748
Deposits for land and stand allocations 3,967 3,967
Available for Sale 78,774 -
Investment property Rental Portfolio 78,774 -
Current Assets 101,042 99,939
Inventories 934 1,245
Stands held for trading 54,936 58,052
Construction contracts and receivables 11,194 7,688
Trade and other receivables 16,100 21,166
Deposits for land and stand allocations 15,278 9,118
Cash and cash equivalents 2,600 2,670
Total Assets 323,970 297,143
Equity and Liabilities
Equity 58,422 52,221
Share capital 46,976 30,346
Reserves 2,543 2,543
Retained income 7,664 16,889
Non-controlling interest 1,239 2,442
Liabilities
Non-Current Liabilities 112,053 159,036
Financial liabilities 53,013 78,300
Financial liabilities - Rental Portfolio 49,956 74,766
Finance lease obligation 925 7
Deferred tax 8,159 5,963
Available for Sale 53,404 -
Financial liabilities Rental Portfolio 53,404 -
Current Liabilities 100,091 85,886
Other financial liabilities 28,053 17,413
Current tax payable 1,321 5,325
Finance lease obligation 249 44
Trade and other payables 64,986 53,483
Construction contracts in progress 754 521
Loans from directors 34 4,347
Bank overdraft 4,694 4,754
Total Equity and Liabilities 323,970 297,143
Shares in issue Excl share incentive scheme 429,976,189 340,000,000
Net asset value per share (cents) 13.59 15.36
Net tangible asset value per share (cents) 13.23 13.12
Condensed Consolidated Statement of Comprehensive Income
31-Dec-12 31-Dec-11
Reviewed Audited
R'000 R'000
Revenue 227,449 175,962
Cost of sales (151,573) (103,724)
Gross profit 75,876 72,238
Other income 539 452
Operating expenses (68,125) (58,521)
Operating profit 8,290 14,169
Investment revenue 25 (369)
Impairment of Goodwill (6,073) -
Fair value adjustments - 709
Profit/(Loss) on sale of non-current assets 187 (2,664)
Finance costs (15,006) (15,503)
Loss before taxation (12,577) (3,658)
Taxation 2,149 9,103
Total comprehensive (Loss)/Income (10,428) 5,445
Attributable to:
Equity holders of the parent (9,400) 3,986
Non-controlling interest (1,028) 1,459
(10,428) 5,445
Weighted average number of shares in issue 400,162,625 337,878,022
Basic (loss)/earnings per share (cents) (2.35) 1.18
Normalised (loss)/earnings per share (cents) (0.88) 1.97
Headline (loss)/earnings per share (cents) (0.88) 2.16
Reconciliation of headline (loss) / earnings
(Loss)/Profit attributable to ordinary shareholders (9,400) 3,986
(Profit)/loss on disposal of non-current asset (187) 2,664
Impairment of goodwill 6,072 -
Normalised (loss)/profit attributable to ordinary
shareholders (3,515) 6,650
Fair value adjustment of investment properties - 648
Headline (loss)/profit to ordinary shareholders (3,515) 7,298
Condensed Consolidated Statement of Cash Flows
31 Dec 2012 31 Dec 2011
Reviewed Audited
R'000 R'000
Cash flows from operating activities 10,670 17,525
Cash generated from operations 27,341 35,436
Interest received 25 (369)
Interest paid (12,675) (15,503)
Taxation paid (4,021) (2,040)
Cash flows from investing activities (28,423) 11,843
Acquisition of property, plant and equipment (1,593) (378)
Proceeds on disposal of property, plant and
equipment - -
Additions to investment property (29,151) (8,049)
Sale of investment property 2,321 20,270
Cash flows from financing activities 17,744 (12,822)
Proceeds on share issue 10,678 3,960
Loans raised/(repaid) 10,254 (17,379)
Loans from directors (4,312) 785
Movements in finance lease obligations 1,124 (187)
Cash flows for the year (9) 16,546
Cash and cash equivalents at beginning of year (2,084) (18,631)
Cash and cash equivalents at end of year (2,093) (2,084)
Condensed Segmental Report
Property Development Rental Portfolio Consolidated
31-Dec-12 31-Dec-11 31-Dec-12 31-Dec-11 31-Dec-12 31-Dec-11
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 216,817 166,222 10,632 9,740 227,449 175,962
Cost of Sales (151,573) (103,724) - - (151,573) (103,724)
Gross Profit 65,244 62,498 10,632 9,740 75,876 72,238
Operating Expenses (63,435) (54,212) (4,690) (4,309) (68,125) (58,521)
Loss on sale of non-
current assets - (2,664) - - - (2,664)
Impairment goodwill (6,073) - - - (6,073) -
Revaluation - - - 709 - 709
Finance cost (8,076) (10,348) (6,930) (5,155) (15,006) (15,503)
Profit/(Loss) before
tax (11,589) (3,934) (988) 276 (12,577) (3,658)
Total assets 246,640 176,360 77,330 120,784 323,970 297,143
Total liabilities 209,695 165,873 55,853 79,049 265,548 244,923
* Available for sale assets and liabilities are included in property development activities for purposes
of segmental reporting.
Condensed Consolidated Statement of Changes in Equity
Share Reval Accum Minority
Capital reserve profit interest Total
R'000 R'000 R'000 R'000 R'000
Balance at 01 Jan 2011 26,385 2,543 21,761 (7,874) 42,815
Income for the year - - 3,986 1,459 5,445
Issue of shares 3,960 - - - 3,960
Change in shareholding - - (8,858) 8,858 -
Balance at 01 Jan 2012 30,345 2,543 16,889 2,442 52,221
Loss for the year - - (9,400) (1,028) (10,428)
Issue of shares 16,631 - - - 16,631
Change in shareholding - - 176 (176) -
Balance at 31 Dec 2012 46,976 2,543 7,664 1,239 58,422
OVERVIEW
Established in 1997, RBA is a supplier of affordable homes in Gauteng,
Polokwane and KwaZulu-Natal.
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.
Market conditions during 2012 remained challenging due to difficulties in
securing mortgage finance for our clients as a result of continued high
levels of indebtedness of our target market. However, there were increasing
signs of a general recovery of demand and improvement in availability of
finance by year end.
Management's key focus at present is in reducing short-term debt and
improving the liquidity position of the group. In order to achieve this, the
management team has made significant changes to the group's strategy in the
following areas:
Increasing Sales Volumes
In order to increase sales volumes, the group has recently restructured its
sales and marketing division and has reviewed its pricing strategies to
ensure that the group's products are more competitively priced and are more
affordable to its clients.
Change in Rental Property Strategy
In addition, the group intends to focus on providing rental and social
housing stock to key market participants rather than owning its own rental
portfolio as it has done in the past.
Improved Pipeline
The group has begun to make significant progress in improving its long-term
prospects through improved relations with land developers resulting in a
significant increase in both the number and quality of available freehold and
sectional title opportunities which will become available in the second half
of 2013 and 2014.
Although the overall results for 2012 were disappointing the group believes
that it is well positioned to deliver improved results in the future.
REORGANISATION OF THE BOARD
A significant reorganisation of the RBA Board took place in the latter part
of 2012 and the Board is now constituted as follows:
- Lisebo Mokhesi - non-executive director and Chairman of the Board
(appointed September 2012);
- Aidan-John Rothman - CEO (appointed September 2012);
- Francois le Roux - executive director (appointed September 2012);
- Bernard Stegmann executive director;
- Jason Mortimer CFO;
- Mark Thompson - non-executive director and the Chairman of the Audit
Committee (appointed November 2012).
CHANGE IN BUSINESS STRATEGY
The RBA directors have embarked on a change in the strategy pertaining to
developing, holding and growing a rental portfolio as part of its business
strategy. It has been decided to approach the rental market differently at
this time by focusing on the development and sale of rental developments to
market participants focused on acquiring and managing large portfolios of
residential rental stock.
RBA currently has identified opportunities for the development of
approximately 1 600 affordable rental and social housing units for
construction and sale to market participants over the next 4 years. The Board
is of the view that this strategy will benefit RBA by making a significant
contribution to future earnings, increasing operating cash flows and
improving interest cover.
This strategy will also assist in reducing the group's debt, which is a major
objective of the board at this time.
REVIEW OF 2012 RESULTS
As indicated above, the new board came into office during the last quarter of
2012. The board notes that relative to its competitors, the group has
underperformed and the results for 2012 were disappointing.
The following highlights are noted:
- Revenue was up by 29% to R227,4 million (2011; R175,9 million) as a
result of the number of houses completed increasing by 18% from 613
houses (2011) to 723 houses (2012).
- Gross profit margins from property development activities reduced to
30.4% (2011; 37.6%). The reduction in gross profit margin was a result
of the group's new approach of focusing on increasing sales volumes.
Smaller houses were constructed during the period and selling prices
were held at 2011 levels.
- Operating costs of R68,1 million (2011; R58,5 million) included the
following unusual and one-off items:
- Severance packages R2,2 million (2011; R Nil)
- Non recoverable debtors impaired R2,3 million (2011; R0,2
million)
- Legal costs R1,7 million (2011; R0,8 million)
- The Group achieved an operating profit of R8,3 million (2011; R14,2
million) for the year. The drop in operating profit was a result of
tighter gross profit margins and an increase in operating costs as
indicated above.
- Goodwill of R6,1 million (2011; R Nil) relating to cash generating
units that will no longer trade was impaired during the year.
- In view of the change in strategy, available for sale investment
property of R78,8 million (2011; Nil) represents rental assets that the
board intends selling. These rental assets have been funded by
financial liabilities of R53,4 million.
- During the year 80,000,000 shares were issued to public shareholders
and 9,976,189 shares were issued to related parties. The combine issue
raised an aggregate amount of R16,6 million consisting of R10,7 million
in cash and R5,9 million to settle certain debts.
- The net asset value of the Group at 31 December 2012 was 13.59 cents
(2011 15.36 cents) per share.
BUSINESS REVIEW
Key operating indicators
As at As at As at
31-Dec-12 30-Jun-12 31-Dec-11
Houses completed in the period 723 257 613
Individual houses under construction at year end 315 175 191
Bank approved sales less cancellations during 620 318 644
the period
Land
The Group has secured 4 150 stands zoned as residential 1 (freehold) and 1 627
opportunities zoned as residential 3 (sectional title) at various stages in
the township establishment process. Key to RBA's success is to continuously
ensure that is has sufficient serviced stands available to support future
sales activity.
Sales and Marketing
The group appointed Daniel Esterhuyse as Head of Sales and Marketing in
October 2012 and has since made significant structural changes to the sales
and marketing division in order to improve overall sales performance.
The initial phase of this process was completed by the end of 2012 and
indications are that the new positioning and marketing strategies are
beginning to yield positive results.
Human capital
At 31 December 2012 the workforce consisted of 186 employees. During November
2012 42 staff members were retrenched as part of the restructuring of our
sales and marketing division. The board is committed to investing in staff
training and ensuring it has an appropriately skilled workforce to meet its
future challenges.
Green Policy
The Group has implemented various initiatives in compliance with the new SANS
building standards aimed at improving the energy efficiency of housing in
South Africa. These initiatives are in line with our commitment to operating
our business in an environmentally friendly manner.
PROSPECTS
The prospects for the Group remain positive due to the following factors:
- The shortage of housing in South Africa remains a significant opportunity
for the group;
- Government continues to consider various mechanisms to support housing
delivery and 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. This will significantly enhance our
target markets ability to own houses;
- The Group has the land, sales, administration and production capacity to
meet forecast demand;
- The affordable housing market continues to be a focal point of the major
commercial banks;
- The low interest rate environment has positively affected our clients'
affordability. We see this lower interest rate environment continuing into
the foreseeable future; and
- The change in the strategy pertaining to development and sale of rental
developments to market participants focused on acquiring and managing
large portfolios of residential rental stock is expected to yield positive
results and assist in the restructuring of RBA's balance sheet.
DIVIDENDS
No dividend has been declared for the year. The dividend policy of RBA will
be reviewed annually in light of RBA's cash flow, gearing and capital
requirements.
SUBSEQUENT EVENTS
Erf 1188 Beverly Extension 64 was sold to Shell SA Marketing (Pty) Ltd. The
property was originally acquired for residential development but over time
the property became better suited for commercial purposes. The proceeds of
R6,5 million were received in January 2013.
A group company owns a development of 148 sectional title units in Protea
Glen Extension 11. RBA entered into a sale of shares agreement on 28 February
2013 to sell all the issued shares of Sunny Shore Investments 103 (Pty) Ltd.
This will give rise to a cash inflow to RBA of approximately R6,1 million.
The proceeds are expected to be received in April 2013. After this
transaction the available for sale rental properties on the group's balance
sheet amounts to R34,1 million with related debt amounting to R24,1 million.
The proceeds from the sale of these two properties will be utilised to settle
certain liabilities and to meet ongoing operational expenses.
BASIS OF PREPARATION
The condensed consolidated financial information for the year ended
31 December 2012 has been prepared in accordance with the requirements of
International Financial Reporting Standards on Interim Financial Reporting
(IAS 34), the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the Companies Act 71 of 2008 of South Africa and the
listing requirements of the JSE Limited. The accounting policies used to
prepare these reviewed condensed provisional annual financial statements are
consistent with those applied for the financial statements for the year ended
31 December 2011. The reviewed condensed provisional annual financial
statements have been prepared by the CFO, Mr JL Mortimer (CA)SA and were
approved by the board on 18 March 2013.
AUDITORS REVIEW REPORT
The condensed provisional financial information for the year ended
31 December 2012 has been reviewed by the Groups auditors, Logista CA(SA)
Incorporated. The review was conducted in accordance with ISRE 2410 Review of
Interim Financial Information performed by the Independent Auditor of the
Entity. The auditors unmodified review report does not necessarily cover all
the information in this announcement. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the auditors work
they should obtain a copy of that report together with the accompanying
financial information from the registered office of the Company. Any
reference to future financial performance included in this announcement has
not been reviewed or reported on by the Company's auditors.
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 2013
L Mokhesi A J Rothman
Chairman Chief Executive Officer
CORPORATE INFORMATION
Executive directors: A J Rothman, J L Mortimer, B A Stegmann, F S le Roux
Independent non-executive directors: L Mokhesi (Chairman), M Thompson
Company Secretary: I de Wet
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: 19/03/2013 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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