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RBA - Unaudited Interim Results For The Six-Month Period Ended 30 June 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")
UNAUDITED INTERIM RESULTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2012
HIGHLIGHTS:
- REVENUE UP 11% TO R92,0 MILLION
- OPERATING PROFIT INCREASED BY 64% TO R7,6 MILLION
The condensed unaudited interim results for the period ending 30 June 2012 are presented below:
Consolidated Statement of Financial Position
30-Jun-12 30-Jun-11 31-Dec-11 31-Dec-09
R'000 R'000 R'000 R'000
Assets
Non-current assets 204,382 155,191 197,204 163,120
Investment property 12,463 38,901 13,613 47,527
Investment property - Rental Portfolio 128,635 69,699 123,143 66,921
Property, plant and equipment 14,776 13,854 13,700 17,326
Goodwill 7,603 7,603 7,603 4,694
Stands held for trading 17,772 8,604 17,430 10,374
Deferred tax 19,166 12,453 17,748 6,971
Deposits for land and stand allocations 3,967 4,077 3,967 3,973
Current assets 102,348 144,248 99,939 107,340
Inventories 1,058 828 1,245 793
Stands held for trading 65,716 106,756 58,052 75,803
Construction contracts and receivables 5,267 15,534 7,688 4,029
Trade and other receivables 18,280 16,003 21,166 10,197
Deposits for land and stand allocations 7,605 2,664 9,118 14,473
Cash and cash equivalents 4,422 2,463 2,670 2,046
Total assets 306,730 299,439 297,143 270,460
Equity and liabilities
Equity 69.681 43,190 52,220 68,545
Share capital 46,976 30,346 30,346 25,396
Reserves 2,543 2,543 2,543 2,543
Retained income 17,362 10,506 16,889 47,767
Non-controlling interest 2,800 (205) 2,442
Liabilities
Non-current liabilities 153,647 130,317 159,036 93,887
Financial liabilities 66,252 70,618 78,300 50,517
Financial liabilities - Rental Portfolio 80,369 49,165 74,766 38,161
Finance lease obligation 1,063 19 7 163
Deferred tax 5,963 10,515 5,963 5,046
Current liabilities 83,402 125,932 85,887 108,028
Other financial liabilities 17,170 39,271 17,413 36,158
Current tax payable 2,740 5,100 5,325 6,816
Finance lease obligation 232 90 44 562
Trade and other payables 56,194 49,708 53,483 34,532
Construction contracts in progress 155 1,773 521 851
Loans from directors 2,018 3,895 4,347 3,063
Bank overdraft 4,893 26,095 4,754 26,046
Total equity and liabilities 306,730 299,439 297,143 270,460
Shares in issue Excl share incentive scheme 429,976,189 340,000,000 340,000,000 307,000,000
Net asset value per share (cents) 16,21 12,59 15,36 22,32
Net tangible asset value per share (cents) 14,44 10,38 13,12 20,80
Consolidated Statement of Comprehensive Income
6 months 6 months 12 months
30-Jun-12 30-Jun-11 31-Dec-11
R'000 R'000 R'000
Revenue 92,005 82,937 175,962
Cost of sales (57,022) (49,947) (103,724)
Gross profit 34,983 32,990 72,238
Other income 540 72 452
Operating expenses (27,895) (28,410) (58,521)
Operating profit 7,628 4,652 14,169
Investment revenue 19 164 (369)
Fair value adjustments - - 709
Loss on sale of non-current assets - (1,508) (2,664)
Loss from associate companies - (11) -
Loss on business combination (1,165) - -
Finance costs (6,944) (6,700) (15,503)
Loss before taxation (462) (3,403) (3,658)
Taxation 1,293 (183) 9,103
Total comprehensive profit/(loss) 831 (3,586) 5,445
Profit/(loss) profit attributable to:
Owners of the company 473 (2,398) 3,986
Non-controlling interest 358 (1,188) 1,459
831 (3,586) 5,445
Reconciliation of headline earnings / (loss)
Profit/(loss) attributable to ordinary shareholders 473 (2,398) 3,986
Profit on disposal of property, plant and equipment - 1,508 2,664
Fair value adjustment of investment properties - - 648
Loss on Business combination 1,165 - -
Headline profit/(loss) to ordinary shareholders 1,638 (890) 7,298
Weighted average number of shares in issue 369,360,312 338,586,740 337,878,022
Basic earnings/(loss)per share (cents) 0.13 (0.71) 1.18
Headline earnings/(loss) per share (cents) 0.44 (0.26) 2.16
Consolidated Statement of Cash Flows
6 months 6 months 12 months
30 Jun 2012 30 Jun 2011 31 Dec 2011
R'000 R'000 R'000
Cash flows from operating activities (1,460) (8,295) 17,524
Cash generated from /(used in) operations 8,175 (55) 35,436
Interest received 19 164 (369)
Interest paid (6,944) (6,700) (15,503)
Taxation paid (2,710) (1,704) (2,040)
Cash flows from investing activities (5,785) 4,879 11,843
Acquisition of property, plant and equipment (1,497) (241) (378)
Acquisition of investment property (5,492) (12) (8,049)
Sale of investment property 1,204 5,132 20,270
Cash flows from financing activities 8,858 (1,585) (12,821)
Proceeds on share issue 16,630 3,960 3,960
Loans repaid (6,689) (5,751) (17,379)
Loans from directors (2,328) 334 785
Movements in finance lease obligations 1,245 (128) (187)
Cash flows for the period 1,613 (5,001) 16,546
Cash and cash equivalents at beginning of period (2,084) (18,631) (18,631)
Cash and cash equivalents at end of period (471) (23,632) (2,084)
Segmental Report
Property Development Rental Portfolio Consolidated
30-Jun-12 30-Jun-11 31-Dec-11 30-Jun-12 30-Jun-11 31-Dec-11 30-Jun-12 30-Jun-11 31-Dec-11
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue 87,137 79,474 166,222 4,868 3,463 9,740 92,005 82,937 175,962
Cost of sales (57,022) (49,947) (103,724) - - - (57,022) (49,947) (103,724)
Gross profit 30,115 29,527 62,498 4,868 3,463 9,740 34,983 32,990 72,238
Operating
Expenses (26,216) (26,645) (54,212) (1,679) (1,765) (4,309) (27,895) (28,410) (58,521)
Loss on sale of
non-current
assets - - (2,664) - - - - - (2,664)
Revaluation - - - - - 709 - - 709
Finance cost (4,024) (4,161) (10,348) (2,920) (2,539) (5,155) (6,944) (6,700) (15,503)
Profit/(Loss)
before tax (731) (2,562) (3,934) 269 (841) 276 (462) (3,403) (3,658)
Total assets 174,646 231,006 176,360 132,085 71,433 120,784 306,731 302,439 297,144
Total
liabilities 151,349 203,349 165,874 85,700 52,900 79,049 237,049 256,249 244,923
Consolidated Statement of Changes in Equity
Share Share Reval Accum Minority
capital premium reserve profit interest Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 Jan 2011 3 26,383 2,543 21,761 (7,874) 42,816
Profit 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 1 Jan 2012 3 30,343 2,543 16,889 2,443 52,221
Profit/(loss) for the year - - - 473 358 831
Issue of shares 1 16,629 - - - 16,630
Balance at 30 June 2012 4 46,972 2,543 17,362 2,800 69,681
OVERVIEW
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
- Building of a rental portfolio
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.
REORGANISATION OF THE BOARD
Since last reporting results, there has been a significant reorganization of the RBA Board as outlined
below:
Kutoane Kutoane resigned as independent non-executive director with effect from 30 June 2012.
Leon Theron (Chairman), Lyndon Kan and Mpho Hlahla resigned on 7 September 2012 as independent non-
executive directors.
David Wentzel resigned as Chief Executive Officer (CEO) and director of the company with effect from 10
September 2012.
Aidan-John Rothman has been appointed as CEO of RBA and director of the company with effect from 10
September 2012.
Francois le Roux, current Chief Operating Officer of RBA's major subsidiary, has been appointed as
executive director of the Company, with effect from 10 September 2012.
Lisebo Mokhesi has been appointed as non-executive director and Interim Chairman of the Board with effect
from 10 September 2012.
Barry Stegmann, current Chief Operating Officer of RBA and Jason Mortimer, current Chief Financial Officer
of RBA, both remain appointed as directors of the Company.
Kirsten Linstrom resigned as Company Secretary with effect from 3 August 2012. Kirsten has subsequently
been replaced by Ilze-Marie de Wet with effect from 4 September 2012.
REVIEW OF 2012 RESULTS
As indicated above, the new board has just come into office and although the results for the first half of
2012 do show some improvement over the comparative period in 2011 the board notes that relative to its
competitors, the results remain disappointing as the improvements came off a low base and although the
Group has returned to profitability, earnings remain marginal after accounting for finance costs. The
following highlights are noted:
- Revenue was up by 11% from R82,9 million (June 2011) to R92,0 million (June 2012) as a result of the
number of equivalent houses completed increasing by 21% from 268 houses (June 2011) to 325 houses
(June 2012).
- The Group continued to focus on cost control measures and as a result the Group operating expenses
from property development activities remained flat against the prior comparative period.
- The Group achieved an attributable profit of R0,5 million (June 2011 R2,4 million loss) for the six
month period to June 2012. The net asset value of the Group at 30 June 2012 was 16.21 cents (June
2011 12,59 cents) per share.
- During the period 80,000,000 shares were issued to public shareholders and 9,976,189 shares were
issued to related parties, raising an aggregate amount of R16,6 million.
BUSINESS REVIEW
Property Development Activities
SNAP SHOT OF WORK IN PROGRESS AT THE PARTICULAR POINT IN TIME As at As at As at
30-Jun-12 30-Jun-11 31-Dec-11
Deals approved by banks awaiting registration 360** 431 379
Individual houses under construction (excluding houses ready for occupation) 175 215 191
Equivalent houses under construction 93 131 161
DATA ILLUSTRATIVE OF THE GROUP'S PERFORMANCE DURING THE RELEVANT TIME PERIOD 6 months 6 months 12 months
ending ending ending
30-Jun-12 30-Jun-11 31-Dec-11
Deals registered 257 215 590
Equivalent houses completed * 325 268 613
* "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.
** This included some 260 deals that were presold in 2010 and 2011 and were expected to register in the
second half of 2012.
During the six month period ended 30 June 2012, 257 deals were registered. As at 30 June 2012, 360 bond
applications were approved and were awaiting registration.
Rental Portfolio
At 30 June 2012 the Group owned 236 rental units. An additional 148 units are under construction in Protea
Glen, Soweto and will be completed before the end of the year.
Land
The Group has secured 4,144 stands zoned as residential 1 (freehold) and 1,863 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.
Marketing
Sales levels over the period were disappointing and this is a key area of focus for the Group.
Production
No problems are being experienced with plan approvals, council connections and NHBRC enrolments. The Group
had 175 freehold houses and 148 rental (sectional title) units under construction at 30 June 2012.
Human capital
Staff turnover remains low and we are committed to ensuring that RBA remains an employer of choice. At 30
June 2012 the workforce consisted of 242 employees.
Green Policy
The Group is committed to operating our business in an environmentally friendly manner. A social and ethics
committee is tasked with, amongst other matters, improving and monitoring our "green policies". The Group
has implemented various initiatives to ensure it is fully compliant with the new SANS requirements.
PROSPECTS
The financial recovery of the Group over the period remained tentative but the directors anticipate an
improved second six months for the 2012 financial year.
Market conditions remain challenging for the residential property sector but there are signs that a general
recovery of demand and improvement in availability of finance will continue. The Group is committed to
finding ways to benefit from these improvements.
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.
- 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.
- Interest rates have recently been reduced by 0.5% which has positively affected our client's
affordability. We see this lower interest rate environment continuing into the foreseeable future.
DIVIDENDS
No interim dividend has been declared during the period.
SUBSEQUENT EVENTS
The directors are not aware of any matter or circumstance arising since the end of the period, which could
significantly affect the financial position of the Group or the results of its operations as presented in
these results.
BASIS OF PREPARATION
These 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 with those used in the annual financial statements for the year ended 31
December 2011.
These interim financial statements have not been audited or reviewed by the Group's auditors.
APPRECIATION
The Group recognises the value of its management team and staff and thanks them for their loyalty and work
ethic during the period. 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
17 September 2012
JL Mortimer B A Stegmann
Chief Financial Officer Chief Operations Officer
CORPORATE INFORMATION
Executive directors: A J Rothman, J L Mortimer, B A Stegmann, F S le Roux
Independent non-executive director: L Mokhesi
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: 17/09/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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