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Unaudited interim results for the six month period ended 30 June 2013
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”)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2013
HEADLINES
- Reduction in total liabilities of R50 million, including interest bearing
debt of R34 million, since December 2012;
- Successful conclusion of a R10 million rights offer;
- Sale of 148 sectional title units in Protea Glen for R47 million in line
with the groups revised strategy on providing stock to rental market
participants;
- Sale of the Group’s office building generated R17 million;
- EPS loss of 2.53 cents per share mainly as a result of delays in the
commencement of new projects;
- Expected launch of three major projects in Orchards, Kirkney and Lehae as a
result of which the group expects to be profitable in the second half of
2013.
The condensed unaudited interim results for the period ending 30 June 2013 are
presented below:
Consolidated Statement of Financial Position
30-Jun-13 30-Jun-12 31-Dec-12
R’000 R’000 R’000
Assets
Non-Current Assets 133,704 150,575 144,154
Investment property 11,431 12,463 11,431
Investment property - Rental Portfolio 74,881 74,828 74,881
Property, plant and equipment 1,879 14,776 14,467
Goodwill 1,530 7,603 1,530
Stands held for trading 15,921 17,772 15,766
Deferred tax 24,095 19,166 22,112
Deposits for land and stand allocations 3,967 3,967 3,967
Available for Sale 35,705 53,807 78,774
Investment property – Rental portfolio 35,705 53,807 78,774
Current Assets 103,639 102,348 101,042
Inventories 859 1,058 934
Stands held for trading 67,785 65,716 54,936
Construction contracts and receivables 7,659 5,267 11,194
Trade and other receivables 21,274 18,280 16,100
Deposits for land and stand allocations 3,459 7,605 15,278
Cash and cash equivalents 2,603 4,422 2,600
Total Assets 273,048 306,730 323,970
Equity and Liabilities
Equity 57,937 69,681 58,422
Share capital 57,566 46,976 46,976
Reserves - 2,543 2,543
Retained income (2,416) 17,362 7,664
Non-controlling interest 2,787 2,800 1,239
Liabilities
Non-Current Liabilities 116,957 123,097 112,053
Financial liabilities 60,744 66,252 53,013
Financial liabilities - Rental Portfolio 49,879 49,819 49,956
Finance lease obligation 889 1,063 925
Deferred tax 5,445 5,963 8,159
Available for Sale 19,752 30,550 53,404
Financial liabilities – Rental Portfolio 19,752 30,550 53,404
Current Liabilities 78,402 83,402 100,091
Other financial liabilities 18,952 17,170 28,053
Current tax payable 1,550 2,740 1,321
Finance lease obligation 300 232 249
Trade and other payables 51,223 56,194 64,986
Construction contracts in progress 127 155 754
Loans from directors - 2,018 34
Bank overdraft 6,250 4,893 4,694
Total Equity and Liabilities 273,048 306,730 323,970
Shares in issue – Excl share incentive scheme 560,115,176 429,976,189 429,976,189
Net asset value per share (cents) 10.34 16.21 13.59
Net tangible asset value per share (cents) 10.07 14.44 13.23
Consolidated Statement of Comprehensive Income
6 months 6 months 12 months
30-Jun-13 30-Jun-12 31-Dec-12
R’000 R’000 R’000
Revenue 133,067 92,005 227,449
Cost of sales (103,932) (57,022) (151,573)
Gross profit 29,135 34,983 75,876
Other income 144 540 539
Operating expenses (36,942) (27,895) (68,125)
Operating (loss)/profit (7,663) 7,628 8,290
Investment revenue 38 19 25
Impairment of Goodwill - - (6,073)
Profit on sale of non-current assets 5,211 - 187
Fair value adjustments (4,588) - -
Loss on business combination - (1,165) -
Finance costs (7,817) (6,944) (15,006)
Loss before taxation (14,819) (462) (12,577)
Taxation 3,744 1,293 2,149
Total comprehensive(loss)/profit (11,075) 831 (10,428)
(Loss)/profit attributable to :
Owners of the company (11,233) 473 (9,400)
Non-controlling interest 158 358 (1,028)
(11,075) 831 (10,428)
Reconciliation of headline earnings / (loss)
Profit/(loss) attributable to ordinary (11,233) 473 (9,400)
shareholders
(5,211) - (187)
Profit on disposal of property, plant and
equipment
Impairment of goodwill - - 6,073
Fair value adjustment 4,588 - -
Loss on Business combination - 1,165 -
Headline (loss)/profit to ordinary shareholders (11,856) 1,638 (3,514)
Weighted average number of shares in issue 443,191,659 369,360,312 400,162,625
Basic earnings/(loss)per share (cents) (2.53) 0.13 (2.35)
Headline earnings/(loss) per share (cents) (2.68) 0.44 (0.88)
Consolidated Statement of Cash Flows
6 months 6 months 12 months
30 Jun 2013 30 Jun 2012 31 Dec 2012
R’000 R’000 R’000
Cash flows from operating activities 5,683 (1,460) 10,670
Cash (used in)/generated from operations 13,462 8,175 27,341
Interest received 38 19 25
Interest paid (7,817) (6,944) (12,675)
Taxation paid - (2,710) (4,021)
Cash flows from investing activities 17,294 (5,785) (28,423)
Acquisition of property, plant and
(215) (1,497) (1,593)
equipment
Acquisition of investment property - (5,492) (29,151)
Disposal of property, plant & equipment 17,509 - -
Sale of investment property - 1,204 2,321
Cash flows from financing activities (24,531) 8,858 17,744
Proceeds on share issue 10,590 16,630 10,678
Loans (repaid)/raised (35,102) (6,689) 10,254
Loans from directors (34) (2,328) (4,312)
Movements in finance lease obligations 15 1,245 1,124
Cash flows for the period (1,554) 1,613 (9)
Cash and cash equivalents at beginning of (2,093) (2,084) (2,084)
period
(3,647) (471) (2,093)
Cash and cash equivalents at end of period
Segmental Report
Property Development Rental Portfolio Consolidated
30-Jun-13 30-Jun-12 31-Dec-12 30-Jun-13 30-Jun-12 31-Dec-12 30-Jun-13 30-Jun-12 31-Dec-12
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 127,363 87,137 216,817 5,704 4,868 10,632 133,067 92,005 227,449
Cost of Sales (103,932) (57,022) (151,573) - - - (103,932) (57,022) (151,573)
Gross Profit 23,431 30,115 65,244 5,704 4,868 10,632 29,135 34,983 75,876
Operating
Expenses (33,951) (26,216) (63,435) (2,991) (1,679) (4,690) (36,942) (27,895) (68,125)
Profit on
sale of non-
current
assets 5,211 - 187 - - - 5,211 - 187
Impairment of
Goodwill - - (6,073) - - - - (6,073)
Fair value - - - (4,588) - - (4,588) - -
Finance cost (4,500) (4,024) (8,076) (3,317) (2,920) (6,930) (7,817) (6,944) (15,006)
(Loss)/Profit
before tax (9,627) (731) (11,589) (5,192) 269 (988) (14,819) (462) (12,577)
Total assets 195,860 174,645 246,640 77,188 132,085 77,330 273,048 306,730 323,970
Total
liabilities 159,579 151,349 209,695 55,532 85,700 55,853 215,111 237,049 265,548
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 2012 30,345 2,543 16,889 2,442 52,221
Loss for the period - - (9,400) (1,028) (10,428)
Issue of shares 16,631 - - - 16,631
Change in shareholding - - 176 (176) -
Balance at 01 Jan 2013 46,976 2,543 7,664 1,239 58,422
Loss for the period - - (11,233) 158 (11,075)
Issue of shares 10,590 - - - 10,590
Realisation of reserve - (2,543) 2,543 - -
Change in shareholding - - (1,390) 1,390 -
Balance at 30 June 2012 57,566 - (2,416) 2,787 57,937
OVERVIEW
Established in 1997, RBA is a supplier of affordable homes in Gauteng, Polokwane
and Kwa-Zulu Natal. Our business model encompasses the complete property
development process viz. the acquisition of land, town planning, project
management of services installation, marketing, sale and construction of quality
affordable homes.
The group’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 progress with the group’s strategy in the following areas:
Increasing Sales Volumes
The group finalised the restructuring of the 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. Indications are that
the groups new positioning and marketing strategies are beginning to yield
positive results.
Improvements to Construction Process
The restructuring of the operations and construction divisions followed the
restructuring of the sales and marketing division. This process was largely
completed by end August and the results have been positive with productivity
levels, quality and on time delivery of houses improving markedly.
Rental Property Strategy
During the period, 148 sectional title units in Protea Glen were sold. The group
will continue to focus on providing rental and social housing stock to key market
participants rather than owning its own rental portfolio.
Improved Land Pipeline
The development of residential land is a complex process with a high risk of
project delays. A key focus area for the Group will be to build a high quality
land bank to ensure sustained profitability in years to come.
REVIEW OF 2013 INTERIM RESULTS
The Group was constrained during the 6 month period due to a lack of available
serviced stands which resulted in lower than anticipated production levels.
The following items are noted:
Revenue was up by 44% to R133,1 million (2012; R92,0 million). The Group completed
262 freehold houses (2012; 257 freehold houses) and 148 sectional title units
(2012; 0 sectional title units) during the period.
Gross profit margins are also dependent on the following factors:
- the mix of freehold houses vs sectional title units sales were currently
sectional title units have been sold at lower margins;
- where houses are built on either the Group’s own land with higher margin or
external land developer’s land with lower margin;
- the size of the units sold were larger units generate higher margins; and
- the sales price of units less the input costs constructing and selling the
units.
Gross profit margin from property development activities reduced to 18% (December
2012; 30%). With the major factors contributing to this being an increased number
of sectional title sales and an increase in the proportion of units sold on land
provided by external land developers.
Operating expenses reduced in comparison with the 2nd 6 months of 2012 and include
the following:
- marketing spend of R2,4 million;
- a once off utility bill of R2,1 million that related to incorrect historic
billings;
- a once off commission paid of R750,000 for the sale of the Group’s office
building.
The Group successfully concluded a rights offer of 125 000 000 shares at 8 cents
per share raising R10 million. The 125 000 000 shares have been taken into account
in the preparation of the interim results as the 125 000 000 shares subject to the
rights issue were listed on the JSE Securities Exchange on 14 June 2013.
The Group concluded the sale of its office building situated in Braamfontein,
Johannesburg, which realized a profit on sale of R5,2 million.
Investment property – Rental portfolio of R74,9 million consists of rental units
owned by the Group that are currently not available for sale as a result of
external equity partners holding a stake in these projects. Management is in the
process of investigating how these units can be converted to being available for
sale to further reduce the Group’s gearing.
Available for sale investment property of R35,7 million consist of rental
properties that the group is actively selling.
The total reduction in liabilities from 31 December 2012 to 30 June 2013 amounted
to R50 million of which R34 million was interest bearing debt, a result of
managements focus on de-leveraging the balance sheet.
The net asset value of the Group at 30 June 2013 was 10.34 cents (2012 – 16.21
cents) per share.
BUSINESS REVIEW
Key operating indicators
As at As at As at
30-Jun-13 30-Jun-12 31-Dec-12
Freehold houses completed in the period 262 257 723
Sectional title units completed and sold in the 148 0 0
period
Individual houses under construction at period 139 175 315
end
Bank approved sales less cancellations during 298 318 620
the period
Land
The Group has secured 2,612 stands zoned for freehold houses and 662 opportunities
zoned for sectional title units at various stages in the township establishment
process. In addition the Group has identified a further 5,927 stands zoned for
freehold houses and 2,344 opportunities zoned for sectional title units that are
actively being pursued.
Human capital
At 30 June 2013 the workforce consisted of 176 employees. The restructuring of the
sales, marketing, operations and construction divisions have been finalised and
the focus will now turn to investing in staff training and ensuring the group has
an appropriately skilled workforce who’s performance supports future growth.
Green Policy
The Group is complying 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 Group is set to launch an additional three major projects i.e. Orchards,
Kirkney and Lehae that are expected to result in a return to profitability in the
second half of 2013. The group also has a sufficient pipeline of projects to
continue operating profitably through 2014.
The prospects for the Group in the medium to long term, remain positive due to the
following factors:
- The need for housing in South Africa remains a significant opportunity for the
group;
- Government's Finance Linked Individual Subsidy Program (FLISP) has now been
implemented for first time homeowners. People earning up to R15,000 a month now
qualify for housing subsidies. This will significantly enhance our target
market's ability to own houses;
- The Group has the land, sales, administration and production capacity to meet
forecast demand; 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.
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 2012.
These 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 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
25 September 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, K M Maroga,
V Thembekwayo.
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: 25/09/2013 09:09:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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