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RBA HOLDINGS LIMITED - Trading and operatinal statement

Release Date: 26/09/2014 07:55
Code(s): RBA     PDF:  
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Trading and operatinal statement

RBA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/009701/06)
(JSE code: RBA ISIN: ZAE000104154)
(“RBA” or the “Company”)



TRADING AND OPERATIONAL UPDATE


RBA is issuing this Trading Update in terms of section 3.4(b) of the JSE Listings Requirements to: provide more detail of the
performance of the Company in the first half of 2014; give shareholders an indication of the Company’s expected performance
during the remainder of 2014; and to give shareholders an indication of some of the key actions that are being taken to ensure the
future growth and sustainability of the Company.


Trading Update


The Company is in the process of finalising its interim results for the 6 month period ended 30 June 2014 and RBA advises
shareholders of the following:


     - the basic loss is expected to be between 3.53 and 3.73 cents per share compared to a loss of 2.53 cents per share for the
          comparable period;


     - the headline loss is expected to be between 3.47 and 3.67 cents per share compared to headline loss of 2.68 cents per
          share for the comparable period.


The financial information on which this trading update is based has not been reviewed or reported on by the Company`s auditors.


Operational Update


The Company’s stock of available serviced land continued to improve in line with expectations. As a result, RBA is currently
constructing houses on seven sites. The only land development project that has experienced significant delays is Atteridgeville. This
project was expected to be ready for top structure construction in April 2014. However, delays due to the illegal occupation of a
portion of the property have caused the completion date to be extended to end September 2014. After this, the Company’s active
project pipeline is expected to be sufficient to allow the Company to operate at above breakeven levels of production.


Sales levels during the period continued to improve with an average of 76 bank approvals per month for the first 6 months of the
year and average bank approval levels from July 2014 in excess of 100 per month. These sales levels are above breakeven and in
line with RBA’s previous best performance in 2006/2007.


In terms of construction activity, RBA started construction on 119 new houses during the first quarter of 2014 versus 225 houses
during the second quarter of 2014. In addition, the Company handed over 136 completed houses during the first quarter versus 198
completed houses during the second quarter of 2014.


The major constraint to performance during the first three months was the tight liquidity position as the Company expanded
operations while operating below breakeven levels. RBA concluded a R 31,2 million loan, debenture subscription and share option
agreement during the period and the Company received R 23,7 million during the second quarter of the six month period with the
balance of R 7,5 million being received during July 2014. The improved liquidity position that resulted from this funding allowed the
Company to improve operational performance in the second quarter demonstrating that the Company’s construction system has
sufficient capacity to operate at levels in excess of profitable levels.


In line with the turnaround strategy adopted in 2012, over the past two years the Company has increased the number of serviced
stands available for sale, improved its project pipeline, increased its construction capacity and it is recording record levels of sales
and marketing performance. With these building blocks in place the major constraint now preventing the Company from operating at
levels above breakeven is further working capital finance.
In order to decisively address this and improve the Company’s balance sheet position RBA plans to complete a transaction to
recapitalise the business during the fourth quarter of 2014. In this regard, shareholders are referred to the cautionary announcement
made on 22 September 2014.


The interim results announcement for the 6 month period ended 30 June 2014 will be released on 30 September 2014.




Johannesburg
26 September 2014



Designated Advisor
Exchange Sponsors

Date: 26/09/2014 07:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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