RBA Holdings posts headline loss

AFFORDABLE homes builder RBA Holdings yesterday reported a headline loss of 2.68c per share for the six months ended June, but said it now expects a return to profitability.

AFFORDABLE homes builder RBA Holdings yesterday reported a headline loss of 2.68c per share for the six months ended June, but said it expected a return to profitability from the second half of this year.

CEO AJ Rothman said the loss was mainly the result of “delays in certain projects which we expected to come through in the first half of the year”.

The AltX-listed group reported a 44% rise in revenue to R133.1m for the six-month period, and a total comprehensive loss of R11.1m.

Mr Rothman said RBA expected a return to profitability in the second half of the year, thanks to the expected launch of three major projects, “and the fact that we have now done quite a lot of work on restructuring our operational and sales sides of the business”.

The three major projects, in Orchards, Kirkney and Lehae, involved the development of freehold houses for sale. RBA was expecting “to roll out a minimum of 15 new houses on each of those sites per month”, he said.

Mr Rothman said a major focus for RBA “remains on reducing overall liabilities in the group”. During the period, RBA reduced its total liabilities by R50m, including interest-bearing debt of R34m.

“We have had a change in strategy from owning rental units to building and selling rental units — so we are continuing to look at how we can remove the remaining rental units from the balance sheet,” he said.

The group’s rental portfolio, valued at R74.9m, 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.

Consequently, RBA was investigating how these units could be converted to being available for sale, in order to further reduce gearing.

During the period, RBA sold 148 sectional title units in Protea Glen for R47m — that beginning of the roll-out of the new strategy of selling rental units.

He said RBA’s gearing “has certainly come down quite significantly over this period”.

During the period, the group successfully concluded a R10m rights offer.

The group had also been focusing on “improving the operational activities within the business — on the sales side and also on the construction side”.

Mr Rothman said: “Obviously, it doesn’t really help if you just return to profitability for six months — the group is now much better positioned, in terms of available projects, to be profitable through the course of next year as well”.

“Given where we have been, that is a significant change,” said Mr Rothman.

RBA said its medium and long term prospects “remain positive” given that the need for housing in SA still provided a significant opportunity for the group.

In addition, the government’s finance-linked individual subsidy programme had now been implemented for first-time home owners — meaning people earning up to R15,000 a month now qualified for housing subsidies.

“This will significantly enhance our target market’s ability to own houses,” RBA said.

The group also had the land, sales, administration and production capacity to meet forecast demand, it said.