Turnaround for RBA Homes

Affordable homes builder RBA Holdings has returned to profitability, reporting headline earnings per share of 2.16 cents for the year ended December 2011 after a loss of 4.94 cents the previous year.

The company, which released its results on Monday, grew revenue 62% to R176 million, while operating profit amounted to R14.2 million compared with a loss of R14.5 million for the previous financial year.

Gross profit was up nearly 90% to R72 million and after tax profit came in at R3.9 million after a R13.3 million attributable loss last year.

CEO David Wentzel attributed the turnaround to a pick up in the housing market, facilitated by an improvement in the access to bond finance for potential borrowers.

"The financial recovery of the group has continued and we anticipate a further improvement in the current financial year," he said.

The biggest obstacles still to be overcome, he noted, are the still "cautious" approach to lending by the major financial institutions, coupled with the still high levels of indebtedness among consumers.

"We are continuously seeing a slow but steady improvement on both these fronts. The demand for housing in our target market, though, remains strong."

As at December 2011 RBA Homes had 325 loan applications submitted to banks awaiting their credit decision, 379 bond applications approved by the banks and awaiting registration, and 191 houses under construction.

For the year ended 2010 RBA Homes had 379 "equivalent houses completed" whereas for the year ending December 2011 it had 613 "equivalent houses completed."

The figure takes into account the number of houses under construction at the beginning of the period, the number of bond registrations during the period and the total number of houses under construction at the end of the period.

It represents the number of "equivalent houses" actually completed in each cycle.

Since its inception, RBA has built and handed over almost 8,000 new homes.

It currently has stock on its books of 4,629 freehold stands and 2,657 sectional title stands in Gauteng, Polokwane and KwaZulu Natal.

In addition it owns and manages a complex of 176 sectional title units for rent in Protea Glen, Soweto.

Construction on the next project, involving a further 148 units, commenced last year and is now well under way.

Wentzel said the recently announced changes to government's housing subsidy system - people earning up to R15 000/month will qualify for a subsidy - and the announcement of the new R1 billion housing fund to be managed by the National Housing Finance Corporation, should add further stimulus to the affordable housing market.