RBA specialises in turnkey affordable housing. These homes range between R250,000 and R750,000 and 40m2 and 80m2 in size. These homes are in high demand because of the affordable housing backlog.
The significant growth seen over the past year has been purely organic as no acquisitions have been made over the period. The group's internal construction division has taken over more than 70% of RBA's production (as opposed to 15% in 2006), resulting in a significant improvement in operating efficiencies and margins.
The financial highlights are as follows:
• Revenue increased 39% to R244m
• Net profit increased 91% to R36m
• HEPS increased 91% to 12 cents
• Net asset value per share increased 327% to 27.5 cents
David Wentzel, the company's CEO, says, “… We have delivered on our promises despite an increase in interest rates and less than ideal market conditions in the latter part of 2007. Our strategy for the 2008 financial year is to introduce higher density housing developments thereby reducing the land cost per unit to the client. The group will continue with its strategy of acquiring land in areas along the urban edges to ensure that its land pipeline is maintained.'
RBA reports that the introduction of the National Credit Act has had limited effect on the results of the company which has been credit vetting its clients for over five years and was thus well prepared for the new regulations.
The group intends growing its rental book significantly during 2008 and that will add an annuity income stream for the company as well as capital appreciation. The introduction of rental units will allow RBA access to clients who will in future qualify for the purchasing of a new home via a home loan.
The company completed 929 homes in 2007 in 12 project areas. More than R55 million was invested in land for future developments.
“We have over 10 years experience in the affordable housing market. An impressive land pipeline, production capacity and efficient project management systems assist us in delivering on the numerous opportunities pertaining to the current housing backlog in South Africa. We expect this trend to continue into the future,” says Wentzel.
