Johannesburg - The directors of listed affordable homes builder RBA Holdings are unable to determine if the company and its consolidated entities will continue as a going concern in the year to December because of the ongoing business rescue proceedings.
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The trustees of Old Mutual’s Housing Impact Fund SA (Hifsa) in February successfully applied to the South Gauteng High Court in Johannesburg for RBA Holdings and its wholly owned subsidiary RBA Developments to be placed into business rescue.
RBA Holdings in 2014 entered into an agreement with Hifsa for a loan of R55 million, with the trust subscribing for 550 million shares at 10c each in the share capital of RBA. The company received the R55m in November 2014.
Three additional subsidiaries, RBA Building Projects, RBA Homes and RBA Executive Homes, were subsequently also placed in business rescue in March.
Trevor Glaum, the firm’s business rescue practitioner, is in the process of preparing business rescue plans for publication and approval by creditors of RBA Holdings and the subsidiaries under business rescue.
The meetings to approve the plans will be held in August.
KPMG expressed a disclaimer of opinion on RBA Holdings’ financial results for the year to December, which were published last week, because the business rescuer practitioner’s plan had not been finalised nor approved.
Financial results
The auditors said they were, therefore, unable to obtain sufficient appropriate audit evidence to support the appropriateness of the financial statements being prepared using the going concern basis of accounting.
The directors of RBA Holdings said in the financial statements that under the going concern assumption, an entity was viewed as continuing in business for the foreseeable future with neither the intention nor the necessity for liquidation, ceasing trading or seeking protection from creditors.
“Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realise its assets and discharge liabilities in the normal course of business,” they said.
The group incurred a net loss of R83.3m in the year to December compared with R75.1m the previous year.
At end-December, the group’s total liabilities exceeded its total assets by R50.3m compared with R13.6m in the previous year.
The group was also in breach of a loan covenant at its year-end, but indicated the lender had not elected to exercise the right to acceleration and were, therefore, not payable on demand at end-December.
Increased revenue
Group revenue increased by 66 percent to R308.5m in the reporting period from R185.7m in the previous year.
Operating losses decreased to R55.1m from R55.9m but included net realisable value adjustments on undeveloped stands held for trading amounting to R15.7m compared with nil in the previous year and fair value adjustments on investment properties of R20.8m compared with R4.2m in the previous year.
Excluding these fair value adjustments, the operating loss for the year dropped to R18.6m, which was a R33.1m improvement compared with the previous year.
No dividends were declared or paid to shareholders during the year.
BUSINESS REPORT