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The AltX housing developer, RBA Holdings, last week announced its audited financial results for the year ended 31 December 2009. The Group has been severly impacted by the recession, local private property bust and the bank's basically freezing home loan credit growth. These factors all contributed to the Group's tangible NAV dropping just under 39% to 19.80c. This acid test value for the troubled Group reflects against the current share price of 16c to show that the market is factoring in future losses (at least). While current loss of 10.95c per share reflects badly versus this tangible NAV, the Group did manage to produce a gross profit of R25 million. Albeit, this was on the back of a 56% drop in revenue for the Group. This drop is simply reflective of the fact that only 266 homes were completed and sold during the period versus the previous financial period's 782 homes. The Credit Crisis' shutdown of credit growth in banks is really the major culprit for this drop in demand. On a positive note, the directors report that "...a big success of the 2009 financial year was the successful completion and letting of 176 sectional title units in Protea Glen, Soweto. As at 31 December 2009 the first phase consisting of 100 units was fully tenanted." Critically regarding the prospects of the Group the directors cite how "...recent months have seen a continued relaxing by banks of their lending criteria. This along with an improvement in the affordability of mortgage loans due to lower interest rates and an improvement in clients` disposable income levels have resulted in a continued improvement in monthly sales. Although natural attrition in the workforce has taken place, the group has retained its sales, administration and production capacity through this difficult period and is well placed to take full advantage of the anticipated recovery in the affordable housing market." Coupled with the surprise interest rate drop by Gill Marcus last week, perhaps RBA's prospects are finally looking a bit better.
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