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LABAT AFRICA LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1986/01616/06)
("LABAT")
THE POWER TO DELIVER
INTERIM RESULTS FOR THE SIX MONTHS ENDING 31 AUGUST 2000
* TURNOVER +132%
* NET OPERATING INCOME +69%
* ATTRIBUTABLE INCOME +17%
CONSOLIDATED INCOME STATEMENTS
UNAUDITED UNAUDITED AUDITED
6 MONTHS 6 MONTHS 12 MONTHS
31 AUG 00 31 AUG 99 29 FEB 00
R'000 R'000 R'000
TURNOVER 94 468 40 707 112 083
NET OPERATING INCOME BEFORE
INTEREST AND TAXATION 14 007 8 287 17 869
NET INTEREST PAID (2 639) (2 382) (4 324)
NET INCOME BEFORE TAXATION 11 368 5 905 13 545
TAXATION (2 922) (616) 925
NET INCOME AFTER TAXATION 8 446 5 289 14 470
ATTRIBUTABLE TO OUTSIDE SHAREHOLDERS (2 021) 214 280
INCOME ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 6 425 5 503 14 750
WEIGHTED AVERAGE NUMBER OF
SHARES ('000) 184 903 148 922 140 757
HEADLINE EPS (CENTS) 3,5 3,7 10,5
FULLY DILUTED EPS (CENTS) 3,5 3,7 10,3
CONSOLIDATED BALANCE SHEETS
UNAUDITED UNAUDITED AUDITED
AT AT AT
31 AUG 00 31 AUG 99 29 FEB 00
EMPLOYMENT OF CAPITAL R'000 R'000 R'000
NON-CURRENT ASSETS
INVESTMENTS 17 546 21 572 17 546
FIXED ASSETS 15 060 8 432 18 855
NET CURRENT ASSETS 53 282 38 711 37 828
CURRENT ASSETS
CASH AND CASH EQUIVALENTS 4 857 20 125 5 495
INVENTORIES 16 723 15 013 16 828
TRADE AND OTHER RECEIVABLES 112 353 78 924 93 033
133 933 114 062 115 356
CURRENT LIABILITIES
BANK OVERDRAFT 33 716 20 644 33 495
SHORT-TERM DEBT 11 769 13 000 6 500
TRADE CREDITORS 35 166 41 707 37 533
80 651 75 351 77 528
85 888 68 715 74 229
CAPITAL EMPLOYED
SHARE CAPITAL 1 849 1 827 1 827
SHARE PREMIUM 49 090 48 724 46 711
DISTRIBUTABLE RESERVES 23 420 7 748 16 995
ORDINARY SHAREHOLDERS' FUNDS 74 359 58 299 65 533
OUTSIDE SHAREHOLDERS 1 682 (214) (417)
TOTAL SHAREHOLDERS' FUNDS 76 041 58 085 65 116
LONG-TERM LIABILITIES 454 890 988
DEFERRED TAXATION 9 393 9 740 8 125
85 888 68 715 74 229
NUMBER OF SHARES IN ISSUE ('000) 184 903 182 721 182 721
NET ASSET VALUE PER SHARE (CENTS) 40 32 36
GROUP PROFILE AND FOCUS
THE GROUP PROFILE HAS CHANGED SUBSTANTIALLY SINCE ITS LISTING IN JUNE 1999 TO
MEET MARKET DEMANDS. THE COMPANY HAS FOCUSED ON ITS FOUR MAIN BUSINESSES. A
RESTRUCTURING PROCESS HAS TAKEN PLACE AND A SOLID PLATFORM FOR EXPANSION HAS
BEEN CREATED. COSTS RELATING TO RESTRUCTURING HAVE BEEN WRITTEN-OFF IN THE
CURRENT PERIOD. MAJOR GROWTH IS FORECAST FOR EACH OF THE CORE BUSINESSES. THE
PRIMARY FOCUS OF THE BUSINESS IS IN THE PROVISION OF TECHNOLOGY SOLUTIONS TO
THE PRIVATE AND PUBLIC SECTORS.
COMMENTARY ON RESULTS
THE PAST SIX MONTHS HAVE BEEN DIFFICULT FOR VENTURE CAPITAL, SMALL MARKET
CAPITAL AND IN PARTICULAR FOR EMPOWERMENT COMPANIES. THE RETAIL TRADE HAS BEEN
HARD HIT BY COMPETITION FROM NEW SOURCES AND THE ECONOMY IN GENERAL HAS
FALTERED. IT IS THEREFORE GRATIFYING TO BE ABLE TO REPORT A VERY SATISFACTORY
SET OF RESULTS FOR THE PERIOD.
TURNOVER HAS INCREASED BY 132% FROM R41 MILLION TO R95 MILLION. MARGINS HAVE
SUFFERED SOMEWHAT DUE TO AGGRESSIVE MARKETING IN A TOUGH MARKET. ONCE-OFF
MARKETING AND DEVELOPMENT COSTS FOR OUR TRAFFIC AND SAMES BUSINESSES HAVE BEEN
WRITTEN-OFF BUT WE EXPECT MARGINS TO IMPROVE SUBSTANTIALLY IN THE SECOND HALF
OF THE YEAR AS THESE INVESTMENTS MATURE.
NET OPERATING INCOME FOR THE PERIOD HAS INCREASED BY 69% FROM R8 MILLION TO R14
MILLION.
ATTRIBUTABLE INCOME TO SHAREHOLDERS HAS INCREASED BY 17% FROM R5,5 MILLION TO
R6,4 MILLION. HEADLINE EARNINGS PER SHARE HAVE DECREASED MARGINALLY FROM 3,7 TO
3,5 CENTS. INTEREST COVER HAS IMPROVED FROM 3,48 TIMES TO A VERY ACCEPTABLE
5,31 TIMES. THE NET ASSET VALUE PER SHARE HAS INCREASED BY 11% TO 40 CENTS PER
SHARE.
PROSPECTS
TRADITIONALLY THE SECOND HALF OF THE YEAR IS A BETTER TRADING PERIOD FOR THE
GROUP THAN THE FIRST. WE EXPECT THAT THIS YEAR WILL BE NO EXCEPTION AND WE ARE
ON TARGET TO EXCEED LAST YEARS PROFIT OF R14,7 MILLION.
PROSPECTS FOR THE INDIVIDUAL BUSINESSES ARE EXCELLENT AND CAN BE SUMMARISED AS
FOLLOWS:
MANAGEMENT CONSULTING
THE CONSULTING BUSINESS IS DOING WELL AND OUR JOINT VENTURE WITH ANDERSEN
CONSULTING IS TAKING OFF. SIGNIFICANT OPPORTUNITIES FOR NEXT YEAR HAVE BEEN
IDENTIFIED AND THE COMPANY IS WELL POSITIONED TO CAPITALISE ON THE LARGE
INVESTMENT IN BRAND BUILDING AND MARKETING.
LABAT TRAFFIC
LABAT TRAFFIC PROVIDES A RANGE OF SERVICES TO TRAFFIC DEPARTMENTS ON AN
OUTSOURCE FEE-SHARING BASIS. THE COMPANY PROVIDES TRAFFIC FINING SYSTEMS AND
THE NECESSARY BACK OFFICE SYSTEMS TO SUPPORT TRAFFIC FINING. CURRENTLY
OPERATING IN PRETORIA AND CENTURION THE SYSTEM IS NOW BEING IMPLEMENTED IN
EDENVALE WITH CONTRACTS FOR WARRENTON, GEORGE AND UPINGTON AWARDED.
FURTHER CONTRACTS ARE BEING NEGOTIATED WITH TRAFFIC AUTHORITIES NATIONALLY.
SAMES
SAMES IS A WORLD-CLASS DESIGNER AND MANUFACTURER OF SEMI-CONDUCTORS. CURRENTLY
THERE IS A WORLD-WIDE SHORTAGE OF SEMI-CONDUCTOR MANUFACTURING CAPACITY. SAMES,
A WHOLLY-OWNED SUBSIDIARY OF LABAT AND THE ONLY MICRO-CHIP MANUFACTURER IN
AFRICA, IS WELL-POSITIONED TO TAKE ADVANTAGE OF THIS GAP IN THE MARKET.
CURRENTLY 70% OF THE SAMES SALES ARE EXPORTS. MICRO-CHIP CONSUMERS IN GERMANY,
INDIA AND CHINA HAVE BEEN FAVORABLY DISPOSED TOWARDS SAMES AND SALES ARE
PROCEEDING WELL IN THESE COUNTRIES. IN ADDITION, THE LUCRATIVE MARKET TO LOCAL
PRIVATE CONSUMERS IS BEING EXPLORED. THE CURRENT RAND/DOLLAR EXCHANGE RATE HAS
HELPED TO MAKE SAMES INTO A REAL PLAYER ON THE WORLD STAGE.
RETAIL
TRADING CONDITIONS ARE TOUGH IN THE RETAIL INDUSTRY DUE TO COMPETITION FOR
CONSUMER SPEND FROM NON-TRADITIONAL SOURCES SUCH AS THE NATIONAL LOTTERIES,
CASINOS AND THE CELLULAR PHONE INDUSTRIES. THE MARKET FOR DURABLE GOODS IS
EXPECTED TO NORMALISE ONCE THE INITIAL GAMBLING EUPHORIA SUBSIDES AND THE
GOVERNMENT'S CURRENT FOCUS ON HOUSING DELIVERY FOR THE MASSES RESULTS IN THE
ACTUAL DELIVERY OF THOSE HOUSES. THE GROUP HAS IDENTIFIED A NEED FOR DIRECT
BLACK ENTREPRENEURIAL INVOLVEMENT AT THE STORE LEVEL AND IS FAR ADVANCED WITH A
FRANCHISE ROLL OUT PLAN. THE AIM IS TO CREATE A FRANCHISED NETWORK OF BLACK
ENTREPRENEURS AND TO THIS END TWO NEW STORES ARE BEING OPENED IN PIETERSBURG
(NOVEMBER 2000) AND HAZYVIEW (DECEMBER 2000) AND A FURTHER 10 ARE PLANNED FOR
NEXT YEAR. DESPITE CURRENT TRADING CONDITIONS THE RETAIL DIVISION IS ON TARGET
TO ACHIEVE ITS PROJECTED PROFIT FOR THE YEAR. A REPOSITIONING OF OUR RETAIL
BUSINESS IS BEING PLANNED TO CREATE A MAJOR NEW BLACK CONTROLLED RETAIL ENTITY
TO SERVICE THE EMERGING MARKET.
DIVIDEND
IT IS THE GROUP'S POLICY NOT TO DECLARE AND PAY DIVIDENDS AT THIS TIME. FOR THE
FORESEEABLE FUTURE ALL GROUP SURPLUSES WILL BE RETAINED IN THE BUSINESSES TO
FUND THEIR FUTURE GROWTH.
FOR AND ON BEHALF OF THE BOARD
J.J. MODISE B.G. VAN ROOYEN
CHAIRMAN GROUP CHIEF EXECUTIVE
21 NOVEMBER 2000
REGISTERED OFFICE TRANSFER SECRETARIES
LABAT AFRICA LIMITED MERCANTILE REGISTRARS LIMITED
LABAT HOUSE, CONSTANTIA PARK CENTRE 11 DIAGONAL STREET
CNR 14TH AVENUE AND JOHANNESBURG 2001
HENDRIK POTGIETER ROAD P O BOX 1053
WELTEVREDEN PARK, 1709 JOHANNESBURG 2000
SUITE 248, PRIVATE BAG X09
WELTEVREDEN PARK, 1715
