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Labat Africa Limted - Audited Results for the year ended 28 February 2002
Labat Africa Limted
(Incorporated in the Republic of South Africa)
JSE Share code: LAB ISIN: ZAE000018354
(Registration number 1986/001616/06)
("Labat" or "the company" or "the group")
THE POWER TO DELIVER
Audited Results for the year ended 28 February 2002
- REVENUE + 27,6%
- OPERATING income + 83,4%
- ATTRIBUTABLE EARNINGS + 123,2%
CONSOLIDATED INCOME STATEMENT
2002 Growth 2001
R`000 % R`000
Revenue 224 204 27,6 175 735
Net operating income before
interest and taxation 46 278 83,4 25 238
Interest paid (6 619) (6 165)
Interest received 760 393
Net income before taxation 40 419 107,6 19 466
Taxation (912) (1 844)
Net income after taxation 39 507 17 622
Attributable to minority shareholders (2 140) (883)
Net income attributable to Labat
shareholders 37 367 123,2 16 739
Shares in issue throughout year (`000) 184 903 184 903
Basic/headline earnings
per share (cents) 20,2 123,2 9,1
STATEMENT OF CHANGES IN EQUITY
Distri- Capital
Share Share butable and
capital premium reserves reserves
R`000 R`000 R`000 R`000
Balance at 28 February 2001 1 849 49 090 33 012 83 951
Retained income for year - - 37 367 37 367
Balance at 28 February 2002 1 849 49 090 70 379 121 318
CASH FLOW STATEMENT
2002 2001
R`000 R`000
Net flow from operating activities 31 981 (1 313)
Net flow from investing activities (5 394) (10 247)
Net flow from financing activities 7 762 11 328
Net increase/(decrease) in cash 34 349 (232)
Cash at beginning of year 5 263 5 495
Cash at end of year 39 612 5 263
CONSOLIDATED BALANCE SHEET
2002 2001
R`000 R`000
ASSETS
Fixed assets 16 828 12 312
Intangible assets 26 357 31 222
Unlisted investments at directors` valuation 217 195
Loan to share investment trust 1 872 1 872
Non-current assets 45 274 45 601
Inventory 34 443 17 813
Instalment sale debtors 82 891 79 424
Trade and other receivables 27 639 27 209
Cash resources 39 612 5 263
Current assets 184 585 129 709
TOTAL ASSETS 229 859 175 310
EQUITY AND LIABILITIES
Share capital 1 849 1 849
Share premium 49 090 49 090
Distributable reserves 70 379 33 012
Capital and reserves 121 318 83 951
Minorities interest 3 082 1 064
Long-term liabilities 6 045 5 832
Deferred taxation 10 576 10 326
Non-current liabilities 16 621 16 158
Bank overdraft - instalment sale finance 26 759 25 555
Other bank overdrafts 14 196 11 992
Other short-term debt 12 048 7 907
Trade and other payables 35 280 27 768
Taxation 555 915
Current liabilities 88 838 74 137
Total equity and liabilities 229 859 175 310
Note
As disclosed in the Annual Report of the previous year, there was a
guarantee of R8,8 million to IBM on behalf of a sold subsidiary. With effect
from 1 April 2002, the company was called upon to make a monthly payment of
R233 000 in terms of this guarantee (R7,8 million as at
28 February 2002). Steps have been taken on the strength of a back-to-back
surety, to recover all amounts paid out or to be paid out.
COMMENTARY
The year gone by was a sad one for us in that we lost our friend and
Chairman Joe Modise. We were privileged to have benefited from his guiding
hand and sound advice. We join his many friends in sending our condolences
and best wishes to his wife and family.
Group profile and focus
The company is focused on four main profitable businesses:
- SAMES - South Africa`s sole manufacturer of integrated circuits for
use in the telephone and energy measurement industry.
- LABAT TRAFFIC SOLUTIONS - offering a range of innovative
technology-driven management systems to traffic departments.
- LABAT MANAGEMENT CONSULTING - offering a range of consulting
solutions primarily to the public sector.
- LABAT RETAIL - a chain of 21 retail furniture, electrical and white
goods stores.
Review of results
Trading conditions, both locally and internationally, have been tough.
Labat is therefore pleased to announce its best ever results in such trying
conditions. LABAT HAS DELIVERED AS PROMISED.
- Revenue increased by 27,6% from R175,7 million to R224,2 million.
- Operating income increased by 83,4% from R25,2 million to
R46,4 million.
- Attributable earnings increased by 123,2% from R16,7 million to
R37,4 million.
- Earnings per share increased by 123,2% from 9,1 cents to 20,2
cents.
- Interest cover has increased from 4,1 to 7,0.
The Balance Sheet was also strengthened considerably during the
year.
- Cash resources increased by R34,3 million from R5,3 million to
R39,6 million.
- Net asset value increased from 45,4 cents to 65,6 cents per share.
It was a wonderful year for our businesses and I take this opportunity to
thank all the directors, management and staff and our partners for their
sterling efforts in the past and I look forward to the same in the future.
SAMES (South African Micro-Electronic Systems (Pty) Ltd)
The company continues to develop new products and markets and is confident
of achieving good growth in the coming year. Indications are that the
industry is picking up world-wide and that SAMES could benefit from the
world-wide capacity shortages that are characteristic of an upturn in this
industry. The past year has been challenging for technology industries world-
wide. SAMES has independently pursued a strategy of growth in niche
international markets and this has been very successful, with the result
that over 90% of current sales are offshore.
Labat Traffic Solutions
Labat Traffic continues to record excellent year-on-year growth in revenue
and profit and continues to grow its technology base and business. The
business now has proven technology and a business model that is expected to
deliver enhanced earnings as a result of the implementation of three new
contracts. Negotiations are at an advanced stage with other municipalities
who now see the benefits of Labat Traffic`s superior technology.
Labat Management Consulting
The management consulting business has been successful in winning new
tenders and in establishing itself as a credible consulting business that is
able to deliver on tenders won. The business continues to forge new
partnerships to target new business opportunities in the public sector. The
consulting business`s strength is its brand name which is becoming more
easily recognisable, thus helping to contribute towards steady year-on-year
growth.
Labat Retail
The image of the retail industry in the past year has been tarnished by
several high profile setbacks which are symptomatic of the difficult trading
conditions prevalent. This has forced the industry to be inward looking to
identify opportunities for increased efficiencies. Rather than chasing
growth, management has pursued a conservative strategy aimed at preserving
the quality of the instalment debtors book rather than pursuing sales at any
cost. This policy has resulted in the growth of the instalment debtors book
by only 4,4% from R79,4 million to R82,9 million. This conservative approach
has enabled us to maintain our base and has positioned us to capitalise on
the anticipated upswing in the retail sector.
Prospects
Labat has delivered three years of double digit growth. Labat and its
management team are committed to continuing these excellent results. Labat`s
hands`-on operational philosophy is in line with the BEE commission
guidelines and the results prove that these guidelines do work. The
challenge facing Labat in the future will be to innovatively implement these
guidelines to create a model for a truly empowered "black chip" company
leveraging off the solid base that it has created. We have budgeted for
moderate growth for the year ahead and have every expectation that these
growth targets will be achieved.
Share price/listing
Over the past three years the share has been trading at prices which did
not remotely reflect the underlying value of the businesses. Negative market
sentiment towards small cap, venture capital and empowerment shares,
together with the general melt down of the IT market has led to a situation
where the company`s shares reached a low of 15 cents last year. Because of
this we were advised to look at alternative ways of unlocking shareholder
value. These included a
de-listing and the sale of some of the company`s businesses. The proposed
transaction with Allied Technologies Limited ("Altech") and the consequent
share price of q80 cents is a result of this advice.
Altech
On 3 May 2002 we announced details of a proposed transaction with
Altech whereby it was proposed, inter alia:
- to sell certain businesses to Altech;
- to distribute the net proceeds to shareholders;
- to eventually dispose of the remaining businesses;
- to de-list the company`s shares.
Because of the complicated nature of the transaction it has been agreed with
Altech to extend the date for the fulfilment of the suspensive conditions
until 1 July 2002.
Accounting policies
The accounting policies applied are consistent with those applied in the
previous year and are in compliance with GAAP.
Dividends
It is company policy that no dividends will be declared as group surpluses
will be retained to fund future growth.
For and on behalf of the board
B G van Rooyen
Group Chief Executive
13 June 2002
Directors: B G van Rooyen (Group CEO), C Becker, V J Labat (USA),
C P Rosholt, R C I Serobe, M J Shabangu
Secretary: M Sender, FCIS
Registered Office: Transfer secretaries:
Island House Computershare Investor Services Limited
Constantia Park Centre 11 Diagonal Street
14th Avenue and Johannesburg, 2001
Hendrik Potgieter Road PO Box 1053
Weltevreden Park, 1709 Johannesburg, 2000
Private Bag X09-248
Weltevreden Park, 1715
Auditors:
Pierce & Gampel
3rd Floor, Andersen Axis
Melrose Arch
Melrose, 2196
Date: 14/06/2002 01:28:13 PM Produced by the SENS Department
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