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Labat Africa Limited - Reviewed Results For The Year Ended 28 February 2006 LABAT AFRICA LIMITED (Incorporated in the Republic of South Africa) Share code: LAB & ISIN: ZAE000018354 (Registration number 1986/001616/06) ("Labat" or "the group") REVIEWED RESULTS FOR THE YEAR ENDED 28 February 2006 GROUP CONSOLIDATED INCOME Reviewed Audited STATEMENT 12 months 12 months 28 February 28 February 2006 2005
(R"000) (R"000) Revenue 156 059 193 867 Continuing operations 144 899 130 814 Discontinued operations 11 160 63 053 Operating income before 42 929 (3 328) depreciation and amortisation Continuing operations 42 112 3 189 Discontinued operations 817 (6 517) Depreciation and (20 161) (22 693) amortisation Continuing operations (19 689) (20 613) Discontinued operations (472) (2 080) Operating profit/(loss) 22 768 (26 021) before interest and taxation Continuing operations 22 423 (17 424) Discontinued operations 345 (8 597) Interest paid (5 957) (9 503) Continuing operations (5 951) (6 501) Discontinued operations (6) (3 002) Interest received 213 541 Continuing operations 213 430 Discontinued operations - 111 Profit/(loss) before 17 024 (34 983) taxation, sale and fair value adjustments Continuing operations 16 685 (23 495) Discontinued operations 339 (11 488) Sale of investments and fair (7 299) (27 650) value adjustments Loss on sale of a subsidiary (19 159) (2 343) Negative goodwill on 1 943 acquisition of subsidiary Impairment on discontinuing - (30 156) operations Revaluation surplus on - (2 906) property Profit on sale of a 11 860 - subsidiary Profit/(loss) before 9 725 (62 633) taxation Taxation (12 829) 4 109 Continuing operations (12 727) (4 966) Discontinued operations (102) 9 075 Loss after taxation (3 104) (58 524) Attributable to Minority interest 15 805 4 423 Equity holders (18 909) (62 947) Loss attributable to (3 104) (58 524) shareholders Shares in issue throughout 184 415 184 415 the period (000) Basic loss per share (cents) (10.3) (34.1) Headline loss per share (6.3) (19.3) (cents) Reconciliation of basic to headline loss Basic earnings (18 909) (62 947) Profit on sale of fixed (99) (321) assets Negative goodwill - (1 943) Loss on sale of subsidiary 19 159 2 343 Impairment of investments - 30 156 and assets Profit on sale of (11 860) - subsidiary Revaluation of property - (2 906) Headline earnings (11 709) (35 618) GROUP CONSOLIDATED BALANCE Reviewed Audited SHEET 28 February 28 February 2006 2005
(R"000) (R"000) ASSETS Property, plant and 43 463 53 726 equipment Intangible assets 31 076 34 984 Investments 2 2 032 Deferred taxation 21 247 22 492 Non-current assets 95 788 113 234 Cash 12 398 3 295 Inventories 13 454 22 196 Accounts receivable 50 961 89 933 Instalment sale debtors - 56 702 Trade and other 50 961 33 231 receivables Current assets 76 813 115 424 Total assets 172 601 228 658 EQUITY AND LIABILITIES Share capital and reserves 49 124 69 878 Share capital 1 844 1 844 Share premium 48 855 48 855 Non-distributable reserves 2 420 2 420 Distributable reserves (3 995) 16 759 Share capital and reserves 49 124 69 878 Outside shareholders 16 512 8 584 Total shareholders" funds 65 636 78 462 Long-term liabilities 35 020 22 665 Deferred taxation 1 232 2 835 Non-current liabilities 36 252 25 500 Bank overdraft 5 64 879 Bank overdraft 5 27 664 Instalment sale bank finance - 37 215 Accounts payable 70 708 59 817 Short-term debt 13 693 12 431 Trade creditors and other 50 499 42 162 payables Taxation 6 516 5 224 Current liabilities 70 713 124 696 Total equity and liabilities 172 601 228 658 Number of shares in issue 184 415 184 415 ("000) Total net asset value per 27 38 share (cents) CASH FLOW STATEMENT Reviewed Audited 28 February 28 February
2006 2005 (R"000) (R"000) Net flow from operating (2,096) 10 071 activities Net flow from investing 5 297 (21 639) activities Net flow from financing 5 897 9 512 activities Net increase/(decrease) in 9 098 (2 056) cash Cash at beginning of year 3 295 5 351 Cash at end of year 12 393 3 295 STATEMENT OF CHANGES IN EQUITY Share Share Non- Distributable Capital Distributable and (R"000) Capital Premium Reserves Reserves Reserves Balance at 1 1 844 48 855 2 420 16 759 69 878 March 2005 Loss for the - - - (18 909) (18 909) year Prior year - - - (1 845) (1 845) adjustments Balance at 28 1 844 48 855 2 420 (3 995) 49 124 February 2006 COMMENTARY The group has continued with its restructuring programme including its disposal of non-core assets. This has resulted in a return to profitability and has left the group with a more streamlined business which is well placed to take advantage of the upswing in the economy. INCOME STATEMENT Revenue The various disposals have led to a R37,808 million reduction of group revenue to R156,059 million from R193,867 million in the previous year. EBITDA There has been a huge turnaround of R46,257 million in the EBITDA from a loss of R3,328 million in the previous year to a profit of R42,929 million in the current year. Profit Before Income Tax, Sales and Fair Value Adjustments This has improved by R52,007 million from a loss of R34,983 million in the previous year to a profit of R17,024 million in the current year. Disposals The impairment on the disposals of discontinued operations has now been fully realised and has resulted in a once off loss of R7,299 million. Interest Interest paid has been reduced by R3,546 million due to the elimination of bank overdraft and instalment finance debt. BALANCE SHEET The most significant change to the Balance Sheet during the past year has been the total turnaround in the group"s cash position. Bank overdrafts and Instalment sale finance have been reduced from R64,879 million to R5,000. Group cash resources have increased by R9,103 million from R3,295 million to R12,398 million. Restructuring The restructuring/disposal process is now almost complete, leaving the group with two main core businesses, Labat Traffic Solutions and SAMES . Labat Traffic Solutions Labat Traffic Solutions continues to record excellent year on year growth in revenue and profits and continues to grow its technology base, its service offering and its 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 many new contracts. Negotiations are at an advanced stage with various municipalities who have seen the benefits of Labat Traffic Solutions"s superior technology and business model and we are projecting similar growth in the years ahead. The business is launching new services to enhance its offering to our existing client base which should result in good future profits. SAMES The business is now back on track and is almost at break even and projecting profits for 2007. A substantial new project, which will see SAMES improving its technology to the 0.8 micron level is well on track. This project is accompanied by a Euro22 million revenue contract over the next few years. Funding for the project has been sourced via the DTI Industrial Participation Programme. New equipment has been sourced for this project and the technology transfer has taken place. Production will start in the second half of the year. Conclusion Labat is now well on the way to a substantial recovery and is projecting profits for the year ahead. The board of Labat would like to thank those who have supported us through our recent difficult times; our management, staff, shareholders and especially our bankers, suppliers and customers. Accounting Policies The results have been prepared in accordance with the group"s accounting policies which have been consistently applied with International Financial Reporting Standards ("IFRS"). The following accounting policies were applied for IFRS reporting: AC 140 (IFRS 3 revised 2004) Business Combinations - Goodwill on consolidation is no longer amortised but is tested annually for impairment as from 1 March 2004. Negative goodwill is recognised immediately in profit and loss. AC 105 (IAS 17) Operating Leases are recognised as an expense on a straight line basis over the lease term. Reviewed opinion The results for the year ended 28 February 2006 have been reviewed by the group"s auditors, RAIN, and their unqualified review opinion is available for inspection at the group"s registered office. Renewal of cautionary Further to the cautionary announcement dated 4 May 2006, shareholders are advised that Labat is involved in negotiations which, if successfully concluded, may have a material effect on the price at which Labat"s shares trade. Accordingly, shareholders are advised to continue to exercise caution when trading in Labat shares on JSE Limited until a further announcement is made. For and on behalf of the board B G VAN ROOYEN 31 May 2006 Directors: B.G. van Rooyen (Chairman); D. M. Asmal (Financial Director) D. J. O"Neill (Non executive); V. J. Labat (Non executive); M. J. Shabangu (Executive); R. C. I. Serobe (Non Executive) Registered Office Auditors Island House RAIN Constantia Office Park 3rd Floor Corner 14th Avenue and Hendrik 30 Melrose Boulevard Potgieter Road Melrose Arch Weltevreden Park, 1709 2196 Private Bag X09-248 Weltevreden Park, 1715 Sponsor Merchant Sponsors (Proprietary) Transfer Secretaries Limited Computershare Investor Services (Proprietary) Limited 70 Marshall Street Johannesburg, 2001 P O Box 61051 Marshalltown, 2017 Date: 31/05/2006 05:15:20 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
