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LAB - Labat Africa Limited - Unaudited group results for the six month period
ended 31 August 2010 and changes to the board of directors
LABAT AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
JSE code: LAB ISIN: ZAE000018354
("Labat" or "the company")
UNAUDITED GROUP RESULTS FOR THE SIX MONTH PERIOD ENDED 31 AUGUST 2010 AND
CHANGES TO THE BOARD OF DIRECTORS
The board presents its unaudited results for the six months ended 31 August 2010
below, together with audited results for the year ended 28 February 2010 and
unaudited results for the six months ended 31 August 2009.
Condensed consolidated statement of financial position at 31 August 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28
2010 2009 February
2010
R`000 R`000 R`000
Revenue 13 268 13 363 28 108
Continuing operations-head - - -
office
Discontinued operations 13 268 13 363 28 108
Operating income/(loss) before 3 609 (5 509) (7 141)
depreciation and amortisation
Continuing operations (275) (3 154) (2 196)
Discontinued operations 3 884 (2 355) (4 945)
Depreciation and amortisation (436) (3 631) (6 363)
Continuing operations (13) - (37)
Discontinued operations (423) (3 631) (6 326)
Operating profit/(loss) before 3 174 (9 140) (13 504)
interest and taxation
Continuing operations (288) (3 154) (2 233)
Discontinued operations 3 462 (5 985) (11 271)
Interest paid (1 331) (3 260) (4 603)
Continuing operations - (1) (683)
Discontinued operations (1 331) (3 259) (3 920)
Interest received 3 249 350
Continuing operations - 1 1
Discontinued operations 3 247 349
Profit/(loss) before taxation, 1 846 (12 151) (17 757)
sale and fair value adjustments
Continuing operations (288) (3 154) (2 915)
Discontinued operations 2 134 (8 997 (14 842)
Fair Value adjustment and (5 825) - (17 020)
other costs
Impairment of financial asset (968)
Expenses relating to (4 857) - -
discontinued division
Impairment Property Plant, - - (17 020)
Equipment, stock
Loss before taxation (3 979) (12 151) (34 777)
Continuing operations (288) (3 154) (3 987)
Discontinued operations (3 690) (8 997) (30 790)
Taxation - - -
Continuing operations - - -
Discontinued operations - - -
Loss after taxation (3 979) (12 151) (34 777)
Continuing operations (288) (3 154) (3 987)
Discontinued operations (3 690) (8 997) (30 790)
Other comprehensive loss - - - (24 318)
discontinued operations
Gain on land and buildings - - 2 028
Impairment on plant and - - (37 218)
equipment
Income tax relating to - - 10 872
components of other
comprehensive income
Total comprehensive loss for (3 979) (12 151) (59 095)
the year net of tax
Attributable to
Minority Interest - - -
Equity holders (3 979) (12 151) (34 777)
Loss attributable to (3 979) (12 151) (34 777)
shareholders
Weighted Shares in issue 197 155 197 155 197 155
throughout the period (`000)
Basic loss per share (cents) (2.0) (6.2) (17.6)
Continuing (0.1) (1.6) (2.0)
Discontinuing (2.0) (4.6) (15.6)
Headline loss per share (cents) (1.5) (6.2) (13.4)
Reconciliation of basic to
headline earnings
Basic loss (3 979) (12 151) (34 777)
Impairment of asset/investment 968 - 8 214
Headline loss (3 011) (12 151) (26 563)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 AUGUST 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28
2010 2009 February
2010
R`000 R`000 R`000
ASSETS
Property, plant and equipment 59 92 55
Other financial assets 179 1 402 179
Non-current assets 237 1 494 234
Trade and other receivables 1 314 14 26
Cash and cash equivalents 6 355 253
Current assets 1 320 369 279
Assets of disposal group 58 334 100 125 58 302
classified as held for sale
Total assets 59 891 101 988 58 815
EQUITY AND LIABILITIES
Share capital and reserves (55 970) (20 892) (51 992)
Share capital 1 972 1 972 1 972
Share premium 49 065 49 065 49 065
Treasury shares (482) (482) (482)
Distributable reserves (106 525) (71 447) (102 547)
Non-current liabilities - - -
Trade and other payables 10 669 8 318 9 894
Current liabilities 10 669 8 318 9 894
Liabilities of disposal group 105 192 114 562 100 913
classified as held for sale
Total equity and liabilities 59 891 101 988 58 815
Number of shares in issue 197 155 197 155 197 155
(`000)
Total net asset value per share (28.4) (11.0) (26.4)
(cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS AS AT 31 AUGUST 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28
2010 2009 February
2010
R`000 R`000 R`000
Net flow from operating 7 024 (29 792) (10 082)
activities
-continuing (581) (3 879) 448
-discontinuing 7 605 (25 913) (10 530)
Net flow from investing (8 149) (2 322) 2 442
activities
-continuing 334 (108) (363)
-discontinuing (8 483) (2 214) 2 805
Net flow from financing (313) (581) (2 333)
activities
-continuing - 3 601 -
-discontinuing (313) (4 182) (2 333)
Net decrease in cash (1 438) (32 695) (9 973)
-continuing (247) (386) -
-discontinuing (1 191) (32 309) -
Cash at beginning of period 1 444 44 112 11 417
-continuing 253 554 168
-discontinuing 1 191 43 558 11 249
Cash at end of period 6 11 417 1 444
-continuing 6 168 253
-discontinuing - 11 249 1 191
Distributable Capital Minority Total
and
R`(000) Reserves Reserves Interest
Balance at 1 March (102 547) (51 992) - (51
2010 992)
Attributable loss (3 979) (3 979) - (3 979)
for the year
Loss before fair (3 011) (3 011) - (3 011)
value adjustments
Fair value (968) (968) - (968)
adjustments
Balance at 31 (106 526) (55 971) - (55
August 2010 971)
SEGMENTAL REPORTING
The Group has adopted IFRS 8 Operating Segments as its segmental reporting
standard which requires an entity to report financial and descriptive
information about its reportable segments, which are operating segments or the
aggregation of operating segments that meet specified criteria.
Operating segments are components of an entity in respect of which separate
financial information is available is evaluated regularly by management.
The Group had two segments which are as follows:
* Technology which manufactures and distributes integrated circuits (chips)
and security hardware. This segment has been discontinued and has been
transferred to non-current assets held for sale.
* Head office operations which provide management services to the group.
* The segments as reported in the segmental analysis are consistent with the
internal reports that are provided to the chief operation decision makers
* Revenue totals show the other operations revenue for the Group after inter-
company elimination of R 2 ,1 million
* The Technology segment has not had any extensive reliance on any single
customer.
Unaudited 31 Audited 28
August 2010 February 2010
R`000 R`000
Revenue by Segment 13 268 28 108
Technology 13 268 28 108
Other operations - -
Loss from operations before finance 3 174 (13 504)
costs and fair value adjustments by
segment
Technology 3 462 (11 271)
Other operations (288) (2 233)
Property, Plant and Equipment by 59 55
segment
Technology - -
Other operations 59 55
Trade and Accounts receivable by 1 314 26
segment
Technology - -
Other operations 1 314 26
Trade and Accounts payable by 10 669 9 894
segment
Technology - -
Other operations 10 669 9 894
Capital Expenditure - 703
Technology - 703
Other operations - -
Depreciation 435 8 393
Technology 435 8 315
Other operations - 78
BASIS OF PREPARATION
The board of directors presents the company`s unaudited interim results for the
period ended 31 August 2010. The accounting policies adopted for purposes of
this report comply, and have been consistently applied in all material respects
with International Financial Reporting Standards ("IFRS") and the abridged
financial statements have been prepared in accordance with the requirements of
IAS 34 (Interim Financial Reporting).
The same accounting policies and methods of computation have been followed as
compared to the prior year. The results have not been audited or reviewed.
FINANCIAL RESULTS
The results for the period under review were satisfactory. Operating profit
before interest and taxation improved substantially from a loss of R9.1m to a
profit of R3.0m. This was primarily achieved from savings achieved by closing
the loss making SAMES plant. The transfer of manufacturing to a modern plant in
China allowed the Integrated Circuit Design Centre ("ICDC") division to start
earning profits. Profits in the ICDC division are expected to be maintained
into the future. After writing off the remaining non-recurring expenses of R5.8m
relating to the closure of SAMES the loss after taxation was R4m.
CORPORATE ACTIVITY
Pharmaceuticals
The sale of shares transaction with Aurora is in the process of being re-
structured and the Pharmaceutical opportunity is to be retained in Labat. Labat
has signed a co-operation agreement with the Industrial Development Corporation
regarding the funding of the Pharmaceutical facility. Labat is further in the
process of finalizing details with a Technology partner in the Pharmaceutical
facility. An agreement in principle has been reached with Global Emerging
Markets (GEM) to fund suitable pharmaceutical acquisitions as part of the
establishment of a true Black Economic Empowerment Entity in the Pharmaceutical
arena.
Mining
Following the announcement on SENS on 09 November 2010, negotiations are still
taking place with Primrose Gold Mines and with ERPM for the acquisition of their
smelting operations. Aurora has announced that the funding for the acquisition
of the Grootvlei and Orkney mines "the gold mines" has been agreed and in terms
of the new funding agreement with Chinese investors and in terms of Aurora`s
negotiation with the Chinese investors, Aurora will retain a 35% share of the
gold mines and intends to negotiate with Labat in order to vend its 35%
shareholding in the gold mines into Labat once the acquisition of the gold mines
by the Chinese investor and Aurora has been finalised. Several other mining
opportunities are being pursued.
CORPORATE GOVERNANCE
During the past few months, there have been many negotiations and changes in
direction. However, the group subscribes to the values of good corporate
governance at all levels and is committed to conducting business with
discipline, integrity and social responsibility and steps are being taken to
ensure that the company regains these characteristics. The board is in the
process of being restructured to address King III requirements.
ISSUE OF SHARES
No new shares were issued during the period under review.
DIRECTORS AND EXECUTIVE MANAGEMENT
For the period under review and until the date of this SENS announcement, the
board of directors consisted of the following:
Date Appointed Date Resigned
KC Zuma# 23 July 2010
BG Van Rooyen
TS Ngubane 23 July 2010
ZG Mandela 23 July 2010
M Hulley# 23 July 2010
DJ O`Neill 23 July 2010
VJ Labat 23 July 2010
R Mohamed 23 July 2010
# Non-Executive Director.
- With effect from 23 July 2010, Mr B van Rooyen changed his role in the
Company from executive to non-executive director.
Pursuant to this announcement, the board of directors will be considering
changes and the appointment of new directors to the board which once agreed upon
will be detailed in a separate announcement to shareholders which will be made
in due course.
POST BALANCE SHEET EVENTS
Subsequent to the period end, the Company announced that the agreement between
Aurora and the Primrose vendor lapsed, which in turn caused the failure of the
agreement with Labat. As mentioned earlier, negotiations regarding the Primrose
and ERPM assets are ongoing. In addition, Labat has been approached to retain
the pharmaceutical opportunity with SAMES within Labat, which is looking
promising. Other than these events, management is not aware of any other
material events which occurred subsequent to the period ended 31 August 2010.
DIVIDENDS
No dividend has been declared.
RENEWAL OF CAUTIONARY
On 27 September 2010 a cautionary announcement was issued advising shareholders
to exercise caution when dealing in the company`s shares. Shareholders are
advised to continue to exercise caution when dealing in the company`s shares
until a further announcement is made, which announcement is expected to be made
within the next two weeks.
By order of the Board
KC Zuma ZG Mandela
Chairman Chief Executive Officer
15 December 2010
Johannesburg
Registered Office
23 Krowton Avenue, Weltevreden Park, Johannesburg, 1079
Private Bag X09-248, Welteverden Park, 1715
Directors
KC Zuma (Chairman)*, BG van Rooyen, D Asmal, DJ O`Neill, ZG Mandela*
(CEO), TS Ngubane*, M Hulley*
* Non-executive
Transaction sponsor Transfer Office
Arcay Moela Sponsors (Proprietary) Computershare Investor Services
Limited (Proprietary) Limited
Date: 15/12/2010 17:31:01 Supplied by www.sharenet.co.za
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