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LAB - Labat - Reviewed results for the year ended 28 February 2011 and
Withdrawal of Cautionary Announcement
LABAT AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
JSE code: LAB & ISIN: ZAE000018354
("Labat" or "the company")
REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011 AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Revenue 27,550 28,108
Continuing operations 27,550 19,375
Discontinued operations - 8,733
Operating loss before depreciation (2,840) (7,141)
and amortisation
Continuing operations 6,220 8,232
Discontinued operations (9,060) (15,373)
Depreciation (869) (6,363)
Continuing operations (394) (1,772)
Discontinued operations (475) (4,591)
Operating (loss) before interest and (3,709) (13,504)
taxation
Continuing operations 5,826 6,460
Discontinued operations (9,535) (19,964)
Interest paid (3,274) (4,603)
Continuing operations (827) (1,649)
Discontinued operations (2,447) (2,954)
Interest received 76 350
Continuing operations 58 350
Discontinued operations 18 -
(Loss) before taxation, sale and (6,907) (17,757)
fair value adjustments
Continuing operations 5,057 5,161
Discontinued operations (11,964) (22,918)
Discontinued operation-disposal of 20,091 (17,020)
investments and fair value
adjustments
Impairment of plant equipment and - (17,020)
inventory
Impairment of investment (48) -
Reversal of provision for finance 20,139 -
costs
Profit/(loss) before taxation 13,184 (34,777)
Continuing operations 5,057 5,161
Discontinued operations 8,127 (39,938)
Taxation - -
Continuing operations - -
Discontinued operations - -
Profit/(loss) after taxation 13,184 (34,777)
Continuing operations 5,057 5,161
Discontinued operations 8,127 (39,938)
Other comprehensive income - (24,318)
Continuing operations
gain on building - 2,028
Discontinued operation
impairment of property, plant and - (37,218)
equipment
Income tax relating to components of - 10,872
other comprehensive income
Total comprehensive income/(loss) 13,184 (59,095)
for the year
Continuing operations 5,057 7,189
Discontinued operations 8,127 (66,284)
Attributable to
Minority Interest - -
Equity holders 13,184 (34,777)
Profit attributable to shareholders 13,184 (34,777)
Weighted Shares in issue throughout 197,155 197,155
the year (000)
Basic profit/( loss) per share 6.7 (17.6)
(cents)
Continuing operations 2.6 2.6
Discontinued operations 4.1 (20.3)
Headline earnings/(loss) per share
(cents) 6.2 (13.4)
Continuing 2.6 2.6
Discontinuing 3.6 (16.0)
Reconciliation of basic to headline earnings
Profit/(loss)for the year 13,184 (34,777)
Sale of assets (1,076) -
Impairment of investment and plant 48 8,214
and equipment
Headline earnings/(loss) 12,156 (26,563)
Continuing operations
Basic / Headline profit 5,057 5,161
Discontinued operations
Profit/(loss) for the year 8,127 (39,938)
Sale of assets (1,076) -
Impairment of investment and plant 48 8,214
and equipment
Headline earnings/(loss) 7,099 (31,724)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
ASSETS
Property, plant and equipment 34,548 39,812
Other financial assets 179 179
Non-current assets 34,727 39,991
Inventories 3,091 2,811
Trade and other receivables 5,517 14,569
Cash and cash equivalents 4,777 1,444
Current assets 13,385 18,824
Total assets 48,112 58,815
EQUITY AND LIABILITIES
Share capital and reserves (23,344) (36,567)
Long-term liabilities 34,020 34,037
Deferred taxation 7,235 7,235
Non-current liabilities 41,255 41,272
Trade and other payables 29,962 53,248
Current portion of financial 56 679
liabilities
Taxation 183 183
Current liabilities 30,201 54,110
Total equity and liabilities 48,112 58,815
Number of shares in issue (`000) 197,155 197,155
Total Net asset value per share (11.8) (18.5)
(cents)
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
Reviewed Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Net flow from operating activities (425) (10,082)
Net flow from investing activities 4,398 2,442
Net flow from financing activities (640) (2,333)
Net increase/(decrease) in cash 3,333 (9,973)
Cash at beginning of period 1,444 11,417
Cash at end of period 4,777 1,444
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R`(000) Share Share Treasury Non Distribu- Total
Capital Premium Shares Distribu- table Capital
table Reserves and
Reserves reserves
Balance at 1 1,972 49,065 (482) - (102,547) (51,992)
March 2010
Total - - - - 13,184 13,184
comprehensive
income for
the year
Surplus on - - - 15,464 - 15,464
revaluation
of property -
after tax
effect
Balance at 28 1,972 49,065 (482) 15,464 (89,363) (23,344)
February 2011
NOTES TO THE FINANCIAL STATEMENTS
Reviewed Audited
12 months 12 months
28 February 2011 28 February 2010
R`000 R`000
1. Assets and liabilities
relating to the
discontinued operations
1.1 SAMES (Wafer
manufacturing facility)
Plant and 1,027 5,379
equipment
Accounts 1,165 1,454
receivable
Provisions 5,824 23,816
Provision for
Finance Cost 20,139 17,757
Other provisions 5,824 6,059
Less reversal of
provision for
finance cost (20,139) -
1.2 ELSEC
Fixed assets - 28
Cash - 179
Accounts - 848
receivable
Stock - 1,536
Trade creditors - (1,543)
Intercompany loan (4,554) (3,976)
Retained income 4,506 2,928
Loss on disposal (48) -
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.
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 R3.0 million.
The Technology segment has not had any extensive reliance on any single
customer.
Reviewed 28 Audited 28
February 2011 February 2010
R`000 R`000
Revenue by Segment 27 550 28 108
Technology 27 550 28 108
Other operations - -
Loss from operations before finance (3 709) (13 504)
costs and fair value adjustments by
segment
Technology (938) (11 271)
Other operations (2 771) (2 233)
Property, Plant and Equipment by 34 548 39 812
segment
Technology 34 516 39 757
Other operations 32 55
Trade and Accounts receivable by 5 517 14 569
segment
Technology 5 513 14 365
Other operations 4 204
Trade and Accounts payable by 29 962 53 248
segment
Technology 15 698 43 355
Other operations 14 264 9 893
Capital Expenditure - 25
Technology - 25
Other operations - -
Depreciation 869 6 363
Technology 845 6 327
Other operations 24 36
COMMENTARY
RESULTS
The group is pleased to report a set of positive results for the period under
review. Headline earnings per share increased to 6.2 cents per ordinary share
from a loss of (13.4) cents in the previous year. Total comprehensive income
for the year was R13.2 million versus a loss of (R59.1) million in the previous
financial year.
Continuing Operations
The Integrated Circuit ("IC") operations performed well during the year. The
transfer of manufacturing to China was completed successfully with one remaining
product transfer to be made. Manufacturing in China has proven to be very
successful with good margins being maintained.
Research and Development
For the IC business, exciting new products in the energy measurement and energy
management fields are being developed. Existing one micron products are being
enhanced and re-designed down to a 0.5 micron platform, with potential to make
substantial manufacturing cost savings, which would result in the group`s IC
product range becoming much more cost competitive.
Discontinuing Operations
Discontinued operations relate to the ceasing of operation of the wafer
manufacturing facility of SAMES and Elsec, a division of SAMES dealing in
security solutions.
The SAMES facility in Koedoespoort lends itself to being utilised for a
pharmaceutical manufacturing and packaging plant. Currently an in-depth study is
being undertaken by Labat and the Industrial Development Corporation to assess
the viability of such a business in South Africa. SAMES surplus fixed assets
are being disposed of and the proceeds are being used to settle remaining
creditors. The de-commissioning exercise will be completed in the next six
months and the facility will then be available for conversion to pharmaceutical
use.
Prospects
The current IC business is doing well and its prospects are good. Capacity
constraints relating to the closed manufacturing plant no longer exist and our
emphasis is now on growing our market and developing new and improved products.
Pharmaceuticals
The investigation into the conversion of the SAMES facility for pharmaceutical
purposes is going well. As mentioned above, the de-commissioning of the old
plant is well advanced. Conceptual designs for Active Pharmaceutical Ingredient
("API") and Oral Solid Dosage ("OSD") plants have been prepared and approved.
The results of the pre-feasibility study are encouraging and the Company
envisages that a profitable API and OSD business, housed in the decommissioned
SAMES facilities, can be developed to provide much needed anti-retroviral
medicines for the Southern African region.
Discussions are ongoing with various industry, technology and funding partners.
Concerns about the feasibility of the establishment of an API facility for the
manufacture of ARV products in South Africa are diminishing steadily. This is
mainly due to the fact that the HIV/Aids pandemic has changed the market horizon
completely. The number of HIV/Aids patients being treated in South Africa
alone, is expected to increase to 3.5 million by 2016 from the current 1.2
million patients. New technologies and the ability to utilise the decommissioned
SAMES facility are assisting in making the overall business case look promising.
The Company expects to make a formal decision in the next three months and the
market will be advised accordingly.
Mining
Following the cancellation of the purchase of Primrose Gold Mines (Pty) Limited
and the purchase of ERPM from DRD Gold Limited, Labat is still pursuing
opportunities in the mining sector. At present investigations are being
undertaken with a view to establishing the viability of successfully entering
the resources markets.
Statement of Compliance and Basis of Preparation
The provisional reviewed financial information for the year ended 28 February
2011 has been prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting
Standards ("IFRS"), the South African Companies Act, as amended and the Listings
Requirements of the JSE Limited ("JSE Listings Requirements") and contain the
information required by IAS 34: Interim Financial reporting. The results have
been prepared in accordance with accounting policies of the group that comply
with IFRS and the JSE Listings Requirements and have been consistently applied
throughout the Group, to all periods represented in this report.
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 28 February 2010.
Review Opinion
These reviewed condensed consolidated financial statements have been reviewed by
the group`s auditors, Ngubane Zeelie Inc, and their unmodified review opinion is
available for inspection at the company`s registered office.
Withdrawal of Cautionary
Shareholders are referred to the cautionary announcements dated 21 April 2011,
08 March 2011, 27 January 2011 and 15 December 2010 and are hereby advised that
negotiations have terminated and that the cautionary announcement is hereby
withdrawn.
Corporate Governance
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.
Post Balance Sheet Events
Management is not aware of any material events which occurred subsequent to the
year ended 28 February 2011.
Dividends
In line with group policy, no dividend has been declared. The directors are not
recommending the payment of a dividend until the negative equity position of the
group has been reversed.
For and on behalf of the board.
B G VAN ROOYEN
CEO
Johannesburg
01 June 2011
Date: 01/06/2011 14:31:00 Supplied by www.sharenet.co.za
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