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LABAT AFRICA LIMITED - Audited Provisional condensed consolidated results for the year ended 28 February 2014 and renewal of cautionary

Release Date: 06/06/2014 16:32
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Audited Provisional condensed consolidated results for the year ended 28 February 2014 and renewal of cautionary

LABAT AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
JSE code: LAB ISIN: ZAE000018354
(“Labat” or “the company”)


AUDITED PROVISIONAL CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 
28 FEBRUARY 2014 AND RENEWAL OF CAUTIONARY ANNOUNCEMENT


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                 Audited       Audited
                                            for the year    (Restated)
                                                   ended  for the year
                                             28 February         ended
                                                    2014   28 February
                                                                  2013
                                                   R'000         R'000
Continuing operations
Revenue                                            9,942        13,117
Cost of sales                                     (3,537)       (5,975)
Gross profit                                       6,405         7,142
Other income                                         186         8,018
Operating expenses                              (12,151)       (13,092)
Operating (loss)/profit                          (5,560)         2,068
Investment revenue                                   12             17
Impairments                                           -           (150)
Finance costs                                      (474)        (1,609)
(Loss)/profit before taxation                    (6,022)           326
Taxation                                              -              -
(Loss)/profit from continuing operations         (6,022)           326
Profit/(loss)from discontinued operations         2,414         (1,225)
(Loss)/Profit for the year                       (3,608)          (898)
Other Comprehensive Income
Loss on revaluation of property                  (9,862)             -
Taxation on revaluation of property               2,761              -
Other comprehensive loss for the year net
of taxation                                      (7,101)             -
Total comprehensive loss for the year           (10,709)          (898)
(Loss)/profit for the year attributable
to owners of the parent:
(Loss)/profit for the year from
continuing operations                            (6,022)           326
Profit/(loss) for the year from
discontinuing operations                          2,414         (1,225)
EARNINGS AND HEADLINE EARNINGS PER SHARE
Total basic (loss)/earnings per share
(cents)  
-Continuing operations                            (3.02)          0.17
-Discontinued operations                           1.21          (0.62)

Total loss per share                              (1.81)         (0.45)

Total headline (loss)/earnings per
share (cents)
-Continuing operations                            (3.01)         (0.08)
-Discontinued operations                           1.31          (0.40)
Total headline loss per share                     (1.70)         (0.48)


The headline loss from continuing
operations was determined using the
following information:
(Loss)/profit attributable to                    (6,022)           326
shareholders of the Group
Adjusted for
-Impairment of asset                                  -           (150)
-Loss/(profit) of disposal of assets                 17           (334)
                                                 (6,005)          (158)

The headline loss from discontinuing
operations was determined using the
following information:
Profit/(Loss) attributable to
shareholders of the Group                         2,414         (1,225)
Adjusted for
-Impairments                                          -            441
-Loss on fair value of disposal group               200              -
                                                  2,614           (784)

Share information                                 ('000)         ('000)

Weighted average shares in issue                199,683        197,155
Shares in issue at year end                     202,212        197,155

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                 Audited          Audited
                                             28 February      28 February
                                                    2014             2013

                                                   R'000            R'000
ASSETS
Property, plant and equipment                         51           26,655
Non-current assets                                    51           26,655
Inventories                                        4,107            5,296
Other financial assets                                10               10
Trade and other receivables                          687            1,837
Cash and cash equivalents                          1,048              830
Current assets                                     5,852            7,973
Assets of disposal groups                         20,672                -
Total assets                                      26,575           34,629
EQUITY AND LIABILITIES
Share capital and reserves                        (8,580)           1,378
Equity                                            (8,580)           1,378
Deferred taxation                                      -            4,554
Non-current liabilities                                -            5,932
Trade and other payables                           4,075            3,341
Loans from shareholders                            9,540            7,751
South African Revenue Services                    11,035           11,757
Provisions                                         8,263            5,847
Bank Overdraft                                        29                -
Total Non-Current liabilities                     32,942           28,696
Liabilities of disposal group                      2,213                -
Total liabilities                                 35,156           33,250
Total equity and liabilities                      26,575           34,629
Number of shares in issue ('000)                 202,212          197,155
Total Net (liability)/asset value per
share (cents)                                      (4.24)            0.69

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                 Audited          Audited
                                            for the year     for the year
                                                   ended            ended
                                             28 February      28 February
                                                    2014             2013
                                                   R'000            R'000
Net flow from operating activities                (1,634)          (5,216)
Net flow from investing activities                    11            3,232
Net flow from financing activities                 1,812              (18)
Net decrease in cash                                 189           (2,002)
Cash at beginning of period                          830            2,832
Cash at end of period                              1,019              830

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                           Non
                                         Total   distributable
                    Share     Share      share      reserves –       Accumulated     Total
                  Capital   premium    capital    Revaluations              loss    equity
                   ('000)    ('000)     ('000)          ('000)            ('000)    ('000)
Balance at 01      1,490    49,065     50,555          15,267           (63,544)    2,277
March 2012
Total                  -         -          -               -              (898)     (898)
comprehensive
loss for the
year
Transfer of            -         -          -            (253)              253         -
revaluation
reserve
through use
Transfer of            -         -          -          (2,088)            2,088         -
revaluation
reserve on
disposal of
property
Balance at         1,490    49,065     50,555          12,926           (62,102)    1,378
01 March 2013
Total                  -         -          -          (7,101)           (3,608)  (10,709)
comprehensive
loss
Issue of              50       700        750               -                 -         -
shares
Transfer of                                              (168)              168
revaluation
reserve
through use
Balance at         1,540    49,764     51,305          (5,656)          (65,541)   (8,580)
28 February
2014

Segmental information
                                          Audited for              Audited
                                       the year ended            (Restated)
                                     28 February 2014          for the year
                                                                      ended
                                                           28 February 2013
                                                R'000                 R'000
Technology
External sales                                  9,942                13,117
Inter segmental revenue                             -
Other Operations
External sales                                      -                     -
Inter segmental revenue                             -                 4,200
Adjustments and eliminations                        -                (4,200)
Total revenue from continuing                   9,942                13,117
operations
Technology
(Loss)/ profit for the year before
disclosable items                              (4,337)                4,725
Impairments                                   (10,293)                 (371)
(Loss)/ profit for the year before
taxation and discontinued
operations                                    (14,630)                4,354
Other Operations
Loss for the year before taxation
and discontinued operations                    (6,917)               (4,555)
Total (loss)/profit for the year
before eliminations, tax and
discontinued operations                       (21,547)                 (201)
Adjustments and eliminations                   15,525                   527
Total (loss) / profit for the year
before taxation and discontinuing
operations                                     (6,022)                  326

SEGMENT ASSETS
Technology                                     23,998                38,816
Other operations                                  321                   342
Adjustments and eliminations                    2,257                (4,529)
Total assets                                   26,576                34,629

SEGMENT LIABILITIES
Technology                                    (62,377)              (63,841)
Other operations                              (25,715)              (20,412)
Adjustments and eliminations                   52,936                51,002
Liabilities of disposal group                 (35,156)              (33,251)

COMMENTARY
RESULTS
The total comprehensive loss for the year was R10,709,197 as opposed to a loss in
the previous year of R898,932.

The majority of the loss, R9,862,838, less a tax rebate of R2,761,594 related to a 
downward property revaluation without which the loss would have been R3,607,953.    
Sales were substantially down due to delays in the introduction of new products.

Maximizing existing business values
SAMES
The SAMES business is trading profitably after year end and the company now has in 
place an efficient business model. Sales volumes are currently low but are expected
to increase substantially when planned new products are introduced. Prospects for 
the future growth of the business are good.

Rail Initiatives
As per our detailed SENS announcement on 15 May 2014, we were pleased to announce 
various Rail Initiatives including an agreement with BFG International to build a 
facility to manufacture interiors for the new Railway coaches for PRASA. BFG/Labat
has won the first phase of this project worth an estimated R1,5 billion.

Labat also announced that it made an offer to acquire a majority shareholding in 
Imfuyo Projects, another rail related business, and its 100% subsidiary Imfuyo Air 
Products.

Labat also entered into an agreement with a Women’s group to build Rail production 
capacity in order to take advantage of existing Rail opportunities.

Pharmaceutical
Plans for the establishment of an API facility in the Free State are nearing conclusion.

Global Emerging Markets (“GEM”)
GEM continues to provide support to Labat and has reconfirmed its US $100m line of 
equity credit for the company for the acquisition of profitable businesses.    
Various potential acquisitions are being pursued.

Prospects
Prospects for the year ahead are good. Existing business initiatives are expected to be 
profitable. The company will remain acquisitive during the forthcoming year.

BASIS OF PREPARATION

Statement of compliance
These audited condensed provisional consolidated financial results, comprise a condensed 
consolidated statement of financial position at 28 February 2014, a condensed consolidated 
statement of comprehensive income, a condensed consolidated statement of changes in equity 
and a condensed consolidated statement of cash flow for the year ended 28 February 2014. 
The audited condensed provisional consolidated financial results have been prepared in 
accordance with the framework concepts and the measurement and recognition requirements of 
IFRS and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee 
and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, 
the presentation and disclosure requirements of IAS 34: Interim Financial Reporting, the
JSE Limited Listings Requirements and the requirements of the South African Companies Act 
of South Africa. The accounting policies are consistent with those of the previous annual
financial statements except for the adoption of new standards and interpretations which
became effective in the current year. These standards did not have a material effect on 
the financial statements, except for additional disclosure requirements. These audited 
condensed results were prepared under the supervision of David J. O’Neill, in his capacity
as Group Financial Director.

Reclassification
In accordance with the company’s accounting policy and the requirements of IFRS5: Non-current 
assets held for sale and discontinued operations, certain comparative figures have been
reclassified in the Statement of Comprehensive Income to disclose, into a single separate line, 
the loss on disposal groups identified during the current year. The reclassification does not 
constitute a change in accounting policy nor a prior period error.

Audit Conclusion
The condensed provisional consolidated financial results of the company and group have been 
audited by NexiaSAB&T. The auditors’ modified audit report, which is available for inspection 
at the company’s registered office, contains an emphasis of matter with regard to the going 
concern of the Group, as follows:

Emphasis of matter
Without qualifying our conclusion, we draw attention to the going concern paragraph in note 39 
to the annual financial statements which indicates that the group incurred a loss for the year 
ended 28 February 2014 of R10 709 197 and, at that date, the group’s current liabilities 
exceeded its current assets by R17 549 977 before the loans from shareholders amounting to 
R9 540 288, which have been subordinated for the benefit of other creditors to the group. These
conditions, along with other matters, indicate the existence of a material uncertainty which may
 cast significant doubt on the company’s ability to continue as a going concern.


Going Concern
Although the group incurred a loss for the year ended 28 February 2014 of R10,709,197 and, 
at that date, the group’s current liabilities exceeded its current assets by R17,549,977 
before the loans from shareholders amounting to R9,540,288, which have been subordinated 
for the benefit of other creditors to the group, the board of directors is of the opinion 
that, having regard to the current status and the future strategy of the Group, the Group has
sufficient resources to continue as a going concern. Subsequent to year end the group dispose
of its property and concluded a rights issue which has served to strengthen the balance sheet
of the group. The ability of the company to continue as a going concern is dependent on a number
of factors. The most significant of these is that the directors are currently in negotiations 
with SARS regarding PAYE, Income Tax and VAT liabilities since 2004. The group has applied for
a section 91A compromise with SARS in order to settle the liability as full and final settlement. 
Directors are of the view that the net result will be a substantial credit in favour of the
company.

Litigation
The group has various claims and counter claims made by and against Labat which have risen in the 
normal course of business as previously disclosed. All these matters are being dealt with by the 
company’s attorneys.

Share Capital
During the year the Company issued 3,387,534 and 1,670,007 shares at 0.1476 and 0.1497 cents 
per share respectively under its general authority to issue shares for cash.

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
The sale of surplus assets, namely the SAMES Property, has been approved by Labat shareholders 
in General Meeting and the transfer of the property and receipt of the proceeds is imminent. 
This sale will raise R18,8 million in cash.

In addition, a Rights issue was concluded subsequent to year end which raised a total of R8,548,541.

These two transactions have served to strengthen the balance sheet and improve the liquidity 
of the group.

RENEWAL OF CAUTIONARY
Shareholders are referred to the announcement released on SENS on 16 May 2014 and are advised that 
the company is still in negotiations with various companies in the Rail sector with a view to 
acquiring capacity in order to take advantage of major Rail opportunities both in South Africa and 
Africa. If negotiations are successfully concluded, it may have an effect on the price at which the
company's securities trade.

Shareholders are accordingly advised to exercise caution when dealing in the company's securities 
until a full or further announcement is made.

Dividends
In line with group policy, no dividend has been declared.

For and on behalf of the board.

B G VAN ROOYEN                                                                         D O'NEILL
CEO                                                                           FINANCIAL DIRECTOR
06 June 2014                                                                        06 June 2014

Directors
B. van Rooyen*, D.J O'Neill*, R. Majiedt^, B. Jacobs^, D Asmal#
Executive*, Independent non-executive^, Non-Executive#

Company Secretary: A Britto
Registered Address: 23 Kroton Avenue, Weltevreden Park, 1709
Sponsor: Arcay Moela Sponsors Proprietary Limited
Transfer   Secretary:   Computershare   Investor   Services   Proprietary
Limited

Date: 06/06/2014 04:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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