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Reviewed provisional condensed consolidated financial results for the period ended 31 August 2015
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 PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE PERIOD ENDED 31 AUGUST
2015
During the year, the group elected to change its year end from 28 February to 31 August, to ensure the
alignment with the intended post balance sheet acquisition of Reinhardt Transport Group Proprietary
Limited (“RTG”) in the logistics sector. The current year therefore only constitutes operations for six months. As
a result, the comparative figures for the year ended February 2015 may not be fully comparable.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
12 months
6 months ended 6 months
ended 28 February ended
31 August 2015 2015 31 August 2014
Reviewed Audited Unaudited
R’000 R’000 R’000
Revenue 7 460 12 127 8 173
Cost of sales (2 429) (3 909) (2 237)
Gross profit 5 031 8 218 5 936
Other income 673 2 606 61
Operating expenses (8 406) (9 419) (4 422)
Operating (loss)/profit (2 702) 1 405 1 575
Investment revenue 5 13 67
Finance costs (3) (398) -
(Loss)/ profit before taxation (2 700) 1 020 1 642
Taxation - - -
(Loss)/ profit from continuing operations (2 700) 1 020 1 642
Discontinued operations
Profit from discontinued operations 138 404 789
Taxation – discontinued income - - 2 612
(Loss)/ profit for the period (2 562) 1 424 5 043
Other comprehensive loss for the year net of taxation - - -
Total comprehensive (loss)/income for the period (2 562) 1 424 5 043
Attributable to:
Owners of the parent:
(Loss)/ profit for the period from continuing operations (2 700) 1 020 1 642
Profit for the period from discontinuing operations 138 404 3 401
(Loss)/ income for the year attributable to owners of
the parent (2 562) 1 424 5 043
6 months ended 12 months ended 6 months ended
31 August 2015 28 February 2015 31 August 2014
Reviewed Audited Unaudited
Per share information:
(Loss)/earnings and diluted (loss)/earnings per share
From continuing operations:
Basic and diluted (loss)/earnings per share (cents) (1.05) 0.42 1.35
From discontinued operations:
Basic and diluted (loss)/earnings per share (cents) 0.05 0.17 0.98
Total (loss)/earnings per share:
Basic and diluted (loss)/earnings per share (cents) (1.00) 0.59 2.33
Headline (loss)/earnings and diluted headline
(loss)/earnings per share From continuing operations:
Basic and diluted (loss)/earnings per share (cents) (1.05) 0.40 1.32
From discontinued operations:
Basic and diluted earnings per share (cents) 0.05 0.21 0.98
Total earnings per share:
Basic and diluted (loss)/earnings per share (cents) (1.00) 0.61 2.30
The headline loss from continuing operations was determined using the following information:
(Loss)/profit attributable to shareholders of the group (2 700) 1 020 2 919
(Profit) /loss on the sale of fixed assets - (38) (61)
Headline (loss)/earnings attributable to shareholders
of the group (2 700) 983 2 858
The headline loss from discontinued operations was determined using the following information:
Profit/loss) attributable to shareholders of the group 138 404 2 124
Fair value adjustment - 103 -
Headline earnings attributable to shareholders of the
group 138 507 2 124
Share information (’000) (’000) (’000)
Weighted average shares in issue 255 992 244 954 216 446
Shares in issue at year end 255 992 255 992 255 992
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
28 February
31 August 2015 2015 31 August 2014
Reviewed Audited ’000 Unaudited
R’000 R’000
ASSETS
Property, plant and equipment 92 35 143
Deferred taxation - - 1 331
Non-current assets 92 35 1 474
Inventories 3 448 2 589 3 033
Other financial assets 10 10 10
Loans to shareholders 2 313 2 011 -
Trade and other receivables 1 587 881 2 548
Cash and cash equivalents 14 189 16 458 16 303
Current Assets 21 547 21 949 21 894
Total Assets 21 639 21 948 23 368
28 February
31 August 2015 2015 31 August 2014
R’000 R’000 R’000
Reviewed Audited Unaudited
EQUITY AND LIABILITIES
Share Capital 2 111 2 111 2 111
Share premium 56 795 56 795 57 734
Accumulated loss (61 018) (58 456) (60 814)
Equity (2 112) 450 (969)
Deferred taxation - - 73
Non-Current Liabilities - - 73
Loans from directors and shareholders 387 387 2 078
South African Revenue Services 9 471 8 674 13 180
Trade and other payables 4 530 3 256 3 949
Provisions 9 363 9 212 5 057
Bank overdraft - 5 -
Current Liabilities 23 751 21 534 24 264
Total Equity and Liabilities 21 639 21 984 23 368
Number of shares in issue („000) 255 992 255 992 255 992
Total Net asset /(liability)value per share (cents) (0.83) 0.17 (0.40)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
12 months
6 months ended 6 months
ended 28 February ended
31 August 2015 2015 31 August 2014
R’000 R’000 R’000
Reviewed Audited Unaudited
Net flow from operating activities (2 691) 21 324 (5 920)
Net flow from investing activities (68) 33 20 242
Net flow from financing activities 495 (5 924) 822
Net (decrease)/ increase in cash (2 264) 15 434 15 144
Cash at beginning of period 16 453 1 019 1 159
Cash at end of period 14 189 16 453 16 303
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non
distributable
Share Share Total share reserves/ Accumulated
capital premium capital revaluations loss Total equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 28 February
2014 - Audited 1 541 49 764 51 305 8 773 (68 654) (8 576)
Profit for the year - - - - 1 424 1 424
Issue of shares 570 7 031 7 601 - - 7 601
Transfer between
Reserves on disposal of
land and buildings - - - (8 773) 8 773 -
Balance at 28 February
2015 - Audited 2111 56 795 58 906 - (58 456) 450
Loss for the period - - - - (2 562) (2 562)
Balance 31 August
2015 - Reviewed 2111 56 795 58 906 - (61 018) (2 112)
Segment information
12 months
6 months ended 6 months
ended 28 February ended
31 August 2015 2015 31 August 2014
Reviewed Audited Unaudited
R’000 R’000 R’000
Technology
External sales 7 460 12 127 8 173
Inter segmental revenue 250 257 -
Other Operations
External sales - - -
Inter segmental revenue - - -
Adjustments and eliminations (250) (257) -
Total revenue from continuing operations 7 460 12 127 8 173
Technology
Profit for the year before disclosable items 2 383 3 747 5 527
Reversal of Impairment - 4 525 -
Profit for the year before taxation and discontinued
operations 2 383 8 272 5 527
Other Operations
Loss for the year before taxation and discontinued
operations (5 083) (2 727) (3 885)
Total (loss)/profit for the year before eliminations, tax
and discontinued operations (2 700) 5 545 1 642
Adjustments and eliminations - (4 525) -
Total (loss)/ profit for the year before taxation and
discontinuing operations (2 700) 1 020 1642
SEGMENT ASSETS
Technology 31 165 27 322 28 066
Other operations 3 220 2 495 1 041
Adjustments and eliminations (12 746) (7 833) (5 739)
Total assets 21 639 21 984 23 368
SEGMENT LIABILITIES
Technology (57 583) (56 260) (58 243)
Other operations (21 465) (15 371) (22 408)
Adjustments and eliminations 55 297 50 097 57 283
Total liabilities (23 751) (21 534) (23 368)
COMMENTARY
RESULTS
The total comprehensive loss for the six month period ended 31 August 2015 was R2, 562m as opposed to a
profit in the previous year ended 28 February 2015 of R1, 424m. Sales for the six month period decreased
when compared with the previous year end period, which periods are not comparable. However the
technology business is growing, trading profitably and previous legacy issues have been dealt with.
Increased legal fees and other costs relating to Labat?s accelerated acquisition programme were incurred
during the period.
Maximizing existing business values
SAMES
The SAMES (Technology) business is trading profitably. Manufacturing is being carried out very successfully
in China and quality and margins are being maintained. The lengthy process of re-design of existing
products, to take us to a 5 micron platform from 2.0 micron, has been successfully completed and improved
new products are being readied for market.
Manufacturing capacity and quality issues, which were always the constraint with our old SAMES plant have
been eliminated and there is substantial capacity available to us in China with no quality issues. We can
now look forward to growing this business with new enhanced quality products.
New Strategy and Initiatives
As an investment holding company, Labat is pursuing investments and acquisitions in various sectors.
However, our main thrust currently is in making acquisitions in the Road Transport Logistics sector.
There are some real opportunities available in this sector to Labat as one of the few Level 1 BEE listed
companies. Accordingly, the company has signed an agreement for a substantial acquisition in this sector,
namely the acquisition of RTG, and are actively seeking other such acquisitions. The General Meeting to
approve the RTG acquisition is on 18 December 2015 as previously announced.
Shareholders are referred to the subsequent events section of this announcement where additional detail
regarding prospective acquisitions are detailed.
Prospects
Prospects for the year ahead are very positive. The existing business is expected to show positive growth
and our acquisition strategy and plan is progressing well. The Company has included a profit forecast in its
circular to shareholders dated 18 November 2015, which is available on the company?s website.
BASIS OF PREPARATION
Statement of compliance
These reviewed condensed consolidated financial statements are prepared in accordance with the
framework concepts and the recognition and measurement criteria of International Financial Reporting
Standards (IFRS), its interpretations adopted by the International Accounting Standards Board (IASB), the
presentation and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, IAS 34 –
Interim Financial Reporting, the Listings Requirements of the JSE Limited and the requirements of the
Companies Act of South Africa (Act 71 of 2008), as amended.
The reviewed condensed consolidated financial results are prepared in accordance with the going
concern principle under the historical cost basis as modified by the fair value accounting of certain assets
and liabilities where required or permitted by IFRS.
All financial information presented in South African Rand has been rounded to the nearest thousand. These
condensed consolidated financial statements have been prepared using accounting policies that comply
with IFRS. The accounting policies used are consistent with those used in the audited annual consolidated
financial statements for the year ended 28 February 2015.
Review Conclusion
These condensed consolidated financial statements for the period ended 31 August 2015 which were
prepared under supervision of the Group?s financial director, Mr D.J. O?Neill CA, have been reviewed by
Nexia SAB&T, who expressed an unmodified review conclusion. A copy of the auditor?s review report is
available for inspection at the Company?s registered office together with the financial statements identified
in the auditor?s report.
Change in year end
During the year, the group elected to change is year end from 28 February to 31 August, to ensure the
alignment with the acquisition of RTG. The current year therefore only constitutes operations for six months.
As a result, the comparative figures for the year ended February 2015 may not be fully comparable.
Going Concern
Although the Group incurred a loss for the year ended 31 August 2015 of R2 562 371 and, at that date, the
group?s current liabilities exceeded its current assets by R2 205 506, amounts owed to shareholders
amounting to R6 407 103 have been subordinated for the benefit of other creditors to the group, resulting a
net current asset position of R4 201 597. 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 with a profitable
business, sufficient cash resources for working capital and acquisition requirements. The going concern
position will be further strengthened through the issue of a specific issue of shares for cash in the amount of
R45million as part of the acquisition of RTG, which will further capitalise the group in order to support the
growth strategy in the logistics sector. The Board therefore considers the group to be a going concern.
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 and no substantial change has occurred from the previously disclosed matters.
Share Capital
There have been no changes in the Company?s issued and authorised share capital during the period.
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
Acquisition of RTG
Shareholders are referred to the announcement released on SENS on 12 June 2015 and the subsequent
announcement of amended terms on SENS on 15 October 2015, 12 November 2015 and supplementary
circular distributed on 27 November 2015, in which Shareholders were advised that the Company has
concluded a subscription and buy-back agreement, and addendums thereto, for the acquisition of a 100%
interest in RTG for a total consideration of R560 million to be financed through a combination of debt and
equity arrangements.
Labat has secured deferred vendor funding to the extent of R230 million from one of the RTG Vendors which
will be used to settle a portion of the Consideration and will be payable in cash in three tranches. The
balance of the Consideration of R330 million will be settled in cash by issuing up to 220 000 000 new Shares in
the Company at 150 cents per Share, of which R129 million will be subscribed for by the RTG Vendors
(including RTG management) and the balance of R156 million will be settled through the Private Placement.
Of the 86 000 000 RTG Vendor shares, 30 000 000 shares will be placed with a BEE shareholder and the
remaining 56 000 000 will be retained by the RTG Vendors. In addition, the board of directors of Labat wish
to raise an additional R45 million for expansion capital by way of an issue of 30 000 000 shares for cash. In
total, the Issue of Shares for Cash will amount to 250 000 000 shares at R1.50 per Share totalling R375 million.
The financial effect of the acquisition of RTG on Labats results in terms of the financial reporting framework
are detailed below;
Description Value (R’000)
Acquisition consideration of RTG 527,650
Fair value of assets acquired and liabilities assumed 343,598
Goodwill from acquisition 184,052
GEM equity facility
Following communication with GEM surrounding GEMs recent request for shareholder approval of a
number of warrants at 30 cents per share as well as an interrogation of the new BEE Codes, the board of
directors has, subsequent to year end, elected to terminate the equity facility of $100 million (R1.2 billion) on
the basis of the cost, the fact that shareholder approval for the issue of the shares at 30 cents is unlikely to
be approved by its shareholders as well as the need to remain as a black-owned company.
Further information
Shareholders are further referred to the Companys announcement of 10 December 2015 regarding Labat?s
intention to acquire two bulk logistics companies and a raw material bulk carrier operating in the private
sector.
Dividends
No dividend has been declared for the period under review (February 2015: Rnil). The board will be
considering the declaration of dividends pursuant to the acquisition of RTG as stated in the circular to
shareholders.
For and on behalf of the board.
B G VAN ROOYEN D ONEILL
CEO FINANCIAL DIRECTOR
14 December 2015
Directors
B. van Rooyen*, D.J ONeill*, R. Majiedt^, B. Jacobs^, D Asmal^
Executive*, Independent non-executive^, Non-Executive#
Company Secretary: Arbor Capital Company Secretarial Proprietary Limited
Registered Address: 23 Kroton Avenue, Weltevreden Park, 1709
Sponsor: Arbor Capital Sponsors Proprietary Limited
Transfer Secretary: Computershare Investor Services Proprietary Limited
Date: 14/12/2015 05:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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