Wrap Text
Unaudited interim results for the six months ended 29 February 2016
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 INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2016
During the first six months of the 2015 financial year, shareholders were advised that 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 Board
has since decided not to pursue the proposed acquisition. In that regard, the reviewed provisional
condensed consolidated financial results for the period ended 31 August 2015 are used for comparative
purposes.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months
ended ended
29 February 2016 31 August 2015
Unaudited Reviewed
R’000 R’000
Revenue 7 201 7 460
Cost of sales (2 230) (2 429)
Gross profit 4 970 5 031
Other income 1 673
Operating expenses (6 024) (8 406)
Operating loss (1 052) (2 702)
Investment revenue 22 5
Finance costs (32) (3)
Loss before taxation (1 062) (2 700)
Taxation 8 400 -
Profit/(loss) from continuing operations 7 338 (2 700)
Discontinued operations
Profit from discontinued operations - 138
Profit/(loss) for the period 7 338 (2 562)
Total comprehensive income/(loss) for the period 7 338 (2 562)
Attributable to:
Owners of the parent:
Profit/(loss)/ for the period from continuing operations 7 338 (2 700)
Profit for the period from discontinuing operations - 138
Income/(loss) for the year attributable to owners of the parent 7 338 (2 562)
6 months ended 6 months ended
29 February 2016 31 August 2015
Unaudited Reviewed
Per share information:
Earnings/(loss) and diluted earnings/(loss) per share
From continuing operations:
Basic and diluted earnings/(loss) per share (cents) 2.83 (1.05)
From discontinued operations:
Basic and diluted earnings/(loss)/ per share (cents) - 0.05
Total earnings/(loss) per share:
Basic and diluted earnings/(loss) per share (cents) 2.83 (1.00)
Headline earnings/(loss) and diluted headline earnings/(loss) per
share From continuing operations:
Basic and diluted earnings/(loss) per share (cents) 2.83 (1.05)
From discontinued operations:
Basic and diluted earnings per share (cents) - 0.05
Total earnings per share:
Basic and diluted earnings/(loss) per share (cents) 2.83 (1.00)
The headline earnings/(loss) from continuing operations was determined using the following information:
Profit/(Loss)attributable to shareholders of the group 7338 (2 700)
Adjustments: - -
Headline earnings/ (loss) attributable from continuing operations to
shareholders of the group 7 338 (2 700)
The headline earnings from discontinued operations was determined using the following information:
Profit attributable to shareholders of the group - 138
Headline earnings attributable to shareholders of the group from
discontinued operations 138
Share information (‘000) (’000)
Weighted average shares in issue 259 202 255 992
Shares in issue at year end 259 202 259 202
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
29 February 2016 31 August 2015
Unaudited Reviewed
R’000 R’000
ASSETS
Property, plant and equipment 223 92
Deferred taxation 8 400
Non-current assets 8 623 92
Inventories 3 780 3 448
Other financial assets 10 10
Loans to shareholders 2 455 2 313
Trade and other receivables 1 126 1 587
Cash and cash equivalents 12 976 14 189
Current Assets 20 347 21 547
Total Assets 28 970 21 639
29 February 2016 31 August 2015
Unaudited Reviewed
R’000 R’000
EQUITY AND LIABILITIES
Share capital 2 111 2 111
Share premium 56 795 56 795
Accumulated loss (53 681) (61 018)
Equity 5 225 (2 112)
Non-Current Liabilities
Loans from directors and shareholders 387 387
South African Revenue Services 8 599 9 471
Trade and other payables 5 546 4 530
Provisions 9 213 9 363
Current Liabilities 23 745 23 751
Total Equity and Liabilities 28 970 21 639
Number of shares in issue („000) 259 202 259 202
Total Net asset /(liability)value per share (cents) 2.01 (0.81)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months ended 6 months ended
29 February 2016 31 August 2015
Unaudited Reviewed
R’000 R’000
Net flow applied to operating activities (926) (2 691)
Net flow applied to investing activities (144) (68)
Net flow (to)/from financing activities (143) 495
Net (decrease)/ increase in cash (1 213) (2 264)
Cash at beginning of period 14 189 16 453
Cash at end of period 12 976 14 189
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
2015 - Audited 2111 56 795 58 905 - (58 457) 450
Loss for the period - - - - (2 562) (2 562)
Balance at 31 August
2015 - Audited 2 111 56 795 58 905 - (61 019) (2 114)
Profit for the period 7 338 7 338
Balance 29 February
2016 – Unaudited 2 111 56 795 58 905 - (53 681) 5224
Segment information
6 months ended 6 months ended
29 February 2016 31 August 2015
Unaudited Reviewed
R’000 R’000
Technology
External sales 7 201 7 460
Inter segmental revenue - 250
Other Operations
Adjustments and eliminations - (250)
Total revenue from continuing operations 7 201 7 460
Technology
Profit for the year before disclosable items 7 338 2 383
Profit for the year before taxation and discontinued operations 7 338 2 383
Other Operations
Loss for the year before taxation and discontinued operations (5 083)
Total loss for the year before eliminations, tax and discontinued
operations (1 062) (2 700)
Total loss for the year before taxation and discontinuing operations (1 062) (2 700)
SEGMENT ASSETS
Technology 28 970 31 165
Other operations - 3 220
Adjustments and eliminations - (12 746)
Total assets 28 970 21 639
SEGMENT LIABILITIES
Technology (23 745) (57 583)
Other operations - (21 465)
Adjustments and eliminations - 55 297
Total liabilities (23 745) (23 751)
COMMENTARY
RESULTS
The profit for the six months to 29 February 2016 has improved to a profit of R7,3m from a loss of R2,6m for the
six months ended 31 August 2015.
Trading losses before taxation have been reduced from R2.7m to R1,06m due to improved performance of
the Company's main operating subsidiary, namely South African Micro-Electronic Systems Proprietary
Limited, known as SAMES and cost containment, although turnover has remained flat.
The major improvement in the profit for the period has arisen from the recognition of a deferred tax asset of
R8.4m on a portion of the assessed loss of approximately R420m at SAMES, more detail of which is set out
below.
SAMES
The SAMES business continues to improve. The business has been profitable for the past five years and is
poised to grow into the future. After successfully moving production to a modern facility in China and
upgrading its current range of products, the company must now invest in the development of enhanced
new products and invest in new testing and other equipment.
This will involve a five year Development and Investment programme which will result in increased revenue
and profits. Investments will be funded from cash flow. Historically, due to the previous losses, intellectual
property and development costs have been impaired or expensed. Since the company has been trading
profitably in recent years since the restructure of the business and is projecting profits into the future, the
approach to recognising intellectual property and the capitalisation of development costs will be reviewed.
In addition, it has been decided to recognise a deferred tax asset on R30m (7%) of the SAMES assessed loss
of R420m, being an R8.4m asset (R30m x 28%) thus recognising some of the real value which resides in the
company.
The recognition of the deferred taxation asset was based on a five year forecast for the SAMES business and
the directors have decided that it is premature to raise the full deferred taxation asset of R117m at this point
in time due to the nature of the business and the industry.
New Strategy and Initiatives
Labat is continuing with its development of a unique BEE Logistics business. Discussions are underway to
develop Joint Venture arrangements with several large logistics companies. Labat has developed
substantial market presence in the Logistics field and is developing its own in-house logistics capacity.
Labat is pursuing several small logistics acquisitions, although these are at an early stage and are not
currently considered to be price sensitive in nature.
Prospects
The prospects for the balance of the year ahead are sound. The SAMES business has the potential to grow
in the next few years with the appropriate investment and marketing. The current rand weakness will help
develop the market further and the range of products is being expanded.
The logistics industry currently offers some interesting opportunities for a BEE company. All of the major
logistics businesses are looking to work with a partner with suitable BEE credentials.
Labat has just completed its new BEE certification, achieving a Level 1 status with 57% black ownership and
34% black female ownership. This BEE status presents major opportunity for Labat in the Logistics market.
Labat is one of a very few listed companies with level 1 BEE certification.
BASIS OF PREPARATION
Statement of compliance
These unaudited interim results 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 unaudited interim 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
unaudited interim results 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 period ended 31 August 2015, which constituted the first 6 months of Labat?s financial
year, after a change in year end from February to August.
These unaudited interim results for the six months ended 29 February 2016 were prepared under supervision
of the Group's financial director, Mr D.J. O'Neill CA. Any reference to future financial performance included
in this announcement has not been reviewed nor reported on by Labat?s external auditor.
Going Concern
The Board of Directors is of the opinion that having regard to the future strategy and prospects of the group,
the group has sufficient resources to continue as a going concern.
Share Capital
There have been no changes in the Company's issued and authorised share capital during the period
under review.
Subsequent Events
Acquisition of Reinhardt Transport Group Proprietary Limited (“RTG”)
Shareholders of Labat are referred to the SENS announcements dated 13 April 2016, 23 March 2016 and
17 March 2016 and are advised that Labat has decided not to pursue the proposed acquisition of RTG, in
the best interest of Labat shareholders.
Proposed acquisitions of Senna Motors Proprietary Limited (“Elf Trans”) and Marble Vervoer (Edms) (Bpk)
(“Marble Vervoer”)
Shareholders are further referred to the cautionary announcements dated 5 May 2016, 17 March 2016,
11 March 2016 and 22 December 2015 and are advised that the negotiations relating to the proposed
acquisitions of Elf Trans and Marble Vervoer were terminated following the completion of due diligence
exercises.
Dividends
No dividend has been declared for the period under review (August 2015: Rnil).
For and on behalf of the board.
B G VAN ROOYEN D O'NEILL
CEO FINANCIAL DIRECTOR
2 June 2016
Directors
B. van Rooyen*, D.J O'Neill*, 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: 02/06/2016 04:12:00 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.