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Reviewed provisional condensed consolidated financial results for the year ended 31 August 2016
LABAT AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
JSE code: LAB ISIN: ZAE000018354
(“Labat” or “the Group”)
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED
31 AUGUST 2016
During 2015, the Group changed its year end from February to August. The previous financial year therefore
only constitutes operations for six months period ended 31 August 2015. As a result, the comparative figures
for the year ended 31 August 2016 may not be fully comparable and thus the results for the year ended 28
February 2015 have also been included in this announcement.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
12 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2016 2015 2015
R’000 R’000 R’000
Reviewed Audited Audited
Revenue 14 312 7 460 12 127
Cost of sales (6 728) (2 429) (3 909)
Gross profit 7 584 5 031 8 218
Other income 5 085 673 2 606
Operating expenses (12 414) (8 406) (9 419)
Operating profit/(loss) 255 (2 702) 1 405
Investment revenue 171 5 13
Finance costs (59) (3) (398)
Profit/(loss) before taxation 367 (2 700) 1 020
Taxation 8 030 - -
Profit/(loss) from continuing operations 8 397 (2 700) 1 020
Discontinued operations
Profit from discontinued operations - 138 404
Taxation – discontinued income - - -
Profit/(loss) for the period 8 397 (2 562) 1 424
Other comprehensive loss for the year net of taxation 343 - -
Total comprehensive income/(loss) for the period 8 740 (2 562) 1 424
Attributable to:
Owners of the parent:
Profit/(loss) for the period from continuing operations 8 397 (2 700) 1 020
Profit for the period from discontinuing operations - 138 404
Income/(loss) for the year attributable to owners of the
8 397 (2 562) 1 424
parent
12 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2016 2015 2015
R’000 R’000 R’000
Reviewed Audited Audited
Per share information:
Earnings/(loss) and diluted earnings/(loss) per share:
From continuing operations
Basic and diluted earnings/(loss) per share (cents) 0,14 (1,05) 0,42
From discontinued operations
Basic and diluted earnings per share (cents) - 0,05 0,17
Total earnings/(loss) per share
Basic and diluted earnings/(loss) per share (cents) 0,14 (1,00) 0,59
Headline earnings/(loss) and diluted headline
earnings/(loss) per share
From continuing operations
Basic and diluted earnings/(loss) per share (cents) 0,14 (1,05) 0,40
From discontinued operations
Basic and diluted earnings per share (cents) - 0,05 0,21
Total earnings per share
Basic and diluted earnings/(loss) per share (cents) 0,14 (1,00) 0,61
Share information (’000) (’000) (’000)
Weighted average shares in issue 255 992 255 992 216 446
Shares in issue at year end 255 992 255 992 255 992
Headline earnings reconciliation: R’000 R’000 R’000
Profit/ (loss) attributable to shareholders of the group 8 397 (2 700) 1 020
Profit/ (loss) on the sale of fixed assets - - (38)
Headline earnings/ (loss) attributable to shareholders
of the group 8 397 (2 700) 982
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 August 31 August 28 February
2016 2015 2015
Reviewed Audited Audited
R’000 R’000 R’000
ASSETS
Property, plant and equipment 1 176 92 35
Deferred taxation 7 896 - -
Non-current assets 9 072 92 35
Inventories 3 142 3 448 2 589
Loans to shareholders 145 2 313 2 011
Other financial assets 10 10 10
Trade and other receivables 1 881 1 587 881
Cash and cash equivalents 9 280 14 189 16 458
Current Assets 14 458 21 547 21 949
Total Assets 23 530 21 639 21 984
EQUITY AND LIABILITIES
Share Capital 2 111 2 111 2 111
Share premium 56 795 56 795 56 795
Reserves 343 - -
Accumulated loss (52 621) (61 018) (58 456)
Equity 6 628 (2 112) 450
Loans from directors and shareholders 284 387 387
South African Revenue Services liability 4 180 9 471 8 674
Trade and other payables 3 515 4 530 3 256
Provisions 8 923 9 363 9 212
Bank overdraft - - 5
Current Liabilities 16 904 23 751 21 534
Total Equity and Liabilities 23 530 21 639 21 984
Number of shares in issue („000) 255 992 255 992 255 992
Total Net Asset /(Liability) Value per share (cents) 2,59 (0,83) 0,17
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
12 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2016 2015 2015
Reviewed Audited Audited
R’000 R’000 R’000
Net flow from operating activities (3 804) (2 691) 21 324
Net flow from investing activities (669) (68) 33
Net flow from financing activities (435) 495 (5 924)
Net (decrease)/increase in cash (4 909) (2 264) 15 433
Cash at beginning of period 14 188 16 452 1 019
Cash at end of period 9 280 14 188 16 452
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non
Total distributable
Share Share share reserves/ Accumulated Total
capital premium capital revaluations loss equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 28 February 2015
- Audited 2 111 56 795 58 906 - (58 456) 450
Loss for the period - - - - (2 562) (2 562)
Balance 31 August 2015
- Audited 2 111 56 795 58 906 - (61 018) (2 112)
Profit for the year - - - - 8 397 8 397
Gains on plant and
machinery revaluation - - - 343 - 343
Balance 31 August 2016 -
Reviewed 2 111 56 795 58 906 343 (52 621) 6 628
SEGMENT INFORMATION
12 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2016 2015 2015
Reviewed Audited Audited
R’000 R’000 R’000
Technology
External sales 13 618 7 460 12 127
Inter segmental revenue - 250 257
Other Operations (including logistics)
External sales 693 - -
Inter segmental revenue 250 - -
Adjustments and eliminations (250) (250) (257)
Total revenue from continuing operations 14 311 7 460 12 127
Technology
Profit for the year before disclosable items 14 366 2 383 3 747
Reversal of Impairment - - 4 525
Profit for the year before taxation and discontinued 6 336 2 383 8 272
operations
Other Operations (including logistics)
Profit/ (loss) for the year before taxation and
1 678 (5 083) (2 727)
discontinued operations
Total profit/ (loss) for the year before eliminations, tax
and discontinued operations 8 298 (2 700) 5 545
Adjustments and eliminations 726 - (4 525)
Total Profit/ (loss) for the year before taxation and
discontinuing operations 8 740 (2 700) 1 020
SEGMENT ASSETS
Technology 21 720 31 165 27 322
Other operations (including logistics) 3 580 3 220 2 495
Adjustments and eliminations (1 770) (12 746) (7 833)
Total assets 23 530 21 639 21 984
SEGMENT LIABILITIES
Technology (41 410) (57 583) (56 260)
Other operations (including logistics) (12 147) (21 465) (15 371)
Adjustments and eliminations 70 461 55 297 50 097
Total liabilities (16 904) (23 751) (21 534)
COMMENTARY
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 six months ended 31 August 2015.
Review Conclusion
These condensed consolidated financial statements for the period ended 31 August 2016 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.
Results
The total comprehensive profit for the year was R 8 740m as opposed to a loss of R2,562m in the six months
to 31 August 2015.
Revenue for the year has increased over the previous comparative yearly figure and is projected to grow in
the year ahead, both in the electronic chip segment and the newly established logistics business, currently
reflected under other operations in the segment report.
Cost of sales and operating expenses increased substantially due to additional development costs.
The major improvement in the profit for the period has arisen from the recognition of a deferred tax asset of
R7,896m, being a portion of the assessed loss of approximately R420m in South African Micro-electronic
Systems Proprietary Limited (“SAMES”), more detail of which is set out below.
Going Concern
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. The Group is projecting
positive cash flows for the year ahead from existing and new business. Additionally, the Company intends
to place a limited number of shares in order to raise a further R9 million in cash in order to fund the working
capital growth in the business and position the Company for small but strategic acquisitions. Current assets
of R14,458m are substantially more than the core current liabilities of R3,800m as provisions for amounts due
to directors and provisions for a SARS disputed liability are not considered current.
SAMES
The SAMES technology business continues to trade profitably. A new generation of products is being
developed and is being introduced to the market over the next three years. There is still a demand for the
older products but enhanced versions of these products will eventually replace them in a phased manner.
All products will be on the 5 micron technology which will give enhanced margins and open new markets
for our products.
We have moved to improved premises in a technology park and are recruiting development staff for
growth. Manufacturing capacity and quality remain excellent. Capacity for growth is almost unlimited.
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.
Prospects
Prospects for the year ahead are good. The existing business is showing good growth and the new logistics
business has commenced in a very positive manner and the Company is already experiencing growth in
revenues and it is also growing its network and client base aggressively.
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, including a claim by an erstwhile partner, GEM Global
Yield Fund LLC SCS, emanating from our cancellation of their facility offer. Labat is vigorously defending this
claim and our attorneys are about to issue a substantial counter claim. These matters are being dealt with
by the Company?s attorneys. No material changes to litigations has occurred from the prior year except for
the following:
Labat has concluded the SARS matter related to the disputed PAYE assessments. The company has
concluded and settled with SARS on an amount of R1,2million.
Post Balance Sheet events
There are no significant post Balance Sheet events.
Acquisitions, Disposals, Share Issues and Repurchases
There were no disposals, share issues or share repurchases during the period under review.
As announced on SENS during March 2016, Labat decided not to pursue the proposed acquisition of
Reinhardt Transport Group Proprietary Limited, in the best interest of Labat shareholders. It was further
announced on 5 May 2016 that negotiations relating to the proposed acquisitions of Senna Motors
Proprietary Limited and Marble Vervoer (Edms) (Bpk) were terminated following the completion of due
diligence exercises.
New Strategy and Initiatives
As announced on 30 August 2016, Labat is continuing with its strategy of building a major BEE Logistics
group. The Company has had discussions with various parties to secure logistics capacity through small
acquisitions, joint ventures and sub contract agreements. The market is very supportive of the creation of a
black-owned logistics group and indications are that substantial work is available to Labat.
Labat has won its first logistics work and deployed its first vehicles for a large mining company during August
2016 and the intention is to grow this contract and also secure other customers.
Share Capital
There have been no changes in the Company?s issued and authorised share capital during the period.
Changes to the Board
There were no changes to the board during the period under review.
Dividends
No dividend has been declared for the period under review (August 2015: Rnil).
Financial instruments
Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the
fair value measurements are observable and the significance of the inputs to the fair value measurement in
its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
The carrying amount of all significant financial instruments approximates the fair value, except for the item
listed below:
Category Opening value Fair value Closing value Fair value hierarchy
R’000 adjustment R’000
R’000
Plant and equipment 833 343 1 179 Level 3
Financial risk management and fair value
There has been no material change in the Group's financial risk management objectives and policies
compared to those disclosed in the consolidated financial statements as at and for the year ended 31
August 2015.
The Group does not currently carry any assets or liabilities at fair value which required any disclosure on its
fair value measurement, other than those disclose above.
For and on behalf of the board.
B G VAN ROOYEN D O'NEILL
CEO FINANCIAL DIRECTOR
30 November 2016
Directors
B. van Rooyen*, D.J O?Neill*, R. Majiedt^, B. Jacobs^, D Asmal^
Executive*, Independent 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: 30/11/2016 05:15:00 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
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