Unaudited interim results for the six months ended 28 February 2017 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 28 FEBRUARY 2017 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 6 months ended 6 months ended 28 February 2017 29 February 2016 Unaudited Unaudited R’000 R’000 Revenue 20 644 7 201 Cost of sales (15 499) (2 230) Gross profit 5 145 4 970 Other income 1 475 1 Operating expenses (5 553) (6 024) Operating profit/(loss) 1 067 (1 052) Investment revenue - 22 Finance costs (69) (32) Profit/(loss) before taxation 998 (1 062) Taxation 8 8 400 Profit for the period 1 006 7 338 Other comprehensive income - - Total comprehensive income for the period 1 006 7 338 Attributable to: Equity holders of the parent 1 006 7 338 Non-controlling interest - - Total comprehensive income for the period 1 006 7 338 Per share information: Basic and diluted earnings per share (cents) 0.39 2.86 Basic and diluted headline earnings per share (cents) 0.39 2.86 Weighted average shares in issue (‘000) 255 992 255 992 The headline earnings reconciliation is set out below Profit for the period 1 006 7 338 Adjustments - - Headline earnings attributable to shareholders of the group 1 006 7 338 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 28 February 29 February 2017 31 August 2016 2016 Unaudited Audited Unaudited R’000 R’000 R’000 ASSETS Property, plant and equipment 1 109 1 176 223 Deferred taxation 7 904 7 896 8 400 Non-current assets 9 013 9 072 8 623 Inventories 3 625 3 142 3 780 Other financial assets 10 10 10 Loans to shareholders 227 145 2 455 Trade and other receivables 11 858 1 881 1 126 Cash and cash equivalents 3 312 9 280 12 976 Current Assets 19 032 14 458 20 347 Total Assets 28 045 23 530 28 970 EQUITY AND LIABILITIES Share Capital 2 111 2 111 2 111 Share premium 56 795 56 795 56 795 Non-Distributable Reserves 343 345 - Accumulated loss (51 617) (52 621) (53 681) Equity 7 632 6 628 5 225 Non-Current Liabilities Loans from directors and shareholders 284 284 387 South African Revenue Services 3 801 4 180 8 599 Trade and other payables 8 258 3 515 5 546 Provisions 8 070 8 923 9 213 Current Liabilities 20 413 16 904 23 745 Total Equity and Liabilities 28 045 23 530 28 970 Number of shares in issue (‘000) 259 202 259 202 259 202 Number of shares in issue net of treasury shares (‘000) 255 992 255 992 255 992 Total Net Asset Value per share (cents) 2.98 2.59 2.04 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 6 months ended Year ended 6 months ended 28 February 2017 August 2016 29 February Unaudited Audited 2016 R’000 R’000 Unaudited R’000 Cash flows from operating activities: Cash receipts from customers 10 559 15 057 7662 Cash paid to suppliers and employees (16 108) (18 963) (8 579) Cash used in operations (5 549) (3 906) (917) Investment revenue - 171 22 Finance costs (69) (58) (32) Net cash from operating activities (5 618) (3 794) (926) Cash flows from investing activities: Purchase of property, plant and equipment (53) (669) (144) Loans from group companies received - - Loans from group companies paid - - Net flow from investing activities (53) (669) (144) Net flow from financing activities: Repayment of South African Revenue Services liability (379) (2 612) Statutory levies raised/(claimed) by South Africa Revenue Services - - Directors and shareholders loans received 82 2 167 Directors and shareholders loans repaid - (143) Net flow from financing activities (297) (445) (143) Net (decrease)/ increase in cash (5 968) (4 908) (1 213) Cash at beginning of period 9 280 14 189 14 189 Cash at end of period 3 312 9 280 12 976 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 Opening balance at 1 September 2015 2 111 56 795 58 905 - (61 019) (2 116) Profit for the period - - - - 7 338 7 338 Balance at 29 February 2016 - Unaudited 2 111 56 795 58 905 - (53 681) 5 224 Profit for the period - - - 343 1 059 1 402 Balance at 31 August 2016 - Audited 2 111 56 795 58 905 343 (52 621) 6 626 Profit for the period - - - - 1 006 1 006 Balance 28 February 2017 – Unaudited 2 111 56 795 58 905 343 (51 617) 7 632 Segment information 6 months ended 6 months ended 29 February 28 February 2017 2016 Unaudited Unaudited R’000 R’000 Technology External sales 3 382 7 201 Logistics Logistics sales 17 262 - Total revenue 20 644 7 201 Technology (Loss)/Profit for the year before disclosable items (789) 7 338 Logistics Profit for the year before disclosable items 1 793 Profit for the year before taxation 1 006 7 338 SEGMENT ASSETS Technology 16 936 28 970 Logistics 11 109 - Total assets 28 045 28 970 SEGMENT LIABILITIES Technology (12 744) (23 745) Logistics (7 669) - Total liabilities (20 413) (23 745) COMMENTARY Results We are pleased to announce a return to profitability at an operations level. Labat’s new logistics business has performed well and has been profitable since inception. The Company’s revenue for the six months ended 28 February 2017 increased to R20.6 million from R7.2 million reported in the corresponding period due to the Company’s expansion into the logistics industry. Cost of sales similarly increased by R15.4 million from R2.2 million mainly due to costs of the logistics business. Net profit before taxation for the period under review has gone from a loss of R1.062 million in the previous corresponding period to a profit of R1.006 million. The taxation credit in the prior period arose as a result of the partial recognition of a deferred taxation asset on the SAMES assessed loss as disclosed previously. The development of the Logistics business has meant that a substantial investment has been made in the Company’s debtors' book. Restatement of per share information The comparative per share information has been restated due to the Company calculating the information based on 259 202 297 shares in issue as opposed to net of treasury shares, being 255 992 274 shares. This resulted in a slight increase in EPS and HEPS from 2.83 cents per share to 2.86 cents per share. The NAV per share increased from 2.01 cent per share to 2.04 cents per share. South African Micro Electronic-Systems Proprietary Limited (“SAMES”) Labat moved the SAMES business to a new facility in a technology centre which necessitated the temporary closure of our production facility for three months which has obviously impacted the revenue and profitability of this segment for the period under review. SAMES is back in full production and revenue is again on target. Since most of our newly developed products are in the energy metering field we have decided to manufacture and market our own energy meter. A prototype has been developed and we intend to launch the product into the local market in the 2017/ 2018 year. Logistics Business During the period under review, the logistics business generated good gross margin and operating profit as projected. The business segment also took over most of the staff and costs from head office but still managed to generate a small net profit. The Board of Labat considers this result to be impressive for a start- up operation. Our marketing efforts are now beginning to show results and the group is well positioned based on work done over the past two years to capitalise on the transformation which is beginning to happen in the Transport and Logistics Industry. Our BEE credentials have been essential in positioning the company for the changes which are currently happening in the industry. Labat has identified some experienced operational partners and is entering into long term joint venture agreements with them, whereby they will become dedicated delivery partners. Prospects We have started the process of negotiating long term contracts with several of the large Mining and other companies that have large logistics requirements details of which will be announced in due course. The prospects for the rest of the year are exciting and all indications are that we will continue to grow the business in the year ahead. BASIS OF PREPARATION Going Concern The Board is of the opinion that having regard to the future strategy and prospects of the group, the Labat group has sufficient resources to continue as a going concern. 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 six month period ended 28 February 2016. These unaudited interim results for the six months ended 28 February 2017 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. Acquisitions and disposals Shareholders were advised of a proposed acquisition by Labat of 51% of the issued share capital of Ormin Coal Proprietary Limited on 30 January 2017. The acquisition was subsequently terminated due to a lapsed agreement as a result of Ormin requiring more time to furnish information that is required for the completion of the due diligence process. There were no acquisitions or disposals during the period under review. Share Capital There have been no changes in the Company’s issued and authorised share capital during the period under review. Changes to the Board During the Company’s annual general meeting held on 2 May 2017, the re-election of Mr B Jacobs as a director was not approved by shareholders. Accordingly, Mr Jacobs is no longer a director of the Company. Mr D Asmal resigned as a non-executive director on 23 May 2017. Mr Rustum Mohamed has been appointed to the board with effect from 30 May 2017. The Board is in the process of appointing an additional director. An announcement to this effect will be made in due course. Dividends No dividend has been declared for the period under review (February 2016: Rnil). Related parties There were no material transactions with related parties during the period under review. For and on behalf of the board. B G VAN ROOYEN D O’NEILL CEO FINANCIAL DIRECTOR 1 June 2017 Directors B. van Rooyen*, D.J O’Neill*, R. Majiedt^ R Mohamed^ 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: 01/06/2017 02:42:00 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. 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