Wrap Text
Reviewed Provisional Condensed Consolidated Results for the year ended 31 August 2017 & 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 Group”)
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED
31 AUGUST 2017 AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 August 2017 31 August 2016
R’000 R’000
Reviewed Audited
Revenue 52 011 14 312
Cost of sales (40 617) (6 728)
Gross profit 11 394 7 584
Other income 1 026 5 085
Operating expenses (14 310) (12 414)
Operating (loss)/profit (1 890) 255
Investment revenue 6 474 171
Finance costs (435) (59)
Profit before taxation 4 149 367
Taxation 493 8 030
Profit for the year 4 642 8 397
Other comprehensive income for the year net of
- 343
taxation
Total comprehensive income for the year 4 642 8 740
Attributable to:
Owners of the parent:
Profit for the year 4 642 8 397
Total comprehensive income for the year 4 642 8 740
Per share information:
Basic and diluted earnings per share (cents) 1,81 3,28
Weighted average shares in issue (net of treasury
shares) (‘000) 256 140 255 992
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 August 2017 31 August 2016
Reviewed Audited
R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment 1 867 1 176
Intangible assets 1 422 -
Deferred tax 8 389 7 896
11 678 9 072
Current assets
Inventories 2 587 3 142
Loans to shareholders - 145
Other financial assets 715 10
Trade and other receivables 18 577 1 882
South African Revenue Services 3 070 -
Cash and cash equivalents 9 226 9 280
34 175 14 459
Total assets 45 853 23 531
EQUITY AND LIABILITIES
Equity
Share capital 2 620 2 592
Share premium 57 745 56 795
Treasury shares (481) (481)
Reserves 300 343
Accumulated loss (47 938) (52 623)
12 246 6 626
Non-current liabilities
Finance lease liabilities 716 -
Current liabilities
Loans from directors and shareholders 399 284
Finance lease liabilities 174 -
South African Revenue Services 361 4 180
Trade and other payables 22 764 3 517
Provisions 9 193 8 924
32 891 16 905
Total Liabilities 33 606 16 905
Total equity and Liabilities 45 853 23 531
Number of ordinary shares in issue (net of treasury shares) (‘000) 258 879 255 992
Net asset value per share (cents) 4,73 2,59
Net tangible asset value per share (cents) 4.18 2.59
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
31 August 2017 31 August 2016
Reviewed Audited
R’000 R’000
Cash flows from operating activities
2 090 (3 907)
Cash generated from/(utilised in) operations
46 171
Investment revenue
(183) (59)
Finance costs
Net cash generated from/ (utilised in) operating activities
1 953 (3 795)
Cash flows from investing activities
Purchase of property, plant and equipment
(53) (669)
Increase in development costs capitalised
(1 422) -
Increase in other financial assets
(700) -
Proceeds from loans to directors and shareholders
85 -
Net cash utilised in investing activities
( 2 090) (669)
Cash flows from financing activities
Proceeds from share issue
505
Repayment of South African Revenue Services liability
- (2 612)
Increase in loans from directors and shareholders
- 2 167
Repayment of loans from directors and shareholders
(251) -
Finance lease payments
(171) -
Net cash generated from/(utilised in) financing activities
83 (445)
Total net cash movement for the year
(54) (4 909)
Cash and cash equivalents at the beginning of the year
9 280 14 189
Cash and cash equivalents at the end of the year
9 226 9 280
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 31 August 2015
- Audited 2 111 56 795 58 906 - (61 019) (2 113)
Profit for the year - - - - 8 396 8 396
Gains on plant and
machinery revaluation - - - 343 - 343
Balance 31 August 2016 –
Audited 2 111 56 795 58 906 343 (52 623) 6 626
Profit for the year - - - - 4 642 4 642
Total comprehensive income
for the year - - - 4 642 4 642
Issue of shares 28 950 978 - - 978
Transfer of revaluation
reserve through use - - - (43) 43 -
Total contributions by and
distributions to owners of the
company recognised
directly in equity 28 950 978 (43) 43 978
Balance at 31 August 2017-
Reviewed 2 139 57 745 59 884 300 (47 938) 12 246
SEGMENT INFORMATION
31 August 2017 31 August 2016
Reviewed Audited
R’000 R’000
Technology
External sales 9 617 13 619
Inter segmental revenue - -
Bulk logistics
External sales 42 394 -
Inter segmental revenue - -
Head office
External sales - 693
Inter segmental revenue 200 250
Elimination adjustments
(200) (250)
Inter segmental revenue
Total revenue as per statement of comprehensive income 52 011 14 312
Profit/(Loss) for the year before disclosable items
Technology 2 289 6 339
Bulk logistics 4 104 -
Head office (7 951) (6 132)
Investment income
Technology 6 469 171
Bulk logistics - -
Head office 5 7 874
Finance costs
Technology - -
Bulk logistics - -
Head office (435) (59)
Depreciation and amortisation
Technology (201) (56)
Bulk logistics - -
Head office (131) (5)
Taxation
Technology 493 8 030
Bulk logistics - -
Head office - -
Other comprehensive income
Technology - 343
Bulk logistics - -
Head office - -
Elimination adjustments - (7 765)
Profit/(Loss) for the year and other comprehensive income
Technology 9 050 14 935
Bulk logistics 4 104 -
Head office (8 512) (6 195)
Total for the year as per statement of comprehensive income 4 642 8 740
Segment assets
Technology 23 835 22 263
Bulk logistics 16 566 -
Head office 6 826 2 173
Elimination adjustments (1 374) (905)
Total assets as per statement of financial position 45 853 23 531
Segment liabilities
Technology (33 386) (41 728)
Bulk logistics (21 471) -
Head office (10 987) (11 829)
Elimination adjustments 32 237 36 652
Total liabilities as per statement of financial position (33 607) (16 905)
COMMENTARY
BASIS OF PREPARATION
Statement of compliance
These reviewed condensed consolidated financial 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 SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as
issued by Financial Reporting Standards Council (FRSC), 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.
These condensed consolidated financial results incorporate the financial results of the company and its
subsidiaries. Results of subsidiaries are included from the effective date of acquisition. All significant
transactions and balances between group enterprises are eliminated on consolidation.
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 31 August 2016.
The preparation of the condensed consolidated financial results for the year ended 31 August 2017 was
supervised by the Financial Director, Mr. D.J.O’ Neill (CA(SA)).
The directors take full responsibility for the preparation of the condensed consolidated financial results for the
year ended 31 August 2017.
Review Conclusion
These condensed consolidated financial results for the year ended 31 August 2017, have been reviewed by
our auditors 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.
Results
The directors of Labat (“Board”) are pleased to announce a profit of R4, 642m for the year ended 31 August
2017.
Revenue increased substantially to R52.0m for the year ended 31 August 2017 from R14, 3m in the year ended
31st August 2016. This substantial increase is primarily due to revenue generated in the logistics business, which
was only started in August 2016. This is a major achievement for a start-up business and revenue generation
has continued to grow in the subsequent quarter. The Company has won some attractive new logistics
contracts. Cost of sales similarly increased in relation to the logistics business. Gross profit increased to R11.4m
from R7.5m. Whilst the gross margin percentage from the logistics segment is lower than that of the SAMES
electronic chip business, the growth in the logistics business has been exponential.
Other income has dropped to R1m for the year under review from R5.0m in the prior year. In the prior year
R3.2m of the R5.0m related to VAT liabilities that were waived. Operating expenses were relatively well
contained with an increase to R14.3m from R12.4m from the prior year, despite substantial start- up costs,
which had to be absorbed for the logistics business. The group made a small operating loss of R1.9m for the
year compared to the a small operating profit in the prior year, primarily due to Other Income being R4m
higher in the prior year.
The Company realised R6.5m (2016: R171k) of investment revenue in the current year, which arose from
interest receivable from overdue SARS receivables. Finance costs of R493k were higher during the year under
review due to invoicing facilities taken out during the year to assist with the rapid growth of the logistics
business.
Profit before taxation of R4.1m was achieved for the year ended 31 August 2017 against the prior year of
R367k, whilst the taxation credit in the prior year was substantially higher due to the raising of a deferred
taxation asset on a portion of the assessed losses in SAMES. This resulted in profit after taxation of R4.6m in the
current year compared to R8.4m in the prior year.
During the current year, intangible assets of R1.4m arose from the capitalisation of development costs of
energy measurement devices by SAMES. Trade and other receivables showed a substantial increase to
R18.6m from R1.9m due to the commencement of the logistics business. Trade and other payables showed
a similar quantum growth to R22.8m from R3.5m. Amounts receivable from SARS of R3.1m arose mainly as a
result of interest receivable on overdue SARS receivables.
The improved performance of the group has also led to the net asset value of the group increasing by 82%
to 4.73 cents per share.
Going Concern
The Board 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 its existing and new business.
South African Micro-Electronic Systems Proprietary Limited (“SAMES”)
SAMES continues to trade profitably. Development of new products is ongoing and management are
confident that its 10-year plan will yield positive growth for the Group. In addition, SAMES has embarked on its
next development phase which entails the recruitment of highly skilled development engineers and support
staff to support the Group’s growth strategy.
Prospects
Prospects for the year ahead are excellent. With the exponential growth of the newly established logistics
business, the Board is of the view that the Group is well-positioned to explore greater opportunities and use
current resources to broadly diversify the Group’s logistics strategy, which includes a seamless franchising
model.
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. One of these, a claim by GEM Global Yield Fund LLC SCS was
dismissed and costs were awarded to Labat. These matters are being dealt with by the Company’s attorneys.
No material changes to litigation have occurred since the previous year.
Post Balance Sheet events
Labat has acquired a 55% shareholding in Labat Kufika Logistics a new logistics business with effect from
1 September 2017. This is a venture with two brothers Adriaan and Pieter Aucamp who have many years of
experience in the logistics industry. The Board is confident that this venture will further contribute to the
Group’s growth in the logistics industry. We have just agreed a R40 million factoring facility with Transaction
Capital to support the growth of the expanded logistics business.
Changes to Property, Plant and Equipment
The Group purchased property, plant and equipment to the value of R1m. There were no disposals during the
year.
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 following non-financial assets were recognised at fair value:
2017 2016
Plant and equipment
Opening balance 876 9
Addition - 418
Fair value adjustment - 476
Depreciation (117) (27)
Fair value closing balance 759 876
Fair value hierarchy Level 3 Level 3
Valuation technique Discounted cash flow Discounted cash flow
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 condensed consolidated financial results for the year ended 31 August
2016.
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 disclosed above. The carrying value of the Group’s financial
instruments however approximates their fair values.
Headline earnings and share information
31 August 2017 31 August 2016
R’000 R’000
Reviewed Audited
Headline earnings reconciliation:
Profit attributable to shareholders of the group 4 642 8 397
Profit on sale of fixed assets (3) -
Headline earnings attributable to shareholders of the
group 4 639 8 397
Earnings and diluted earnings per share: cents cents
Basic and diluted earnings per share (cents) 1,81 3,28
Headline earnings and diluted headline earnings per
share
Headline and diluted headline earnings per share
1,81 3,28
(cents)
Share information (’000) (’000)
Weighted average shares in issue 256 140 255 992
Shares in issue at year end 262 089 259 202
It should be noted that the prior year reviewed results reflected earnings and headline earnings of 0.14 cents
per share. This was correctly reflected at 3.28 cents per share in the published audited results, incorporated
in the Annual Report.
Share Capital
During the year under review, the Company issued 2,886,625 under its general authority to issue shares which
authority was approved by shareholders at the Company last annual general meeting held during May 2017.
There were no share repurchases effected.
Acquisitions
Other than the acquisition of the 55% stake in Kufika Transport, effective 1 September 2017, there were no
other acquisitions concluded by the Company during the year under review.
Related party transactions and balances
The Group entered into transactions with related parties which were in the ordinary course of business, and
on an arm’s length basis, and which were consistent with the previous year and are not considered to be
material to an understanding of these results.
Changes to the Board
As announced on 2 May 2017, the re-election of Mr B Jacobs as a director and appointment as an Audit and
Risk Committee member was not approved. Mr D Asmal also resigned as an independent non-executive
director of the Company with effect from 24 May 2017 but remains available to assist the Company with
various mandates.
On 30 May 2017, Mr Rustum Mohamed was appointed as an independent non-executive director of the
Company. Subsequent to the year-end, Ms Beverley Penny was appointed as an independent non-
executive director of the Company effective from 30 November 2017.
Dividends
No dividend has been declared for the period under review (August 2016: Rnil).
Forward looking statements
This report may contain certain forward?looking statements concerning Labat’s operations, economic
performance and financial condition, plans and expectations. Such views involve both known and unknown
risks, assumptions, uncertainties and other important factors that could materially influence the actual
performance of the group. No assurance can be given that these will prove to be correct and no
representation or warranty expressed or implied is given as to the accuracy or completeness of such views or
as to any of the other information in this report.
Renewal of cautionary announcement
Shareholders are referred to the cautionary announcement issued on 8 August 2017, last renewed on
3 November 2017, and are advised that the Company is still in discussions relating to various acquisitions,
which, if successfully concluded, may have a material effect on the price of the Company’s securities.
Accordingly, shareholders are advised to continue exercising caution when dealing in the Company’s
securities until a full announcement is made.
For and on behalf of the board.
B G VAN ROOYEN D O’NEILL
CHIEF EXECUTIVE OFFICER FINANCIAL DIRECTOR
Johannesburg
12 December 2017
Directors:
B. van Rooyen*, D.J O’Neill*, R. Majiedt^, R. Rustum^, B. Penny^
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
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