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LAB
LAB
LAB - Labat - Reviewed Results For The Year Ended 28 February 2007
LABAT AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
Share code: LAB & ISIN: ZAE000018354
("Labat" or "the group")
REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2007
GROUP CONSOLIDATED INCOME STATEMENT Reviewed Audited
12 months 12 months
28 February 2007 28 February 2006
(R`000) (R`000)
Revenue 163 390 156 046
Continuing operations 163 390 144 885
Discontinued operations - 11 161
Operating income before depreciation 33 909 40 976
and amortisation
Continuing operations 33 909 40 159
Discontinued operations - 817
Depreciation and amortisation (18 758) (20 158)
Continuing operations (18 758) (19 686)
Discontinued operations - (472)
Operating profit before interest and 15 151 20 818
taxation
Continuing operations 15 151 20 473
Discontinued operations - 345
Net interest paid (5 212) (5 743)
Continuing operations (5 212) (5 737)
Discontinued operations - (6)
Profit before taxation, sale and 9 939 15 075
fair value adjustments
Continuing operations 9 939 14 736
Discontinued operations - 339
Fair Value Adjustments 30 802 (5 746)
Loss on discontinued operation - (5 746)
Restructuring costs related to (7 500) -
discontinued operation
Fair value adjustment to financial (2 976) -
asset
Goodwill written off (1 442) -
Recovery on impairment loss 42 720 -
Profit before taxation 40 741 9 329
Taxation (10 717) (12 847)
Continuing operations (10 717) (12 847)
Discontinued operations - -
Profit after taxation 30 024 (3 518)
Attributable to
Minority interest (12 929) (15 733)
Equity shareholders 17 095 (19 251)
Shares in issue throughout the year 186 415 184 415
(000)
Basic loss per share (cents) 9,17 (10,4)
Headline loss per share (cents) (13,0) (7,3)
Reconciliation of basic to headline
loss
Basic profit/(loss) 17 095 (19 251)
Goodwill written off 1 442 -
Loss on sale of subsidiary 44 5 743
Impairment of investments and assets - -
Profit on sale of assets (10) (45)
Reversal of impairment loss (42 720) -
Headline loss (24 150) (13 553)
GROUP CONSOLIDATED BALANCE SHEET Reviewed Audited
12 months 12 months
28 February 2007 28 February 2006
(R`000) (R`000)
ASSETS
Property, plant and equipment 97 502 43 463
Goodwill 21 276 22 718
Other intangible assets 6 180 8 358
Deferred taxation 21 399 21 713
Non-current assets 146 357 96 252
Other financial assets 1 864 9 696
Inventories 16 917 13 454
Trade and other receivables 44 038 42 179
Cash and cash equivalents 43 337 12 212
Current assets 106 156 77 541
Total assets 252 513 173 793
EQUITY AND LIABILITIES
Share capital and reserves 74 590 49 147
Share capital 1 864 1 864
Share premium 49 065 49 065
Non-distributable reserves 10 768 2 420
Distributable reserves 12 893 (4 202)
Share capital and reserves 74 590 49 147
Minority interest 17 434 16 549
Unexpended grant 37 256 -
Long-term liabilities 36 116 35 020
Deferred taxation 4 740 1 698
Non-current liabilities 40 856 36 718
Trade and other payables 53 990 50 028
Other short-term debt - 1 307
Bank overdraft 1 384 5
Current portion of financial 15 682 11 143
liabilities
Provisions 2 879 455
Outside shareholders for dividends - 1 980
Taxation 8 442 6 461
Current liabilities 82 377 71 379
Total equity and liabilities 252 513 173 793
Number of shares in issue (`000) 186 415 184 415
Total net asset value per share 40 27
(cents)
CONSOLIDATED CASH FLOW STATEMENT Reviewed Audited
12 months 12 months
28 February 2007 28 February 2006
(R`000) (R`000)
Net flow from operating activities (6 986) 1 390
Net flow from investing activities 29 002 1 844
Net flow from financing activities 9 109 5 683
Net increase/(decrease) in cash 31 125 8 917
Cash at beginning of year 12 212 3 295
Cash at end of year 43 337 12 212
STATEMENT OF CHANGES IN EQUITY
Share Share Non- Distributable Capital
distributable and
(R`000) capital premium reserves reserves reserves
Balance at 1 1 864 49 065 2 420 (4 202) 49 147
March 2006
Loss for the year - - - 17 095 17 095
Revaluation of - - 8 348 - 8 348
plant and
equipment
Balance at 28 1 864 49 065 10 768 12 893 74 590
February 2007
COMMENTARY
The group has continued with its restructuring programme and has finalised the
disposal of all non-core assets. The group now comprises two core
businesses, SAMES and Labat Traffic Solutions. Each of these businesses is
being further strengthened in order to extract maximum shareholder value.
INCOME STATEMENT
Revenue
The group revenue from continuing operations has increased by R18,4 million
from R144,9 million to R163,3 million. This represents an increase of 12,7%
in very competitive markets.
EBITDA
Margins came under severe pressure during the year and because of this, the
group EBITDA from continuing operations has been reduced by R6,3 million
from R40,2 million to R33,9 million. Delayed implementation of a major
SAMES contract has impacted negatively on cost recovery for this contract
and consequently has impacted adversely on the budgeted EBITDA line.
Revaluation of assets
The plant, machinery and equipment in SAMES has been revalued in line with IFRS
requirements by an independent valuer. This revaluation has resulted in a
surplus of R54,4 million.
Grant
During the year, a development grant of R42 million was received under the
auspices of the Department of Trade and Industry`s offset programme. The
grant is to be used in the furtherance of the SAMES business plan so as to
ensure the long-term survival of this vital national facility. The grant
will be credited to income over the course of the development programme as
expenditure is incurred. In the year to February 2007, R4,7 million of
these funds was credited to the income statement and it is planned that the
remainder will be expensed and credited to the income statement over the
next 18 months.
Settlement
As part of the restructuring process and disposal of non-core assets, a
settlement of R7,5 million relating to a discontinued operation, was made
during the year. Labat has counter guarantees from three individuals
relating to the payment of this settlement and is pursuing these guarantees
through normal legal avenues.
BALANCE SHEET
The balance sheet has been substantially re-structured and net bank debt has
been eliminated. Group net cash resources have increased by R29,7 million
from R12,2 million to R41,9 million. Capital and Reserves have improved by
R25,5 million from R49,1 million to R74,6 million.
Labat Traffic Solutions
The business continues to do well and expects to grow revenues and profits in
the year ahead. In line with the strategy of expanding and enhancing the
service offering to our customers, it is planned to roll out the new Total
Computer Solutions, windows based, back office system in July 2007. This
will substantially enhance our product offering and create a significant
challenge to competitors. New initiatives to collect a substantial backlog
of fines have been initiated with the help of outside contractors. We
expect that these initiatives will add substantially to the bottom line.
SAMES
Difficult trading conditions in the industry have prevailed during the current
year. The implementation of a major contract, on which much of the
business` revenue growth was dependent, was delayed by a further 9 months
and is only now being gradually implemented. This has seriously affected
our revenue and has contributed to an EBITDA loss of R6,9 million for SAMES.
However, this is a substantial improvement on the previous year where the
EBITDA loss was R14,8 million.
The business is being completely restructured to respond to significant changes
in the industry. There will be an increase in emphasis on design rather
than production. Like many other South African industries, SAMES is being
affected by low cost Chinese manufacturing and will have to change its core
business model to survive in the long term. Associated businesses around
the core technology are being acquired and developed and these will
eventually replace the existing business. SAMES faces many challenges and
will need to continue with bold initiatives in order to grow.
Despite the many challenges the directors are confident that the business can
be turned around and is a going concern.
Accounting policies
The results have been prepared in accordance with the group`s accounting
policies which have been consistently applied and comply with International
Financial Reporting Standards ("IFRS").
Reviewed opinion
The results for the year ended 28 February 2007 have been reviewed by the
group`s auditors, RAIN, and their qualified review opinion is available at
the group`s registered office for inspection.
The qualification relates mainly to the ability of SAMES to continue as a going
concern. The difficulties experienced at SAMES have been disclosed in the
current and preceding publications. The going concern risk is mitigated by
the fact that at year end SAMES cash reserves amount to R33,0 million and
that the contract to supply product to Finland has been implemented.
Further, the company has developed and implemented a turnaround strategy
that includes a stringent programme of cost cutting and cost control which
has succeeded in significantly reducing the extent of the company`s losses
as highlighted in this publication.
For and on behalf of the board
B G VAN ROOYEN
Chairman
13 June 2007
Directors: B G van Rooyen, D J O`Neill, V J Labat*
* Non-executive
Registered Office
23 Kroton Avenue
Weltevreden Park, 1709
Private Bag X09-248
Weltevreden Park, 1715
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited
70 Marshall Street
Johannesburg
2001
P O Box 61051
Marshalltown, 2107
Auditors
RAIN
3rd Floor
30 Melrose Boulevard
Melrose Arch
2196
Sponsor
Merchant Sponsors (Proprietary) Limited
Date: 13/06/2007 12:03:30 Produced by the JSE SENS Department.
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