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LAB
LAB
LAB - Labat Africa - Audited Results For The Year Ended 29 February 2008
And Notice Of Annual General Meeting And Renewal Of Cautionary
Announcement
LABAT AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
Share code: LAB & ISIN: ZAE000018354
("Labat" or "the group" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008 AND NOTICE OF ANNUAL
GENERAL MEETING AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the audited financial statements for the year
ended 29 February 2008 will be posted on 17 September 2008. These financial
statements contain no material modifications, other than those detailed below,
to the reviewed results that were published on 27 June 2008. Van Wyk Charted
Accountants have now completed their audit of Labat`s annual financial
statements and their report is available for inspection at the company`s
registered office.
Restatement
During the 2008 financial year, it was noted that Labat`s subsidiary, Total
Computer Services (Proprietary) Limited ("TCS"), applied the revenue
recognition policy adopted by the group incorrectly in prior periods. It was
impracticable to determine specific effects of this prior period error on
comparative information for periods prior to 28 February 2007. The effect of
this prior period error has been applied to the carrying value of the assets
and liabilities at the beginning of the 2008 financial year and a
corresponding adjustment to the opening balances of each of the affected
components for the year.
The effects of this on the group are as follows:
Effect on assets
Increase in current assets 4 355
Effect on liabilities
Increase in deferred tax 1 263
Effect on retained earnings
Attributable to equity holders 811
Attributable to minorities 2 281
Further, the audited financial statements of Labat differ from the reviewed
financial results published on 27 June 2008, for the following reasons:
- depreciation on camera equipment has been reclassified from operating
expenses as cost of sales;
- an overpayment on a trade receivable recognised in income was reversed to
trade payables;
- work in progress calculations were revised in TCS;
- taxation and deferred taxation effects of the above were accounted for;
and
- the net result of the above on the group was an immaterial after tax
increase in group earnings of R44 400 (forty four thousand four hundred
Rand)
GROUP CONSOLIDATED INCOME Audited Restated
STATEMENT
12 months 12 months
29 February 28 February
2008 2007
(R`000) (R`000)
Revenue 154 646 161 790
Continuing operations 41 784 48 650
Discontinued operations 112 862 113 140
Operating income before 50 207 33 404
depreciation and
amortisation
Continuing operations 28 740 (4 299)
Discontinued operations 21 467 37 703
Depreciation and (21 548) (18 758)
amortisation
Continuing operations (13 583) (11 244)
Discontinued operations (7 965) (7 514)
Operating profit before 28 659 14 646
interest, taxation and fair
value adjustments
Continuing operations 15 157 (15 543)
Discontinued operations 13 502 30 189
Interest paid (9 650) (8 304)
Continuing operations (5 336) (4 708)
Discontinued operations (4 314) (3 596)
Interest received 5 029 2 981
Continuing operations 2 235 983
Discontinued operations 2 794 1 998
Profit before taxation, sale 24 038 9 323
and fair value adjustments
Continuing operations 12 056 (19 267)
Discontinued operations 11 982 28 590
Fair value adjustments (12 223) (29 728)
Continuing operations 3 854 (29 728)
Discontinued operations (16 077) -
Profit /(Loss) before 11 815 (20 405)
taxation
Taxation (10 420) (32 062)
Continuing operations (22) (21 405)
Discontinued operations (10 398) (10 657)
Profit/(Loss) after taxation 1 395 (52 467)
Continuing operations (189) (70 400)
Discontinued operations 1 584 17 933
Attributable to:
Profit to minority 2 230 12 641
shareholders
Loss to equity shareholders (835) (65 108)
Profit/(Loss) to 1 395 (52 467)
shareholders
Weighted average shares in 189 100 186 415
issue (000)
Basic loss per share (cents) (0.4) (34.9)
Headline loss per share (0.5) (20.6)
(cents)
Reconciliation of basic to
headline earnings
Basic profit/(loss) (835) (65 108)
Impairment of goodwill - 19 253
Profit on sale of assets (62) (10)
Settlement of third party - 7 500
guarantee
Headline profit/(loss) (897) (38 365)
GROUP CONSOLIDATED BALANCE Audited Restated
SHEET
12 months 12 months
29 February 28 February
2008 2007
(R`000) (R`000)
ASSETS
Property, plant and equipment 87 432 97 499
Goodwill 19 424 3 466
Other intangible assets 2 120 6 180
Other financial assets 2 704 1 291
Non-current assets 111 680 108 436
Other financial assets - 350
Inventories 18 233 16 917
Trade and other receivables 50 573 47 570
Cash and cash equivalents 44 112 40 530
Current assets 112 918 105 367
Total assets 224 598 213 803
EQUITY AND LIABILITIES
Share capital and reserves 31 316 40 365
Unexpended grant 39 686 37 256
Long-term liabilities 57 099 35 860
Deferred taxation 21 789 18 168
Non-current liabilities 78 888 54 028
Trade and other payables 46 769 48 704
Bank overdraft 1 862 1 395
Current portion of financial 13 153 15 896
liabilities
Provisions & Outside 10 703 8 338
shareholders for dividends
Taxation 2 221 7 821
Current liabilities 74 708 82 154
Total equity and liabilities 224 598 213 803
Number of shares in issue 197 155 186 415
(`000)
Total net asset value per 11.5 13.1
share (cents)
CASH FLOW STATEMENT Audited Restated
12 months 12 months
29 February 28 February
2008 2007
(R`000) (R`000)
Net flow from operating (3 865) (16 147)
activities
Net flow from investing (9 147) (10 425)
activities
Net flow from financing 16 594 54 890
activities
Net increase in cash 3 582 28 318
Cash at beginning of year 40 530 12 212
Cash at end of year 44 112 40 530
STATEMENT OF
CHANGES IN EQUITY
Share Share Non- Distributable
Distributable
R`(000) Capital Premium Reserves Reserves
Balance at 28 1 864 49 065 41 099 (67 516)
February 2007 as
previously stated
Prior year - - - 626
adjustments
Balance at 28 1 864 49 065 41 099 (66 890)
February 2007 as
restated
Issue of share 108 - - -
capital
Prior year - - - (1 003)
adjustment
Minorities bought - - - (702)
out
Loss for year - - - (835)
Dividends paid - - - -
Balance at 29 1 972 49 065 41 099 (69 430)
February 2008
Table continues:
Capital and Minority Total
Reserves Interest
24 512 13 111 37 623
626 2 116 2 742
25 138 15 227 40 365
108 - 108
(1 003) - (1 003)
(702) 3 186 2 484
(835) 2 230 1 395
- (12 033) (12 033)
22 706 8 610 31 316
CONDENSED SEGMENTAL REPORT Technology Other Total
(R`000) (R`000) (R`000)
2008
Revenue 154 646 - 154 646
Earnings before interest and tax 37 956 (9 297) 28 659
and fair value adjustments
Trade and accounts receivable 47 470 3 103 50 573
Trade and accounts payable 41 488 5 281 46 769
Non-current liabilities 57 099 - 57 099
2007
Revenue 161 790 - 161 790
Earnings before interest and tax 16 833 (2 187) 14 646
and fair value adjustments
Trade and accounts receivable 43 640 3 930 47 570
Trade and accounts payable 45 532 3 172 48 704
Non-current liabilities 35 860 - 35 860
COMMENTARY
During the year under review, the board of Labat continued with its planned
restructuring of the group. Subsequent to the unbundling of the shares in TCS
(formerly Labat Traffic Solutions (Proprietary) Limited), a subsidiary of
Labat, and the listing of TCS on the Alternative Exchange ("AltX") of JSE
Limited, ("JSE"), South African Micro-Electronic Systems (Proprietary) Limited
("SAMES") and its subsidiaries remain the only operating business within the
group.
Unbundling and listing of TCS
In a circular to shareholders dated 25 February 2008, shareholders were
advised that it was proposed that TCS would be listed on the AltX on Monday, 7
April 2008 and that immediately before the listing, the unbundling would be
effected by way of a distribution in specie by Labat to Labat shareholders of
TCS ordinary shares in the ratio of one TCS ordinary share for every Labat
share. Furthermore, additional TCS ordinary shares would be issued by way of a
private placement to selected private individuals, corporations and
institutions.
At a general meeting of shareholders held on Tuesday, 18 March 2008,
resolutions approving the unbundling and the specific issue of TCS ordinary
shares were passed by 100% of shareholders present and eligible to vote. In an
announcement released on SENS on 27 March 2008, shareholders were advised that
all conditions precedent relating to the unbundling had been fulfilled and
subsequently, TCS was listed on the AltX on Monday, 7 April 2008.
TCS has been disclosed as a discontinued operation on the face of the Income
Statement. Non-current assets of R40.5 million (2007:R25.7 million), current
assets of R39.6 million (2007:R35.6 million) non-current liabilities of R34.4
million (2007:R8.7 million) and current liabilities of R28.16 million
(2007:R27.3 million) relate to TCS.
Results
Income Statement
The results for the year under review show a substantial improvement from the
previous year. Operating income has improved substantially and profit before
tax improved by R32.220 million from a loss of R20.405 million to a profit of
R11.815 million.
Earnings per share has improved from a loss of 34.9 cents to a loss of
(0.4)cents.
Balance Sheet
The Balance Sheet has been strengthened considerably and the cash position has
improved by R3.582 million from R40.530 million to R 44.112 million.
SAMES
The business continues to improve and is being re-structured into three
distinct sections i.e. the waferfab and MEMS unit, the Integrated Circuit
Design Company, being the design company, and downstream businesses housed in
the SAMES business park. Although international markets are extremely
difficult at present, the current Rand weakness is having a positive effect on
revenue and the company is currently making a small profit.
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"), IAS34 and the Companies Act, 1973 (Act
61 of 1973), as amended.
Audit opinion
The results for the year ended 29 February 2008 have been audited by the
group`s auditors, Van Wyk Chartered Accountants, and their unqualified opinion
is available for inspection at the group`s registered office.
Extract from Auditor`s Report
Report on other legal and regulatory requirements
"A subsidiary in the group, Total Client Services Limited has been reported in
terms of section 44(2) and 44(3) of the Auditing Profession Act. It has been
reported that certain unlawful acts or omissions by management responsible for
the management of Total Client Services Limited which constitute reportable
irregularities in terms of the Auditing Profession Act have occurred, and have
been reported to the Independent Regulatory Board for Auditors."
Notice of Annual General Meeting
Notice is hereby given that the annual general meeting of shareholders of
Labat will be held at 15h00 on 10 October 2008 in the boardroom of the
company, 23 Kroton Avenue, Weltevreden Park, Roodepoort, to transact the
business stated in the notice of annual general meeting, which is contained in
the Annual Report.
Renewal of Cautionary Announcement
Further to the cautionary announcement dated 8 August 2008 where shareholders
were advised that Labat has entered into negotiations to explore alternative
opportunities in addition to the delisting which, if successfully concluded,
may have a material effect on the price at which Labat`s shares trade,
shareholders are advised to continue to exercise caution when trading in Labat
shares on the JSE until a further announcement is made.
For and on behalf of the board.
B G VAN ROOYEN
Chairman
17 September 2008
Directors: B G van Rooyen, D J O`Neill, V J Labat*, T van der Walt*
* Non-executive
Registered Office
23 Kroton Avenue
Weltevreden Park, Roodepoort, 1709
Private Bag X09-248
Weltevreden Park, 1715
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown, 2107
Auditors
Van Wyk Chartered Accountants
Corner Koedoesnek and Grysbok Streets
Waterkloof Ridge, Pretoria
0181
Sponsor
Merchant Sponsors (Proprietary) Limited
Date: 17/09/2008 12:55:49 Produced by the JSE SENS Department.
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