| Mon 31 May 2004, 17:02 | | LABAT AFRICA LIMITED - REVIEWED RESULTS FOR THE YE |
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Release Date: 31/05/2004 16:58:52 Code(s): LAB
LABAT AFRICA LIMITED - REVIEWED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2004
AND CAUTIONARY ANNOUNCEMENT
Labat Africa Limited
REVIEWED RESULTS for the year ended 29 February 2004
(Incorporated in the Republic of South Africa)
Share code: LAB ISIN: ZAE000018354
(Registration number 1986/001616/06)
(`the company` or `the group`)
THE POWER TO DELIVER
GROUP CONSOLIDATED INCOME STATEMENT
Reviewed Audited
12 months 12 months
29-Feb-04 28-Feb-03
R`000 R`000
Revenue 175 651 244 930
Net operating income before depreciation
and amortisation 7 019 38 162
Depreciation and amortisation (16 324) (8 507)
Net operating (loss)/income before interest
and taxation (9 305) 29 655
Interest paid (11 518) (11 680)
Interest received 931 1 291
Net (loss)/income before taxation (19 892) 19 266
Taxation 6 896 11 902
Net (loss)/income after taxation (12 996) 31 168
Attributable to outside shareholders (650) (774)
(Loss)/Income attributable to shareholders (13 646) 30 394
Shares in issue throughout the year (`000) 184 415 184 415
Basic (loss)/earnings per share (cents) (7,4) 16,5
Headline (loss)/earnings per share (cents) (7,1) 17,2
Reconciliation
Basic earnings (13 646) 30 394
Write-off share premium - 1 142,0
Write-off goodwill 193,0 133,0
Loss on sale of investment 431,0 -
Headline earnings (13 022) 31 669
CASH FLOW STATEMENT
Year ended Year ended
29-Feb-04 28-Feb-03
Net flow from operating activities 3 302 6 799
Net outflow from investing activities (23 233) (41 161)
Net flow from financing activities 2 728 17 305
Net decrease in cash (17 203) (17 057)
Cash at beginning of year 22 555 39 612
Cash at end of year 5 352 22 555
GROUP CONSOLIDATED BALANCE SHEET
Reviewed Audited
12 months 12 months
29-Feb-04 28-Feb-03
R`000 R`000
ASSETS
Fixed assets 46 567 53 201
Investments 55 386 37 953
Deferred taxation 22 305 13 912
Non-current assets 124 258 105 066
Cash 5 352 22 555
Inventories 26 336 35 417
Instalment sale debtors 92 913 94 221
Trade and other receivables 22 588 21 947
Current assets 147 189 174 139
Total assets 271 447 279 205
EQUITY AND LIABILITIES
Share capital and reserves 138 539 151 584
Outside shareholders 5 178 4 369
Total shareholders` funds 143 717 155 953
Long-term liabilities 18 680 23 502
Deferred taxation 11 600 12 117
Non-current liabilities 30 280 35 619
Bank overdraft 21 113 14 827
Instalment sale bank finance 36 109 35 411
Accounts payable 40 228 37 395
Current liabilities 97 450 87 633
Total equity and liabilities 271 447 279 205
Total net asset value per share (cents) 75 82
STATEMENT OF CHANGES IN EQUITY
Share Share Distributable Capital and
capital premium reserves reserves
R`000 R`000 R`000 R`000
Balance 28 February
2003 1 844 48 855 102 854 153 553
Prior year
capitalisation
of leased assets (1 969) (1 969)
Subtotal 1 844 48 855 100 885 151 583
Loss for year (13 646) (13 646)
Revaluation of
investment 601 601
Balance at 29 February
2004 1 844 48 855 87 840 138 539
COMMENTARY AND REVIEW OF RESULTS
The worst downturn in the history of the semi-conductor industry and the
continued strength of the Rand has led to our first ever trading loss.
Corrective action has been taken and there are positive signs of a turnaround in
the semi-conductor industry. SAMES, our semi-conductor company, is again
projecting to make a profit in the year ahead. In common with all exporting
companies we have had to make radical changes to our business model to
counteract the weakness of our trading currency (US$). Apart from the obvious
cost-cutting exercises which all Dollar dependent businesses have had to do, we
have developed new markets to increase volumes and have launched new products
and downstream businesses which are initially focused on the local market.
We have entered into negotiations to sell our retail business. This transaction
will eliminate most of our debt and as a further debt reduction and capital
raising exercise we are proposing a rights issue. These items are more fully
detailed below.
Each of our Technology businesses is projecting substantial profits for the
year(s) ahead and we are confident that we will meet these projections. SAMES
The past year has been extremely difficult for SAMES. In common with all
exporters, SAMES has been badly affected by the continued appreciation of the
Rand which has cost SAMES some R22 million over the past year and consequently
has led to a period of substantial trading losses. Management have put plans in
place to counteract the almost total dependence on exports and are confident
that these initiatives and a projected increase in volumes will bring the
business back to profitability in the short term. The two most immediate
initiatives flowing from SAMES are:
the manufacture of meters for the local, African and International markets.
Together with local partners we have developed a new sophisticated meter which
is aimed at the fast developing pre-paid electricity market. With built-in GSM
communication capability linked to back office financial and management systems
we believe that this meter will revolutionise the energy metering and
electricity billing industry and will generate substantial future profits; and
the extension of SAMES into the smart card business is a logical step. We have
been building capacity in the card business for several years. The recent
acquisition of Africard has given us a major step forward in the expansion of
our plans. The launch of our partnerships with major international players in
the bank, GSM and I.D. card arenas will be announced in June.
LABAT RETAIL
Although the Retail industry has performed strongly in the past year it has been
decided that the continuing mismatch between Labat Retail and the rest of our
businesses, which are technology-related, can no longer be sustained. A decision
has therefore been made to sell this business and negotiations are currently
taking place to this effect. This potential transaction will have the effect of
eliminating the majority of our bank borrowings and interest charges. Further
announcements in this regard will be made shortly.
LABAT TRAFFIC SOLUTIONS
The business has had a successful year as far as winning and rolling out new
contracts. Collection levels have been an ongoing problem but various
initiatives have been put in place to counteract the non-payment culture.
Agreement has now been reached with most of our clients to allow payment of
fines via electronic and other easy payment mechanisms thus removing the last
impediment to raising collections significantly.
Digital camera technology has advanced in the past two years and is now
significantly more cost effective than film technology. Consequently we have
decided to use digital technology in all new contracts. We expect that this new
technology will bring significant operational and financial savings. Our
51% shareholding in Total Computer Services (`T.C.S.`) has been very successful.
We have agreed that in future Labat Traffic will only tender for the supply of
camera solutions in conjunction with T.C.S. doing the back office to ensure
adequate collection rates.
IT/MC
This division has gone through a restructuring and now comprises three distinct
but synergistic businesses, Labat Software Solutions which is a sales channel
organisation that utilises channel partners to sell the entire SSA
Global suite of solutions to customers, Leading Edge Solutions which is a
software development company servicing the supply chain management industry and
Labat Management Consulting which provides project management services to
Government agencies and to the private sector. The businesses have performed
well and we are negotiating to obtain new products and services to expand the
existing suite.
RIGHTS ISSUE
In order to further capitalise the business for substantial envisaged growth it
is proposed that the company undertakes a rights issue. Discussions are taking
place with our advisers on the best way of effecting this and a further notice
to this effect will be issued shortly.
PRIOR YEAR ADJUSTMENTS
During the prior year an adjustment was made to reflect the capitalisation of
certain assets held under finance leases. The adjustment was calculated based on
our best estimate at the prior year-end. Subsequent finalisation of the affected
amount has resulted in an adjustment to comparative figures. The effect on
comparative figures has been to reduce attributable income by R1,1 million and
R0,9 million in the prior years and to reduce fixed assets by R0,9 million,
deferred tax assets by R1,3 million and to increase long-term liabilities by
R0,2 million and deferred tax liabilities by R0,4 million.
Basic earnings per share is reduced from 17,0 cents to 16,5 cents, and headline
earnings per share from 17,7 cents to 17,2 cents.
ACCOUNTING POLICIES
The accounting policies applied are consistent with those applied in the
previous year and are in compliance with the South African Statements of
Generally Accepted Accounting Practice.
REVIEWED RESULTS
The results for the year ended 29 February 2004 have been reviewed by the
company`s auditors Pierce and Gampel and their unqualified review opinion is
available for inspection at the company`s registered office.
CORPORATE GOVERNANCE
The group subscribes to the values of good corporate governance at all levels
and is committed to conduct business with discipline, integrity and social
responsibility.
DIVIDENDS
It is company policy that no dividends will be declared as group surpluses
will be retained to fund future growth.
CAUTIONARY
Labat shareholders are advised to exercise caution when dealing in their
shares until further announcements regarding the disposal of Labat Retail
and the rights issue have been made.
For and on behalf of the board
B G VAN ROOYEN
Chairman
31 May 2004
Registered office: Transfer Secretaries:
Island House Computershare Investor Services 2004 (Pty) Ltd
Constantia Park Centre 70 Marshall Street
Corner 14th Avenue and Johannesburg
Hendrik Potgieter Road 2001
Weltevreden Park PO Box 61051
1709 Marshalltown, 2107
Sponsor
Brait Sponsors
REVIEWED results for the year ended 29 February 2004
