Labat Africa reports R10.3m turnaround profit
CAPE TOWN - Labat Africa reported a turnaround to a R10.3m profit for the year to end August 31, 2020, from R72.9m loss the previous year, but there remained audit questions relating to the fuel subsidiaries that were put into business rescue.
The results for the black owned and managed investment holding group, released Monday, were reviewed by auditing firm Nexia SAB&T, which expressed a modified review opinion, including a paragraph referring to the business rescue of Labat’s fuel businesses, which hit difficulties from the drop in fuel demand during lockdown and the impact of Covid-19.
The operating loss doubled to R36.7 million in the year to August 31 from a loss of R18.6m in 2019. The share price increased 2.33 percent to 44 cents Monday morning.
Revenue fell to R40.2m from R52.8m. The headline loss per share came to 10.8 cents versus a headline loss of 25.2 cents the previous year.
A R73.7m loss on discontinued operations and an amount of R107.3m for profit on loss of control, which relates to the deconsolidation of these subsidiaries, was included in the income statement.
"Force Fuel Proprietary and Force Fuel Properties Proprietary... were subject to review by the component auditors. However, at the date of this report, the review was not concluded. These subsidiaries were placed under business rescue and as a consequence, Labat Africa lost control over these subsidiaries, and the subsidiaries were deconsolidated,” the results announcement said.
“Due to the review of these subsidiaries not being concluded, Nexia SAB&T were unable to obtain sufficient appropriate audit evidence that the amounts relating to loss on discontinued operations and profit on loss on control were free of material misstatement,” the results said.
Goodwill on Force Fuel on R30.4m and intangible assets of R29.5m was impaired as at business rescue date. Revenue and profit margins in the fuel business also saw a sharp decline given the state of the fuel industry.
The overall results however reflect a sharp turnaround of the group. Revenue in the logistics business fell due to the effects of Covid-19 and the technology business saw revenue decrease slightly.
Labat concentrated on growing its cannabis healthcare business during the year, but was unable to complete various acquisitions.
SAMES had a profitable year and made an energy metering technology design breakthrough.
“This will translate into SAMES regaining its place as a supplier of world class energy metering technology and solutions to the international and local semiconductor markets,” the group directors said.
“The continuing Labat owned businesses’ growth have been adversely affected by the pandemic and are expected to grow exponentially in the years ahead as local and international market conditions improve,” they said.
BUSINESS REPORT ONLINE