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Labat Confirms 6-month Loss of R17,5 m, Reviews All Financial Forecasts

Labat is in the process of reviewing all its financial forecasts in the light of the loss that has emerged for the year ending February 2021.  The company said on 5 July 2021 that it would report a total net loss of R17,5 million for the six months to end-February 2021, after a loss of R4.7m a year earlier.

 

The company narrowly escaped the JSE’s sanction after falling issue interim results within the stipulated period.

 

It also withdrew profit forecasts for the 2021 and 2022 financial years, citing the fallout of Covid-19, difficulties in raising capital during the pandemic and the delay in full legalisation of the cannabis market in SA.  The price was down 6.45% to 29c in early afternoon trade on the JSE on 5 July 2021, valuing the company at R126m.

The company issued a statement on 5 July 2021 urging the government to move quickly to finalize cannabis regulations, saying it was falling behind its neighbours in unlocking the potential of the legal marijuana economy.

“The slow pace of SA’s regulatory process could prove to be costly with Zimbabwe just announcing that it is offering international cannabis investors the option of owning 100% of their operations and the right to choose where in the country they would like to invest. This is a big departure from the country’s existing foreign investment regime which requires significant local shareholding in any such venture” it said.

Labat, which was founded in 1995 and listed on the JSE a year later, is transitioning away from logistics and energy to health care with a special focus on cannabis that will be managed from seed to the customer.  It has sold its fossil fuels division and has restructured the company to take advantage of the seed to sale opportunities in the value chain.

Labat Group Structure

 

Labat’s share price over the year, as of 5 July 2021: Source: Business Day

 

The master plan proposes the establishment of an executive oversight committee comprising several ministers, farmers, manufacturers and retailers to drive its implementation. Provincial cannabis committees are envisaged for each province where there is production and manufacturing of the crop.

Cannabis is regarded as having health benefits that include the reduction of nausea and vomiting during chemotherapy and treating severe forms of epilepsy, among other ailments.

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