Labat Warns Shareholders

Labat Warns Shareholders: There’s More Blood on the Tracks

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Labat’s reworked financial statements for the 6 months ending February 2021 are likely to unveil a horror story with the JSE listed company dipping back into a loss despite its acquisition spree in the cannabis space.  The company has been in danger of losing its listing because of late financials. 

 

In a SENS statement on 2 July 2021, two days after its deadline to submit the financials, Labat issued this terse communication:

 

Labat Shareholders are advised as follows:

  • The basic loss per share (“LPS”) for the six- month period ended 28 February 2021 will decline by more than 100%, moving from a restated LPS of (1.2) cents for the six-month period ended 29 February 2020 to a LPS of (4.5) cents per share;
  • The headline loss per share (“HLPS”) for the six month period ended 28 February 2021 will decline by 50%, moving from a restated HLPS of (3.0) cents for the six-month period ended 29 February 2020 to a HLPS of (4.5) cents.

 

How the full year’s financials for February 2021 will be stated is unclear at this stage, but it’s clear that shareholders – among them significant players in the cannabis industry – are seeing their equity dissolve. 

 

All Labat will say is: 

The financial information contained herein has not been reviewed and reported on by the group’s external auditors.

In terms of paragraph 3.4(b) of the Johannesburg Stock Exchange’s Listing Requirements, a listed company is required to publish a trading statement as soon as it is satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported upon next will differ, by at least 20%, from those of the previous corresponding period.

Shareholders are reminded that the Force Fuel business was deconsolidated in accordance with IFRS 5 in the prior financial year and that the Company’s operations comprise the technology business through SAMES, the bulk logistics business and the healthcare business.

Labat’s share price was trading at 30 cents on Friday 2 July 2021.   

Almost a year ago the situation was entirely different with Labat, stating in its 6 months financial statements ending August 2020, that:

The Group’s total assets exceed its total liabilities by R69.8million (2019: total liabilities exceeded total assets by R (34.4) million), has accumulated losses of R (98.4) million (2019: R (108.7) million, current assets exceed its current liabilities by R 6.1 million (2019: current liabilities exceeded current assets by R (46.5) million) and the group earned a profit after taxation of R10.4million (2019: loss after taxation of R (72.9) million).

Following the restructuring of the business and recent acquisitions, the group, notably the SAMES and Logistics businesses, performed reasonably well given the impact of COVID-19. The company is actively turning the businesses around with a targeted focus on the Healthcare business. The company has also identified new synergistic business opportunities in order to improve margins and group profitability.

The string of deals and raising of capital have clearly not helped in terms of the bottom line. After a surge into the black, Labat is back in the red for the foreseeable future.

 

See Labat’s historic income statement at the Wall Street Journal here!

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