W G WEARNE LIMITED - Corrective announcement regarding abridged results and Milost transaction

Corrective announcement regarding abridged results and Milost transaction

 WG Wearne Limited
 (“Wearne” or “the company” or “the Group”)

 (Incorporated in the Republic of South Africa)
 (Registration number 1994/005983/06)
 JSE Code: WEA
 ISIN: ZAE000078002

 Corrective announcement regarding abridged results and Milost transaction


1)    Abridged audited consolidated financial statements for the year ended 28 February 2017
      (“the announcement”)
1.1           Shareholders are referred to the announcement released on SENS on 4 October 2017.
              Paragraph 1 “Notes to the financial information”) should have read:
     The reviewed financial results for the year ended 28 February 2017 which was released on
     SENS on 3 July 2017 has been restated. The reviewed financial results for the period ended
     28 February 2017 have been restated due to the following items:

     1.        Revenue decreased from R417,829 million to R389,429 million due to the
               elimination of Intercompany administrative charges resulting in a decrease in Gross
               Profit to R41,769 million. The restatement of Revenue has no impact on the
               comprehensive loss for the year under review of R32,185 million (2016: R12,468
               million)
     2.        A decrease in Operating expenses to R62,964 million due to the re-classification of
               Intercompany expenses previously recognised.
     3.        A decrease in both Trade Payables and Receivables of R9,828 million due to the
               elimination of intercompany Sundry Debtors and Creditors.

     1.2 Audit report

     The audit report issued by Grant Thornton on the underlying annual financial statements included
     a modified audit report based on material uncertainty relating to going concern and reportable
     irregularities and not an emphasis of matter.

     The material uncertainty relating to going concern is due to the group incuring a loss from
     continuing operations of R28.8 million during the year ended 28 February 2017. The group's ability
     to fund its short-term liquidity requirements is dependent on the continued financial support of all
     funders, the successful conclusion of final agreements, and timeous draw downs, on the "Milost"
     facility obtained from a Private equity firm from the United States of America, the successful
     implementation of overhead reduction measures implemented by the board, receiving the
     contractual retention from a major client as expected and return to profitable trading.

     The following reportable irregularities occurred and have been reported to the Independent
     regulatory board for Auditors on 12 September 2017:

          -   Contravention of Section 30.3(c) of the Companies Act
           Each year a company must prepare annual financial statements, be approved by the
           Board and signed by an authorised director, within six months after the end of its
           financial year, or such shorter period as may be appropriate to provide the required
           notice of an annual general meeting in terms of section 61(7). Annual financial
           statements for the year ended 28 February 2017 have been prepared for the group, but
           not approved by the Board and signed by an authorized director.


     -   Contraventions of the V.A.T. and P.A.Y.E Acts have taken place:
           On 19 June 2017 the Group entered into “instalment Payment Agreements” with SARS
           regarding the repayment of outstanding VAT and PAYE liabilities. Whilst the Instalment
           Payment Agreements have been adhered to, current VAT and PAYE amounts due for
           the months of June 2017 and July 2017 have not been paid. The Instalment Payment
           Agreement states that the agreement may be terminated or modified if any additional
           tax liabilities are not paid on the respective due dates.


     -   Contravention of the Pensions / Provident Fund Act
           The Group has not paid over the pension / provident fund amounts deducted from
           employees’ salaries for the months June, July and August 2017 to the relevant Pension
           / Provident funds.


2)       Funding commitment between Wearne and Milost Global Inc (“Milost”)

 Shareholders are referred to the announcement dated 26 September 2017 between Wearne and
 Milost where Milost has committed equity and debt funding of up to R300 000 000 in terms of
 which Milost will, subject to certain terms and conditions:

     -   invest R50 million in Wearne for the subscription of ordinary shares in Wearne; and
     -   lend and advance R250 million in convertible notes.


 For clarity purposes the R250 million in convertible options will require shareholders’ approval.




 6 October 2017
 Randburg



 Designated advisor
 Exchange Sponsors

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