The JSE has cautioned Labat shareholders that the company's amended financial statements for the year to February contain a modification.
On Friday, the bourse said shareholders should refer to the financial statements to ascertain the exact nature of the modification. Its listing has been annotated with an “E”, to indicate the modification, which will be removed once the auditor's report no longer contains a modification, says the JSE.
Labat said in a statement, issued earlier this month, that there were changes to the results that it issued in June. The initial results had an unqualified audit opinion, which has now been changed to an emphasis of matter by the auditors.
The company's amended results included several adjustments relating to further impairments of South African Micro Electronic Systems, and accounting treatments of costs and cash balances.
Dodgy dealings
Auditing firm Ngubane Zeelie's emphasis of matter relates to “certain unlawful acts or omissions committed by persons previously appointed to the Labat board and then responsible for the management of the company, which constitute reportable irregularities in terms of the Auditing Profession Act”.
In August, Labat said when Aurora-appointed directors were in charge of the company, two irregularities were discovered and reported to the company auditors, which were subsequently identified as reportable irregularities.
Labat was in the process of buying two gold processing operations on the East Rand last year, from controversial mining company Aurora Empowerment Systems, for R38 million. Aurora was also in the process of buying out Labat through its Aurora Investment Holdings subsidiary at 5c a share.
Four Aurora directors were appointed to the board as a result of the pending buyout. They were replaced in June after the deal fell through in January. The auditors have since confirmed to the IRBA that the reportable irregularities are no longer taking place.
Taking steps
The first irregularity related to a cheque worth R9 million, which was “signed by unauthorised signatories of the company for the payment of Aurora debt”. The payment was stopped at the bank and Labat has successfully defended the payment claim.
Labat said the second matter relates to a $2 million investment, which an investor had been led to believe was to be invested in Labat, but which was “diverted” to an Aurora account and never received by Labat. The investor is apparently pursuing the matter against the third parties.
The Aurora-appointed directors have been replaced and the issues reported to all relevant authorities, including the JSE and IRBA, for “appropriate action”.
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