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No sweeteners in Tongaat results
No sweeteners in Tongaat results
Published Date: 2019-12-11 | Source: Stephen Gunnion | Author: Stephen Gunnion
Auditors Deloitte and Touche have raised concern about its ability to continue as a going concern.
Tongaat Hulett has put on a brave face, saying its core business remains strong with positive cash flows and strong margins. That's despite reporting a significant loss for the year to end-March and a slump in its net asset value to negative R3 billion.
Auditors Deloitte & Touche have raised concern about the sugar producer and land owner's ability to continue as a going concern. However, they said they were satisfied that reportable irregularities in the group's previous financial statements were no longer continuing.
Tongaat asked for its shares to be suspended in June after delaying the release of its results due to accounting fraud that led to the restatement of its 2018 financials. Last week, it said it planned to pursue claims against some former executives after a probe into the group's affairs by PricewaterhouseCoopers Advisory Services uncovered dubious accounting practices. The investigation found that 10 executives, including former CEO Peter Staude, inflated profits to boost their own financial incentives.
The restatement of its accounts amounted to R11.9 billion, much bigger than the R3.5 billion to R4.5 billion it estimated in May. It said that was mainly due to impairments and the derecognition of expropriated land in Zimbabwe of R4 billion and some R3 billion of deferred tax assets that had not been recognised.
Its operational performance also continued to decline despite sustained good performance from its starch operation and its land development business benefiting from the revised revenue recognition policy. The decline was mainly due to the overhang of surplus sugar arising from excessive imports in SA and Mozambique, a big drop in local demand for sugar as a result of the Health Promotion Levy (sugar tax) and low world sugar prices.
The group reported a 2% fall in revenue to R17.1 billion for the year, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose to R1.86 billion from a restated R727 million. Its basic loss per share reduced by 10% to 948c ad its headline loss per share narrowed by 4% to 823c. It hasn't declared a dividend after paying out 160c per share last year. Its net asset value swung from R62 million to negative R2.97 billion.
it said the initial phases of reducing debt through streamlining and rationalising operations and improving business performance and accountability had commenced. It had also rolled out twelve key projects across all areas of the business, aimed at maximising net cash. Debt refinancing agreements would come into effect once certain outstanding administrative conditions had been met. It agreed with its SA lenders that they would execute a plan to reduce the level of debt by a minimum of R8,1 billion by 30 September 2021. This would require the sale of more non-core assets and a rights issue.
Tongaat's shares were trading at R13.21 when they were suspended on 10 June, following a 76% decline since January. They remain suspended.
Tongaat finally released financials to march. R12bn asset write downs. Operations look ok with positive cash flows. As expected the fraud was in overstating asset values and capitalized costs. Share still suspended-- Wayne McCurrie (@WayneMcCurrie) December 10, 2019
1. Embattled sugar producer Tongaat briefly highlights how it got into the mess it currently finds itself in.-- EQUITY AXIS (@EquityAxis) December 10, 2019
Tongaat is battling a crisis of financial accounts manipulation & mismanagement also involving Zim operation
Strategic communication vs propaganda pic.twitter.com/DaTwQuChci