Tongaat suspended on results delay


Tongaat suspended on results delay

Published Date: 2019-06-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tongaat suspended on results delay

The sugar producer said the decision wasn't taken lightly and was meant to protect investors as its financial statements couldn't be trusted.

Tongaat Hulett asked to halt trade in its shares on the JSE and London Stock Exchange yesterday due to mounting concern over the state of its financial accounts. But not before they had fallen a further 5.3%. It said the move was taken to protect investors and buy management more time to support the completion of a forensic investigation and implement remedial actions.

The sugar producer and land owner's shares have toppled 72% since 22 February when it warned it would report a significant loss for the year to end-March. Two weeks later, it said a strategic and financial review of the company had revealed certain practices that would require further examination and which might require remedial actions, if verified. It brought auditors PwC on board to assist. Its own auditors are Deloitte. Just over a week ago, the group confirmed that it would have to restate its 2018 financial results, which would delay the release of its 2019 results to October. They should have been released before the end of this month.

The need to restate its 2018 annual results rendered its unaudited interim results for the six months to end-September unreliable, it said, and its February trading statement couldn't be trusted either. Apart from giving it more time to complete the forensic investigation and the restatements, the suspension would allow the company to complete its strategic review and accelerate a turnaround strategy.

Although it was still in the process of determining the impact of certain past practices on its numbers, its 31 May update estimated that the equity on the balance sheet as at 1 April 2018 would be reduced by between R3.5 billion and R4.5 billion. That's due to a number of issues that didn't meet International Financial Reporting Standards (IFRS) criteria.

As part of the turnaround strategy, it said it was committed to selling certain assets and was making progress in reducing debt, strengthening its balance sheet and improving its liquidity position.

It aimed to reinstate its listing by the time it releases its results, or possibly earlier if sufficiently reliable information can be released. It said the decision to suspend trading hadn't been taken lightly.

The group's shares were trading at R13.21 when they were suspended.

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