Tongaat ready to trade again


Tongaat ready to trade again


Published Date: 2020-01-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tongaat ready to trade again

The sugar producer and land owner says its suspension may be lifted next week, giving investors time to absorb its latest financials.

Tongaat Hulett plans to lift the suspension of its shares as early as next week as it prepares to release its interim results. And while it will report a loss for the six months to end-September, the beleaguered sugar producer and land owner says it will be smaller than the previous year.

Last month, Tongaat said it would only ask the JSE to resume trading in its shares once shareholders had a clearer view of its financial performance and position. It asked for its shares to be suspended last June after delaying the release of its 2019 results due to accounting fraud that led to the restatement of its 2018 financials. Last month, 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.

In a trading update ahead of the release of its interims tomorrow, Tongaat said it would report a loss of between R303 million and R327 million for the half year, down from a restated loss of R392 million for the comparative period. Its headline loss would reduce from R354 million to between R300 million and R322 million.

Tongaat said its performance was skewed by the application of hyperinflationary accounting for its Zimbabwe business, which affected the fair value of its biological assets in that country. Mozambique returned to profit due to higher local sales on the back of beneficial pricing and promotions, as well as successful cost containment. However, its SA sugar operations will report a bigger operating loss due to lower sales volumes and a shift in sales toward lower margin exports.

Profit from land development and conversions ratcheted up over the period as it re-recognised previous deals which are now only allowed to be accounted for upon transfer due to new accounting policies. The profitability of its starch and glucose operations was stable against the prior period as higher maize prices negated good growth in local sales volumes, it said.

Operating cash flow before working capital movements was positive for the period and capital expenditure was confined to essential replacement items.

Tongaat's shares were trading at R13.21 when they were suspended on 10 June, following a 76% decline since last January.


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