Tongaat tanks after warning that probe may affect financials

TONGAAT Hulett’s share price plunged roughly 30 percent on the JSE on Friday after the group said it was bringing in PricewaterhouseCoopers to conduct a comprehensive review of “certain practices” at the firm that might impact on its previously reported financial information.

The share plunged after the agriculture and agri-processing business said the ongoing strategic and financial review of the company had revealed certain practices that would require further examination and which, if verified, might require remedial action, including assessing the impact on its previously reported financial information. “The full impact is being determined and might have a material effect on the price of the company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the company’s securities,” the company said.

On Friday, the share closed 28.34 percent lower at R22, while the market cap was R2.97 billion.

The share has lost more than 79 percent in the past 12 months, declining from R107.50 around this time last year.

Market commentators have drawn attention to how Tongaat Hulett reports its land sales. This comes at a time investors are easily spooked in the light of accounting fraud at Steinhoff.

Alarmed tweets on social media likened this to “Stellenbosch accounting”, with calls for the JSE to step in.

The group flagged that: “As this has only just come to light, the board does not have sufficient information to provide further details at this time. The board is affording this matter its urgent attention.”

Tongaat Hulett replaced both its chief executive and its chief financial officer last year to turn around the performance of the company.

On Friday, the group said the turnaround was gaining steam.

“Further to the recent trading update, the board wishes to advise shareholders that meaningful progress is being made with the formulation of a comprehensive turnaround strategy for Tongaat Hulett,” the group said.