Tongaat Hulett is expected to return from the cold to the JSE today
TONGAAT Hulett is expected to make a return to the JSE nearly seven months after its shares were suspended by the bourse following an accounting scandal in which its assets and profits were inflated.
The agriculture and agri-processing company said the JSE had agreed to lift the suspension with effect from today to enable investors to absorb the financial information that was now available.
This comes after Tongaat released its results for the six months to end September on Friday, which reflected a reduction in losses.
It reported a headline loss of R314 million during the period, down from the restated headline loss of R354m compared to last year. However, chief executive Gavin Hudson said the group was still facing significant challenges and there was a lot of hard work ahead of them, but the firm had a robust strategy, a committed management team, as well as a supportive and engaged board.
“We are moving strongly in the right direction. Tongaat is generating decent cash flow with strong margins and we are on track to meet our first-year target of improving cash flow by R1 billion. We have also met and exceeded our first debt reduction target, which was agreed with our lenders. We are at an advanced stage of assessing assets, which may be suitable for disposal,” Hudson said.
The group continued to be affected by subdued local sales and competition from low-margin sugar imports in South Africa. In 2019 Tongaat hired PricewatershouseCoopers to conduct a forensic investigation, which resulted in 10 executives being fingered for wrongdoing, including former chief executive Peter Staude.
“The new board and executive management team is actively engaging in responding to the recommendations in the review to ensure those responsible for these practices are held accountable,” the group said.
Tongaat Hulett has also committed to reducing its debt in South Africa by at least R8.1bn by March 2021 and said the debt burden would be reduced through a combination of cost savings and cash flow initiatives, the sale of certain non-core assets, as well as an equity capital raise and/or the disposal of core assets or majority stakes in core assets.
Revenue decreased by 1.5 percent to R8.09bn, down from R8.21bn, while operating profit improved significantly to R1.23bn, compared to last year’s R315m.
Hudson said the results reflected decisive steps the company had taken to stabilise the business and it was starting to see encouraging signs of progress on a number of fronts.
“While growth in 2020 will continue to be under pressure, we are now focused on the opportunities that have been identified to create value for shareholders. We are confident that we have the right platform, the right strategy, the right business plan and the right people in place,” he said.