Tongaat turns bitter over threat of restated results
Shares in Africa's largest sugar producer, Tongaat Hulett, fell as much as 33% on Friday after the troubled firm announced that it may have to restate its financial results going back a number of years following a strategic review.
The cane grower said the review had "revealed certain practices which will require further examination". Audit firm PwC has been called in to assist with the review.
The KwaZulu-Natal-based company is facing a number of challenges that have seen its shares plunge 68% to R22 from their peak in September 2014. It has had to review much of its cane valuations downwards to reflect lower expected revenues in future resulting from depressed global sugar prices and the recently introduced sugar tax in SA.
As one of SA's biggest landowners, the company has had problems with its land business as sales have slowed. Some analysts also believe the company has been incorrectly recording the sale of land on credit as profit but as debtors have failed to pay, these transactions may have to be restated.
In Zimbabwe, Tongaat has struggled to repatriate dividends given that country's foreign currency crisis and in Mozambique, the company has been forced to sell its products for a pittance as cheap imports affect demand.
Last year, the company announced that it had introduced new accounting standards under IFRS 9 and 15 which required it to change the way certain transactions and balance sheet items were valued, thereby affecting profit-and-loss calculations.
One of the oldest companies on the JSE, founded in 1892, the company has seen a number of senior management changes recently. This week, it announced that the head of its SA sugar business and the head of sugar in Mozambique had taken early retirement. Interim CEO Sydney Mtsambiwa, who took over from former group head Peter Staude late last year, stepped down as head of Zimbabwe operations and looks to be front runner to run the sugar business in SA.