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10 Jun 2019 17:36
Tongaat revealed that its financial statements for the year ended March 31 would need to be restated. (Dean Hutton/Bloomberg/Getty)
Embattled sugar producer Tongaat-Hulett has requested the suspension of its listing on the Johannesburg Stock Exchange (JSE), with immediate effect the group announced on Monday.
The company’s secondary listing on the London Stock Exchange has also been suspended.
The move comes amid concerns over possible financial irregularities at the company, and questions over corporate governance in the private sector after the spectacular failure of retailer Steinhoff.
Last month, Tongaat revealed that its financial statements for the year ended March 31 would need to be restated. This is after an on-going financial review revealed past practises that were of “significant concern” to the board, and “resulted in financial statements that did notreflect Tongaat Hulett’s underlying business performance accurately”.
The company said the restatements could amount to a reduction of between R3.5-billion to R4.5-billion.
Problematic areas identified included how the company previously accounted for land sales in terms of international financial reporting standards as well as how it valued its growing sugar cane.
The board said that it has now concluded that the company’s unaudited interim results for the six months ended September 30 2018 cannot be relied upon, nor can its February trading statement issued for the twelve months ended March 31 2019.
Due to its concerns that there is “insufficient information in the market to enable investors to make informed decisions” and a risk of speculative trading it voluntarily approached the JSE with a request for the suspension.
Other objectives for the suspension also included allowing the group’s management more time to support the completion of the forensic investigation and the restatements, in order to release the March 2019 financial statements, which it has previously said it aimed to release by October.
The decision has not been taken lightly the board said.
It viewed the suspension as temporary the company said and expected it to be lifted “no later than the time of release of the March 2019 financial statements”.
Tongaat-Hulett also wanted to address any possibility of there being “two levels of information in the market” arising from the various processes involved the restructuring and reduction of the company’s debt. The company announced in mid-May that it was negotiating a standstill agreement with its lenders and other “obligers”.
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