PwC probe finds executives at Tongaat Hulett overstated profits, assets
JOHANNESBURG- South Africa’s sugar producing giant, Tongaat Hulett, said on Friday a PwC probe found that certain senior executives had overstated profits and certain assets by using “undesirable accounting practices”.
The agriculture and agri-processing firm, which produces a range of sugarcane and maize based products, has been battling to restore investors’ confidence after announcing earlier in the year that it would have to restate prior financial reports as part of a strategic and financial review.
Tongaat Hulett fell more than 4 percent on the JSE in June this year when auditing firm PwC began its probing of the agriculture and agro-processing group’s 2018 financials amid mounting operational challenges.
Tongaat Hulett said that its audited financial statements for the period needed to be restated, after a review found that reporting reflected in the 2018 financial statements is in the process of being determined and an estimated reduction in the amount reflected as the company’s equity as at April 1, 2018, is anticipated to be between R3.5 billion and R4.5bn.
In the past 12 months the stock has shed around 79.88percent compared to the same time a year ago.
Ron Klipin, a senior analyst at Cratos Asset Management, said Tongaat’s decline worsened, following the hasty retreat of then long-serving chief executive Peter Staude last October as a result of a major deterioration in operations.
“The group’s financials appear to be flawed as the valuation metrics are suspect, which are likely to impact on profits, thereby requiring a re-examination of 2018 results and a subsequent delay in 2019 results,” Klipin said.