CAPE TOWN - The long-awaited return of sugar maker Tongaat-Hulett to the JSE
could happen as early as next week after the embattled group flagged that it was in negotiations with the bourse to lift the suspension of its shares from trading.
Tongaat told shareholders in a guidance yesterday that it had turned the corner, and that it would table its financials for the six months ended in September tomorrow.
The group said its losses had narrowed nearly a quarter to between R303million and R327m.
It said headline loss had also improved from the restated R354m in the comparable six months of 2018, buoyed by improved production in South Africa, Mozambique and Zimbabwe.
Tongaat requested the suspension of its shares in June last year following a delay in the publication of its mid-year financials.
The group said its results to end March 2018 could not be relied upon as they had been inflated by between R3.5 billion to R4.5bn.
It said the discrepancies would have implications for its interim results to end September 2018 and the full year to end March 2019.
Tongaat shares have tumbled
nearly 87percent from R173 in November to R16.50 at the time of the suspension.
New chief executive Gavin Hudson roped-in PricewaterhouseCoopers to conduct a forensic probe.
In November, Tongaat released a seven-page report which fingered 10 executives for wrongdoing, including the former chief executive Peter Staude.
However, the group did not release the entire report, citing that it was subject to legal privilege and other confidentiality restrictions.
The group said yesterday that the reported headline loss per share in the 2018 interim period of -74 cents had been restated to -322c, while the headline loss per share for the period to September 30, 2019, was anticipated to be between -238c to -222c per share.
It also said that it had to apply hyperinflationary economy accounting to the financial results of the Zimbabwean operations for the half year.
Zimbabwe's inflation reached 350percent by September 30, 2019, relative to October 1, 2018.
This had the impact of increasing rand-denominated operating profit in these operations, threefold.
Tongaat said Mozambican operations also experienced a turnaround, benefiting from higher local sales and cost containment.
It said this and the positive impact of the Xinavane refinery coming on stream in the six months returned the operations to profitability, after a loss in the comparable period.
In South Africa, the group said production improved by 10percent and good progress was made with cost reduction efforts.
It said lower sales volumes and the consequent change in the sales mix toward lower margin exports, however, increased the South African operations’ operating loss in the period.
The group said that the profitability of the starch and glucose operations was stable, while higher maize prices negated good growth in local sales volumes.
It said land conversion and development profits increased, mainly due to the re-recognition of historic property deals.
The deals recognised represented the equivalent of 141000m² of new building floor space, compared to 17000m² (restated) in the prior period.
Higher finance cost and taxation, together with a net monetary loss arising from hyperinflation accounting in Zimbabwe, countered strong improvements in operating profit of the group.
Operating cash flow before working capital movements was positive.
The working capital cycle normalised. Capital expenditure during the period was confined to essential replacement items.
Total borrowings remained stable, increasing by 3percent from increased production and higher finance costs.