Tongaat shares back to JSE trading on Monday

It suspended trading on June 10 after revelations of accounting irregularities that saw its share plummet some 75% last year.

The JSE has agreed to lift the suspension of trade in the shares of 127-year-old sugar giant Tongaat Hulett with effect from Monday, 3 February. The struggling KZN-based group confirmed this on Friday upon releasing its half-year results to 30 September 2019.

Read: Tongaat Hulett slashes chairman’s fees by more than half

Tongaat Hulett CEO Gavin Hudson told Moneyweb he was pleased that the group would resume trade now that a clearer financial picture of its business has been established. It also comes as Tongaat is looking at a capital raise as one of the options to reduce its debt, which has hit some R11 billion.

The group, which was rocked by an accounting scandal last year, opted to ask the JSE to suspend trade in its shares on June 10 after the stock plunged as more details of the accounting irregularities came to light. Some 75% of the value of Tongaat’s market cap had been wiped the boards in 2019 with its shares last trading at R13.21.

Read: Damning Tongaat Hulett forensic report fingers ex-executives, including Peter Staude

Tongaat Hulett posted a headline loss of R314 million for the interim period. This was an “improvement” compared to the R354 million restated loss for the comparable six months of 2018.

Its revenue was down 1.5% to R8.085 billion for the period, while operating profit was up sharply from R315 million to almost R1.3 billion. With the group reporting a basic loss per share of -235 cents, Tongaat declared no interim dividend. However, it said that the basic loss per share was also an improvement compared to the -356 cents loss per share for the corresponding period.

“Tongaat Hulett has taken decisive steps to stabilise the business, strengthen its governance and financial structures, restructure its high debt levels and initiate processes to start reducing the debt to more sustainable levels,” it noted in its JSE Sens statement on the results.

“While early in the process, it is encouraging to note signs of progress emerging on several fronts, in terms of the positive steps being taken towards positioning Tongaat Hulett for its return to sustainable value creation for shareholders. Steady progress is being made on improving cash flow, with an increased focus on operational performance and cost curtailment. Tongaat Hulett has also met and exceeded its first debt reduction milestone,” it added.