JSE fines Tongaat Hulett for breaching listing rules

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Sugar cane at harvest.
Sugar cane at harvest.
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The Johannesburg Stock Exchange has fined sugar producer Tongaat Hulett R7.5 million and publicly censured it for publishing financial statements that contained errors. 

"Tongaat Hulett notes and accepts both the findings and the public censure issued by the JSE," the company said in a statement on Wednesday.

Last year, the KwaZulu-Natal based firm was embroiled in a financial scandal that showed accounting irregularities resulting in inflated profits. Its shares plummeted and were subsequently suspended from the JSE for a period of seven months. Since returning to the market, its stock has gained just under 17%. Its shares have slumped 96% over the past five years. 

Tongaat had to include restatements in its annual financial statements for the year ended March 2019 and its unaudited interim financial results for the six months ended September 2019, as previous financial statements had contained "a substantial number of prior period errors," the JSE said.

The material errors were included in certain of its financial reports between 2011 and 2018.

"The accuracy and reliability of financial information published by companies are of critical importance in ensuring a fair, efficient and transparent market," the JSE said. 

Since the collapse of Steinhoff International since the end of 2017, the local bourse and the auditing profession has faced criticism from investors for not better monitoring the stocks listed on the JSE.

The JSE said that the financial impact of the restatements of prior period errors in the annual financial statements for the year ended 31 March 2018 were material in that namely, total assets decreased by about R10 billion, representing a decrease in total assets of approximately 34%. Earnings per share of 618 cents decreased to a loss per share of 1054 cents and headline earnings per share of 534.8 cents decreased to a headline loss per share of 861 cents. 

The restatements also affected Tongaat's interim financial statements for the six months ended 30 September 2018

The JSE said R2.5 million of the fine will be suspended for a period of five years on condition that Tongaat does not again breach its listing requirements. 

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