- Tongaat Hulett will be issuing summons' against the company's former directors who have been implicated in accounting irregularies.
- The JSE fined Tongaat Hulett R7.5 million following the accounting irregularities.
- The sugar producer has made headway in its debt reduction strategy, having reduced it by R6.4 billion, against its R8.1 billion target for March 2021.
Tongaat Hulett is moving on its civil action against the disgraced company’s former executives including former CEO, Peter Staude, who can expect to be with issued summons’ in the next few weeks.
The civil action is one part of Tongaat CEO Gavin Hudson’s cleanup of the company that he has been at the helm of over the past 18 months.
“The focus is on the ex-CEO, former financial director, the head of the property business and senior financial executives in the business. So it’s really the top pyramid of the previous directors,” Hudson said on Friday, in an interview with Fin24.
Former CEO Staude retired in 2018 as well as the company’s other senior directors who were found to have played a role in what was described as “undesirable accounting practices” by PwC, following its investigation into Tongaat.
The investigation came after the company found irregularities and had to restate its financials.
The 120-year old sugar producer has had a tough run in the past two years with its shares been suspended on the JSE last year. Last month, the bourse imposed a R7.5 million fine on Tongaat.
Since trading has resumed in Tongaat's shares at the start of the year, its shares have gained over 13%.
Tongaat is taking a similar route to Steinhoff, which has also launched a claim against its former CEO Markus Jooste for R850m.
Jooste has been a central figure in the company’s near collapse following the accounting irregularities uncovered in the company in 2017, which resulted in a share price plunge of more than 90%.
Hudson said the Tongaat team has been working on restoring governance at the sugar producer but the road ahead was a long one.
“There is a lot of work to be done in that space, restating the financials has taken a huge amount of effort because you have to go and clean the base, you need to unpack everything that was incorrectly recorded, this was not one transaction. So you have to clean the cupboards as it were,” said Hudson.
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He added that he was focused on changing Tongaat’s culture of complacency.
Hudson had earlier presented the group’s annual results for the year ended 31 March financial results which showed an improvement in its operating profit, which increased to R3.3bn from R551 in the last year.
Tongaat also increased its revenue by 18% to R15.4 billion.
Hudson said the results reflect the company’s success in its strategy to stabilise and restructure the business.
“We are very happy with the results and I think they speak for themselves, so it’s always a relief to get them out and we start again on the next one,” said Hudson.
The sugar producer has made headway in its debt reduction strategy, signing debt reduction transactions of just over R6 billion, against its R8.1 billion target for March 2021.
It has so far received R630 million of the debt reduction proceeds.
Tongaat’s debt stood at R12.6 billion in March this year, significantly higher than its market capitalisation of just over R700 million.
Hudson said although the company was making progress in reducing it, he sometimes felt like he worked for the bank.
The debt reduction was done through asset sales and the starch business is next in line to be sold, which is expected to bring in R4.9 billion.
However, that sale has hit a roadblock after the value of the business was questioned by Barloworld.
Hudson said however that issue will be sorted out and,"Tongaat remains optimistic that there hasn't been a material event."
Chris Logan, owner and CIO of Opportune Investments said the results showed progress, which was not surprising given the company’s good management team.
“They’ve got the scope to change things because of how badly the old team messed things up,” said Logan.
He added that the civil claim is a step in the right direction since the former directors need to be held responsible.