SOUTH AFRICA – Tongaat Hulett’s shares could be back for investors to trade on the JSE next month, as the company is due to release its financial statements for the six-months ended September 30.

The embattled sugar producer asked the JSE to suspend its shares from the main bourse in June 2019 after it uncovered accounting irregularities that resulted in inflated assets and profits.

Its shares were also suspended on the London Stock Exchange. The company asked the JSE in December to postpone lifting the suspension, saying it needed more time to analyse its numbers.

On Wednesday, Tongaat released an update on the outstanding results, warning shareholders to expect up to R327 million (US$21.8M) in losses for the six months to September 2019.

“It was expected that the suspension would be lifted once the company had released its trading statement for the six-month period ended 30 September 2019.”

“Accordingly, the board has entered into discussions with the JSE to request the lifting of the suspension of its shares, potentially in the first week of February 2020,” said Tongaat in an update to shareholders.

The company was forced to restate its 2018 profits after the discovery of irregularities.

In the restatement of the six months to September 2008, its headline loss ballooned to R392 million (US$26.2m) from its previously reported loss of R110 million (US$7.3m).

While the headline loss for the comparable period in 2019 is expected to narrow by between 17 percent and 23 percent, the fact that it remains this high will likely be difficult for shareholders to swallow.

Tongaat expects a headline loss per share of between -238 and -222 cents, which would be an improvement on the loss per share of -322 cents from 2018.

Tongaat attributed the losses in the six months to end September 2019 from hyperinflation in Zimbabwe, as well as higher finance costs and taxation.

The company said Zimbabwe’s official inflation rate increased by 350 percent from 1 October 2018 to September 2019, affecting the fair value of biological assets.

For this reason, it had to apply hyperinflation accounting principles.

In South African, lower sales volumes and increased exports — which tend to have a lower profit margin — undermined a 10 percent improvement in sugar production, resulting in elevated operating losses for the group’s local unit.

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