Johannesburg Stock Exchange slaps Tongaat Hulett with a fine for non-compliance with listing requirements

SOUTH AFRICA – Johannesburg Stock Exchange (JSE) has issued a public censure and a maximum fine of R7.5 million (US$435,000) on sugar producer Tongaat Hulett Ltd due to non-compliance with its listing requirement.

The JSE said the company’s financial information published for the period 2011 to 2018 did not comply with international financial reporting standards and was incorrect, false and misleading.

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“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 in a statement.

The South African exchange operator also indicated that due to the company’s full co-operation and remedial actions after its internal review uncovered irregular accounting, it would suspend R2.5 million (US$147,800) of the fine for five years on condition that Tongaat does not breach the listings requirements during the period, reports Money Web.

Last year, the KwaZulu-Natal based firm was embroiled in a financial scandal that showed accounting irregularities resulting in inflated profits.

PwC’s audit in November 2019 found that certain Tongaat senior executives overstated profits and certain assets by using “undesirable accounting practices”, prompting the agriculture and agri-processing company to restate its 2018 financials.

The exchange operator said restatements of the financials for the 2018 financial year were material and included a drop in total assets of around R10 billion (US$591m).

Its restated headline earnings per share (HEPS) showed a loss of 861 cents per share versus a previously stated profit of 534.8 cents per share.

Tongaat, which produces a range of sugarcane and maize-based products, said it noted and accepted the JSE findings.

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“The Tongaat Hulett Board and management remain committed to good corporate governance and have undertaken to prevent a recurrence of a transgression of the Listings Requirements,” Tongaat said in a statement.

Tongaat said in June that it expected to report a jump of more than 200% in operating profit from a previous R1.2bn (US$70.9m) for the year to March.

It said the improved performance was a result of the group’s turnaround strategy spearheaded by CEO Gavin Hudson, who took the helm at the sugar producer amid a storm of allegations of financial misconduct.

“This result is on the back of excellent progress with the overall business turnaround strategy. The board believes that the underlying fundamentals of the business are good and that the group is in a much stronger position than it was a year ago,” the company said.

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