Tongaat Hulett to vote on business rescue plan thi...

Tongaat Hulett to vote on business rescue plan this month

Zim Now Writer

Tongaat Hulett will hold a meeting to consider and vote for a business rescue plan by end of this month after suffering basic losses R1.07 billion for the year to March 2022.

Speculation has it that postponement of a key meeting to vote on the amended business rescue plan to the end of November was prompted by “the emerging development of a third bidder as well as legal battles being put up” by Robert Gumede and his consortium.

Tongaat Hulett was suspended from the JSE in July last year and remains suspended from trading.

The government of Zimbabwe has invited bids for fresh investment into sugar mills in the country.

The government of Zimbabwe and other bidders are disputing Tongaat Hulett’s preference for Tanzanian entity Kagera to acquire the assets of the South African agro-processing group which also has operations in Mozambique and Botswana.

Mozambican RGS reportedly offering double the offer by Kagera – has been named as the third preferred bidder after Kagera and a consortium led by South African businessman, Gumede.

Tongaat had delayed its financials for the full year to the end of March 2022, and released its financial statements for the period earlier this week.

The basic loss for the year to March 2022 amounted to R1.07bn while the headline loss per share went up from 508 cents in 2021 to 585c for the period under review. Borrowings rose to R8.2bn, compared to R7.2bn as at March 31, 2021, a 13% increase of R962m.

The South African business borrowed 85% of this at R6.9bn while Mozambique accounts for 12%, with Zimbabwe making up for R255m or 3% of the total figure.

Revenue for the period remained unchanged at R15.5bn with the operating profit fell to R584m from the 2021 restated profit of 1.4bn.

Ebitda for the period fell 67% to R591m against a marked reduction in free cash flows from R802m to R297m, prompting the company to withhold a dividend for the period.

The company said it had made progress in recent years in improving governance and management controls, reducing debt, improving cash flow and in the repatriation of dividends from Zimbabwe as well as renewal of “investment in people” and processes resulting in an 8% reduction during the period under review.

Zimbabwe sugar operations, which benefited from buoyant local sales but suffered effects of hyperinflation, increased costs, and lower exports. Capital expenditure for the Zimbabwe operations increased by R54m “in line with efforts to recoup a backlog of” capital projects.

There was a 65% decrease in dividends and management fees received from Zimbabwe to R139m during the year under review to March 31 2022, Tongaat reported.

For Mozambique operations, free cash flow of R418m was higher compared to the previous outturn of R390m and was solidified by capital expenditure of R99m. High interest rates of up to 22% limited cash availability.

“The South African sugar operations experienced a challenging year. The civil riots and low economic growth also weighed on the revenue, profits, and cash flows of the property business.” The South Africa operations of Tongaat resultantly suffered impairment losses of R325m.