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AGRI-BUSINESS group Tongaat Hulett faces material liquidity uncertainty but its board and management team are hopeful they can steer the business back to sustainability.

At its annual results presentation in Cape Town on Tuesday, the agri-business with a focus on sugar production, said it has a target of reducing its debt by R8,1bn by March 2021. It is also focusing on cost efficiencies, working capital improvement, interest savings and reduction in capex, which it expects will lead to a R3 billion cash flow improvement and debt reduction. Strategic business partnerships relating to the milling and property operations, meanwhile, will aim to yield a further R1 billion to R2 billion. The company will, furthermore, approach its shareholders to raise R4 billion in equity. In addition, there are initiatives in place to dispose of non-core assets, and announcements on this will be made in due course.

Chief executive officer Gavin Hudson said the group was looking at disposing of non-core assets, and announcements on this will be made in due course.

“We are entertaining all proposals. Everything is on the table,” said Hudson, who was appointed in February this year to replace Peter Staude, who retired in October 2018.

At the briefing chief financial officer Rob Aitken, who was appointed in March this year to replace Murray Munro who stepped down as CFO in August 2018, said the group has set itself milestones for debt reductions, and had already achieved the first one.

Tongaat announced in May this year that its audited consolidated financial statements for the year ended March 31, 2018 would need to be restated. A resulting financial and strategic review of its business included a forensic probe into accounting irregularities carried out by PwC. Its leadership received the results of the six-month probe in late November. The report found that some senior executives initiated or participated in “undesirable accounting practices” that ultimately resulted in the overstatement of profits and certain assets in the 2018 financial year.

After receiving the report – which it says is confidential – Tongaat said it intends to institute civil claims against former top executives. The group suspended its listing on the JSE in June and subsequently cancelled its London Stock Exchange listing in an effort to further reduce costs and complexity. With the publishing of its 2019 financial statements, the board will now be requesting the JSE to lift the suspension of its shares “in due course”, according to Louis von Zeuner, who joined the board in December 2018 and assumed the role of chair in October this year.

The group’s results for the financial year to the end of March 2019 showed a headline loss of R923m against a restated loss of R947m the previous year. – Fin24