eBusiness Weekly
Tawanda Musarurwa
Allegations of financial misappropriation of South Africa-headquartered sugar manufacturer Tongaat Hullet Limited (THL) has forced Zimbabwean subsidiary, Hippo Valley Estates Limited to postpone publication of its FY2019 results.
The Zimbabwe Stock Exchange (ZSE) has given Hippo Valley leeway to publish its financial results by the end of next month, from the initial publication deadline of 30 June, 2019.
The parent company — Tongaat Hullet Ltd — is facing an accounting scandal back in South Africa, which resulted in the suspension of its securities on the Johannesburg Stock Exchange (JSE) last week.
The group’s share was suspended on the 10th of this month, following the JSE’s announcement on May 31 that the company would have to restate its equity by between R3,5 billion and R4,5 billion for its 2018 year.
To this extent, Tongaat Hullet Ltd moved to delay the announcement of its 2019 financial results to October, by which time it is targeting to recommence trading on the South African bourse.
Hippo Valley Estates has said although it is not aware of any financial impropriety by the company, it has decided to carry out its own internal investigations as it is likely be impacted by investigations on its parent company.
Hippo Valley Estates and Tongaat Hullet use the same accounting policies.
“Hippo Valley Estates would like to advise members that it is not aware of any deliberate or fraudulent errors, misstatements or financial malpractices by the company in the financial information previously released, that might have been aimed at misleading the investing public,” said Hippo Valley in a notice to the ZSE.
“Hippo Valley Estates adopted the THL accounting policies and as such, any changes to the group accounting policies that may result from the THL review of its financials are likely to impact the company’s financials. As a result, the board is performing its own internal review of the company’s financial statements to critically assess the company’s accounting policies (compared to requirements of International Financial Reporting Standards) in the context of dynamics in the local environment.”
Tongaat Hulett Limited has been conducting a strategic and financial review since February this year.
The parent company at the time said that the adjustments relate to the “reassessment of land sales against the revenue recognition criteria defined by International Financial Reporting Standards and the associated profit margins”, a revision to growing cane valuations and a reversal of capitalisation costs related to cane roots, projects, maintenance and inventory.
At the end of last month, the group announced that the financial review had revealed certain past practices that would result in the restatement of its audited consolidated financial statements for the year ended March 31, 2018.
The board of THL concluded that reliance on the 2018 financial statements is “no longer appropriate and that the financial information therein should not be relied upon.”
