SKEWED RESULTS FOR TONGAAT HULETT AFTER TAMBANKULU SALE

MBABANE – South Africa’s Tongaat Hulett has reported a financial performance which is notably skewed by the disposal of the Namibian and Eswatini operations, which contribute to the comparative to results for the group.  

This is as per the recently released reviewed condensed consolidated interim financial results for the six months ended  September 30, 2021. Back in June 2020, Tongaat Hulett, which was seeking to reduce its debt by R8.1bn by March 2021, said it had agreed to sell an agribusiness  here in Eswatini for E375 million. The sale of Tambankulu Estates included two agricultural estates astride the Black Umbuluzi River in northeastern Eswatini, and has 3 767 hectares under cultivation. The purchaser was Eswatini’s Public Service Pensions Fund (PSPF).

Tongaat Hulett had acquired Tambankulu in 1998, and the transaction was concluded on December 1, 2020. In the latest interim results for the period ending September 2021, Tongaat Hulett highlighted about the partial contribution from the disposed of starch and glucose, Namibia and Eswatini operations in the comparative period. In considering the comparative financial results, it should be noted that Tongaat Hulett disposed of its starch and glucose, Namibian packaging, and Eswatini agricultural operations during the 2021 financial year. The starch operation was classified as a discontinued operation in the 2020 financial results.

Results

The Namibian and Eswatini operations did not represent a separate major business segment and consequently remained classified as continuing operations.
The results for the six months ended September 30, 2020 include financial contributions from the starch and glucose operation and the Eswatini operation for the full six months, and from the Namibian operation for a period of three months. “Financial performance in the current period is notably skewed by the disposal of the Namibian and Eswatini operations, which contribute to the comparative results, as well as restatements of certain prior-year numbers,” highlighted the report.

Revenue is said to have grown by five per cent to E8.5 billion (September 2020: E8.1 billion, restated). “Higher revenue in the Zimbabwe and Mozambique sugar operations was offset by the loss of revenue following the disposal of the Namibia and Eswatini operations. “Revenue excluding the disposals increased by 10 per cent. The gross profit margin of 33 per cent was below the prior period of 35 per cent,” shared the sugar producer. Operating profit decreased by 23 per cent to E1.3 billion (September 2020: E1.7 billion, restated). This movement mainly reflects the impact of lower sugar production in the South African operation, increased expenses in Zimbabwe and the E183 million benefit from the profit on disposal of the Namibian packaging operation in the prior period.

Revenue (excluding disposals) increased by 10 per cent to E8.4 billion. Sugar production volumes declined by 87 700 tonnes (10 per cent) to 782 400 tonnes due to lower sugarcane yields, the disruption caused by the civil riots and various production-related challenges at the mills. “When the Eswatini and Namibian operations were disposed of last year (2020), they did not represent a separate major business segment and were not classified as discontinued operations. “Consequently, the comparative period includes revenue of R402 million, operating profit ofe million and an adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation)  of E99 million contribution from these operations,”  stressed the report.

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