In 1857, 19-year-old James Leige Hulett landed in Durban with twenty pounds and bags of ambition. After leasing a 600 acre farm, the young man from Kent cycled through a variety of crops before discovering sugar cane. As a result, in his early 50s Hulett established what has been KZN’s iconic corporation for more than a century.
Hulett, a devoted Methodist who also founded the famous Kearsney College private school, is surely turning in his grave. His creation, now called Tongaat Hulett, is being wracked by scandal, its shares having dropped 95% in three years. With R11bn in debt, the group is now effectively owned by banks. Trade in Tongaat shares are suspended until end October.
Over the past few days I invested time looking into the mess, getting the reminder how hindsight is an exact science. Digging into the past decade exposes a growing chasm between stated profit and cash that was actually hitting the bank account. Almost everyone, including management, the board and even the banks, seemed to miss this telltale sign.
Not so Investec’s consumer staples sector analyst Anthony Geard, a chartered accountant who is also a qualified CFA. A year ago, Geard very publicly called for the head of then Tongaat CEO Peter Staude. The share price was then R80. Pre-suspension last week, it had fallen to R13.50. Guess not everyone is feeling sore about developments.
