Sweet revenge: Investors want a little word with Tongaat
Management, auditors, and investment analysts are quaking as bitter shareholders get ready to rumble
The Tongaat Hulett share price fell almost 10% on Thursday morning following a reminder of the grim news that it is likely soon to be facing shareholders. Wednesday’s SENS announcement must have sent chills down the spines of many key players in the SA business community. The value destruction will be felt not just by the Tongaat shareholders.
The company has provided some details about the scope of the strategic and financial review that was launched in March. The details, which make it difficult to imagine how the company’s external auditors will emerge unscathed, include the timing and recognition of land sales and the allocation of related costs; the fair value of biological assets; and the assessment of various assets for impairment.
If the results of the review by PwC require the restatement of prior financial information – as is expected – then the company's external auditors will have some explaining to do. No doubt shareholders and other stakeholders will be reminded yet again that the auditors are only as good as the information supplied to them. If this is indeed the case then it is time shareholders considered whether auditors are actually worth the steep fees they charge.Not just the auditing profession is in the dock. Until remarkably recently Tongaat was a darling of the investment analyst community, whose members obviously took as fact the financial information churned out by management.