It was stated on 9 October 2019 that Tongaat Hulett is preparing to pull out of sugar farming as part of a turnaround plan that has seen the company issue 5 000 employees with retrenchment notices. Tongaat has already identified several estates that it will lease to black cane growers to keep land productive until the farms are sold for property development.
The trading of Tongaat’s shares was suspended on the JSE and in London in June over the accounting irregularities, while its results for several years were subjected to a forensic audit. Tongaat’s sugar operations cover 119 000 hectares of land, mainly in KwaZulu-Natal and Mpumalanga, with subsidiaries operating in Mozambique and Zimbabwe.
Three estates totalling 3 900 hectares will be leased to Uzinzo Sugar Farming at below market rent to produce about 160 000 tonnes of sugarcane for Tongaat, generating an annual revenue of about R79-million. Uzinzo is 65% owned by three black sugar farmers, with 15% owned by staff and 20% by Tongaat.
Sydney Ncalane, one of the partners at Uzinzo, said the company had been able to retain about 280 workers at the three estates, located at Shongweni, Dube TradePort and Tongaat. More seasonal workers will be re-employed during the harvesting season. Ncalane said Uzinzo had a haulage agreement with Tongaat Hulett which meant the company had a guaranteed market for all the sugarcane it produced. The situation came as a shock to the people and their unions. The outstanding forensic report was presented to the board last month.
“We have a burning platform and an opportunity to renew our business model. Returning the business to where it should be in the medium to longer term – operating strategically, sustainably, efficiently and profitably – will require a fundamental restructuring of the business. We will concentrate on our strengths, and closely review or move away from business practices where we are not strong.
“Critically, we need to cut our costs while increasing our efficiencies. We have moved to zero-based budgeting to focus on the things we really need to operate optimally and are in the process of streamlining our operations to be more efficient,” said Hudson.
Apart from reducing its headcount, the company will also be strengthening its corporate governance and leadership team.
Industry experts have claimed that Tongaat has been investing too much money into the sugar business while generous remunerations to its top executives have not helped its cause.
Last year’s CEO, Peter Staude, took home R16,7 million including a R6.6 million bonus.
PREVIOUSLY THIS YEAR …
15 July 2019
Moneyweb contacted Peter Staude for comment on the group’s accounting anomalies under his watch, and the calls for him to pay back the more than R94 million in bonuses and incentives he received in his last 10 years as CEO.
According to company records, Staude received a total remuneration package of just less than R176.4 million between 2008 and 2018, when he retired. Around R38.8 million of that was in the form of cash bonuses (between 2008 and 2017) and R55.8 million in long-term incentives, while the balance was made up of his salary and retirement and medical aid benefits.
Tongaat Hulett’s latest shareholder register (to June 2019) shows that Staude owns just over 402 000 shares, currently valued at more than R5.3 million.
Tongaat Hulett has seen a rash of resignations since late last year, including its long-time CFO Murray Munro. Company records show that Munro received a total remuneration package of R97.6 million for the 10-year period until his departure in 2018. This included almost R19 million in bonuses and R30.5 million in incentives.
Hudson, a former SABMiller boss in Turkey, took over as Tongaat CEO in February, while Rob Aitken was appointed new CFO in March.
Michael Deighton, head of the group’s property and land conversion division, resigned in May, and last month Nonhlanhla Mjoli-Mncube, a non-executive director who has served on the board for more than nine years, joined the long list of exits.
A criminal case has been opened against an unidentified former executive at Tongaat, which the group says is being investigated by the South African Police Service. While Moneyweb is aware of who the executive might be, Tongaat would not verify this information and declined to comment further.
Tongaat’s sugar operations currently encompass 119 000 hectares, of which 8 400 hectares are owned and farmed by Tongaat, 61 500 hectares are owned and farmed by white commercial farmers and 49 300 hectares are owned and farmed by previously disadvantaged individuals (PDIs).
Phase one of FarmCo is set to meet the Agri-BEE scorecard objectives including equity and ownership profiles, through the creation of a large-scale black-owned sugarcane farming enterprise.
Three dynamic individuals from the North Coast, Nonhlanhla Gumede (33), Khetha Ncalane (45) and Khumbulani Mthethwa (44) have been selected to be at the helm of Uzinzo Sugar Farming. These individuals have a 65 percent shareholding. There is also a 15 percent shareholding for the employees through an employee trust.
Tongaat Hulett, which will retain a 20 percent shareholding, will play a facilitative and mentorship role in the short-term.
In 2011 Nonhlanhla joined her father in the management of a 90.3-hectare farm. The six years of experience on her father’s farm motivated her to buy her own farm, which she did in 2017.
Nonhlanhla’s 170-hectare North Coast farm has the potential to produce 3 300 tons of sugarcane. She has diversified her business to also grow, supply and distribute fresh produce to schools as part of the Ilembe Enterprise development programme, which has enabled her to employ more labour on her farm.
Khetha Ncalane, another shareholder within Uzinzo Sugar Farming, has a long history with Tongaat Hulett. He was first introduced to Tongaat Hulett when his father was employed as a general worker. Many years later, Ncalane joined Tongaat Hulett himself and has worked as a trainee; an estate supervisor and manager in many Tongaat Hulett Estates including Wewe, Hillhead and Dube Ridge.
In 2003, Ncalane established his own company, called Emkay. In its first year of operation Emkay harvested 45 000 tons of sugarcane.
The business has grown over the past 16 years and he now harvests between 200 000 – 250 000 tons of sugarcane in his various operations. He also provides a wide range of agricultural services to small-scale and land reform growers.
As a true operator, Ncalane said that based on the current projections, the three estates have the potential to produce 160 000 tons. However, Ncalane believes that Uzinzo will in fact be able to produce between 180 000 and 190 000 tons.
Khumbulani Mthethwa, the third shareholder, was born in Ndulinde under Inkosi Mhlongo. This traditional leadership area forms part of the Ilembe district municipality.
Mthethwa knew from an early age that he wanted to be part of the agricultural sector. This passion propelled him to purchase a 271-hectare farm in 2011 which is annually producing 10 000 tons of sugarcane.
In 2018, he bought his second farm which is 120 hectares and has the potential to produce 5 000 tons. In addition, Mthethwa is one of the largest harvesting contractors within the sugar industry.
He is currently harvesting 270 000 tons of sugarcane for small-scale growers in communal areas.
As part of his commitment to poverty alleviation and food security, Mthethwa has established a five-hectare vegetable block in Ndulinde. He supplies Enterprise Ilembe with his produce monthly.
He has also applied through the Department of Economic Development, Tourism and Environmental Affairs to be part of the Radical Agrarian Socio-Economic Transformation (RASET) programme.
Through RASET, he will also be one of the service providers producing vegetables for the surrounding schools and hospitals.
“I have been humbled by the trust bestowed to Uzinzo by Tongaat Hulett,” said Mthethwa. “There was no room for failure. We will work in partnership with government to address issues of unemployment, youth and rural development.”
Tongaat Hulett, berei voor om van die suikerboerdery te onttrek as deel van ‘n omkeerplan waarin die maatskappy 5 000 werknemers met kennisgewing van afleggings uitgereik het.
Verskeie plase is reeds geïdentifiseer wat dit hoofsaaklik aan swart produsente sal verhuur om grond produktief te hou totdat die plase verkoop word vir eiendomsontwikkeling.
Niemand weet hoe lank dit sal verloop nie. Die verhandeling van Tongaat se aandele is op Junie op die JSE en in Londen opgeskort weens die onreëlmatighede.
Tongaat beslaan 119 000 hektaar grond, hoofsaaklik in KwaZulu-Natal en Mpumalanga, met filiale wat in Mosambiek en Zimbabwe bedryf word.
Soos ook hier gesien kan word, is daar heelwat groot besighede en industriee wat duisende hektaar grond is, waarvan Tongaat maar een van vele ander is.
Myne sowel al die nasionale en provinsiale parke se grote verskil netso en beslaan honderde duisende hektaar grond wat nooit in enige grondaudit genoem word nie. Vir jare was ons almal deel van ‘n groter ratkas en netwerk, soos onder andere nywerhede en plaaslike owerhede.
Ons het nooit hierdie besighede besit vir wie ons gewerk het nie, maar was wel werkers. Ons almal het onder op die besoldigingsleer begin met ‘n karige salaris, en soms het sommige van ons meer as een werk gehad en saans ook by eetplekke gewerk vir ekstra inkomste. Weer eens, niemand het ander gevange gehou om vir ‘n spesifieke werkgewer te werk nie en werk was ook nie gereserveer nie. Ooreenkomste was aangegaan vir spesifieke werke en uitdagings.