Tongaat Hulett is facing a showdown with shareholders over the fact that, according to new research, R8.2bn in value has been destroyed since 2012. Last week, the 126-year-old sugar company made headlines when Investec Securities analyst Anthony Geard argued that based on an awful decade of falling returns, CEO Peter Staude should "step aside" — only for the bank to throw its analyst under the bus by apologising to Staude for the "embarrassment". But an analysis from David Holland, professor at the University of Cape Town Graduate School of Business and founder of consultancy Fractal Value Advisors, shows just how deep Tongaat’s value destruction runs. This shows how capital spending has vastly exceeded Tongaat’s after-tax operating profit by R8.2bn cumulatively since 2012. "So this means R8.2bn in value has been destroyed over the past seven years. They have been sticking too much money into the sugar business every year. Yet their cost-of-capital vastly exceeds their return-on-cap...

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