Bidvest to take profit hit after writing down Comair
Airline operator hit by national lockdown that suspended air travel
karl gernetzky and Odwa MjoPicture: SUPPLIEDBidvest, which owns more than a quarter of aviation group Comair, had its worst day in six weeks on the JSE after it said on Monday that it has fully written down its investment in the airline.The company’s share price fell 5.83% to R143, its biggest drop since April 16, after it said in a trading statement that recognised a gross capital impairment of R232m, while its share of Comair’s operating losses was R209.7m.
The airline operator was significantly affected by the national lockdown as air travel was suspended since late March. As lockdown restrictions have been eased to level-three, the government has permitted limited domestic flights from June 1.Comair, which operates budget airlines Kulula.com and British Airways flights in SA, went into business rescue in May and was suspended from the JSE after Covid-19 grounded aircraft, but its business rescue practitioners, Shaun Collyer and Richard Ferguson, have said there is a reasonable chance the business can be saved.
“In light of this, Bidvest believed it prudent to fully impair its investment in Comair. As a consequence, Bidvest will also no longer equity account Comair,” the company said. Bidvest holds a 27% stake in Comair.Comair’s business rescue plan is likely to be published on June 9 while a shareholder vote to approve the plan will be held on June 24.
Bidvest said on Monday it continued to battle with the impact of Covid-19, SA’s weak economy and a decline in the share price of Adcock Ingram, in which it has a controlling stake.“The expected impact of a peak in Covid-19 infections on our employees, and our ability to deliver products and services to our customers, is being carefully considered. The operating environment remains very uncertain for the balance of financial year and forecasting is impractical,” Bidvest said.
Graphoc: RUBY-GAY MARTINThe company, which provides freight, financial and hygiene services, warned that a strategic review of all its businesses and right-size operations could lead to retrenchments in all of its six divisions.“Industries that are under incremental pressure include travel, and related activities, while out-of-home hygiene services offer good structural growth opportunities,” Bidvest said.
The group, which acquired British hygiene business PHS for £495m in December said the hygiene market remains resilient amid an increasing need for out-of-home hygiene services due to Covid-19.“This is expected to accelerate the development and maturity of the industry globally,” Bidvest said.
Headline earnings per share in the group’s year to end-June are expected to fall by more than 20%, it said, adding it may issue a more detailed trading update. Read more: Business Day »
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