Ascendis Health’s share price slipped 4.8% to 60 cents on Friday after it said that it had put a subsidiary, Surgical Innovations (SI), into business rescue.
In the six months to December 31, 2022, Ascendis raised a R67 million provision in its interim results because of a dispute between SI and the South African Revenue Service (Sars) relating to value added tax for the 2018 - 2020 tax periods.
SI distributes surgical and acute care medical equipment and consumables in South Africa. It represents reputable global agencies and has an equipment footprint that services private and government hospitals.
Ascendis said yesterday SI’s underlying business remained sound and presented “attractive prospects.”
It was, however, burdened by “onerous non-operational creditor agreements and disputes with Sars relating to prior financial periods which have caused untenable financial strain.”
SI had already paid R18m under Sars’ voluntary disclosure programme over the past year as part of a ‘clean -up’ project. After that SI was assessed with another R67m including interest and penalties, for an unrelated matter pertaining to value added tax, the group said in a statement.
“Despite a formal objection to this assessment and active engagements with Sars to reach an amicable solution – Sars has advised that SI will remain liable for the full assessed amount which is payable in short order.”
Ascendis said this approach, with the actions of another non-operational creditor, had left the Ascendis no option but to enter business rescue proceedings.
Daniel Terblanche from DT Consult RSA as the Business Rescue practitioner had been appointed as the business rescue practitioner.
“The business rescue process will provide SI with a temporary reprieve to resolve these disputes...and will enable the operational business to continue functioning without any significant disruption,” SI’s board said.
The SI board did not believe the business rescue process would materially affect the ability to continue trading and were satisfied there was a reasonable prospect of rescuing SI.
BUSINESS REPORT