Helloworld is heading for a profitable financial year 2015, expecting to make AUD 7 million before tax, but its board plans to write down the goodwill balance and incur a non-cash impairment charge of AUD 205 million.
The company is scheduled to release the audited financial accounts for FY15 on 28 August 2015. It has provided a trading and operational update in relation to the outlook for the financial year ended 30 June 2015.
The balance sheet includes a number of intangible assets such as goodwill, the company said in a statement to the Stock Exxchage, “which arose from a number of legacy transactions including the 2010 merger of Stella Travel Services Pty Ltd and Jetset Travelworld Limited.
“The preparation of the full year results includes an assessment of the carrying value of intangible assets to ensure that the balances are appropriately supported based on a number of factors.
“These include cashflows from ongoing operations with reference to market growth assumptions as well as HLO’s [Helloworld’s] market capitalisation having regard to recent trades of large parcels of shares in HLO.
“Based on these factors, the Board have determined that it is prudent for the Company to write down the goodwill balance and incur a non-cash impairment charge of AUD 205 million.”
That statement goes on to say that at 30 June 2015, the company held a cash balance of AUD 176.1 million comprised of general cash of AUD 27.4 million and client cash of AUD 148.7 million.
“HLO had a positive net cash position and headroom in its debt facilities of AUD 60.8 million. The goodwill write down is a non-cash charge which will be recognised in the statutory results with no impact on HLO’s cashflows or ongoing operations.
“The Company has a strong balance sheet and is positioned for long-term sustainable growth.”
In an operational update, the company noted that in December 2014, HLO announced that its wholly-owned subsidiary QBT Pty Ltd (QBT) had been appointed as the sole provider of travel management services to the Whole of Australian Government.
“The contract appointing QBT commenced immediately and all Australian Government agencies were to transition their existing arrangements to the new structure by 1 July 2015. We are pleased to confirm that QBT successfully completed the transition as at 30 June 2015.
“This has been one of the largest transitions in Australian travel management history and involved 142 entities, uploading of more than 120,000 traveller profiles and the migration to a single online booking tool.”
The latest results can be contrasted with those of the previous full year, ending 30 June 2014, when helloworld reported a full-year loss of AUD 61.2 million, reflecting the costs of implementing the group’s transformation plan, the sale of its inbound business and GST court case penalties.
In that year, the group’s disposal of its inbound business delivered a AUD 5.5 million loss and the transformation plan carried costs of AUD 15.8 million. There was also a non-cash goodwill impairment of AUD 59.5 million and GST case penalties of AUD 2.7 million as imposed by the Federal Court.
Written by Peter Needham