Helloworld Limited $59.5 million “non-cash impairment of goodwill”.
Listed travel agency group Helloworld has just provided a trading update, confirming that it will take a $59.5 million writedown of goodwill in its Retail Segment.
The impairment was foreshadowed in late June, with the preparation of the company’s full year results including a review of the carrying value of intangible assets which has now been completed.
“We have considered it prudent to effect this non-cash impairment, and are confident that the strength of the balance sheet, together with the focused, consolidated helloworld network, provides a strong platform for future growth in a multichannel environment,” said ceo Elizabeth Gaines.
Full details of the writedown have not been provided at this stage, but it’s understood that it involves reduction in the carrying value of the group’s former marquee travel agency brand names such as Harvey World Travel, Travelscene, Jetset and Travelworld.
Gaines said that the Retail Segment remains profitable and has generated “Adusted EBITDAI” of $50.5 million in FY14.
She confirmed that the group’s number of locations in Australia and New Zealand had declined by about 7%, and this reduction along with an “enhanced agent incentive structure and a commitment to growing the helloworld brand through an increased investment in marketing” will reduce Adjusted EBITDAI in the next financial year by between $5 million and $10 million.
The company expects its overall Adjusted EBITDAI result for FY14 to be within the range of $40 million to $41 million – excluding costs associated with the implementation of helloworld and other non-recurring items.
Gaines said that profit before tax is expected to significantly improve in FY15.
More information in today’s Travel Daily.