FCTG Topdeck write-off
FLIGHT Centre Travel Group (FCTG) has confirmed an almost $50 million impairment charge relating to its youth-focused Topdeck touring business due to the operation’s recent underperformance.
The whopping $46.4m write-off was part of an announcement late on Fri afternoon, in which FCTG MD Graham Turner also detailed the early impact of the coronavirus crisis.
He said the non-cash adjustment for Topdeck related to goodwill, brand names and other intangible assets, while other impacts to the company’s H1 pretax profit included $7 million in reaccommodation costs after the collapse of Tempo and Bentours.
Turner also confirmed a $3.1 million negative impact to reflect changes in the fair value of Flight Centre’s initial investment in the Ignite Travel Group business, of which FCTG took 100% ownership during the period (TD 20 Sep 19).
He said Flight Centre was set to report strong sales for the six months to 31 Dec, with TTV increasing 11.1% globally to a record $12.4 billion for the half.
However, events such as Brexit, trade wars, unrest in Hong Kong and relatively subdued consumer sentiment in Australia will see the company report an underlying pre-tax profit of $100m-$105m - which will then be adjusted for abnormal items, meaning FCTG’s statutory profit may be as low as just $36.1 million for the period.
MEANWHILE the emergence of coronavirus has meant it will be more difficult for Flight Centre to deliver its previously targeted full year profit of up to $350 million.
Turner said the virus had already adversely affected FCTG’s small corporate travel operations in China, Singapore and Malaysia.
Other areas that could be affected in upcoming months included corporate travel and the Cross Hotels & Resorts business which targets Chinese outbound travellers as clientele for its 24 properties in Thailand, Bali and Vietnam.
Turner also warned that while the virus had not yet significantly affected demand for travel to countries other than China, leisure travellers may potentially alter travel plans in the coming months if larger-scale outbreaks of coronavirus were detected elsewhere in the world.