FCTG Topdeck write-off

Travel Daily - - Contents -

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.

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