The annual results for Webjet will be subject to a qualified audit because of dispute with the online travel agency’s auditors, BDO.
Webjet says the issue is over “a technical accounting matter” relating to the treatment of transactions associated with a deal made last year global agency Thomas Cook.
BDO doesn’t agree with recognising the agreement as an intangible asset and that the fixed management fee payable to Webjet is income.
If Webjet adopted the accounting treatment proposed by BDO, $11 million revenue from the Thomas Cook contract would have to be reversed.
And the $32.7 million marked as an intangible asset associated with the Thomas Cook contract would disappear.
Webjet says the position adopted by BDO is contrary to the advice from two big four accountancy firms.
Under an agreement announced in August last year, Sunhotels, Webjet’s European online accommodation business servicing the wholesale market, took responsibility for the majority of the volume of Thomas Cook’s hotel business.
As part of the new deal, Thomas Cook transferred around 3,000 hotel contracts to Webjet’s Sunhotels.
In a market announcement today, Webjet board says it intends to apply the same accounting treatment for the Thomas Cook agreement for the full year as it used for the six months to December.
The half year accounts were signed off by BDO but the accountancy firm has since changed its mind on the treatment of the Thomas Cook deal.
“Webjet notes that this technical accounting matter does not in any way change the cash flows or economics of the Thomas Cook arrangements, and importantly, this highly strategic partnership has commenced successfully and is expected to deliver significant benefits to both parties,” the company says.
“Webjet remains confident in its strategy to become a global leader in what is a significant and attractive B2B market opportunity.”
Webjet says it expects to report full year EBITDA (earnings before interest, taxes, depreciation, and amortisation) consistent with its earnings guidance of $80 million.
The company is due to report its results on August 31.
In its latest half year results, Webjet’s net profit after tax quadrupled to $39.4 million on the sale of its Asia-focused business unit Zuji and strong growth across its digital retail and digital wholesale business.
Profit from continuing operations rose 87% to $20 million and revenue climbed 48% to $92 million. Operating profit surged 68% to $30.6 million.
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