Webjet Share Price Slumps Over Feud

Shares in Webjet Ltd [ASX:WEB] have fallen 6.24% today due to a disagreement with its auditor.

What is the dispute about?

BDO Audit, the accounting firm in question, has raised concerns with Webjet. The two parties can’t agree on transactions related to an agreement with tour operator Thomas Cook. BDO believes Webjet has cooked the books. At least in regard to a technicality.

Webjet has countered this claim. ‘The position adopted by BDO is contrary to the advice obtained by Webjet from two Big 4 accounting firms on the above issues.’ Webjet expects BDO to rectify the matter and move ahead with their end-of-year report.

What does this mean for Webjet’s future?

Webjet seems confident that the issue will be resolved smoothly. They highlight that the matter won’t have an impact on cash flow. However, they do concede that, if BDO’s suggestion were to go ahead, the company would lose $11.5 million in earnings. In addition to a $32.7 million write-off in value from the Thomas Cook contract.

Clearly there’s more to the matter than meets the eye.

Hopefully the matter will be resolved swiftly, though Webjet faces a nervous wait. As do investors. For now, everyone will be waiting with baited breath for the full report, due on 31 August.


Ryan Clarkson-Ledward
Junior Analyst, Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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