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.

Regards,

Ryan Clarkson-Ledward
Junior Analyst, Money Morning

PS: If you want to avoid disasters like Webjet, you should learn from the best. In a special report, ‘The Three Best Investments in Australia for 2017 and Beyond’, Money Morning investment director Kris Sayce reveals three investments that could boost your wealth.

Whether you’re new to the market or an experienced investor, everyone can take something away from this report. To get your free copy, click here.


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

To find out more about the publications Ryan works on and how you can subscribe, please click on the corresponding link here:


Money Morning Australia