Travel booking company Helloworld (ASX: HLO) has reported a $69.9 million loss for a year it described as a "perfect storm", just like competitors such as Flight Centre, Corporate Travel Management and WebJet.
During FY20 Helloworld's bottom line dropped by more than $100 million as international and even some interstate travel took a hit.
Booking activity is starting to pick up although total transaction volume (TTV) is just 30 per cent of last year's levels in July 2020.
The bulk of the loss stemmed from non-cash impairment charges of $67.1 million, mostly due to COVID-19 impacts.
The lion's share of the impairment, at $51.8 million, relates to Helloworld's wholesale and inbound business which is heavily reliant on an almost paralysed international travel sector.
In addition, around $14 million of the impairment loss relates to the recently acquired TravelEdge Group. In light of COVID-19 that segment's near-term cash flows are ecxpected to be below what was assumed at the time of acquisition as 30 per cent of the group's TTV was historically derived from international travel.
Before tax the company managed to record a $17.1 million profit, while revenues fell by $75 million in FY20 to $282.1 million.
"This has been the most challenging period in our company's history, and we are working, like every other business around the world, to manage the responses to this crisis so we can be there when the world starts to emerge from COVID-19 and starts travelling again," says Helloworld CEO and managing director Andrew Burnes (pictured).
"I believe that travel experiences will be even more treasured when this has ended. People will not hesitate to go and see the things they have always wanted to do in the newfound knowledge that circumstances can change very rapidly.
Tightening the belt, securing cash
To mitigate COVID-19 impacts the company reduced monthly net operating cash outflows to around $2 million, excluding one-off costs, from April 2020 onwards.
In addition, Helloworld completed a $50 million equity raising in July and August to improve its liquidity.
The signs of recovery seen in July 2020 are expected to improve further from October as Australian state borders reopen.
"This together with other call centre related activity has provided the company with some revenue generation during the COVID-19 period so far," says Helloworld.
To date, the company has paid out full or partial refunds from its corporate, wholesale and ticketing businesses of more than $800 million in Australia and New Zealand.
Helloworld has been receiving JobKeeper wage subsidies during the pandemic period which will continue to at least March 2021. Between July and March, under current JobKeeper levels, the company expects to receive a net benefit of approximately $20 million in additional subsidies for retained employees.
Because of continued uncertainty, fuelled by COVID-19, Helloworld is unable to provide any guidance for FY21 at this point in time.
"Travel relies on the ability of people to move without undue restriction and that is not the case at present in Australia or New Zealand, where citizens are not even allowed to leave their countries except on the most compassionate of grounds," says Helloworld.
"With overheads at around $4 million to $5 million per month.strong liquidity and a significantly lower cost base across our key business operations, we are confident we can continue to adapt the business to the circumstances that confront us, ride out this "perfect storm" and take advantage of opportunities as they arise and emerge from this crisis in a very strong position."
Updated at 9:47am AEST on 1 September 2020.
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