G8 confirms non-cash impairment charge as strategic portfolio review completes
G8 Education Ltd has confirmed that it expects to pass an after tax impairment charge in the range of $230 million to $250 million after the completion of a strategic portfolio review that commenced in the second half of 2019.
The charges, which are non-cash in nature, follow a detailed assessment of the Group’s assets in accordance with accounting standards, focusing in particular on the uncertainty and risk of delays in economic recovery and the subsequent impact on performance, with a resulting reduction in carrying values determined.
Specifically, the charges will be applied to the carrying value of intangible assets on the balance sheet, principally goodwill and also the right of use assets and some tangible assets related to a number of underperforming centres, including some recently acquired Greenfield centres.
As at 31 December 2019 G8 reported intangible assets of $1,193 million and right of use assets of $606 million.
The new charges will be reflected in the half year ending 30 June 2020 financial statements and due to their non-cash nature will have no impact on the Company’s debt facilities, banking covenants, cash levels or operating performance.
The Company also noted that, with respect to the charges against the underperforming centres, their passing will provide the Group with “more flexibility” with respect to how it manages them going forward.
The final outcome of the impairment review is subject to audit and approval of the half year 2020 results.
G8 will hold its Annual General Meeting on 17 June 2020 at which it is expected they will provide further detail on current trading as signalled in their recent announcement about the impact of the new “Return to CCS” roadmap.
To read the G8 release please click here.