Web Travel Group Ltd (ASX: WEB) shares are back from suspension on Thursday morning.
But unfortunately for shareholders, the travel technology company's shares have sunk deep into the red.
In early trade, the WebBeds owner's shares are down 6% to $4.22.
Image source: Getty Images
Why are Web Travel shares tumbling?
Investors have been hitting the sell button today after the company finally revealed what is delaying the release of its half year results.
They were scheduled to be released earlier this week but have been pushed back after its divorce with Webjet Group (ASX: WJL) appeared to make a mess of its accounts. Online travel agent Webjet has also delayed the release of its results until next week for the same reason.
What has caused the delay?
Web Travel revealed that the delay has been caused by its auditors requiring a change in the application of an accounting standard in respect to the recognition of supplier liabilities. It explains:
In the normal course of preparing our 1H25 results, Web Travel Group Limited was advised by its Auditors of a requirement to change the application of an accounting standard in respect of the recognition of supplier liabilities.
Specifically, the Company will now adopt AASB 9 (Financial Instruments) instead of AASB 137 (Provisions, Contingent Liabilities and Contingent Assets) to account for the differences between amounts accrued and amounts invoiced by and paid to suppliers.
Management notes that this change will result in a timing impact in recognising these differences. As a result, certain historical financial information is being restated. It expects the following impacts:
- $2.5 million increase to EBITDA in 1H25
- ~$1.5 million reduction in EBITDA in FY24 (net), which includes a c.$1.5 million increase in 2H24 EBITDA and a c.$3 million reduction in 1H24 EBITDA
- An approximate $32 million decrease to retained earnings as at 31 March 2023, reflecting adjustments related to prior years.
- An approximate $32 million increase in the trade and other payables balance as at 30 September 2024.
While on paper this doesn't look great, management notes that these restatements are non-cash in nature and reflect timing differences in recognition across periods.
It also highlights that it was informed of this development over the weekend and based on initial indications of its potential materiality, requested a trading halt to assess its impact.
However, despite what Web Travel shares are saying today, the change has now been determined not to be material to the company's earnings and financial position.
Management advised that these specific restatement adjustments are now being finalised and will be included in the company's half year results when they are released on 27 November.
