ASIC notes the decision by ASX-listed Cabcharge Australia Limited (Cabcharge), announced on 6 February 2017, to record an impairment charge of $20.7 million on its 49% stake in UK-based CityFleet Network (CFN) and $7.9 million on its portfolio of taxi licence plates. ASIC had previously made inquiries in relation to the assessment of the recoverable amount of the company's intangible assets and investment in CFN for the year ended 30 June 2016. Cabcharge’s announcement indicated that the impairment made against the taxi licence plates was required because taxi plate income is continuing to adjust following regulatory reforms announced by some States during 2016. Cabcharge also said that it had increased the risk weighted discount rate for its portfolio of taxi plate licences to reflect this continuing uncertainty on future income levels in those States. The impairment of its investment in CFN was said to reflect deterioration in CFN's trading profit in the period since August 2016. As outlined in media release 16-428MRASIC calls on preparers to focus on useful and meaningful financial reports, impairment testing and asset values remain a focus area of our financial reporting surveillances.
CAB Price at posting:
$2.96 Sentiment: Sell Disclosure: Held
