Computer equipment rental group Hire Intelligence (ASX:HII) has warned it may need to write off $449,000 goodwill in its 100%-owned subsidiary Cityside Asset.
Hire Intelligence plans to stop the practice of having company-owned outlets pay franchise fees to Cityside, which operates the franchise business of the Hire group.
While this will have no effect on earnings for the Hire Intelligence group, it will lower Cityside’s profitability to below breakeven, Hire said. This will terefore impact the carrying value of its goodwill.
As a result of the expected charge, the company has reduced its ebitda forecast to between $1.4 million and $2 million, compared to a normalized ebitda range (ignoring the write-off) of between $1.9 million and $2.5 million.