Engineering and project management company Ausenco Ltd
(ASX:AAX) says it will incur a non-cash impairment charge of around $6.8 million in its half year result.
The company says the impairment charge was identified as part of a review of its energy businesses intangible assets which was foreshadowed at the company’s annual general meeting in May.
The charge represents 5% of the value of the goodwill assets associated with businesses what were acquired in 2008.
CEO Zimi Meka says the charge arose as a result of the costs of current strategic initiatives being incurred in advance of earnings from new projects, in combination woth delays in government environmental and greenhouse initiatives, particularly in North America.
This, he says, made achieving short term financial targets for the energy business difficult.
Ausenco says the impairment charge will have no impact on the group’s cash flow or on its compliance with financial covenants.
Mr Meka says Ausenco’s core business offerings and its geographical and commodity diversification mean that it is well positioned for strong growth and improved performance with global economic recovery.
For the 2009 calendar year, Ausenco reported profit of $20.14 million, down on the year before.
