Travelex warns of heavy EBITDA reduction in Q1 2020 due to cyber-attack and Covid-19
Travelex estimates that there will be a reduction of Underlying EBITDA in Q1 2020 compared to the equivalent period of 2019 of approximately £25 million on a like-for-like basis, mostly attributable to the malware.
Finablr’s brand Travelex has earlier today published estimates of the impact that the recent cyber incident and the novel coronavirus will have on its financial performance in the first quarter of 2020.
Following the cyber-attack that affected its business from December 31, 2019, Travelex today announces that it has successfully restored all its customer-facing systems in a phased and controlled program. The decision to immediately take the Travelex systems offline at the time of the attack contained the spread of the malware and protected the integrity of customer and partner data.
Given that certain financial reporting tools were unavailable for part of January, the publication of Travelex’s FY19 results is now expected to be from mid-April.
The outbreak of Covid-19 is an incremental negative for Travelex’s business given broad exposure to airports and travel flows, the company said. VAT and related services will also be negatively impacted. While China and other Asian in-country revenue account for approximately 10% of Travelex revenues, other markets closely linked to Asian outbound travel are also experiencing headwinds.
As a result of the above-mentioned factors, Travelex estimates that there will be a reduction of Underlying EBITDA in Q1 2020 compared to the equivalent period a year earlier of approximately £25 million on a like-for-like basis, mostly attributable to the malware. Travelex has a cyber-insurance policy in place which Travelex currently expects to offset a material proportion of this EBITDA reduction in addition to covering the direct costs of recovery. However, the timing of EBITDA recognition and receipt of the insurance recovery is yet to be determined.
At present, Travelex does not expect the cyber-attack to have any material impact on trading during its peak periods in the second quarter and third quarter of 2020 which contribute a large proportion of Travelex’s annual EBITDA. Travelex’s current expectation is that the results for the FY20 would reflect the benefit of the cyber-insurance policy and cost actions taken by the business.
The extent of Covid-19 and the period for which it continues cannot be predicted at this time.