Why McMillan Shakespeare Limited shares just dropped on some bad news

The McMillan Shakespeare Limited (ASX:MMS) share price has tumbled lower after announcing plans to recognise a non-cash asset impairment of $15.3 million after tax in its FY 2017 results.

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The McMillan Shakespeare Limited (ASX: MMS) share price isn't having a great end to the week.

In afternoon trade the salary packaging specialist has seen its shares drop almost 2.5% to $14.58.

Why have its shares fallen?

This morning the company advised that it expects to recognise a non-cash asset impairment of $15.3 million after tax in its FY 2017 results which will be released on August 23.

This relates to the carrying value of intangibles for the warranty and insurance business which forms part of its Retail Financial Services segment.

As the expected asset impairment is a non-cash item, the company intends to add it back to its statutory NPAT for the purpose of calculating its underlying NPATA

Management expects to announce FY 2017 underlying NPATA of $87.2 million, which will be flat on FY 2016's result.

Motley Fool contributor Motley Fool Staff has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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