Following concerns from the Australian Securities Exchange and the corporate regulator, Spotless was forced to reaffirm its earnings guidance but offered no explanation for the company’s unusual share trading, reported The Australian on 31 May 2016.
Spotless received a price query from securities regulators after its stock fell by more than 9 per cent on Thursday 26 May after three million shares were traded just after the market closed.
And while Spotless’s share prices had also declined by more than 10 per cent over the past fortnight, they rose by 5.5 per cent on Monday 30 May ‘after the company reaffirmed its earnings would be unchanged from last year, as it advised in December’.
‘The stock closed up 5.5 per cent yesterday (Monday 30 May) to close at $1.14, still almost 30 per cent below is $1.60 price,’ noted The Australian.
“Spotless affirms that, subject to economic conditions, its earnings for the financial year ending 30 June 2016 are unlikely to differ materially from its previous earnings guidance as set out in Spotless’ first-half results announcements on February 23,” the company said.
Spotless also confirmed in a statement released to the market that it had “commenced a process to assess the potential shareholder value that could be generated by the sale of its laundries business,” but that “no assurance can be given that a transaction will proceed”.
In the past financial year, Spotless reported earnings of $316.4 million and an adjusted profit of $150.2 million off revenues of more than $2.8 billion.
However, while the company has stated that it “was comfortably within its loan covenants”, Spotless continues to be inundated with high levels of debt; by the end of December, the company’s debt had risen from $564 million to $802 million.
‘The company also recorded declining cash flows from operating activities – just $17.5 million for the six months ending December, compared with $88.7 million for the previous corresponding period’.