Spotless’s cleaning services division has reported sales revenue of $433.8 million, up almost 35%, for the financial year ended June 2011. The report, issued to the stock exchange on 19 August, attributed the buoyant result to the Cleanevent acquisition while also noting an 18.6% organic revenue growth.
During 2011 the company secured significant new business ‘wins’ across various sectors including retail (Stockland and Westfield); airports (Qantas); and leisure, sport and entertainment (V8 Supercar events, Presidents Cup golf and Hyatt Hotel, Auckland).
Cleaning services’ EBIT was up 10.8% to $15.4 million with a stronger second half.
The Spotless Group’s sales revenue rose by 11.1% to $2,648.1 million with ‘underlying’ EBIT up 7.5% to $101.2 million and a reported EBIT up 5.3% to $90.1 million. A final dividend of 6.0 cents was declared.
Spotless is upbeat about its future Group prospects pointing out that ‘despite economic uncertainty,’ it is ‘confident in client demand for the outsourcing of essential facility services. Future growth will benefit from the maturing profile of new contracts won over the past 12 months.”
Significant future events include the 2011 Rugby World Cup in New Zealand and ‘activity ramp up in 2012 and 2013 for the London Olympic Games’, in which Spotless has major stakes.
Regarding cleaning, directors observed ‘continued industry pressure on margins in single service cleaning’; significantly higher Australian wage inflation; and tighter margins for recently re-tendered contracts.
‘Activity levels within contracts renegotiated during the GFC continue to be slow to recover,’ they added.
CEO Josef Farnik referred to Spotless Group’s business platform and IT systems’ investment. “Roll-out of the new business platform is well underway and we envisage that net of operating costs Spotless will realise annualised EBITDA benefits of $20 million to $25 million once the project is completed in FY13. Our cleaning division and corporate centre will be fully operational on the platform by the end of FY12, with other divisions to follow in FY13.
“This modern scalable business process and IT platform will ultimately replace almost 100 legacy systems. It will enable us to improve client service yet lower our administrative burden and improve our management and reporting of information,” noted Farnik.