“Spotless has done its turnaround and is now looking for growth,” said Spotless chairman Margaret Jackson at the annual general meeting on 27 October at Melbourne Town Hall.
Jackson gave an overview of Spotless’ success over the last year. “The company returned to public ownership after two years of significant transformation and we are focussed on delivering value for our shareholders,” she said.
“Bruce [Dixon, chief executive] and his team have achieved this by: improving the financial performance of the business, and in fact exceeding prospectus forecasts; strengthening the balance sheet via the IPO process; and embedding an unrelenting focus on cost and efficiency at every level of the organisation.”
Jackson reviewed the company’s financial results too revealing that revenue, EBITDA, NPAT and cash flow all exceeded the prospectus forecast. “Specifically, statutory EBITDA of $185.9 million was 3.6 percent ahead of the prospectus forecast.
“Proforma EBITDA increased from $166.2 million last year to $252.2 million, and 1.4 percent, ahead of the prospectus forecast. This result is driven by increased revenue in conjunction with the cost reduction focus on overheads, procurement reviews, property, insurance and contract efficiency savings.
“Our focus for 2015 will be to maintain the momentum we have built over the last two years and ensure we deliver on the prospectus forecast,” she stated.
Jackson focused on Spotless’ growth strategy, which she said is underpinned by four pillars; “underlying market growth; outsourcing penetration; market share growth; and expansion opportunities in adjacent services and customer sectors.”
She also announced that Spotless has secured of a number of large strategic contracts including the Department of Defence facilities in Queensland and New South Wales – valued at more than $1.2 billion; WA Housing in Western Australia; and Virgin Australia Lounges nation wide.
“This organic growth continues to demonstrate the strength of the Spotless brand and the capability of our business development teams and operational staff,” noted Jackson. “Perhaps the most compelling example of the company’s business model is Public Private Partnerships. We now have 14 PPPs, with five due to mobilise in FY16 and FY 17.
“The current annual revenue from our PPP portfolio is approximately $100 million. This will more than double when the Royal Adelaide Hospital, and the remaining four PPPs commence operations.”
Jackson believes the fastest and most sustainable way to supplement Spotless’ underlying growth is via strategic acquisitions of high quality, market leading businesses. “Spotless is already able to self-deliver 75 percent of all services, making us the leading outsourced service provider in the local market with a reputation for reliability,” she said. “But growth by acquisition could see us further broaden our own in-house capabilities – enhancing service to our customers, providing greater control for Spotless and delivering more consistent safety and compliance standards.”
In light of this Spotless has already acquired two commercial laundry businesses.”Our business has a strong pipeline of new opportunities. Importantly, our current portfolio of contracts is profitable, after making the strategic decision to exit some non-core and loss-making contracts. We will apply the same strategic filter to all new contracts we bid for,” Jackson shared.
“Our overhead cost base is $60 million lower than when Spotless was last a listed company and this cost base has been maintained for more than 18 months – demonstrating it is possible to manage cost, deliver growth and prioritise the safety of our people,” she concluded.