Spotless on track for bigger profit

Australian caterer and building manager Spotless Group today posted an almost 150 per cent jump in annual net profit, and said the next one would be even bigger.

The company said its 2004/05 net profit was up 147.8 per cent to A$56 million. Its 55 per cent owned New Zealand company Taylors group yestereday posted a "disappointing" 18 per cent fall in its June year profit to $3.5m.

Spotless said the 2004/05 result reflected higher trading results, lower goodwill charges and a net profit of A$25.7 million on the sale of Clifford Hallam Pharmaceuticals (CHP).

"The company is expecting to generate net profit in fiscal 2006 which will be higher than fiscal 2005, when measured excluding foreign exchange gains on intercompany loans, the profit on the sale of CHP, and goodwill charges," Spotless said.

In the current financial year, Services Australia is expected to deliver sufficient growth to largely compensate for the absence of CHP's trading profit, the company said.

"Much of this growth should come from the new contracts signed in the markets of Defence, Public Private Partnerships and Government, and the continued focus on operating efficiency," Spotless said.

Retailer Services is expected to continue to deliver revenue and profit growth from both its existing customer base and a number of new accounts that were signed in fiscal 2005.

The impact of foreign exchange rates and resin prices continue to remain volatile and unpredictable.

On its results for the financial year ending June 30, 2005, Spotless said Services Australia achieved record revenue growth of 7.8 per cent for the full year.

The major sources of growth were the provision of maintenance and catering services to the healthcare, education, defence and resources markets, and growth in the supply of pharmaceuticals by CHP.

Services New Zealand achieved local currency revenue growth of four per cent against the previous corresponding period, however favourable foreign exchange rate movements translated this result into a 9.4 per cent increase in reported Australian dollar terms.

The Services USA division, which comprised the operations of Windswept, achieved revenue growth of seven per cent in local currency terms, mostly due to emergency response activity associated with the Florida hurricanes in the first half of the financial year.

Spotless' Retailer Services segment produced year-on-year revenue growth of 24 per cent in local currency terms driven by contributions from new accounts and market share gains with retailers both in the Americas and Europe.

This represents a solid outcome considering US retail apparel sales displayed only modest growth in fiscal 2005, while the European market was, and remains, soft.

The company posted a fully franked dividend of 13.5 cents per share for the second half, one cent higher than the prior corresponding period.

This takes the annual dividend to 24 cents per share, up one cent on the full year total last year.

- AAP