Spotless renews public housing contract worth $62 million a year

Beleaguered cleaning and catering company Spotless Group has been re-awarded a contract worth $62 million a year to maintain NSW's social housing.

The company will manage more than 24,000 properties for the NSW Land and Housing Corporation for next five years.

Sources have told Fairfax Media several overseas buyers were interested in Spotless.
Sources have told Fairfax Media several overseas buyers were interested in Spotless. Photo: Louie Douvis

It has held the contract since 2002. The re-signing comes after Spotless' share price has more than halved since early December after it warned investors its next profit would fall 10 per cent year-on-year.

Chief executive Martin Sheppard cited a delay or deferral of tender decisions for the profit slump. It also lost contracts, such as the catering rights to Brisbane's Suncorp Stadium which it held for more than 30 years. The company also struggled to gain new business, including a $400 million contract with Rio Tinto.

Spotless chief executive Martin Sheppard says the company has a "valued" relationship with the NSW Land and Housing ...
Spotless chief executive Martin Sheppard says the company has a "valued" relationship with the NSW Land and Housing corporation. 

Mr Sheppard said Spotless was "very pleased to continue" its "valued relationship" with the NSW Land and Housing Corporation.

He said it would involve maintenance, renovations and heritage works across three regional centres: Central Coast, Sydney's inner west and Illawarra.

"The annualised total revenue from the contract is over $62 million," Mr Sheppard said.

Despite the soft market, Mr Sheppard told the market last month the company had managed to retain almost 90 per cent of its existing contracts this financial year. This doesn't include the NSW social housing contract.

Spotless shares were almost 1 per cent lower at $1.03 on Monday afternoon. Its shares have plunged more than 58 per cent since its 12-month high of $2.47 last April.

The low share price has made the company, which returned to the ASX via a $1 billion float in March 2014, vulnerable to a takeover.

Sources have told Fairfax Media several overseas buyers were interested in Spotless, which employs 39,000 people and generated $2.8 billion in revenue last financial year.

The company told investors last month its earnings before interest depreciation, tax and amortisation will be flat in 2016, but its net profit will fall 10 per cent from last year's profit of $142.8 million.