First Impression: Spotless Group (SPO) FY16 Result

Divisional result: Facility Services (92% of SPO revenue): EBITDA up 12.7% to $293m. Margins fell 60bps to 9.6% due to the 5% margin on acquired businesses vs the steady 10.7% on existing business; Laundries (~8% of SPO revenue): EBITDA down 17.2% to $71.4 . Margins fell 680 bps to 24.2% due to acquisition integration issues; Contract renewals by number increased y-y to 83% (from 78%) contrasting with renewal rates by revenue which feel from 91% to 83% confirming the loss of several large value contracts | Net operating cash flow down 42.6% to $142m.