IMF Bentham and William Roberts Lawyers released a joint statement this week claiming Spotless’ financial results for the 12 months to 30 June 2015, released on 25 August 2015, were allegedly misleading and in breach of the company’s continuous disclosure obligations.
Between the end of FY14 and the publication of the FY15 financial statements, Spotless changed its policy in relation to the capitalisation of ‘pre-contract costs’, the statement said.
This change concealed the fact that Spotless did not meet its prospectus earnings forecasts for FY15 on a like-for-like basis when applying the accounting policies used for the original forecast, the statement also said.
Spotless allegedly failed to disclose the change of the accounting policy and the financial impact of the change as required under Australian accounting standard AASB 108.
IMF Bentham proposed to fund proceedings in the Federal Court of Australia against Spotless Group Holdings Ltd, while William Roberts Lawyers proposed to conduct the proceedings.
“Although Spotless announced that it had beaten its prospectus FY15 earnings forecasts, this does not appear to have been the case on a like-for-like basis. Spotless has allegedly modified an accounting policy, without disclosing the change in accordance with the accounting standards,” William Roberts principal Bill Petrovski said.
“It appears that FY15 NPAT was increased by almost 25 per cent over what it would have been had the prior accounting policy been used. Spotless’ margins in FY15 also appeared to be healthier than was actually the case. Accordingly, it will be alleged that Spotless’ shares traded at an inflated price.”
The claim is proposed to be brought on behalf of Spotless shareholders who acquired shares between 25 August 2015 and 1 December 2015. However, the relevant period may date back further.
Spotless responded with its own statement on the ASX, noting the announcement that IMF Bentham proposed to fund a shareholder class action against Spotless on a “conditional” basis.
“Spotless advises that no proceedings have been served against the company,” the statement read.
“Spotless considers that it has at all times been in compliance with its continuous disclosure obligations and intends to vigorously defend proceedings in the event that they are commenced.”
Accountants Daily contacted Spotless but the firm declined to comment.
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