Empired has faced fresh questioning from the ASX over recent trading activity of the company’s shares.
The ASX put a series of questions to Empired, continuing to probe around a possible leak of sensitive information.
The new questions follow an earlier series of questions from the ASX, after Empired’s share price dropped amid a flurry of trading, which the ASX dubbed ‘significantly above average trading volume’.
Empired responded to the first round of questions and posted a Trading Update for its financial half-year operating results.
The latest round of questions focused on whether the information in the announcement was ‘inforamtion that a reasonable person would expect to have a material effect on the price or value of its securities’, when Empired first became aware of the information and whether the information was disclosed prior to the ASX update, and whether the information was released ‘promptly and without delay’.
In response, Empired advised the ASX that it became aware on 21 January of the changes to the revenue guidance, with revenue for the first half of the year expected to be impacted by ‘transitional’ difficulties.
In its response, Empired says it became aware that H1 FY16 revenue would be around $79 million and reported EBIDTA would be in the range of 1% to 2% of revenue after the managing director and CFO provided with revised December monthly financial information for its New Zealand and United States subsidiaries, which make account for around 35% to 40% of total revenues for the company.
Mark Waller, Empired company secretary, says in the response to the ASX that the company first became aware of the effect of the Australian sales restructure on revenue was to reduce sales revenues by $4.1 million on 21 January during a review of the December management accounts for the Australian operations.
“The impact of this amount on the company’s earnings was more severe than had been anticipated by the company prior to 21 January 2016,” Waller says.
The copany had become aware of the total costs of additional contracts and the expense reduction program information, back in November, with those costs ‘foreshadowed’ at the company’s AGM and in the AGM presentation released to the ASX on 16 November.
Waller stated that while the company was aware ‘of some of the information referred to in the announcement before the date of the announcement’ the information was not released to the market at an earlier time for a number of reasons, including the incompleteness of some information.
The additonal contract cost of $1.1 million and the cost reduction program cost of $700,000 was not considered to be market sensitive at the time, Empired says, because the EBITDA was not expected to be materially different from expectations.
“While the items noted… have together had a material effect on profitability, at all times prior to 21 January 2016, the company still expected to deliver EBITDA for H1 FY16 in line with what the company understood to be market expectations’, Waller says.