Clive Peeters outlines 7 reasons for trading irregularities

By Patrick Avenell

MELBOURNE, VIC: Clive Peeters has not been able to provide any firm reasons for the recent upswing in its share price over the last two days. Since its close last Friday at 29 cents, shares in Clive Peeters have risen to 41.5 cents, a jump of 43 per cent.

In a letter from the Australian Securities Exchange (ASX) to Clive Peeters yesterday, Issuers manager James Gerraty asked if there was explanation for this vibrant trading. Financial controller Steve Rowarth responded this morning.

“No. The company is not aware of any information concerning it that has not been announced which, if known, could be an explanation for recent trading in securities of the company,” wrote Rowarth.

Essential to this response is the phrase ‘not been announced’. Rowarth explained in his letter that trading Clive Peeters is currently being affected by a number of issues, both internal and external. Due to this, Rowarth identified seven key factors influencing Clive Peeters retail and trading performance in the short-to-medium term.

As noted in his letter, these factors are:

-The misappropriation of $19.3 million by an employee, which is currently in the process of being recovered.
-The presence of appropriate insurances, in relation to the cash misappropriation.
-The company’s trading result for FY09 was materially affected by the misappropriation, and that future results should reflect improvements due to its absence.
-A $38 million reduction in annualised costs.
-A $23 million inventory reduction.
-The launch of the Clive Peeters online business.
-The announcement that the company will maintain tight control over capital.

Rowarth also noted that due to the uncertainty surrounding the future of interest rate levels in Australia, with more rises predicted following last week’s announcement, the sales levels at retail stores is difficult to predict.

“It is not possible to gauge the effect of the recent announcement of an official interest rate increase, with the prospect of more to follow over Q2 2010, on the still fragile big ticket discretionary retail environment,” wrote Rowarth.

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