Empired under ASX scrutiny over share drop

Officials at the Australian Securities Exchange continue to ask questions about a dramatic drop in the share price of IT services provider Empired, after its stock plummeted last week ahead of a downward revision in performance figures.

On Thursday the ASX wrote to Empired asking if management had an explanation for the speedy drop in its share value, from 77 cents to 50 cents.

The ASX inquired whether Empired was still compliant with listing rule 3.1, which demands that public companies immediately share any information that a “reasonable person” would expect would have a material impact on the value of its securities, as a guard against insider trading.

Empired immediately called a trading halt and on Friday morning released internal performance data that revealed a number of “transitional” activities had affected its bottom line in 2015, including a revenue drop linked to the restructure of its sales team, contract delays and a plant and equipment writedown.

However, the company insisted that the figures had only been collated for internal distribution and said it was not aware of any “cessation of confidentiality” that could account for the spike in trading and subsequent price drop.

Despite this, the ASX has continued to query Empired's collation of its performance figures, asking for specific dates upon which Empired became aware of its financial situation.

Empired managing director Russell Baskerville told iTnews he “certainly wouldn’t say he isn’t concerned” about the situation but was confident the ASX was “just following due process”.

He reiterated his disappointment in some of the costs that sprung up in late 2015 but said he was pleased with the outlook for the coming six months.

Empired's response to the ASX stated that full performance figures for the first half of FY16 were only announced to the board at lunchtime on 21 January 2016, and were subsequently published on the ASX early the following morning.

The company had its Australian operating figures since 20 January but only completed them with its US and New Zealand figures on 21 January, it said. It became aware of the impact of its sales restructure, which hit revenue by $4.1 million, on the same day.

The ASX price chart suggests, however, that Empired’s share price plunge started as early as 13 January 2015.