No dividend, as expected, after UGL swung to a $236.4 million net loss in 2014-15 from a $62 million profit a year earlier as the company’s new management team continued cleaning up its balance sheet.
Many of the impairments and write-downs have already been signalled by the company over the past eight months or so, while others were newly announced yesterday.
The new found honesty had no impact on investors who were out selling anything and everything in yesterday’s rout.
As a result UGL shares lost more than 4% to $1.75.
UGL 1Y – UGL rings in $236m loss
UGL’s statutory net loss was much larger than the market had forecast, thanks to more than $300 million of write-downs and charges being revealed yesterday.
Chief executive Ross Taylor, who took over from CEO Richard Leupen in November, said the write-downs were necessary to “reposition the business for its future” (of course, and to lump as much of the bad stuff on the previous long time CEO).
UGL took a $63 million write-down on goodwill related to its rail businesses; $55.6 million of write-downs "associated with the resources slowdown"; a $27.8 million write-down to settle project claims; $26.7 million of restructuring charges; and a $13.2 million charge to reflect a more conservative method of accounting for tender costs.
As announced earlier in the year, UGL also took a $122.5 million provision to account for cost blow-outs on its troubled Ichthys power plant joint venture in Darwin.
In addition, it took a $38.1 million restructuring charge to reflect a new operating model and job cuts. UGL also said it plans to save $33 million annually by getting rid of 200 full-time employees and removing duplicated jobs following last year’s $1.2 billion sale of property arm DTZ to TPG, the private equity group, which has gone on to buy US property group, Cushman and Wakefield from the Exor group of the Angelli family for $US2 billion.
Underlying earnings before interest and taxation, excluding income from DTZ, of $47.5 million were line ball with the company’s forecast.
Earnings in UGL’s rail and defence division fell 29% to $32.4 million due to declining demand for locomotives from the coal industry, while earnings in its technology systems division fell 51% to just $10.3 million.
But engineering and construction earnings rose 53% to $42 million due to the continuation of work on the Ichthys project but no profit margin was recognised.
And as previously signalled in February at interim results time, UGL did not pay a final dividend.
UGL told investors at its half-year results in February that it would not pay an interim or a final dividend in fiscal 2015.
UGL forecast underlying profit margins would rise to 3% in 2015-16 from 2% in the year to June. Revenue for the current year is expected to be in line with the $2 billion for the year to June, which was up 10.5% on a year ago.
So in effect, no growth in revenues and the company is looking for cost cuts and controls to hep margins grow an ambitious 50%.
