UGL has told shareholders that its property and engineering arms are being split as quickly as possible and will be standalone companies by June 30 next year.
However the groups won’t be officially demerged until late 2014 or early 2015.
The company wants to reduce its $581 million debt pile and gearing of 34 per cent before it separates the businesses by selling assets and cutting costs.
It also needs time to establish separate capital structures, management teams and other financial functions, chairman Trevor Rowe told shareholders at the company’s annual general meeting in Sydney.
There has been frustration from shareholders keen on the DTZ property business but not the engineering arm who want the demerger to occur quicker and unlock the greater value UGL says will be achieved.
“We are proceeding as quickly as possible to prepare DTZ and engineering to operate on a standalone basis,” Mr Rowe said.
“Once separated, DTZ and engineering will have sustainable capital structures which will allow each business to achieve their strategic objectives and pursue growth opportunities as they arise.”
Chief executive Richard Leupen forecast more growth in the real estate services business, which already dominates UGL’s earnings as mining companies’ cost cutting has hurt engineering.
It had won $830 million globally in new contracts and extensions in the September quarter.
“We are seeing an ongoing recovery in North American (property) markets as well as strong growth potential in Asia, particularly China,” he said.
Engineering and operations-maintenance revenue was forecast to be flat – following steady falls last fiscal year – assuming no further project cancellations or deferrals, he said.
Shares in UGL, which currently has a market capitalisation of more than $1.3 billion, closed 19 cents, or 2.4 per cent, lower at $7.72.
By Greg Roberts