UGL Denies Fraud Allegations as Shares Plummet

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Wednesday, February 19th, 2014
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UGL has emphatically denied allegations made by a former senior executive that the company “cooked the books” in order to deceive investors.

At the start of the week, News Ltd’s The Australian reported that Robert Shibuya, formerly a property services chief with UGL, told a US court that he had been fired for making complaints about the company’s “cooking of the books by misstating financial results and manipulating employees bonuses” for the purpose of deceiving investors.

During a discussion about the Australian engineering group’s December half earnings, UGL chief executive Richard Leupen strenuously denied the allegation, stating that “there is no substance to it,” and dismissing to it as a “vexatious claim.”

Richard_Leupen

Richard Leupen

Leupen pointed out that there was no sign that a regulatory complaint had been lodged despite Shibuya’s allegations.

The allegations come at a difficult time for the company, with shares plunging 12 per cent on the day that Leupen made his emphatic denial, due to concerns about sluggish market conditions and faltering capital investment in the resource and infrastructure sectors during the first half of fiscal 2014.

Investors were left unswayed by the fact that the group’s managed to raise its first-half net profit for the 2014 fiscal year, or by its decision to divest itself of its non-core property services arm DTZ and it efforts to reduce gearing.

Net profit attributable to members hit $29.5 million in the December half, for an increase of 13.5 per cent compared to the previous corresponding period.

Revenue from ordinary activities also logged a significant increase, rising by 5.6 per cent in the December half compared to the previous period to hit $1.99 billion.

The group said that if reasonable trading conditions persist, it expects underlying net profits after tax for 2014 to be around $120 million, which is at the lower end of the prior guidance range.

Leupen said the group’s diverse revenue sources, over half of which originate offshore, puts it in a strong position to deal with adverse conditions on the Australian market.

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