UGL Posts $106m Loss on Ichthys Writedown

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Tuesday, August 23rd, 2016
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Engineering group UGL hopes to claw back some of a $200 million writedown it made on the massive Ichthys natural gas project near Darwin, but it’s unsure when it will pay shareholders a dividend again.

UGL has narrowed its full-year net loss to $106.3 million, from its $236.4 million loss in 2014/15, despite disruptions and delays on the Ichthys structural, mechanical and electrical package (SMP) and power plant (CCPP) projects.

After negotiations with its client JKC Australia LNG, the company expects to settle historical claims on the SMP project before the end of August.

UGL is also optimistic about addressing claims over the CCPP project in coming months.

“UGL continues to manage the delivery of the projects and the respective contracts diligently to ensure an acceptable commercial outcome is achieved for the company and its joint venture partners through to completion,” the company said in a statement on Monday.

Meanwhile, the engineering group also provided a separate set of results excluding the Ichthys projects.

Net profit from its rail and defence, asset services, technology systems, engineers and construction and Asia divisions was up, at $33.5 million, from $12.9 million in 2014/15.

UGL’s rail and defence order book has increased to $3.3 billion for the current financial year after the company won the $2.3 billion contract to build the NSW government’s new fleet of 500 intercity train carriages.

“We expect FY17 revenue to be stable with continued strength across maintenance and upgrade markets offset by subdued locomotive sales,” UGL chief executive Ross Taylor said.

UGL did not pay a final dividend, and has not paid one for two years. The company did not say when dividend payments would resume.

“The future reinstatement of dividends will be considered by the board as appropriate in the context of UGL’s capital requirements and outlook,” the company said.

UGL LOSSES

  • Loss of $106.3m, narrowed from $263.4m
  • Revenue flat at $2.3 billion
  • No dividend paid.
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