UGL narrows losses as Ichthys writedowns continue to weigh

UGL has narrowed its losses to a little over $100m and says it will consider the reinstatement of dividends.

UGL chief executive Ross Taylor.

Engineering services group UGL says the reinstatement of dividend payments will depend on the group’s balance sheet and outlook, after narrowing its full-year loss to a little over $100 million.

UGL today booked a loss of $106.3m for the year through June, a solid improvement on last year’s loss of $236.4 million.

The loss included a $200m writedown on at the Ichthys liquefied natural gas project off the coast of northern Western Australia, after the company in June disclosed a serious dispute over payment claims and effectively downgraded earnings guidance for a two-year period.

At the time, UGL (UGL) said it no longer anticipated any profit from the Ichthys structural, mechanical and electrical package (SMP) and power plant (CCPP) projects through the next two financial years. UGL said it expects a commercial settlement by the end of August.

Revenue for the group fell 3.6 per cent to $1.94 billion over the year and the board declined to pay a final dividend, which had been foreshadowed.

“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.

But UGL chief executive Ross Taylor said the company was experiencing strong progress across its base businesses.

“We secured $2.4bn in work during the year and have continued to sell well in July and August with an additional $800m in wins secured, including the recently announced New Intercity Fleet contract with the NSW Government which further broadens our recurring revenue base,” Mr Taylor said.

“The base business is well set-up as we enter FY17 to meet the objectives we set more than a year ago, including revenue growth of around $300 million and further EBIT margin improvement to approximately 4 per cent,” he said.