UGL confirms DTZ demerger

By a staff reporter, with AAP

UGL Ltd will proceed with a demerger of its engineering and property bsuinesses as soon as possible, after posting a steep fall in full-year profit.

Investors responded positively to the news. At the 1015 AEST official market open UGL shares were 3.11 per cent higher at $7.63, against a benchmark index fall of 0.07 per cent.

In the year to June 30, UGL's net profit was $36.472 million, a 72.8 per cent decline on the previous year's $135.392 million.

The group said net profit was weighed down by $55.6 million of costs associated to restructuring, the rebranding of DTZ, the amortisation of acquired intangibles, and there was a gain on the sale of property.

Underlying profit was $92.1 million, in line with earlier guidance.

Revenue in the same period was $3.816 million, 14.3 per cent lower than the 4.454 billion in 2012.

The group announced a fully-franked final dividend of 5 cents, to be paid on September 6 to shareholders on the register at August 23. Combined with the interim dividend of 34 cents, the group will pay a fully-franked total dividend of 39 cents in the year.

In 2012, UGL paid a partially-franked total dividend of 70 cents.

UGL chief executive Richard Leupen said the company's engineering business had suffered due to a slowdown in capital investment in the resources and infrastructure sectors.

But, he said, the DTZ business had seen its annual revenue rise to $1.9 billion, helped by an improvement in the US property market and a continued strong performance from its Chinese and Asia Pacific markets.

Demerger next logical step: Rowe

UGL chairman Trevor Rowe said the planned demerger would enhance shareholder value over the short and long term.

The group will work towards separating its property business DTZ from its under-performing engineering business over the next 12 to 18 months.

"Over the past decade, UGL has successfully grown its property services and engineering businesses to become sizeable businesses which are leaders in their respective markets," he said.

"As both businesses enter their next phase of growth, the operational and strategic priorities of each business, and the associated management and financial requirements are starting to diverge.

"As a result, we believe a demerger is the next logical step which will allow each business to pursue their own strategic priorities and opportunities for growth."