UGL to Spin Off Property Unit After Posting 45% Drop in Profit
UGL Ltd. (UGL), the Australian company that acquired U.K. real estate broker DTZ Holdings Plc in 2011, plans to split its operations into two listed companies by June 2015 to allow each to follow its own growth strategy.
UGL will create two companies, one focused on global property services and the other on engineering, construction and maintenance services in Australia, New Zealand and Asia, it said in a statement to the Australian stock exchange today. The company today reported underlying profit after tax in the 12 months to June 30 fell 45 percent from a year ago to A$92.1 million ($84.7 million).
UGL in December 2011 bought the London-based DTZ for about 77.5 million pounds ($120.2 million), gaining access to China, where DTZ has the biggest geographic presence among international real estate advisory firms. The plan to create two separate companies follows a 3.5 percent drop in the company’s share price this year, compared with a 8.7 percent gain in the benchmark S&P/ASX 200 index.
“A demerger is the next logical step which will allow each business to pursue their own strategic priorities and opportunities for growth,” Chief Executive Officer Richard Leupen said in today’s statement. “A demerger will recognize the fundamentally different markets, geographic focus and strategic requirements of the two businesses.”
DTZ’s revenue grew 21 percent in the year to June 30 from a year earlier to A$1.9 billion while UGL’s engineering revenue fell 30 percent to A$1.8 billion due to slower investment in Australia’s resources and infrastructure sector, UGL said.
The company plans to complete the integration of DTZ globally and the property unit’s global headquarters in the U.S., and focus on reducing debt before the demerger, it said today. The board proposes that Leupen will continue to lead the company as it prepares for the demerger, Chairman Trevor Rowe said in the statement.
UGL expects underlying net income after tax of between A$120 million and A$130 million in the year ending June 30, 2014, it said.
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