Robert Shibuya, who left UGL property arm DTZ in September last year, made the claim and further accused the company of his unfair dismissal, which occurred after he said he refused to cooperate with the creative accounting practice and reported it to the company’s board, according to The Australian.
The report says Shibuya claims his position was terminated due in part to “complaining about, protesting and opposing the defendant's cooking of the books by misstating financial results and manipulating employee bonuses so as to deceive investors” and for “refusing to participate in such unlawful activity by presenting the misstated financial results to the board and investors”
Sydney-based UGL reportedly said the allegations were “ambit claims of a disgruntled former employee” and it intended to fight the case and possibly launch counter claims against Shibuya.
The news broke as UGL announced its half-year results today, with an update on its demerger plan for DTZ.
Addressing investors, UGL said its board would evaluate unsolicited third party interest received in DTZ to determine whether these indicative proposals were in the best interests of shareholders.
“Demerger preparation continues as our primary approach to ensure that a separation of DTZ and engineering is completed by the end of the 2014 calendar year, subject to regulatory and statutory approvals, including shareholder approval,” the company said in a statement to the market.
“We are making good progress on establishing DTZ and engineering as two stand-alone entities and this work is expected to be completed by June 30, 2014.
“While we continue to proceed as quickly as we can to prepare the businesses to operate on a stand-alone basis, it is business as usual for both DTZ and engineering and we are working to ensure no disruption to clients, employees, partners or other stakeholders.”
To its financial results, DTZ reported a better performance than engineering, which struggled to grow in the soft Australian market in the half-year period.
DTZ has reported underlying net profit after tax of $49.7 million for the six months ended December 31 last year.
Reported NPAT for the half-year period was $29.5 million, including net costs of $20.2 million comprising restructuring costs, demerger costs and the amortisation of acquired intangibles.
Despite ongoing challenging market conditions in Australia, the group’s operating revenue increased 7% to $2.2 billion and earnings before interest and taxes was $78.5 million in the half-year period.
“DTZ delivered another half year of revenue growth with our North Asia and UK businesses delivering particularly strong results,” UGL managing director and CEO Richard Leupen added.
“Our engineering business performed resiliently in a challenging market environment underpinned by a strong base of diversified recurring revenue streams.
“Continued project delays, increased competition and margin compression in our engineering business impacted earnings performance in the half-year period.”
UGL’s engineering business reported declining revenue of $1.2 billion in the half-year period.
EBIT declined 40% to $35.9 million.
Rail operations stayed healthy and continued to deliver a solid contribution in the first half, reflecting UGL’s performance in the maintenance market, both in passenger and freight rail, which continue to generate long-term recurring revenue streams.
“Our freight locomotive build business successfully secured $87 million in new locomotive contracts as of February 2014, supporting key clients in Australia across the coal and iron ore sectors,” the company said.
“Engineering’s $4.6 billion order book remains solid with recurring revenues comprising 79% of the order book, providing UGL with a degree of insulation in a contracting market environment.
“Solid bidding activity is also underway for a number of project opportunities for which UGL is well positioned, particularly in the rail, transport, power and LNG sectors.”
Over the last 12 months, overheads have been reduced by approximately $100 million, reflecting the challenging domestic engineering markets.
Further cost reduction initiatives will be undertaken to improve margin performance in the second half of the 2014 financial year and into FY2015.
Looking to the future, Leupen said UGL had secured $2 billion of new projects and an $8 billion order book, 86% of which consisted of long-term recurring maintenance contracts, supporting future earnings.
“We are bidding on significant opportunities in the rail, transport, power and liquefied natural gas sectors and we are well positioned to benefit from the strong growth in global property services as we further build the DTZ brand,” he added.
Despite the contraction in Australian resources capital spending, Leupen said UGL’s business model was responding well to the challenging domestic operating environment on the back of its diverse base of recurring revenues and its exposure to global property services.
“UGL is also well placed to benefit from the emerging infrastructure pipeline in Australia, particularly in the power and transportation sectors,” he said.
“The revenue performance of engineering in the half-year period suggests that we remain on track to operate in FY2014 at similar revenue levels to FY2013.
“The restructuring of UGL’s cost base should also lead to improved margin performance in the second half of FY2014.
“DTZ continues to provide solid growth prospects to offset the softer Australian market with its favourable exposure to the growth potential in Asia and the recovering UK and North American markets.
“When considered together, UGL expects to be at the lower end of previous guidance generating underlying NPAT of around $120 million in FY2014, subject to a continued reasonable trading outlook.”
