FINANCE: DTZ has posted a 17% increase in revenue, contributing to a turnaround in parent UGL’s business which saw profit and revenue rise.
The property services business, which is to be sold to a TPG-led private equity consortium for A$1.2bn (£675m), delivered A$2.3bn of revenue and A$123.9m of earnings before interest and tax in the year to 30 June.
UGL highlighted the UK and north Asia as key contributors to DTZ’s solid results, with the economic recovery in the UK “generating strong revenue growth in corporate real estate services”.
In respect of Asia, it said that “continued growth in capital markets in mainland China saw the execution of significant real estate transactions which contributed strongly to the financial performance”.
In an update on the sale of DTZ, which was announced on 16 June, UGL said the process is expected to conclude late in 2014, dependent on achieving regulatory approvals.
It said: “UGL’s board intends to return surplus funds to shareholders after paying down debts and determining the appropriate capital structure of UGL for the future. It is estimated that surplus funds will be in the range of A$400-A$500m.”
The board has determined not to pay a final dividend for FY2014 but rather to implement an effective capital management plan at close of the DTZ sale.
UGL said options have been evaluated to determine the most efficient return of funds to shareholders with a capital return expected to be a likely outcome.
Following the completion of the DTZ sale, it will give details on the value of surplus funds and the form of return to shareholders, with the board seeking approval from shareholders at the annual general meeting in October 2014.
It added that the DTZ sale and debt reduction will also permit the board to implement a clear dividend policy based off stable engineering earnings and the low capital intensity of the business.
The group, which has been weathering a slowdown in its engineering business, reported a 6% increase in operating revenue to A$4.5bn.
It posted a 22% increase in underlying net profit to A$111.7m, with underlying EPS of 67.1c per share.
This fell to a net profit after tax of A$62.1m and EPS of 37.3c per share, including the impact of restructuring and DTZ separation costs.
UGL managing director and chief executive Richard Leupen said: “This is a solid result for UGL, with revenue and earnings growing amidst the ongoing impact of challenging domestic operating conditions.
“DTZ delivered its twelfth consecutive year of earnings growth with the United Kingdom and north Asia being key contributors.
“Our engineering business revenue was in line with the prior year while a 3% increase in earnings resulted in margin improvement for the 2014 financial year, particularly in the second half.”
bridget.o’connell@estatesgazette.com
