Ann: DTZ Sale Completion & Ichthys Update, page-14

A bit of an over reaction to the ambiguity of the situation, I believe. This is from the statement:

"UGL have been advised by CH2M Hill that as claims for the recovery of these increased costs are not yet sufficiently resolved to recognise as revenue to offset the increases, they will book a USD85 million provision in their September quarter accounts pending resolution of these issues. While acknowledging the JV’s position in relation to the provision recognised, UGL is still reviewing the cost to complete estimate and given ongoing discussions with the client regarding the claims position and project acceleration does not feel in a position to reliably measure the provision at this stage.
The JV and JKC are engaged in a series of meetings aiming to close out these issues by end 2014/early 2015 and also to accelerate the project to recover the delays. UGL will update the market at the half year results or earlier once in a position to reliably measure the financial outcome of the project."

The positives in this statement are that they are in discussion with the client regarding claims to possibly recover some of the increases, and also that they are looking to accelerate the project to recover the delays, which would reduce the potential liability. It is the correct accounting procedure to put it in the September statements as a liability but the liability recorded for September is not likely to be as high as the actual liability. Any recoveries will go back on the books as revenue after resolution, which should be in early 2015.

UGL has been out of favour so long I think that investors are edgy about any bad news and jump ship very quickly. In my opinion they negotiated the best deal for shareholders with the sale of DTZ and returning profits to shareholders, and are concentrating on their core business. DYOR but I'm still holding.