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Fulton Hogan puts off AGM amid negotiations on AU project

Monday 12th November 2012

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Fulton Hogan, the privately held construction company, has delayed its annual meeting until mid-December amid negotiations relating to a problematic Australian project which has already scuttled a scheduled share buyback.

The Christchurch-based company will hold its annual meeting on Dec. 19 as it continues holding talks that are "material to the annual results of the company," it said in a letter to shareholders. It will instead hold a series of informal meetings between Nov. 29 and Dec. 6 updating investors on Fulton Hogan's performance, which would typically be held after the AGM.

"These negotiations relate to the financial outcome of a project in Australia which has been impacted by severe adverse weather conditions and some complexities around the contract," chairman Ed Johnson said. "Obtaining clarity on the contractual matters is pivotal to the 2011-12 financial performance of the company and the provision of up-to-date and accurate financial information to shareholders."

In June, the company formally revoked its October offer to buy back small share parcels, citing some difficult trading and project issues in Australia as well as a potential acquisition opportunity.

Fulton Hogan's A$705 million joint venture with Leighton Holdings to upgrade the Sapphire-to-Woolgoolga section of the Pacific Highway in New South Wales lost 71 days to wet weather in the first six months of this calendar year. The project has been reported in Australian media as being in financial strife due to rainfall and poor planning. The upgrade didn't lose any work days in August.

The construction company gets more than half its revenue from across the Tasman after acquiring the half of Australia's Pioneer Road Services it didn't already own.

Fulton Hogan ended the 2011 financial year with a forward order book of $3.2 billion, up 10 percent from a year earlier. Orders were helped by the company winning a share of the government's roads of national significance programme, which made major roadways a funding priority.

The company said it expects available funding from New Zealand Transport Agency road maintenance and operations will come under pressure this year as the government realigns its focus.

"The NZ government is focussed on directing funds to areas of most need while maintaining borrowing to manageable levels and we know that Christchurch is a high priority in this respect," Robert Jones, chief operating officer infrastructure NZ, said in a quarterly update.

BusinessDesk.co.nz

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