![]() If timely resolution of the claims cannot be achieved, it is likely that the claims will need to be concluded through formal dispute processes in order to achieve an outcome which appropriately reflects UGL's entitlements.Īs we have previously stated, UGL will not recognise margin on the SMP project while commercial negotiations are ongoing. While commercial negotiations are continuing on the SMP project, they are becoming protracted with a satisfactory commercial outcome yet to be agreed. Sydney: UGL Limited (ASX: UGL) today advises that the construction of the Ichthys SMP and CCPP projects being undertaken by UGL (in joint venture with Kentz and CH2M Hill, respectively) continues to experience substantial delays and disruption attributable to the client, JKC Australia LNG Pty Ltd (JKC, a joint venture between JGC Corporation, KBR and Chiyoda Corporation). UGL's balance sheet is strong and is expected to remain fully compliant with all relevant financing covenants ![]() UGL will continue to generate strong cash conversion of 100% of EBITDA, excluding the Ichthys projects In accordance with its continuous disclosure obligations, UGL will inform the market should it determine to raise a provision across SMP and CCPPĮxcluding the Ichthys projects, UGL is on track to achieve 3% EBIT margins plus $5.7m FX gain in FY16 and 4% EBIT margins on increased revenue of at least $300 million in FY17 To the extent negotiations cannot be satisfactorily concluded on SMP and CCPP and recovery of claims is pursued through formal dispute processes, this could give rise to contract loss provisions of up to $200m Substantive commercial negotiation of the SMP claims is ongoing however, negotiations have become protractedĪs previously stated, margin will not be recognised on the SMP project while commercial negotiations are ongoing UGL maintains a strong contractual position with issues clearly attributable to client delays and disruption Substantial claims have been raised with JKC on both SMP and CCPP ![]() Update on commercial negotiation of claims arising from substantial client delays and disruption on Ichthys SMP and CCPP projects ![]()
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