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UGL board avoids 2nd strike spill

The board of engineering company UGL has avoided a shareholder-induced spill, after disgruntled investors didn't have the required numbers to instigate a so-called second strike over executive remuneration.

At last year's annual meeting 30 per cent of shareholders voted against the company's remuneration report, leading to a first strike against UGL.

When more than 25 per cent of shareholders vote against a remuneration report, a first strike is recorded against the company.

If repeated the following year, the vote can lead to a board spill.

At this year's annual general meeting about 16 per cent of the almost total shareholder votes were cast against the remuneration report.

The re-election of board directors Guy Cowan, Robert Denham, Ray Chien and Dr Douglas McTaggart was passed on a show of hands.

Chief executive Richard Leupin said the board had heeded shareholders' warnings and had better explained the rationale behind its remuneration report this year.

"I am very pleased to see an improvement in the vote in support of our remuneration framework this year and would like to thank our shareholders for their vote of confidence in the board," he said.

Mr Leupin said the company was off to a good start in 2012/13 and had been awarded about $845 million in new and extended contracts.

"We see no reason for a change of direction or strategy but do see opportunities for new activities to be added to UGL as mentioned previously," he said.

"From our existing business we expect stronger growth will return when global economic conditions stabilise and confidence returns."

Mr Leupin also told shareholders that the unprecedented levels of volatility and uncertainty across global markets was affecting the business.

He said UGL had managed to stay a stable and diverse business with the majority of its revenue generated from providing essential non-discretionary services.

"UGL continues to expect 2013 trading conditions overall to be volatile and challenging which we presently forecast to result in a similar trading performance to the 2012 financial year as we forecast at the full year," he said.

"We anticipate that the continuing uncertainty and projects timing will result in a more pronounced earnings skew to the second half."

UGL posted a 15.3 per cent fall in net profit to $134.3 million for the year to June 30, down from $158.5 million the previous year.

In August, UGL forecasted a similar profit for the 2012/13 financial year.