To record the gain, CIMIC reclassified its holdings in Ventia from an “associate” to a “financial investment” measured at fair value.
The construction group said it was able to do this because it no longer had “significant influence” over its Ventia investment after removing nominee directors from Ventia’s board and waiving certain rights from late March 2022 until September 2023.
Significant influence is usually presumed to exist when CIMIC owns 20 per cent – 50 per cent of another entity. It reduced its shareholding in Ventia to 21.9 per cent in early March after shares were released from escrow.
The Ventia reclassification also contributed to CIMIC’s work in hand dropping to $30.4 billion from $33.2 billion a year earlier.
CIMIC reported financial assets of $215.8 million, up from $80.4 million a year earlier, boosted by “unlisted investments.”
These included CIMIC subscribing to Class C preference shares with a coupon return in Thiess, the mining group in which it has a 50 per cent stake, worth $191.3 million.
CIMIC accounts for the shares as an equity instrument, and chose to recognise changes in their value in its profit and loss statement, and the shares’ coupon as operating cash flow.
Thiess, which CIMIC operates in a joint venture with US hedge fund Elliott Management Corporation and last year bought Western Australian mining services group MACA through a $367 million takeover, reported a $277.5 million profit compared with $282.1 million profit a year earlier.
CIMIC also bought several companies during the financial year – Victoria’s Logistic Engineering Services for $8.1 million; WA’s Onyx Projects for $13.4 million; and Hong Kong’s Ecco Engineering for $4.6 million.
The group sold its troubled Leighton International business to UAE investment group SALD in February 2023 for “nominal consideration” after last year transferring the entity which held its 45 per cent investment in its Middle Eastern joint venture to the same company.
The construction group has now divested all rights in its Middle Eastern investments.
CIMIC’s exposure to credit risk for receivables at the end of December was $3.1 billion, up from $2.3 billion a year earlier.
Non-recourse factoring across the group, which reflects the amount of cash from invoices that CIMIC is receiving early from a third party, increased to $528.4 million from $434.1 million a year earlier.
CIMIC has deferred a decision on whether to declare a final dividend after paying an interim dividend of 39¢ per share in early October.