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CIMIC Group Falls 20% After Writing Down $1.8 Billion From Middle East Venture

Tim Montague-Jones

Tim Montague-Jones has over 20 year investment management experience working in the financial markets. Previous experience includes a ten year stint at Morningstar as a Senior Equity Analyst/Portfolio Manager, founding the Morningstar Growth Portfolio and a founding member of their Investment Committee. Tim was also a Senior Equity Analyst for Macquarie Group and a member of the winning team to obtain the 2016 LONSEC Fund Manager of the Year award.

CIMIC Group Limited (ASX: CIM) has fallen nearly 20% this morning, from $35.09 to $28.34 after providing an update on its BIC Contracting strategy and the consequent impact on its financial results.


CIMIC is an international contractor within the telecommunications, engineering, infrastructure, building, property, mining and environmental services industries. The company’s core geographies are Australia, New Zealand the Asia Pacific, however, they also have ventures in the Middle East.

The company has completed a strategic review of its investment in a non-controlling 45% interest in BIC Contracting, a company operating in the Middle East. After discussing with lenders, creditors, clients and stakeholders (whilst taking into account the context of an accelerated deterioration of local market conditions), CIMIC has decided to sell its stake in BIC Contracting and expects to take a one off post tax impact of around $1.8 billion in its 2019 financial statements (which includes a $700 million cash outlay to pay for BICC liabilities, which it has guaranteed). Consequently, CIMIC will not declare a dividend for 2019.

As such, CIMIC will focus its resources and capital allocation on growth opportunities in its main core markets of Australia, New Zealand and the Asia Pacific. The company expects to announce its 2019 financial results on 4 February 2020, where NPAT is expected to be reported at around $800 million (excluding the BICC impact).



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