CIMIC’s share plunge prompts response

GMT, which claims a point of difference from other analysts as a purely research-focused firm for clients with nothing riding on the outcome of share price movements, said CIMIC’s high – 9.3 per cent – level of unbilled revenue on its balance sheet showed it was taking an aggressive approach to revenue recognition.

“We found CIMIC’s accounting among some of the most aggressive we have seen,” GMT said.


The report, which accused CIMIC of boosting its pre-tax profits by up to $800 million over the past two years, appeared to have little impact until Monday’s share plunge.

CIMIC initially declined to comment on GMT’s accusations, but the firm, which is 73 per cent owned by Spanish construction group ACS, subsequently issued a “clarification statement” to the ASX confirming its compliance with its disclosure obligations.

“For accurate information and analysis related to the company, CIMIC advises market participants to refer to its 2018 and past annual reports, its quarterly, half and full-year financial results, and its other disclosures,” the company said.

“CIMIC notes that its annual reports and full-year financial results are fully audited and in compliance with accounting standards,” it said.

A spokesman for the ASX said the exchange had “noted” the share price movements and “liaises with companies about their obligations as a matter of course”.

One investor, TAMIM Australia’s head of investment, Ron Shamgar, who recently sold out of the construction giant said he saw no reason why management would artificially inflate earnings.

Mr Shamgar said his fund sold down its holdings as the stock was overvalued.

GMT also said CIMIC had used its 2016 acquisition of construction group UGL, a $524 million deal, to inflate profits, a view based on the unexplained write-down of UGL’s net assets which prompted an immediate jump in profits.

Property Editor at The Age and BusinessDay journalist for Fairfax’s,, and

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