Slump in contracts puts more Bradken jobs at risk
The company faced shareholders for the first time on Tuesday since being dealt another blow in the form of a Federal Court decision that found in April that the company and its top bosses, including former NSW premier and chairman Nick Greiner, had engaged in bid rigging.
Bradken is appealing.
Speaking at the annual meeting, chief executive Brian Hodges said he was forecasting similar revenues this year to last, but expected the first half to be marked by a "dramatic" drop off in orders from mining companies as commodity prices fell. "It started in October for us and has been quite strong and dramatic," he said.
"We stress the first half of 2014 will be quite challenging."
But the company said it expected conditions to improve in the second half.
"If recent improvements in order intake continue, we still expect the year to be broadly comparable with 2013."
Mr Hodges said the company was confident about its appeal to the Federal Court, which found Bradken, Mr Greiner and he himself had engaged in cartel activity in its acquisition of mining parts company Norcast. The court ordered the company to pay $22 million in damages to Norcast's owner, Swiss group Pala.
"Our advice is there is very strong grounds for appeal around both the cartel and bid-rigging claims," Mr Hodges said.
The Australian Shareholders Association advised shareholders on Tuesday to reject the company's remuneration report on the basis that Mr Hodges was paid "considerably higher than other direct reports".
It also rejected the granting of restricted share rights, worth $715,000 over three years, to Mr Hodges, saying it was critical of some of the conditions of the award given Mr Hodges' already high salary.
ASA chairman Ian Curry said the Federal Court decision had raised corporate governance issues that it would be "looking to Bradken to address".
Frequently Asked Questions about this Article…
Bradken is experiencing a potential job redundancy situation due to a decline in contracts as the resources boom declines. This has led to a dramatic drop in orders from mining companies, impacting their business operations.
Bradken has faced legal challenges, including a Federal Court decision that found the company and its top executives engaged in bid rigging. The company is currently appealing this decision.
Bradken is forecasting similar revenues to last year despite the decline in mining contracts. They expect the first half of the year to be challenging but anticipate improvements in the second half if recent order intake improvements continue.
Bradken is confident about its appeal against the Federal Court decision, which found them guilty of cartel activity. They believe there are strong grounds for appeal regarding both the cartel and bid-rigging claims.
The Australian Shareholders Association has advised shareholders to reject Bradken's remuneration report, citing that CEO Brian Hodges was paid considerably higher than other direct reports. They also criticized the granting of restricted share rights to Mr. Hodges.
The Federal Court decision has raised corporate governance issues for Bradken, with the Australian Shareholders Association looking to the company to address these concerns.
The Federal Court ordered Bradken to pay $22 million in damages to Norcast's owner, Swiss group Pala, as a result of the ruling on cartel activity.
Bradken expects conditions to improve in the second half of the year. If recent improvements in order intake continue, they anticipate the year's performance to be broadly comparable with 2013.
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