Multiplex books Wembley damage

Australian construction and property company Multiplex has reported a first-half loss, hit by the soaring cost of rebuilding London's Wembley Stadium, but stands by its forecast for a profit this year.

The loss on Wembley was larger than Multiplex had foreshadowed in December, and sparked an 8 per cent drop in the firm's shares to a four-month low.

"It just highlights how unpredictable this company is," said Justin Blaess, director of property securities for ING Investment Management.

"We still have very low confidence in the market's forecast. It's a high risk investment."

Multiplex issued six profit warnings between February and December last year, largely due to cost blowouts at the A$1.1 billion ($1.2 billion) project to rebuild Britain's iconic soccer stadium. The company's shares dropped 42 per cent in 2005.

Looking to end the nightmare, it swallowed a charge of A$251 million after tax on Wembley in the first half, wrapping in all losses from potential further delays and damages it could face if it fails to deliver the stadium by a final deadline, yet to be agreed on.

Multiplex booked a loss of A$119.6 million for the six months to December 31 compared with a profit of A$11.9 million a year earlier. The first-half loss also included property revaluations worth A$112.5 million, required under new accounting rules.

Excluding property revaluations and before inter-group transfers and outside equity interests, the group reported a loss of A$165.3 million, compared with analysts' forecasts for a loss of around A$46.7 million.

"We believe that as we put Wembley behind us, and the very disappointing result that that's led to in this interim result, we can expect strong levels of profitability from our construction business going forward," chief executive Andrew Roberts said.

The project has eroded Multiplex's available cash and loans by 35 per cent to A$484 million since June.

To boost its reserves, the company said it was considering selling some of the Chelsfield assets it bought in Britain last year to other companies, or into new Multiplex-managed trusts.

Multiplex said it still expected to meet its forecast for a full-year net underlying profit after tax of A$50 million.

Wembley overshadowed a 145 per cent jump in net profit to A$184 million from the group's property trust, built on its Chelsfield and Ronin acquisitions last year.

The English Football Association decided this week to transfer the FA Cup final to the Millennium Stadium in Wales, because it was not totally sure that Wembley would be ready in time for the final on May 13.

The company's total loss on Wembley has mounted to A$351 million, of which A$50 million was recouped last year from the Roberts family, which founded Multiplex.

The result put the company into breach of some of its financial covenant ratios.

However, Andrew Roberts said that based on talks with the group's eight lenders, he was confident that all the banks would let the company off the hook on the covenants.

"Every expectation is that the waivers will be received," he said.

Multiplex shares ended down 4 per cent at A$3.15 after hitting a low of A$3.01, while the listed property trust index finished up 1.2 per cent.

- REUTERS