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In The Australian newspaper today:

Multiplex shares on brink

Paddy Manning

31May05

SHARES in developer Multiplex could sink below $2 today as the company battles to regain market credibility from a second profit downgrade caused by delays and cost overruns on the landmark Wembley Stadium.

Multiplex slashed profit forecasts for 2004-05 by more than a quarter after a $41 million after-tax writedown on the stadium project in London.

The writedown is after payment of a $50 million indemnity offered in February by the family of Multiplex founder John Roberts, when the company announced writebacks of $68 million and said it would break even on the project.

Mr Roberts stepped down as executive chairman on Friday, when Multiplex shares went into trading halt at $3.26. Offers on the stock were sitting at $1.90 last night. 

Andrew Roberts, Multiplex chief executive and son of John, looked shaken as he fronted media and analysts at a briefing in Sydney last night. "We certainly weren't expecting to be sitting here, in such a short period, and announcing that our indemnity has been called," Mr Roberts said.

"But obviously we'll be honouring that commitment."

Multiplex now expects to make a profit after tax of $170 million in 2004-05 -- $65 million or 27 per cent below previous guidance of $235 million.

Final distributions for the year will be 14c per unit, meaning total distributions will be 29.8c, 3.5c or 10.5 per cent lower than the forecast 33.3c. This is well above forecast earnings per security of 16c

Delivering what he described as a "very unsatisfactory result", Mr Roberts said the Wembley losses were "directly related to a slippage in program", with a peer review indicating the project would not be completed before the end of March 2006.

It is unclear whether this will be in time for next year's FA Cup, scheduled for May 13, because the Football Association was last week given a deadline of September to decide if it needed an alternative venue. The project was due to be completed by January 30.

Losses on Wembley could be greater than the $41 million writedown announced yesterday, which does not assume payment of up to pound stg. 14 million ($33.5 million) in liquidated damages nor a further pound stg. 3 million per month payable should the program run on beyond March 2006.

However, Mr Roberts said the situation with unresolved subcontractor claims by and against Wembley was slightly better than forecast in February, when Multiplex said it needed to negotiate favourable resolution of claims worth pound stg. 45 million to break even.

Mr Roberts said the peer review process, which had covered all the company's major construction projects, including in the UK and Australia, had found "no additional loss-making projects".

Multiplex said the balance of cash advanced from its trust to the corporation stood at $770 million -- much larger than assumed by analysts and well above the $413 million reported in the half-year results.

Yesterday's guidance also included a surprise writedown of $18 million in accounting losses resulting from the acquisition of UK property joint venture Duelguide, plus $6 million of other losses.

Mr Roberts said the underlying economics of the Duelguide deal remained "strong".

Multiplex forecast 2005-06 earnings of between $200-215 million after applying international accounting standards.

Mr Roberts again dismissed speculation on a possible break-up of the group, or reprivatisation of the construction division. Industry sources said investment banks were already scouting for buyers for parts of the business. Macquarie Research Equities yesterday canvassed a de-stapling of the company.

Responding to reports of a rift between himself and his father, Mr Roberts said "I don't think it assists to personalise it".