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Last Updated: Monday, 30 May 2005, 16:08 GMT 17:08 UK
Stadium firm predicts 45m loss
Wembley National Stadium chief executive Michael Cunnah (left) and Multiplex construction project director Ashley Muldoon at Wembley Stadium
Critics say construction of Wembley Stadium could be delayed
The Australian property firm building the new Wembley football stadium has insisted it will be finished in time for next year's FA Cup final.

Multiplex's assurance comes despite it predicting a 45m loss on the project.

The group has pushed back the completion date by three months to March 2006 but has insisted the stadium will be ready for the cup final in May.

On Friday, the company's executive chairman quit and shares were suspended while it revises earnings guidance.

In February Multiplex said the project would not be profitable.

'Unacceptable result

Multiplex has been in serious trouble for quite some time
Ian Verrender, business editor of the Sydney Morning Herald

The predicted loss is more than double the 21m the Roberts family, which holds a 26% stake in the company, had agreed to cover.

Multiplex has now made a pre-tax write-down of $A59m (24.6m; $44.9) on the project.

The problems at Wembley have contributed to the group reducing its 2005 profits forecast to $A170m (71m; $129.3m) from $A235 (98.2m; $178.8).

But chief executive Andrew Roberts said the stadium would "absolutely" be finished in time for next year's FA Cup final.

"The Wembley result is unacceptable and completely overshadows the strong results from other parts of the business," he said.

The result was "extremely disappointing" and it would take time to earn back investors' confidence, he added.

Productivity levels previously assumed on the project were not being achieved, he said.

And costs associated with completing steel work, being able to meet the project's programme and the group's ability to recover claims against third parties were among several major risks to the project, he added.

But Mr Roberts said the project was not putting the group under financial stress.

It still had $A800m (334m; $609m) in cash and undrawn credit, he added.

The company's shares are expected to resume trading this week.

Interests sold

It was announced on Friday that company founder, John Roberts, will remain as a director though resigning as executive chairman. Deputy chairman Allan McDonald has replaced him as non-executive chairman.

The Wembley problems also prompted chief operating officer Noel Henderson to resign from the board of directors.

But Mr Roberts' son Andrew will stay as chief executive.

The company has sold its interests in several properties recently including a development scheme in Barnsley and a hospital construction project in Plymouth.

Last week it sold a stake in the White City shopping mall project in West London, prompting concerns it could be scrambling for cash.

However, the company's shares recovered slightly when it said its cash position was solid. Broker UBS forecast the company would fall 15% short of its previous guidance for 2005 profits.

Trouble ahead

A workman inside Wembley Stadium
Controversy has never been far from the Wembley Stadium project

Just a few months ago, the company raised money from shareholders whilst saying it would at least break even on the Wembley project.

"Multiplex has been in serious trouble for quite some time," Ian Verrender, business editor of the Sydney Morning Herald, told the BBC's Today programme on Friday.

He said that "problems with subcontractors really lie at the heart of the problems they've had with Wembley".

Mr Verrender also raised doubts as to whether Wembley stadium would be completed on time.

Fixed-price contract

Mr Verrender described Multiplex as "a very private company that suddenly found itself a public company (18 months ago) and has had difficulty coming to grips with the requirements surrounding public companies."

Multiplex has agreed a fixed-price contract with the Football Association to build the stadium so cannot easily recoup cost overruns.

"It's pretty serious when the chairman resigns," Stuart Stuckey, a fund manager at Pengana Capital in Sydney told Dow Jones Newswires.

"The big issue right now is that the senior management team clearly don't have the information systems in train to be able to understand what's going on."

See around the new Wembley stadium

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24 Feb 05 |  Business
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