Multiplex eyes sound future post-Wembley
THE AGE August 17, 2006 - 10:40AM
Australian builder Multiplex says its workbook is looking strong after posting a sharp rise in annual earnings, although its Wembley experience has put it off taking on more stadium projects.
The construction group on Thursday reported a net profit of $216.8 million for 2005/06, up 157.2 per cent on the previous year.
Multiplex chief executive Andrew Roberts flagged a sound future for the company, which has been the focus of unfavourable sentiment this year due to the troubled revamp of Wembley Stadium in London.
The builder stapled securities shot up 11 cents or about three per cent to $3.55.
"Aside from Wembley, the group's achievements have been numerous and there has been a genuine positive momentum building in the business," Mr Roberts said.
Construction on the stadium failed to meet the completion deadline ahead of the prestigious FA Cup final in May this year, forcing the event to be relocated to Cardiff's Millennium Stadium.
New delays announced this month have now pushed the likely completion date out to June next year, effectively ruling out the chance it will be ready in time to host next year's FA Cup.
Mr Roberts said stadiums like Wembley did not fit into the company's business model, which now focused more on commercial and residential property developments as well as funds management.
"Wembley's been a great disappointment to us financially and that is disappointing to all," Mr Roberts said.
"In terms of stadium projects generally, they don't really fit into an integrated business model.
"Did Wembley and the experience we had on Wembley weigh onto our thinking?
"Yes, of course, undoubtedly - this made us reluctant to want to continue to get involved in something like that."
The $1 billion project incurred a pre-tax loss for the year of $364.3 million, or $255 million after tax.
As a result, the company's construction division made a pre-tax and interest loss of $319.8 million.
But Mr Roberts was confident the company could recoup its losses through entitlements from stadium operator Wembley National Stadium Ltd, which Multiplex claims is largely responsible for a series of recent delays.
"We have made an assumption and we believe the assumption is conservative - obviously our objective is to achieve our fair entitlements, which we believe are in excess of our current values," Mr Roberts said.
Multiplex said its property development division had a solid development pipeline while its construction arm had a replenished workbook and good forward workload.
"The board believes the group's prospects for FY2007 are sound," Multiplex said.
The company's property development division contributed earnings before interest and tax (EBIT) of $100.0 million to the overall group result while the property funds management division contributed EBIT of $53.8 million.
Multiplex Property Trust also performed strongly, contributing EBIT of $446.5 million.
The group also handed over full responsibility for the remaining design and construction works for the White City shopping complex in west London to the Westfield Group.
Westfield acquired Multiplex's 25 per cent stake in the development in May, building the shopping centre group's stake to 50 per cent.
Multiplex retains a UK construction workbook and development portfolio with an estimated completion value in excess of more than $7 billion.
The company declared a final distribution of 17.5 cents per stapled security, taking the full year distribution to 25.5 cents.
© 2006 AAP
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