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Multiplex's Wembley losses to hit £150m

NEWS - Aussie builder assesses financial damage ahead of Sydney Stock Exchange announcement

MULTIPLEX bosses are preparing to admit that losses on its disastrous scheme to rebuild Wembley stadium will hit £150 million.

The Aussie firm is due to unveil its interim results next month and is busily carrying out an assessment of how much it has blown on the job before making its announcement to the Sydney Stock Exchange on February 23.

News of the whopping loss comes as the firm faces a further hammer blow in its race to complete the stadium in time for the FA Cup Final in May.

With over 3,000 men still working on the job, Construction News understands Multiplex is having to prop up one of its subbies financially or risk ruining any hope it has left of completing work in time for the March 30 deadline.

One source close to the project said: 'Multiplex is having to take a view of whether to support this company or not. If it doesn't, then it might not be finished on time. I think the subbie is saying that it has been on the job far longer than it expected and has been asked to accelerate work, which costs money.' Last month Multiplex banked £127.5 million from the sale of stakes in data warehousing company Global Switch and the Stratford City urban regeneration project in east London. But despite the proceeds, the contractor is now admitting that 2006 group profits will be virtually eliminated.

In two profit warnings issued just before Christmas it admitted that in a worst-case scenario 2006 profits could be shredded by as much as £87 million. It had originally forecast a profit of around £91 million.

Much of this £87 million and a smaller figure it gave of £44 million, which Multiplex said was the 'more likely' scenario, is expected to be taken up by cost overruns at Wemb ley.

One source said: 'Multiplex can't put an exact figure on how much it will lose at Wembley for the simple reason it doesn't have one yet. It keeps changing.' The firm has also agreed to put out programme updates on the project later this month and in February and March.

The firm also admitted that Wembley would not be completely finished by the end of March.

It said: 'Some of the work that is not critical to delivering the operational status of the stadium will continue past March 2006 but still permit the FA Cup Final to be played on May 13.' But for the first time it conceded the final might end up being played at the Millennium Stadium in Cardiff, its home of the past five years.

Multiplex said: 'There remains a material risk that the stadium will not be available for the final. Such a delay would be likely to lead to significant additional costs, including liquidated damages.' Two days earlier ? on December 19 ? Multiplex warned that profits would be off by £70 million but was asked to put out a clarification by the Sydney Stock Exchange.

Multiplex has already officially lost £75 million on Wembley but the real figure is close to £100 million. Founder John Roberts said at its interim results last February that he was putting up £20 million of his own estimated £500 million fortune to cover any losses on the job when the company said it was writing back profits on Wembley to a break even position.

But with Multiplex bracing itself for demands for more money from a host of subbies as the completion deadline approaches, some in the industry are now speculating that losses could end up being closer to £200 million.

The firm is hoping to claw back some of this through a series of legal actions, the first of which will begin in the High Court this April against its former steelwork contractor Cleveland Bridge, which left the job in August 2004.

nFormer Multiplex UK managing director Paul Gandy has left the company.

Mr Gandy was moved sideways in summer 2004 and put in charge of expanding Multiplex's business in mainland Europe.

He had particular responsibility for a development in Gibraltar but left late last year to begin his own business as a PFI consultant.

He was replaced as UK boss by former Wates director Martin Tidd at the end of 2004.

At Wembley this summer?

May 13: FA Cup final

May 21: Championship play-off final

May 27: League 2 play-off final

May 28: League 1 play-off final

May 30: England v Hungary friendly international

June 11: Bon Jovi concert

June 24: Take That concert

August 20 & 22: Rolling Stones concert