Lend Lease (LLC) advised on Monday that it was standing a number of executives in its Abigroup construction business aside, after discrepancies relating to the reporting of profits and losses on two projects came to light.
The discrepancies involve the potential under-reporting of the anticipated profit on one project and the potential under-reporting of the anticipated loss on another project, the group said.
Based on current information, and while noting that a review of these matters has not yet been completed, Lend Lease said it has no reason to believe these matters would have a net material impact on the group’s fiscal 2012 financial position, results, or the outlook.
In a statement, Lend Lease said it appeared that its full share of available profits from the D2G joint venture in Queensland as at 30 June 2012 was not disclosed to senior group management, the board or the external auditors. As a consequence, the extent of the anticipated profit on that project may not have been adequately recognised within the group’s results, it said.
Also, Lend Lease said certain costs on the Peninsula Link Project in Victoria anticipated as at 30 June 2012 may not have been appropriately accounted for in determining the financial results of that project. Therefore, the extent of the anticipated loss on that project may also not have been adequately recognised, it said.
Lend Lease said it is conducting an immediate and thorough investigation of these matters and all the surrounding circumstances in conjunction with the group’s external auditors.
The price of the stock fell around 7.5% to $7.70 on the back of this news.
Although LLC is trading below our fair price of $9.50 given the events and the current strain on the property sector we remain cautious on this company and prefer to look at Westfield as a better exposure in the sector.
For more information on Lend Lease (LLC) please contact us on 07 4771 4577.