Lend Lease warns on Abigroup accounting problems

10 September 2012

Lend Lease has found accounting discrepancies at its subsidiary Abigroup. The problems relate to the reporting of profits on two projects in Australia, and Lend Leases says it has suspended the executives responsible while an investigation takes place. Lend Lease said it does not believe the discrepancies will have a material impact on the group's financial position, profits or outlook.

The projects where issues have arisen are the AU$ 1.95 billion (US$ 2.02 billion) Dinmore to Goodna road project in Queensland, where Abigroup is part of the joint venture carrying out the work. Lend Lease believes its profits from the scheme may have been under estimated. On the down side, Lend Leases said that costs on the Peninsula Link Project in Victoria may not have been fully accounted for, and that Abigroup may make a larger loss on the project than expected.

"Lend Lease is conducting an immediate and thorough investigation of these matters and all the surrounding circumstances in conjunction with the Group's external auditors. A number of executives responsible for oversight and management of Abigroup will stand aside during the investigation," said a company statement.

The suspended executives are thought to include Abigroup managing director David Jurd and CFO David Walker.

While the investigation is underway, responsibility for Lend Lease's Australian construction business will be handled by David Saxelby, Mark Menhinnitt and Frank Krile, the COO, CEO and CFO respectively of Lend Lease's Australian operations, aided by group financial controller, Andrew Muller.

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