Securities Commission to consider Wakefield prospectus

By Phil Boeyen, ShareChat Business News Editor

Monday 17th December 2001

Recently listed healthcare provider Wakefield Hospital (NZSE: WFD) has landed itself in hot water with the Market Surveillance Panel for failing to disclose relevant information about forward profits to the market.

The panel has been investigating the hospital company after it released half-year results on November 16 and stated that full-year profits were likely to be half the amount forecast in its August prospectus.

The prospectus forecast a full-year surplus of $1.965 million. Interim profit after tax was $417,000.

In its finding the MSP says that central to the reduced earnings and full year forecast for the hospital company was a substantially lower volume of publicly funded cardiac surgery than was forecast in the prospectus.

"By early November 2001 (at the latest), WFD was aware of a decline in publicly funded cardiac surgery which was more substantial than that anticipated in the forecast contained in the prospectus, and the likely impact that this reduction would have on earnings.

"This knowledge put the attainment of the Prospectus forecast into considerable doubt, and constituted Relevant Information that should have been communicated to the market immediately under Listing Rule 10.1.1."

The panel says it accepts that the directors of WFD were inadvertent in withholding the information from the market but that nonetheless, the company breached the rule and should have advised the market earlier.

"The panel's investigation necessarily involved some consideration of the soundness of the prospectus forecasts themselves. The determination of this matter does not fall within the jurisdiction of the panel, but it will be referring this question to the Securities Commission for its consideration."

The market has punished WFD severely for its less-than-forecast performance, rerating it well down from its float price of $2.50 per share.

Comments from our readers

No comments yet