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A Report on Aspects of the Initial Public Offering of Wakefield Hospital Limited in 2001

BACKGROUND TO THIS REPORT

4. WHL made an offer of shares to the public in a combined investment statement and registered prospectus dated 6 August 2001 (the "offer document"). Following the IPO, the shares were allotted on 5 September 2001 and WHL listed on the New Zealand Stock Exchange on 6 September 2001.

5. Just over 2 months later, on 16 November 2001, WHL announced its half-year results for the period from 1 April 2001 to 30 September 2001. The results showed a profit after tax that was about 60% lower than the previous year. The company attributed this to:

   "a reduced amount of cardiac surgery done under contract to public sector healthcare organisations".

6. At the same time the Chairman of the company, Mr John Calder, released a statement saying that WHL's "full-year earnings are likely to be about 50% of the profit forecast when the company floated".

7. On 17 December 2001 the Market Surveillance Panel announced the outcome of an investigation into compliance by WHL with the continuous disclosure obligations of the NZSE Listing Rules. The Market Surveillance Panel's investigation looked at the period between the release of the offer document on 6 August 2001 and the announcement by WHL on 16 November 2001 of its half-year results.

8. The Market Surveillance Panel concluded that WHL had inadvertently breached Listing Rule 10.1 in failing to make timely disclosure of relevant information to the market, namely a known decline in publicly funded cardiac surgery. WHL accepted the Panel's findings.

9. In addition to its formal findings the Panel's decision concluded:

   "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"

10. The matter was referred to the Securities Commission on 17 December 2001.