Slater & Gordon Lawyers has announced a class action against GPT Group on behalf of shareholders, which will allege that the company:
1. provided earnings and distribution guidance to the market that was misleading and deceptive; and 2. subsequently failed to comply with its continuous disclosure obligations by informing the Australian Securities Exchange (ASX) as its forecast earnings deteriorated.
On 7 July 2008, GPT released a statement to the ASX, in which its forecast earnings for the 2008 calendar year were slashed by 27%.
1. Forecast operating income was downgraded 27% from $633m to $464m; 2. Distributions per stapled security was downgraded 30% from 28.9c to 20.0c; and 3. Earnings per stapled security were downgraded from 29.4c to 21.2c.
This was in stark contrast to guidance provided by the company only six weeks prior and, in response, the price of GPT stapled securities fell by 24% over the following two days. It will be alleged that GPT provided forecasts to the market without reasonable basis and failed to disclose the extent to which its earnings were being supported by one-off asset sales.
Who Should Register?
If you acquired stapled securities in GPT Group between 28 February 2008 and 6 July 2008, you may register for this class action by calling Slater & Gordon on 1800 555 777 or by e-mail to [email protected].
Registration of your interest will allow Slater & Gordon to keep you informed about the matter as it proceeds, but does not make you a client of the firm, oblige you to join the class action, or cause you to become liable for any legal fees. If you request, we will send you information about retaining Slater & Gordon, if the class action proceeds.
Comprehensive Legal Funding will provide litigation funding to eligible shareholders subject to a sufficient level of interest in the proposed claim.
Chronology
28 February 2008 – GPT states that its earnings and distribution would be flat for 2008 when compared to its results for 2007.
1 May 2008 – GPT holds its Annual General Meeting where Chairman reassures the market, stating:
Since late last year we have seen rapid and indeed dramatic changes to the environment in which we all operate. World financial and credit markets have been shaken in a manner not seen for many decades. While the systemic risks seem to have subsided the fallout on equity markets will continue for some time yet. Clearly, GPT is not immune from this changed environment and neither is anyone else.
Those organisations that can face the new realities and can adapt their strategies to meet them, will thrive. GPT intends to be one of those and is adapting and changing rapidly as it has always done.
GPT’s great strengths are its size, its diversity, and the high quality of its assets and in particular, core Australian investments that represent 80 per cent of total assets of $14 billion. This year like last year, GPT will generate over $600 million in net operating cash flow which will be distributed to you our owners. In 2004 before GPT became independent the figure was $440 million. That translates to a 30 per cent uplift in distributions from 22 cents per security to 28.9 cents per security in three years.
22 May 2008 – GPT releases its March Quarterly update, which confirmed that the performance of GPT’s high quality investment portfolio remained solid. No updated guidance on earnings or distribution was provided.
7 July 2008 – GPT downgrades its results after allegedly “stress testing” the assumptions underlying its previous guidance over the preceding days.
GPT Price at posting:
87.5¢ Sentiment: None Disclosure: Not Held
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