Wigton inadequate disclosures in the quarterly report.
The capital market got a huge body blow with the release of Wigton Windfarm quarterly results for the first quarter to June that suggests a bright future outcome but the reality is vastly different.
Analysis of the results and historical data show clearly that investors have been unwittingly, duped into believing that the earnings of the company had blasted off sharply from 5.5 cents reported for the 2019 fiscal year, but nothing could be further from the truth. The directors’ report accompanying the June quarterly results is just inadequate, as it does not clearly communicate what investors can expect for the rest of the year. There is just very limited historical information to go by to help.
The company posted positive results for the June quarter, with profit jumping 109 percent from $175 million to $366 million with modest foreign exchange gains, resulting in earnings per share of 3.3 cents. IC Insider.com’s computation puts full year’s earnings at 7 cents for the year assuming revenues grow 6 percent for the year.
Revenues rose 6 percent to $833 million for the quarter with gross profit rising from $606 million to $641 million. Other income comprising $34 million in foreign exchange gains moved from $60 million to $68 million. Importantly, finance cost fell sharply from $358 million to $147 million while administrative expenses edged slightly higher to $79 million from $78 million. The data is showing revenues in the first quarter of 2018 as 32 percent of the full year’s earnings. The next three quarters earned 68 percent or an average of 22.5 percent. If the similar development takes place this year, then earnings in the balance of the year will be just above that for the first quarter, as fixed costs will reduce quarterly profit considerably from that reported in the first quarter.
Going forward, there will be added cost ongoing cost associated with the listing, including listing fees, registrar services for the more than 31,000 shareholders, production of the annual report and annual general meeting as well as additional staffing.
Directors have a responsibility to communicate critical information to investors so that they can properly interpret the financial information presented and not having to guess exactly what is placed before them.
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The Wigton’s June quarterly report falls far short of what is expected of a company of its size and with so many shareholders. The quarterly shows that production of energy grew 2.9 percent to 55,331,319 KWH but the directors stated that they expect to produce 169 Giga Watt Hours the average over the past three years. There is no mention of how the first quarter’s production, relates to the full year’s output. There is no mention of seasonality in the report. In fact, a review of the prospectus provides no information about seasonality, a critical bit of information that is missing. “If the company’s business is highly seasonal, IAS 34 encourages disclosure of financial information for the latest 12 months, and comparative information for the prior 12-month period, in addition to the interim period financial statements. [IAS 34.21]”
The shocking discovery is the composition of directors and shareholders of the company. People in authority should avoid conflicts of interest. The big question is, on what basis was the Wigton’s prospectus approved with a board member of the Financial Services Commission shown as a director of the company and subsequently a shareholder? Judges cannot oversee cases involving themselves, to do so, would be a huge conflict.
