This article is from the Australian Property Journal archive
SHAREHOLDERS in retirement village operator Fig Tree Developments, formerly Village Life, have won a four year long battle.
Yesterday IMF Australia, which is also funding the class action against Centro and Centro Retail Trust, announced that it has reached an out of court settlement with Fig Tree Developments and certain directors.
The terms of the conditional settlement are confidential between the parties. But it was revealed that IMF will receive revenue of approximately $1.4 million and generate a profit after capitalised overheads of approximately $0.4 million (before tax) from this investment.
In July 2005, IMF launched a $25 million class action against Village Life on behalf of shareholders who purchased shares between November 2003 and May 2005.
IMF claimed Village Life issued three profit downgrades between February and June 2005, stating the company had incurred construction delays or development delays and had other problems, including cost over-runs on several unidentified projects and also difficulties with the tenanting of completed villages.
In 2005, Village Life’s shares fell from a high of $2.80 in January 2005 to less than $0.30 after the third profit downgrade on 21 June 2005.
In its prospectus, Village Life forecast that it would complete the construction of 102 villages (approximately 5,000 units) and make a net profit after tax of $15.4 million for the year to June 2005. Village Life fell short of this construction target, completing the construction of 79 villages (slightly less than 4,000 units).
On September 2005, Village Life delivered a profit of $2 million for the year to June 2005, 87% below the IPO forecast and in the following FY06, the company reported a net loss of $17.3 million.
Shareholders who purchased Village Life shares in the IPO, or on the market were seeking to recover losses incurred as a result of misleading and deceptive conduct and breaches of the continuous disclosure regime during this period. The conduct and alleged breaches relate to various statements and omissions made in the prospectus and during the course of 2004 and 2005.
Australian Property Journal
