FORECAST: WFD: Impact of Budget tax changes on Wakefield Health

6 Aug 2010 3:35 pm

WFD 06/08/2010 FORECAST

REL: 1535 HRS Wakefield Health Limited

FORECAST: WFD: Impact of Budget tax changes on Wakefield Health

The New Zealand Government's budget announced on 20 May 2010 made a number of significant changes to tax rules, including the removal of depreciation on buildings for tax purposes and a reduction in the company tax rate from 30% to 28%. These changes will be effective for Wakefield Health from 1 April 2011. In common with other companies that have a substantial investment in buildings, the removal of depreciation for tax purposes will have a material non-cash one-off impact on earnings as a result of an accounting adjustment to the deferred tax balance required by New Zealand equivalents to International Financial Reporting standards (NZ IFRS). Based on preliminary estimates, Wakefield's deferred tax liability will increase by approximately $6 million, resulting in an equivalent increase in reported tax expense. This adjustment is subject to finalisation and review by the Company's auditors and therefore the final amount may differ from this preliminary guidance. It is an accounting entry only and will have no impact on the cash flows, underlying profitability or approach to distributions of the Company. None of the Company's debt covenants will be at risk of breach as a result of the adjustment. A finalized adjustment will be recognised in the Company's results for the six months ending 30 September 2010, which are expected to be released in November 2010. We are aware that there are changes to accounting standards under consideration by international accounting standard setters that may impact this area in future, but it will be some time before any such changes are finalised. The ongoing effect of the loss of a depreciation deduction will be an increase in tax expense that will be offset by the benefits of the reduction in company tax rates. Ends Issued by Wakefield Health Limited 8 August 2010

Any further enquiries, contact Bevan Miller, Chief Financial Officer, Wakefield Health Ltd. Telephone (04) 381 8127 End CA:00198103 For:WFD Type:FORECAST Time:2010-08-06:15:35:48

More announcements for WFD