WiseTech short could impact super

Several superannuation funds could get caught in the crosshairs after a short report on WiseTech by J Capital has seen shares in the key Australian tech stock plummet.

AustralianSuper, for example, has a $4.2 million holding in WiseTech.

Australian Ethical discloses on it has a holding in WiseTech but does not say how much that investment represents.

The J Capital short report said WiseTech has overstated profits since listing, with the short seller estimating that overstatement might amount to 178% of revenue.

J Capital estimates an underlying organic growth rate for WiseTech of 10%, whereas WiseTech claims 25%.

Especially suspect, according to the short seller, is the company's European revenue growth - which it alleged is overstated by $48 million.

J Capital said: "We have obtained financial fillings of European subsidiaries that showed declines in revenue and that support our estimates and we have spoken with former employees who reported much lower organic growth."

The short seller said WiseTech is able to shield subsidiaries from audit scrutiny through a deed of cross guarantee.

"WiseTech's Australian subsidiaries, through which much of the international revenue has been channeled, have been shielded from audit scrutiny," J Capital said.

WiseTech chair of the audit and risk management committee Christine Holman resigned from her role with the company last week.

Securities in the company were placed on a trading halt on Monday 21 October as a result of the short report.

WiseTech called the short report "misinformation" and said: "WiseTech rejects the claims of financial impropriety and irregularity contained in the report. The report was published without prior inquiry to WiseTech."

WiseTech founder and chief executive Richard White said: "Regardless of the noise and market disruption of these short-seller, self-serving and misleading claims, we will continue to strive to ensure our shareholders are informed about the fundamental performance of our business."

The company also said the report is clear that J Capital stands to gain from a decline in WiseTech's share price.

White adeed: "We are very concerned that the allegations in the document may mislead and manipulate the market to the detriment of WiseTech's business and its shareholders, large and small."

He called for the regulator to investigate attempts by overseas short sellers to target ASX companies.

WiseTech said no overstatement in profit, growth or revenue was made and that accounts were accurate and not inflated through acquisition accounting.

It also said there was no overstatement in European revenues and that pre-IPO accounting was not unusual.

Read more: J CapitalAustralian EthicalAustralian SuperChristine HolmanRichard WhiteWiseTech of
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