What is the Downer EDI class action about?
On 17 August 2022, Downer EDI published its FY22 financial results and gave guidance for the 2023 financial year (FY23) of underlying net profit after tax and before amortisation of acquired intangible assets (NPATA) of 10% to 20% growth versus FY22.
Downer EDI reaffirmed this guidance on 3 November 2022, when it held its Annual General Meeting and published accompanying ASX announcements.
On 8 December 2022, Downer EDI informed the market that it no longer expected to meet its FY23 underlying NPATA guidance, and announced that it now expected to achieve underlying NPATA in FY23 of between $210 million and $230 million, being growth of approximately -7% and 2% versus FY22.
On the same day, Downer EDI also informed the market that it had identified accounting irregularities in its Australian Utilities business involving historical misreporting of revenue and work in progress in one of Downer EDI’s maintenance contracts, which had resulted in a historical overstatement of pre-tax earnings in the order of $30 million – $40 million at the end of November 2022, accumulated across FY20-23.
Following Downer EDI’s disclosures on 8 December 2022, its share price declined by approximately 20.4% ($0.98) in a single day of trading.
On 27 February 2023, Downer EDI published its 1H23 financial results and provided an update on its investigation into the accounting irregularities. With respect to its FY23 underlying NPATA guidance, Downer EDI announced that it now expected to achieve underlying NPATA in FY23 of between $170 million and $190 million, being a further downgrade to its guidance first announced on 17 August 2022.
Downer EDI also informed the market that its investigation into the accounting irregularities had been completed, which had found, among other things, that its post-tax earnings were overstated by a total of $22.2 million between April 2020 and 30 June 2022, of which $1.7 million related to FY20, $8.8 million related to FY21 and $11.7 million related to FY22. Downer EDI also disclosed that its post-tax earnings for the contract the subject of the accounting irregularity for 1H23 was a loss of $12 million.
Following Downer EDI’s disclosures on 27 February 2023, there was a further decline in Downer EDI’s share price of approximately 23.7% ($0.94) in a single day of trading.
On 4 May 2023, Maurice Blackburn filed a class action in the Supreme Court of Victoria alleging that Downer EDI engaged in misleading or deceptive conduct and breached its continuous disclosure obligations.
You are eligible to register for the Downer EDI Class Action if you purchased or acquired Downer EDI shares between 23 July 2019 and 24 February 2023 (inclusive).
Frequently asked questions
Nothing. The action is being run on a 'no win, no fee' basis.
Registering for the Downer EDI Class Action will not expose you to any out of pocket cost. Unless and until there is a successful outcome, all costs will be borne by Maurice Blackburn.
In the event of a successful outcome, any costs payable to Maurice Blackburn will be deducted from, and will not exceed, any compensation that you are entitled to receive.
It is difficult at this early stage to predict how much you may ultimately recover as a result of losses that may have been suffered.
Following registration, we will be able to provide you with a preliminary loss calculation, to give you an idea of your possible loss on one of the methods which might be employed by the Court. However, all claims will be the subject of further investigation and legal advice and your loss figure may change.
No. Eligibility is not determined by whether or not you still hold shares in Downer EDI. As long as you acquired or purchased Downer EDI shares during the claim period you are at this stage eligible to register to participate in the Downer EDI Class Action.
First, it allows Maurice Blackburn to confirm that you are a group member and to provide you with information concerning the progress of the investigation and litigation and your potential claim, as well as to contact you if you become eligible to receive compensation. You may become eligible to receive compensation in the event that the Downer EDI Class Action settles at a mediation, or if there is a favourable judgment.
Second, there is no cost to register. If you wish you are also able to sign a costs agreement for Maurice Blackburn to represent you in the proposed class action.
Third, in the event of a successful settlement or judgment, there is a risk that Maurice Blackburn will not know about your claim or how to contact you, if you have not registered.
Maurice Blackburn is Australia’s leading class actions law firm with an unparalleled record of helping our clients secure the nations’ largest class actions recoveries, totalling over $3.7 billion since 1998.
Australian leaders in class actions.
Our reputation for excellence in class actions is unparalleled, having recovered more than $4.2 billion for clients.
We are the only Australian class actions firm to deliver $100m+ settlements to clients in shareholder and listed securities actions, which we have done on ten occasions.
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