Downer EDI class action

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.

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).