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WiseTech Global hit with shareholder class action
Investors have filed a class action against WiseTech Global over allegations it breached disclosure obligations.
Naomi Neilson
Phi Finney McDonald filed the action in the Victorian Supreme Court on behalf of shareholders who acquired an interest in the logistics software behemoth between 21 August 2019 and 18 February 2020.
In August 2019, WiseTech guided the market to expect between $145 million and $153 million in its earnings before interest, taxes, depreciation and amortisation (EBITDA) for the following financial year.
It also provided a guidance of 34 to 42 per cent in its EBITDA growth relative to the prior corresponding period, and an EBITDA margin of 33.1 per cent. This was affirmed in October and November 2019.
In February 2020, WiseTech revised its EBITDA guidance down to a range of $114 million to $132 million, its growth guidance down to a range of 5 to 22 per cent, and its margin down to 28.3 per cent.
By the end of the day, its share price had fallen 27.31 per cent. It fell another 11.78 per cent the following day.
The company admitted a number of the businesses it had acquired in the previous years had been underperforming.
Phi Finney McDonald principal lawyer Tania Noonan said the guidance was allegedly issued “without reasonable grounds”, with its EBITDA margin “always likely to be below FY2019 given the time and investment required to integrate acquired businesses”.
“For aggressive and high-growth companies, pride often comes before a fall. Good corporate governance requires a culture of compliance – not with powerful founders – but with the law,” Noonan said.
“Investors are entitled to expect that Australian publicly listed companies have a reasonable basis for their financial forecasts.
“The integrity of the Australian share market requires companies to immediately disclose price-sensitive information in accordance with the ASX listing rules so that investors can make informed decisions.”
WiseTech’s founder, chief executive and major shareholder, Richard White, stood down late last month after media reported on allegations he invested in businesses and bought houses in exchange for sex.
In a statement on the Australian Stock Exchange, the logistics software behemoth said White would take a “short period of leave” and return in a consulting role that pays $1 million a year.
Phi Finney McDonald noted it was aware of these media reports, but the class action has not directly engaged with the allegations.
However, the firm said it would investigate whether its clients have any further claims against WiseTech “in relation to those issues”.
Naomi Neilson
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
You can email Naomi at:
