WiseTech to vigorously defend class action, once served
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More news: WiseTech says it has not been served with any originating process linked to a class action announced by law firm Phi Finney McDonald, but plans to defend any claim if served.
What they said: In an announcement to the ASX, WiseTech said it "has not been served with any originating process in respect of the class action proceedings. [WiseTech] intends to vigorously defend any such proceedings if they are served".
WiseTech faces shareholder class action over growth strategy disclosure
The news: Australia's biggest listed technology company WiseTech Global is facing a class action lawsuit in the Supreme Court of Victoria over allegedly misleading conduct in its financial guidance between August 2019 and February 2020 linked to its rapid acquisition of companies.
The context: The company allegedly told the market its earnings guidance was on track at a time when WiseTech was facing delays in the integration of the acquired businesses.
In 2019, WiseTech guided that it expected an EBITDA of $145 million to $153 million in FY20, 34% to 42% in EBITDA growth relative to the prior corresponding period and an EBITDA margin of 33.1%. WiseTech then affirmed this guidance on 23 October and 19 November 2019.
However, in February 2020, it revised down its FY20 EBITDA guidance to a range of $114 million to $132 million, and its EBITDA growth guidance down to a 5% to 22% range, and its EBITDA margin down to 28.3%. The company's share price fell 27.31% to the close of trade on 19 February 2020 and a further 11.78% the following day.
The case, brought by law firm Phi Finney McDonald alleges that WiseTech engaged in misleading conduct and breached its disclosure obligations as it "aggressively acquired companies in pursuit of its global expansion strategy. The company had acquired approximately 40 companies in the years preceding the claim period," the firm said in a statement.
Tania Noonan, principal lawyer at Phi Finney McDonald said: “The class action alleges that WiseTech issued its FY20 guidance without reasonable grounds and that, in truth, its FY20 EBITDA margin was always likely to be below FY19 given the time and investment required to integrate acquired businesses”.
Phi Finney McDonald noted: "The class action does not directly engage with recent revelations regarding the conduct and behaviour of former CEO Richard White. However, Phi Finney McDonald is investigating whether its clients have further claims against WiseTech in relation to those issues".
Last month, WiseTech said it was reviewing media reports of allegations against the firm's founder and CEO White by a woman who he had a sexual relationship with that resulted in the businessman paying her millions of dollars to settle the matter.
The source: Phi Finney McDonald
