Austal and former chief executive David Singleton are facing legal action over an alleged failure to properly disclose a change in the company’s earnings guidance in 2016.
In a statement published by the Australian Securities and Investments Commission, the corporate regulator alleges Austal did not immediately disclose to the market expectations its US shipbuilding division would generate a significant loss in the year to June 2016.
Austal had released its earnings guidance in December 2015 indicating its US business would be profitable for that period and affirmed that guidance in February 2016.
ASIC alleges Austal was aware that, from at least June 4 of that year, it would likely need to undertake a writeback of at least US$90 million on its littoral combat ship program, which would have generated a significant loss for the company in the year to June 2016.
Austal reported a writeback of US$115 million on the program in July 4 and recorded a statutory group EBIT loss of between AU$116 million and AU$121 million.
ASIC has alleged Austal breached its continuous disclosure obligations and that the shipbuilder had engaged in misleading or deceptive conduct by failing to correct or withdraw its previous guidance.
The regulator also alleges Mr Singleton, who was Austal’s chief executive between 2016 and 2020, contravened the corporations act for his involvement and by failing to exercise reasonable care and diligence as a company director.
Austal acknowledged the proceedings in a release to the ASX earlier today.
“Austal will consider the documentation provided by ASIC before deciding its next steps,” the statement said.
“Austal will keep shareholders advised of all material developments in relation to the proceedings.”
Shares in Austal finished trading at $2.27 today, down $0.02 on opening.