Posted on 10 Aug 2018
Slater and Gordon, backed by global litigation funder IMF Bentham, has filed a class action against Brambles Ltd in the Federal Court of Australia.
The claim is brought on behalf of all shareholders who purchased shares in Brambles between 18 August 2016 and 17 February 2017 (inclusive). It is alleged that during this period, Brambles misled investors, and wrongly withheld information it was required to disclose as an ASX-listed entity.
Brambles Ltd is an ASX 20 company that operates the CHEP and IFCO logistics brands with a supply chain of reusable pallets, crates and containers across more than 60 countries.
After announcing the investigation into the class action in April this year, a large number of investors came forward to register their claims with Slater and Gordon and IMF Bentham.
Slater and Gordon Associate Kaitlin Ferris said investors lost millions of dollars after Brambles revised its FY17 profit guidance in January and February 2017.
“We have had a lot of interest from both institutional and ‘Mum and Dad’ investors in joining the class action,” Ms Ferris said.
“Many of these shareholders have expressed their concern about Brambles’ conduct in the lead up to the 2017 downgrade announcements. These views are consistent with our investigations to date, which have revealed that there is a strong case to be made that Brambles misled the market and breached its continuous disclosure obligations.
“Today marks an important step in the proceeding, and we expect to appear before the Federal Court soon to seek orders for a timetable which will move the case along,” she said.
The claim alleges that Brambles knew that the cost of its exceptional profit growth in FY16 would make future growth at the same rate in FY17 impossible. The market was misled to believe that the growth achieved in Brambles’ profits in FY16 was the ‘new normal’.
But in reality, the company had cannibalized FY17 growth, by having reaped the benefits of increased pallet sales in FY16 while incurring only a fraction of the associated costs. These costs inevitably flowed through in FY17, which meant that Brambles was never going to achieve a profit result consistent with its guidance.
“This case doesn’t only call into question Brambles’ statements about its future performance – when you look at what the company was saying when announcing its ‘exceptional’ FY16 results, and compare that with the explanation Brambles eventually provided for its poor FY17 performance, it’s clear that the market was misled about the quality of the company’s FY16 growth from the very beginning,” Ms Ferris said.
The case has been issued as an ‘open’ class action, meaning that any affected shareholders can still register their claims, and seek to recover losses suffered as a result of Brambles’ alleged misconduct.
The allegations against Brambles
The claim as filed includes allegations that Brambles Ltd:
- Did not have reasonable grounds to issue its FY17 Guidance in August 2016;
- Therefore made misleading and deceptive representations to the market in breach of section 1041H of the Corporations Act 2001 (Cth); and
- Breached its obligations of continuous disclosure by failing to withdraw the FY17 Guidance under ASX Listing Rules 3.1, in contravention of section 674(2) of the Corporations Act.
The action is being funded by IMF Bentham and participants are not required to pay any fees unless the class action is successful.