If you are a shareholder of a2 Milk and purchased shares between 19 August 2020 and 9 May 2021, you may be entitled to compensation. A class action has been launched against a2 Milk Company Limited following allegations of misleading statements and breach of continuous disclosure obligations. This class action, which has been consolidated by Slater and Gordon and Shine Lawyers, aims to recover losses incurred by investors who were affected by the company’s inaccurate financial guidance and subsequent revisions.
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What is the Class Action About?
The legal claims center around misleading or deceptive conduct and a breach of continuous disclosure obligations. Shareholders are alleging that a2 Milk provided financial guidance for the 2021 financial year (FY21) that was not supported by reasonable grounds, causing investors to suffer significant losses when a2 failed to meet its expected revenue and profit targets.
The Key Claims in the Class Action
On 19 August 2020, a2 Milk issued financial projections, including expectations for strong revenue growth and an EBITDA margin between 30% and 31% for FY21. However, subsequent announcements in the months that followed revealed significant discrepancies, ultimately leading to a substantial drop in share value. These announcements included:
- 28 September 2020: Revised revenue estimate of $1.80bn to $1.90bn and EBITDA margin of 31%.
- 18 December 2020: Further reduction to $1.40bn to $1.55bn revenue and EBITDA margin of 26% to 29%.
- 25 February 2021: Revenue estimate of $1.40bn and EBITDA margin of 24% to 26% (excluding transaction costs).
- 10 May 2021: Final revision, with expected revenue of $1.2bn to $1.25bn and EBITDA margin of 11% to 12%.
Slater and Gordon argues that a2 Milk should have known, by 19 August 2020, that these projections were not achievable due to factors like discounting and disruption in sales channels. The daigou/reseller market, an important sales channel for a2, was impacted, further affecting their financial performance.
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Allegations Against a2
Slater and Gordon alleges that a2 Milk misled investors by maintaining unrealistic FY21 guidance despite knowing that the company was facing challenges, including pricing pressures from the e-commerce market. Additionally, a2 is accused of failing to disclose material information that would affect the company’s financial performance, thus breaching the Corporations Act 2001 (Cth).
Group Costs Order (GCO) Approved
In a significant development, the Supreme Court of Victoria approved a Group Costs Order (GCO) in December 2023, at a rate of 24% (including GST). This means that Slater and Gordon and Shine Lawyers will receive a percentage of the settlement or award recovered from a2. Importantly, group members (shareholders participating in the class action) will not face out-of-pocket expenses for legal fees, as the costs will be covered by the lawyers, even if the case is unsuccessful.
Who is Eligible to Join the Class Action?
The class action is open to all shareholders who purchased a2 Milk shares between 19 August 2020 and 9 May 2021. Additionally, claims from shareholders who bought shares before 19 August 2020 and held them until after 28 September 2020 are also included.
If you purchased shares within the claim period and believe you were impacted by these events, you may be eligible for compensation.
How to Register Your Interest
To stay informed and participate in the a2 Milk Shareholder Class Action, you need to register your interest through the registration page hosted by Shine Lawyers. Registration is free, and there are no out-of-pocket costs for participants. To ensure you don’t miss important updates as the case progresses, it’s crucial to sign up.
Important Dates and Deadlines
- Claim Period: 19 August 2020 – 9 May 2021
- Registration Deadline: Register as soon as possible to stay updated and ensure your eligibility for participation.
Frequently Asked Questions
1. Am I eligible to register my interest?
If you purchased a2 shares during the specified claim period, you are eligible to register.
2. Should I register now if I bought shares during the period?
Yes, it is important to register now to ensure you are kept up to date on the proceedings.
3. Will I have to pay anything for participating?
No, participants will not face any out-of-pocket costs. The Group Costs Order ensures that legal fees are covered by Slater and Gordon and Shine Lawyers, even if the case is unsuccessful.
4. What documents are available for review?
Key documents, such as the Amended Consolidated Statement of Claim, Amended Defence, and Group Proceeding Summary Statement, are available for group members.
Take Action Now
If you are a shareholder of a2 Milk and believe you have suffered losses due to misleading financial guidance, don’t miss the chance to participate in the class action. Register your interest today and ensure you’re informed every step of the way. For more details or inquiries, contact [email protected].
This class action provides a crucial opportunity for affected shareholders to seek compensation and hold a2 Milk accountable for its actions. Act now to ensure your rights are protected.
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