This is a listed-company disclosure case, but the lesson matters for any business that gives investors confident numbers. Worley told the market it expected increased FY2014 earnings. Internally, the budget had been adjusted up from earlier drafts, and the later evidence included management notes, budget assumptions, market conditions and internal warnings that the targets were stretched.
The Full Court allowed Mr Crowley's appeal and dismissed Worley's cross-appeal. It held that the remitter judge had been wrong on the loss question. Once contraventions had been established, the Court considered that the analysis should start with the fact that Worley had published future-performance information that was misleading or deceptive and lacked a reasonable basis.
The Court found some loss had been proved and quantified share price inflation for Mr Crowley's purchase at negative 5.92%, producing an amount of $593 plus interest.
For founders, boards and finance teams, the practical point is evidence. Guidance is not protected just because directors believed it or because the board signed off. The assumptions underneath the number matter. If senior managers know the budget is stretched, if market conditions have changed, if forecasts depend on large management adjustments, or if the business later cannot explain the bridge from internal numbers to public statements, the disclosure risk rises sharply.
Growth companies should build this discipline before they are public.