1.1 The proposed proceedings are against WDS Limited (WDS) for...

1.1 The proposed proceedings are against WDS Limited (WDS) for failing to disclose material
information and misleading and deceptive conduct concerning2 forecast earnings for the
financial year ending on 30 June 2010 (FY10).
1.2 WDS is a publicly listed company on the Australian Securities Exchange (ASX: WDS). WDS
principally provides services to the mining, oil and gas and infrastructure industries.
1.3 On 26 August 2009, WDS delivered its FY09 results, reporting EBITDA of $54m and NPAT
of $20m. The company stated that it expected revenues in FY10 to be in line with FY09 and
EBITDA margins to stabilise/improve (the August Forecast).
1.4 On 27 October 2009, WDS confirmed its new expectation that FY10 NPAT would be in the
range of $22 - $24m (which WDS noted was lower than the then market consensus of circa
$26m, excluding the Titeline acquisition) (the October Forecast). The October Forecast
was based on recent conversations with several of its clients involved in the Queensland
CSG-LNG projects concerning construction start dates being at the earliest in 4QTR FY10
and most probably 1QTR FY11 (the October CSG-LNG Information).
1.5 Immediately following the 27 October 2009 announcement, WDS share price dropped from
$2.06 to $1.76 on a trading volume of 3.4m.
1.6 Despite WDS noting at a JP Morgan Conference on 17 November 2009 that the impacts of
the Global Financial Crisis on WDS included heightened operational uncertainty (project
delays, changes to clients short term work programs and delays in remobilisation of existing
projects), falling visibility on forward workflow and margin pressure, no change was made to
the October Forecast.
1.7 On 2 February 2010, WDS revised its guidance for FY10 EBITDA to approximately $31m
and FY10 NPAT to approximately $7m (the February Forecast). Immediately following
this announcement, WDS share price dropped from $1.51 (it had dropped from $1.70 in the
previous 3 days trading on low volumes) to $0.69 on a trading volume of over 48m.
1.8 On 16 February 2010, WDS announced the resignation of Gareth Mann, the Chief Executive
Officer and Managing Director, and also announced a further downgrade to FY10 NPAT of
$1.5m attributable to its oil and gas business.
1.9 On 27 April 2010, WDS further revised the February Forecast and announced that FY10
NPAT was anticipated to be a loss from normal operations (including restructuring costs) in
the range of $7m - $10m citing several key impacts as underpinning this result.3 The WDS
share price dropped to $0.60 by 30 April 2010.