Victorian Registry, Federal Court of Australia (VID933/2010).
On 7 and 14 September 2009, Sigma, as part of a rights issue through which it raised $297m of capital, provided profit guidance for the full year ending 31 January 2010.
The guidance provided that the market should expect modest growth with no major changes or disruptions to the business. At this time, shares were trading at around $1.02.
On 25 February 2010, Sigma announced a trading halt that lasted 5 weeks.
On 31 March 2010, Sigma emerged from its trading halt releasing its financial results for the full year ending 31 January 2010. These results disclosed:
- underlying net profit after tax (NPAT) of $67.7m (some 26.5% below market expectations);
- reported NPAT loss of $389m; and
- goodwill impairments of $424.4m.
In response to the 31 March 2010 announcement, Sigma’s share price fell to around $0.44 – a fall of approximately 55%.
On 29 October 2010 Slater and Gordon issued a representative proceeding against Sigma in the Federal Court of Australia. The proceeding was brought on behalf of individuals who:
- purchased shares in Sigma between 7 September 2009 and 25 February 2010; and
- executed a litigation funding agreement with Comprehensive Legal Funding.
The class action alleged that Sigma:
- engaged in misleading or deceptive conduct in relation to the guidance provided on 7 and 14 September 2009 by providing guidance concerning its NPAT for the year ending 31 January 2010, without reasonable basis;
- engaged in misleading or deceptive conduct by overstating its first-half result of $32.2m by between 20 and 35 per cent; and,
- Sigma breached its continuous disclosure obligations by failing to inform the market of information, of which it ought to have been aware throughout the period, including the significant deterioration in Sigma’s share of the generic pharmaceuticals market to the extent that this varied from management’s expectations.
Following a court-ordered mediation, the parties reached agreement on a settlement of the proceeding on 24 October 2012. On 19 December 2012 the Federal Court of Australia approved the settlement of the Sigma Class Action.
Sigma paid a total of $57.5m which was distributed amongst the class action group members. Sigma did not admit liability under the terms of the settlement.
Slater and Gordon administered the settlement in accordance with a court approved Settlement Distribution Scheme. Following completion of the distribution in June 2013, the Court made final orders on 2 August 2013 and the proceeding concluded.
Settlement Approval (19 December 2012).