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Highlights:
- Today Downer announced its updated NPAT guidance for FY23, as it has recognised some irregularities in its past accounting activities.
- As a result, Downer’s share price dropped below 21% on ASX as of 1:12 PM AEDT today.
Today, the commercial service provider Downer EDI Limited (ASX:DOW) revealed the updated NPATA guidance for FY23 as a result of some irregularity in the company’s utilities business accounting.
Followed by this update, Downer’s share price plunged significantly on ASX. As of 1:12 PM AEDT, the company’s share price stood at AU$3.770 apiece, down by 21.458% on ASX today (8 December 2022).
As per the latest update, Downer said that it had noticed some accounting irregularities in its Australian Utility business. The irregularities took place due to some misreporting of revenue and work in progress in the past in one of the company’s maintenance contracts.
At present, Downer has initiated a detailed investigation which is being treated with utmost priority now.
As of now, the irregularities are estimated to result in an overestimation of pre-tax earnings in the order of AU$30 million to AU$40 million at the end of November 2022. It was accumulated across several financial years (FY20, FY21, FY22, and FY23). However, any other potential ongoing impact on earnings is still being evaluated by the company.
Trading updates of Downer
Earlier in the month of August, Downer’s expected underlying NPATA growth in FY23 was between 10% to 20%, considering no disruption in business due to COVID-19, weather, labour shortage, etc.
However, now Downer expects its underlying NPATA for FY23 to be in the range of AU$210 and AU$230 million, excluding prior period impacts of accounting irregularities.
