Global finance director Michael Daly warned CFO Simon Holt in the email on August 7, 2013 that there was a “strong sense” within the company that the 2014 targets for both the full year and half year were a”stretch”.

“And I agree with that given current performance and the reliance on timely realisation of the cost saving targets,” Daly says in the email, referred to in a second further amended statement of claim filed in the Federal Court last week.

WorleyParsons is accused of misleading the market with overly positive earnings guidance for the 2014 financial year in presentations to the market in August and October 2013.

The class action alleges company executives, including CEO Andrew Wood and Holt, were aware that there was no reasonable basis for the earnings guidance, which was downgraded on November 20, 2013.

In another email, a top finance executive tells Daly he expects the earnings for the first half of 2014 will “shock the market”. The email was sent the day after an October 10, 2013 presentation to the market by Wood, in which he repeats positive earnings forecasts from August.

WorleyParson’s global director of corporate finance, John Allen tells Daly that he had “encouraged a more pessimistic outlook”, but that Wood and Holt “remained optimistic.”

“Andrew did talk to a lower H1, but unless we get some very good answers on [the] ATM [project] and some of our other disputed amounts, my personal view is that our first half number is going to shock the market – they will simply not believe that we can do double our first half in the second half (and I would have to say that I understand where they are coming from). I actually encouraged a more pessimistic outlook but Andrew Wood and Simon Holt remain optimistic,” Allen wrote.

The class action alleges that WorleyParsons, through its officers, was aware that its FY14 earnings would fall materially short of expectations and that the company breached its continuous disclosure obligations by not informing the market.

The earnings guidance made on six occasions in August and October ahead of the November 2013 downgrade was misleading and without reasonable basis, it claims.

The company lost a bid in January last year to have the statement of claim dismissed for abuse of process.

“The close proximity in time between the giving of the earnings guidance and the November earnings downgrade, in and of itself, is sufficient to require an explanation from WorleyParsons as to the basis upon which the August 2013 and October 2013 earnings guidance was given and the reasons for the change in WorleyParsons’ opinion as to future earnings between those dates and the date when the November earnings downgrade was given,” Justice Lindsay Foster said.

“WorleyParsons endeavoured to demonstrate that a satisfactory explanation of these matters was provided by WorleyParsons in its release to the ASX on 20 November 2013. Once again, however, this argument developed into a detailed consideration of matters which can only ultimately be determined at the trial.”

Crowley is represented by ACA Lawyers. WorleyParsons is represented by Herbert Smith Freehills.

The case is Larry Crowley v WorleyParsons Limited.