ASIC v Electro Optic Systems Holdings Limited - Continuous Disclosure Contravention

Original Word Document (171.1 KB) FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Electro Optic Systems Holdings Limited [2026] FCA 405

| File number(s): | ACD 105 of 2025 |
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| Judgment of: | JACKMAN J |
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| Date of judgment: | 8 April 2026 |
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| Catchwords: | CORPORATIONS – application for declaration of contravention of s 674A(2) of the Corporations Act 2001 (Cth) – agreed penalty sought – where defendant failed to notify ASX of changes to revenue forecast which could reasonably be expected to have a material effect on the value of its shares – appropriateness of agreed penalty considered – significance of theoretical maximum penalty considered – mitigating factors considered – declarations made – penalty ordered |
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| Legislation: | Corporations Act 2001 (Cth)

Crimes Act 1914 (Cth) |
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| Cases cited: | Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; (2017) 254 FCR 68

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450

Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; (2015) 327 ALR 540

Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 3) [2017] FCA 1018

Australian Competition and Consumer Commission v Mercedes-Benz Australia/Pacific Pty Ltd [2022] FCA 1059; (2022) 163 ACSR 645

Australian Competition and Consumer Commission v Murray Goulburn Co-operative Co Ltd [2018] FCA 1964

Australian Competition and Consumer Commission v Samsung Electronics Australia Pty Ltd [2022] FCA 875

Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; (2018) 262 FCR 243

Australian Securities and Investments Commission v AGM Markets Pty Ltd (In Liq) (No 4) [2020] FCA 1499; (2020) 148 ACSR 511

Australian Securities and Investments Commission v National Australia Bank Ltd [2025] FCA 947

Australian Securities and Investments Commission v Vanguard Investments Australia Ltd (No 2) [2024] FCA 1086

Australian Securities and Investments Commission v Westpac Banking Corporation (No 3) [2018] FCA 1701; (2018) 131 ACSR 585

Australian Securities and Investments Commission v Westpac Banking Corporation [2019] FCA 2147

Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Westpac Banking Corporation [2020] FCA 1538; (2020) 148 ACSR 247

Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482

Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1

Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68

McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29; (2011) 202 IR 467

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285

Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249

Trade Practices Commission v CSR Ltd [1990] FCA 762

Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49; (2021) 284 FCR 24 |
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| Division: | General Division |
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| Registry: | Australian Capital Territory |
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| National Practice Area: | Commercial and Corporations |
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| Sub-area: | Regulator and Consumer Protection |
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| Number of paragraphs: | 101 |
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| Date of hearing: | 2 April 2026 |
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| Counsel for the Plaintiff: | Mr J Hutton SC with Mr R Strong and Ms J Fumberger |
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| Solicitor for the Plaintiff: | Australian Government Solicitor |
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| Counsel for the Defendant: | Mr J Giles SC with Mr C D McMeniman |
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| Solicitor for the Defendant: | MinterEllison |
ORDERS

| | | ACD 105 of 2025 |
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| BETWEEN: | AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Plaintiff | |
| AND: | ELECTRO OPTIC SYSTEMS HOLDINGS LIMITED

ACN 092 708 364

Defendant | |

| order made by: | JACKMAN J |
| DATE OF ORDER: | 8 April 2026 |
THE COURT DECLARES THAT:

1.    Pursuant to s 1317E(1) of the Corporations Act 2001 (Cth) (Act), in circumstances in which:

(a)    Electro Optic Systems Holdings (EOS) was aware (within the meaning of “aware” in the listing rules of the ASX (Listing Rules)) by 25 July 2022 that:

(i)    there was no reasonable basis to consider that EOS was likely to achieve the revenue which had been forecast in the Revised July 2022 Forecast in relation to the Major Contract and New Business Opportunities and, in turn, it would not achieve revenue in FY2022 of $212.3 million; and

(ii)    FY2022 revenue was more likely to be $164 million with a possibility of an additional $27 million

(the July 2022 Forecast Information);

(b)    as at 25 July 2022, EOS ought to have disclosed the July 2022 Forecast Information to the market by issuing updated guidance to the market which reflected the July 2022 Forecast Information;

(c)    during the period 25 July 2022 to 31 October 2022, EOS:

(i)    had the July 2022 Forecast Information; and

(ii)    was required by ASX Listing Rule 3.1 to notify the ASX of the July 2022 Forecast Information;

(d)    during the period 25 July 2022 to 31 October 2022, the July 2022 Forecast Information was:

(i)    not “generally available” within the meaning of s 676 of the Act; and

(ii)    information which, if it were generally available, would have had a material effect on the price or value of EOS ordinary shares;

(e)    EOS did not announce the July 2022 Forecast Information to the market in the period 25 July 2022 to 31 October 2022; and

(f)    EOS was negligent as to whether the July 2022 Forecast Information was information that would, if it were generally available, have a material effect on the price or value of EOS ordinary shares,

EOS contravened s 674A(2) of the Act on 25 July 2022 and, by virtue of 1317QA, on each subsequent day until 31 October 2022.

THE COURT ORDERS THAT:

2.    Pursuant to s 1317G of the Act, EOS pay to the Commonwealth of Australia a pecuniary penalty in the amount of $4,000,000 in respect of the contraventions referred to in para 1 above within 28 days of the date of this order.

3.    EOS pay the plaintiff’s costs of and incidental to the proceedings agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKMAN J:

Introduction

1 The defendant (EOS) is a listed company whose ordinary shares are quoted on the Australian Stock Exchange (ASX).

2 On 29 June 2022, EOS made an announcement to the ASX in which it stated that it expected its revenue in 2022 to be equal to or exceed its revenue in 2021, namely $212.3 million (June 2022 Guidance Statement).

3 EOS admits that by 25 July 2022, EOS was aware (for the purposes of the listing rules of the ASX (Listing Rules)) that there was no reasonable basis to consider that it was likely to achieve revenue of $212.3 million in the 2022 financial year (FY2022), and that its revenue for that year was more likely to be $164 million with a possibility of an additional $27 million (the July 2022 Forecast Information). Despite that awareness, EOS did not immediately or at any time in the period from 25 July 2022 up to and including 31 October 2022 (Relevant Period) disclose the July 2022 Forecast Information to the ASX.

4 The plaintiff (ASIC) commenced this proceeding on 25 November 2025 by Originating Process, supported by an affidavit of Ms Jody Maree Marshall affirmed on 25 November 2025 (Marshall Affidavit), which annexes a Statement of Agreed Facts and Admissions (SAFA) prepared by ASIC and EOS for the purposes of s 191 of the Evidence Act 1995 (Cth).

5 In the SAFA, EOS:

(a)    has admitted that the July 2022 Forecast Information was information which, if it were generally available, would have had a material effect on the price or value of EOS ordinary shares (SAFA [85]);

(b)    has admitted that, by 25 July 2022, it was “aware” (within the meaning of the Listing Rules) of the July 2022 Forecast Information, and was required by ASX Listing Rule 3.1 to notify the ASX of the July 2022 Forecast Information (SAFA [82]–[83]);

(c)    has admitted that, by its failure to disclose the July 2022 Forecast Information to the ASX (on the basis of the facts set out in the SAFA), it contravened s 674A(2) of the Corporations Act 2001 (Cth) (the Act) on or about 25 July 2022 and, by virtue of s 1317QA of the Act, on each subsequent day until 31 October 2022 (SAFA [88]);

(d)    has admitted that its contraventions prejudiced the interests of EOS and its shareholders for the purposes of s 1317G(1)(b)(i) of the Act and were “serious” for the purposes of s 1317G(1)(b)(iii) of the Act (SAFA [89]); and

(e)    consents to the making of a declaration of contravention in the terms set out in Annexure A to the SAFA (SAFA [3]).

The position of the parties was clarified at the hearing as having been intended to state in SAFA [89] that EOS admits that the contraventions materially prejudiced the interests of EOS and its shareholders for the purposes of s 1317G(1)(c)(ii) of the Act, and were “serious” for the purposes of s 1317G(1)(c)(iii) of the Act.

6 ASIC and EOS join in seeking the declaration of contravention of s 674A(2) in the terms set out in Annexure A to the SAFA and jointly seek an order that EOS pay a pecuniary penalty of $4 million: Marshall Affidavit [3].

7 The parties submit, and I accept, that the relief sought appropriately reflects the seriousness of the contravening conduct engaged in by EOS, while paying appropriate regard to the full range of relevant factors, including those standing in mitigation of EOS’s conduct.

Relevant Legislative Provisions

8 Since August 2021, and so throughout the Relevant Period, s 674A(1) and (2) of the Act have provided as follows:

(1)    Subsection (2) applies to a listed disclosing entity if provisions of the listing rules of a listing market in relation to that entity require the entity to notify the market operator of information about specified events or matters as they arise for the purpose of the operator making that information available to participants in the market.

(2) If:

(a) this subsection applies to a listed disclosing entity; and

(b) the entity has information that those provisions require the entity to notify to the market operator; and

(c) the information is not generally available; and

(d) the entity knows, or is reckless or negligent with respect to whether, the information would, if it were generally available, have a material effect on the price or value of ED securitie s of the entity;

the entity must notify the market operator of that information in accordance with those provisions.

9 As it applies to entities listed on the ASX, s 674A(2) requires information to be notified to the ASX in accordance with the provisions of the Listing Rules, in particular Chapter 3, which includes Listing Rule 3.1 as follows:l

Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities, the entity must immediately tell ASX that information.

10 By Listing Rule 19.12, an entity becomes “aware” of information:

… if, and as soon as, an officer of the entity … has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as an officer of that entity.

11 Section 1317QA provides:

Continuing contraventions of civil penalty provisions

(1) If an act or thing is required under a civil penalty provision to be done:

(a) within a particular period; or

(b) before a particular time;

then the obligation to do that act or thing continues until the act or thing is done (even if the period has expired or the time has passed).

(2) A person who contravenes a civil penalty provision that requires an act or thing to be done:

(a) within a particular period; or

(b) before a particular time;

commits a separate contravention of that provision in respect of each day during which the contravention occurs (including the day the relevant pecuniary penalty order or relinquishment order is made or any later day).

12 Section 1317QA(1) is engaged because an act (namely, notification to the ASX) is required to be done under a civil penalty provision (s 674A(2)) within a particular period (namely, the period commencing when the entity becomes aware of the information and ending immediately after that time). The period in question is contained in Listing Rule 3.1, but s 674A(2) requires the act to be done within that period because it requires it to be done “in accordance with” the Listing Rule.

13 Section 1317QA(2) then operates so that there is committed a separate contravention of s 674A(2) each day subsequent to the day on which the obligation to notify the ASX arose, until the day upon which the obligation is satisfied.

Agreed Primary Facts

EOS and Dr Greene

14 At all relevant times:

(a)    EOS was a registered public company and included in the official list of the ASX (SAFA [6]);

(b)    EOS and its subsidiaries (EOS Group) were in the business of the design and manufacture of products for the space, communication and defence markets (SAFA [9(a)]);

(c)    EOS’s Defence Systems Division (EOSDS) was responsible for manufacturing remote weapon systems (RWS), turrets and sensor systems for various military applications, including infantry fighting vehicles, combat reconnaissance vehicles and naval vessels (SAFA [9(b)]);

(d)    the other business operations of the EOS Group were managed through its Space Systems Division (EOSSS) (SAFA [9(c)]);

(e)    the EOS Group had an annual reporting period (FY) ending on 31 December each year (SAFA [9(d)]).

15 As a public company, the Listing Rules applied to EOS in relation to the ordinary shares issued by EOS (EOS ordinary shares) and required EOS to notify the ASX of information about specified events or matters as they arose, for the purpose of the ASX making that information available to participants in the ASX: SAFA [7]. At all material times, EOS ordinary shares were “ED securities” within the meaning of the Act: SAFA [7].

16 Dr Ben Greene is the founder of the business of the EOS Group and at all material times was a director of EOS (until 27 March 2023), the Chief Executive Officer of the EOS Group (until 31 July 2022) and, from 1 August 2022, the Chief Innovation Officer of EOS: SAFA [8].

17 EOS’s practice regarding revenue guidance was that:

(a)    from at latest 2017, at or around the time of announcing its results for the previous year or at the time of its Annual General Meeting, EOS made announcements to the ASX in which it provided guidance about its revenue expectations for the current financial year: SAFA [14];

(b)    EOS, from time to time, made announcements to the ASX providing updates or revisions of its revenue guidance: SAFA [15];

(c)    updated revenue, profit and cash flow projections were provided to the EOS Board on a regular basis, usually through Finance Reports prepared by the former CFO and provided to the EOS Board at its regular monthly meetings: SAFA [16]; and

(d)    decisions to make announcements to the ASX providing revenue guidance were made by the EOS Board: SAFA [17].

Forecasts and ASX announcements

18 EOS prepared several forecasts and made several announcements to the ASX relevantly between May 2022 and October 2022. The forecasts relevantly made assumptions about four items.

19 The first such item was a major contract EOS announced on 30 January 2018 with an overseas buyer (the Major Contract) for the supply of, amongst other things, a number of RWS units to be manufactured by EOS and installed on vehicles (land RWS units) and vessels (marine RWS units) supplied by the customer: SAFA [18].

20 The Major Contract was partly performed by 31 December 2021 and was ongoing in 2022: SAFA [19].

21 At all relevant times EOS recognised revenue from the Major Contract on a milestone basis for using a cost input method of allocation in accordance with Accounting Standard AASB 15: SAFA [20]. Under this method of allocation (SAFA [21]):

(a)    a proportion of the contract price was attributed to each complete system supplied and installed under the contract (system unit price);

(b)    milestones (system revenue milestones) were identified for the supply and delivery of each complete system, and a proportion of the system unit price was allocated to each milestone; and

(c)    EOS recognised revenue on the achievement of each milestone in accordance with the allocations referred to in para (b) above.

22 EOS used the system revenue milestones for its forecasts of expected revenue from the Major Contract: SAFA [22]. One system revenue milestone used was the manufacture of a land RWS unit that passed the Factory Acceptance Test (FAT) specified in the Major Contract: SAFA [23].

23 The second item was the Commonwealth Government Opportunity (CG Opportunity). This was an anticipated opportunity whereby EOS would put an unsolicited proposal to the Commonwealth Department of Defence (Department of Defence) which involved EOS being engaged by the Department of Defence as the prime contractor for a risk mitigation activity (RMA) relating to a major Department of Defence acquisition program (the CG Contract): SAFA [38]. As at late June 2022 (SAFA [38]):

(a)    EOS had led a consortium of 31 companies which successfully completed, in around December 2021, a capability demonstration in Canberra;

(b)    if the Department of Defence decided to proceed with the RMA proposed by EOS, EOS expected that the Army could seek up to a specified amount of funding for the RMA in conjunction with Gate 1 approval;

(c)    EOS expected first-stage Gate 1 approval from the Australian Government in 2022;

(d)    if the RMA was funded, EOS expected the CG Contract would be awarded to EOS immediately after Gate 1 approval; and

(e)    EOS assumed that that it would be able to negotiate a contract to carry out the RMA which would allow EOS to recognise revenue in each month from September to December 2022 totalling $50 million.

24 The third item (the R400 Sales Opportunity) was an anticipated opportunity whereby (SAFA [39]):

(a)    commercial opportunities to enter into new contracts for the sale of RWS systems for immediate delivery in connection with the war in Ukraine would become available in 2022;

(b)    EOS would secure such a contract or contracts; and

(c)    under those contracts, EOS would supply and deliver RWS units.

25 As at June 2022 (SAFA [40]–[41]);

(a)    there were a certain number of RWS units in storage at EOS’s premises which had been sold to another customer which had given in principle consent to the resale of those units for use in Ukraine (RWS Resale units), with such units to be replaced by units to be subsequently manufactured by EOS; and

(b)    EOS was actively pursuing opportunities in:

(i)    the United States – which had announced approximately US$7 billion in military assistance to Ukraine;

(ii)    various NATO countries – by the end of May 2022, EOS had submitted proposals (via various defence contractors) to the Dutch, German, and Czech governments as part of those countries’ military aid programs; and

(iii)    Ukraine – an offer to the Ukrainian Ministry of Defence,

but had not identified a firm buyer for any RWS units.

26 The fourth item (the R&D Funding Opportunity) was an anticipated opportunity whereby (SAFA [42]):

(a)    EOS would obtain a contract or commitment from one or more other entities to contribute $15 million towards the cost of research and development in relation to a particular emerging defence technology, to be undertaken by EOS in FY2022; and

(b)    EOS would undertake the research and development pursuant to that contract or commitment;

(c)    as at June 2022, EOS was in discussions with a customer in relation to a development contract relating to products using the relevant technology; and

(d)    EOS believed that the total value of the development contract would be approximately US$30 million.

27 The four items described in the preceding paragraphs are referred to below and in the SAFA as the New Business Opportunities.

28 Between May 2022 and 25 July 2022, EOS management prepared four revenue and profit forecasts: one in each of May and June and a further forecast in early July that was revised later in that month. These forecasts are detailed in the SAFA.

29 In or about May 2022, EOS management prepared a revised forecast which provided for total operating revenue in FY2022 of $283.6 million comprised of the amounts set out in SAFA 24, which among other things assumed that (SAFA [25]):

(a)    in relation to the Major Contract:

(i)    EOS had recognised revenue from the manufacture and successful testing to FAT standard of RWS land units in the first three months of 2022;

(ii)    in the remainder of 2022, EOS would recognise further revenue from the manufacture and successful testing to FAT standard of additional land RWS units, and

(b)    in the 7 months from April to November 2022, EOS would recognise revenue totalling $87 million from three New Business Opportunities, referred to as:

(i)    the CG Opportunity – $50 million;

(ii)    the R400 Sales Opportunity – $22 million; and

(iii)    the R&D Funding Opportunity – $15 million.

30 On 27 May 2022, EOS made an announcement to the ASX (27 May 2022 ASX Announcement) which (SAFA [26]):

(a)    referred to a “Strategic Review” initiated by the Board in March 2022;

(b)    identified under the heading “Outlook” (and more generally throughout the 27 May 2022 Announcement) various geopolitical (international and domestic) tailwinds and events that posed opportunities for EOS, and also “Challenges”, such as human resources, supply chain (the fragility of such having been exposed by COVID-19 and the Ukraine), potential backlog and inflation; and

(c)    contained a statement, under the heading “2022 Guidance”, that: “2022 revenue is expected to be higher than 2021 and the company will consider specific guidance after actions arising from the Strategic Review”.

31 On or about 13 June 2022, EOS management prepared a management forecast that predicted total revenue for FY2022 of $268.1 million, comprising expected revenue of $173 million from existing contracts and $95.1 million from new business yet to be secured (June 2022 Forecast): SAFA [27]. This forecast assumed (SAFA [28]):

(a)    in relation to the Major Contract:

(i)    EOS had recognised revenue from the manufacture and successful testing to FAT standard of land RWS units in the first five months of 2022;

(ii)    in the remainder of 2022, EOS would recognise further revenue from the manufacture and successful testing to FAT standard of additional land RWS units; and

(b)    in the 7 months from June to December 2022, EOS would recognise revenue totalling $87 million from the New Business Opportunities comprising the same amounts as in the May 2022 Forecast.

32 On 29 June 2022, EOS made an announcement to the ASX that: “The Company provides guidance that it expects FY22 revenue to be equal to or exceed FY21” (29 June 2022 ASX Announcement): SAFA [45]. EOS’s revenue for FY2021 had been $212.3 million: (SAFA [46]).

33 On or about 5 July 2022, EOS management prepared a revised revenue and profit forecast which provided for total operating revenue of $213.6 million comprising the amounts set out in SAFA 52 which, among other things, assumed (SAFA [53]):

(a)    in relation to the Major Contract:

(i)    EOS had recognised revenue from the manufacture and successful testing to FAT standard of land RWS units in the first five months of 2022;

(ii)    in the remainder of 2022, EOS would recognise further revenue from the manufacture and successful testing to FAT standard of additional land RWS units; and

(b)    in the 7 months from June to December 2022, EOS would recognise revenue totalling $37 million from the New Business Opportunities as follows:

(i)    the CG Opportunity – $10 million;

(ii)    the R400 Sales Opportunity – $12 million; and

(iii)    the R&D Funding Opportunity – $15 million.

34 At its meeting on 25 July 2022, the EOS Board was advised that EOS management had prepared a revised forecast (Revised July 2022 Forecast) that predicted total revenue for FY2022 of about $212.2 million, of which $46.5 million comprised new business yet to be secured. The Revised July 2022 Forecast, amongst other things, assumed that (SAFA [70]):

(a)    EOS had recognised revenue from the manufacture and successful testing to FAT standard of land RWS units in the first six months of 2022;

(b)    in the remainder of 2022, EOS would recognise further revenue from the manufacture and successful testing to FAT standard of additional land RWS units; and

(c)    in the six months from July to December 2022, EOS would recognise revenue totalling A$37 million from the three New Business Opportunities comprising the same amounts as in the First July 2022 Forecast.

35 In the circumstances discussed in more detail below, by 25 July 2022, EOS ought to have become aware that (SAFA [82(b)]):

(a)    there was no reasonable basis to consider that EOS was likely to achieve the revenue which had been forecast in the Revised July 2022 Forecast in relation to the Major Contract and the New Business Opportunities and, in turn, it would not achieve revenue in FY2022 of $212.2 million; and

(b)    FY2022 revenue was more likely to be $164 million with a possibility of an additional $27 million.

(July 2022 Forecast Information)

36 EOS was therefore “aware” (within the meaning of “aware” in the Listing Rules) of the information set out in the preceding paragraph: SAFA [82(c)].

37 Despite this awareness, EOS did not tell the ASX of the July 2022 Forecast Information on or immediately after 25 July 2022 or make any further announcement to the ASX concerning its FY2022 revenue until 8 September 2022.

Disclosures

38 Due to its inability to lodge half-year financial statements by 31 August 2022, EOS’s shares were suspended from trading on the ASX from the commencement of trading on 1 September 2022: SAFA [76].

39 As set out in SAFA [76]–[80], EOS made the following disclosures to the market on 8 September and 31 October 2022.

(a)    First, in an ASX announcement dated 7 September 2022 and released to the ASX on 8 September 2022 (7 September 2022 ASX Announcement), EOS informed the market that some revenue recognition may be “delayed from H2 2022 into H1 2023”: SAFA [77]. In that announcement EOS released its Half Year Report to the ASX and announced (with a forward-looking statements disclaimer summarised in SAFA [78]) in a section headed “Guidance” (SAFA [77]):

(i)    H1 FY2022 revenue was A$53.8 million, “representing a 45% reduction on the prior comparative period” (H1 FY2021 having been A$97.8 million);

(ii)    some revenue recognition may be “delayed from H2 2022 into H1 2023”;

(iii)    there were “significant new business opportunities” which may “provide increases in revenue in the short term”; and

(iv)    “the Board of Directors have asked the newly appointed CEO and CFO to conduct a thorough re-assessment of the financial outlook for the Company, including an assessment of these evolving risks and opportunities and any impacts on revenue.”

(b)    Second, in an announcement made on 31 October 2022 (31 October 2022 ASX Announcement) EOS updated the revenue guidance provided in May and June 2022 to say that “Revenues in the range of $100–$140m are expected to be recognised in the 2022 year, with a further approximately $40–80m, previously thought to be recognised in 2022, now more likely (due to supply chain constraints) to be recognised in 2023”: SAFA [80]. That announcement also included, as recorded in SAFA [80]:

(i)    “Revenue from new business opportunities that was previously expected to earn approximately $30m revenue during the year are now expected to…earn revenue during 2023 and subsequent periods”;

(ii)    “EOS was in active contract negotiations regarding the potential provision of a significant number of RWS systems and related components and spares to Ukraine… This has the potential to materially improve future revenue and cash flow. There is no certainty that any particular outcome or transaction will result from these discussions.”; and

(iii)    a forward-looking statements disclaimer summarised in SAFA [78].

40 Following the lodgement of EOS’s half-year financial statements early in the morning of 8 September 2022, the trading suspension was lifted from the commencement of trading on 8 September 2022: SAFA [79].

Contraventions of 674A(2)

41 EOS has admitted that, during the Relevant Period (SAFA [83]–[89]):

(a)    EOS had the July 2022 Forecast Information;

(b)    EOS was required by ASX Listing Rule 3.1 to notify the ASX of the July 2022 Forecast Information;

(c)    the July 2022 Forecast Information was not “generally available” within the meaning of s 676 of the Act;

(d)    the July 2022 Forecast Information was information which, if it were generally available, would have had a material effect on the price or value of EOS ordinary shares;

(e)    EOS did not announce the July 2022 Forecast Information during the Relevant Period;

(f)    EOS was negligent as to whether the July 2022 Forecast Information was information that would, if it were generally available, have a material effect on the price or value of EOS ordinary shares;

(g)    by reason of those matters, EOS contravened s 674A(2) of the Act on or about 25 July 2022 and, by virtue of s 1317QA, on each subsequent day until 31 October 2022; and

(h)    the contraventions prejudiced the interests of EOS and its shareholders for the purposes of s 1317G(1)(b)(i) of the Act and were “serious” for the purposes of s 1317G(1)(b)(iii) of the Act.

42 The last of those admissions was infelicitously drafted. As noted above, the position of the parties was clarified at the hearing as having been intended to state in SAFA [89] that EOS admits that the contraventions materially prejudiced the interests of EOS and its shareholders for the purposes of s 1317G(1)(c)(ii) of the Act, and were “serious” for the purposes of s 1317G(1)(c)(iii) of the Act.

Approach to proposed penalties by agreement

43 The proper approach to making declarations and orders proposed by consent in a civil penalty proceeding, and the public interest in doing so, was explained in Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 (FWBII) at [58], where the High Court said that subject to the court being sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty.

44 The principles that apply where the parties to a civil penalty proceeding have settled that proceeding and agreed and jointly proposed a penalty to the Court were outlined by the Full Court in Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49; (2021) 284 FCR 24 at [125]–[127] and 129 as follows (and applied in Australian Competition and Consumer Commission v Mercedes-Benz Australia/Pacific Pty Ltd [2022] FCA 1059; (2022) 163 ACSR 645 at 4; Australian Competition and Consumer Commission v Samsung Electronics Australia Pty Ltd [2022] FCA 875 at 74):

[125] First, the Court must be persuaded that the penalty proposed by the parties is appropriate…

[126] Second, if the Court is persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the agreed penalty jointly proposed is an appropriate remedy in all the circumstances, it would be highly desirable in practice for the Court to accept the parties’ proposal and therefore impose the proposed penalty…

[127] Third, in considering whether the agreed and jointly proposed penalty is an appropriate penalty, it is necessary to bear in mind that there is no single appropriate penalty. Rather, there is a permissible range of penalties within which no particular figure can necessarily be said to be more appropriate than another. The permissible range is determined by all the relevant facts and consequences of the contravention and the contravener’s circumstances. An agreed and jointly proposed penalty may be considered to be “an” appropriate penalty if it falls within that permissible range… It is unlikely to be considered an appropriate penalty if it falls outside that range.

…

[129] Fourth, in considering whether the proposed agreed penalty is an appropriate penalty, the Court should generally recognise that the agreed penalty is most likely the result of compromise and pragmatism on the part of the regulator, and to reflect, amongst other things, the regulator’s considered estimation of the penalty necessary to achieve deterrence and the risks and expense of the litigation had it not been settled… The fact that the agreed penalty is likely to be the product of compromise and pragmatism also informs the Court’s task when faced with a proposed agreed penalty. The regulator’s submissions, or joint submissions, must be assessed on their merits, and the Court must be wary of the possibility that the agreed penalty may be the product of the regulator having been too pragmatic in reaching the settlement…

Declarations

45 Section 1317E of the Act relevantly provides as follows:

1317E Declaration of contravention of a civil penalty provision

Declaration of contravention

(1)    If a Court is satisfied that a person has contravened a civil penalty provision, the Court must make a declaration of contravention.

(2)    The declaration must specify the following:

(a)    the Court that made the declaration;

(b)    the civil penalty provision that was contravened;

(c)    the person who contravened the provision;

(d)    the conduct that constituted the contravention;

…

46 In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; (2017) 254 FCR 68 at 93, the Full Court stated:

Declarations relating to contraventions of legislative provisions are likely to be appropriate where they serve to record the Court’s disapproval of the contravening conduct, vindicate the regulator’s claim that the respondent contravened the provisions, assist the regulator to carry out its duties, and deter other persons from contravening the provisions…

47 EOS has admitted the contraventions on the basis of the agreed facts as set out in the SAFA. On the basis of the facts agreed in the SAFA, I accept that EOS has contravened s 674A(2) of the Act, and that I should make declarations accordingly in the terms sought by the parties.

Pecuniary penalties

48 The Court has the power to impose a penalty on EOS by virtue of s 1317G of the Act, which relevantly provides as follows:

1317G Pecuniary penalty orders

Court may order person to pay pecuniary penalty

(1)    A Court may order a person to pay to the Commonwealth a pecuniary penalty in relation to the contravention of a civil penalty provision if:

(a)    a declaration of contravention of the civil penalty provision by the person has been made under section 1317E;

…

(c)    if the contravention is of a financial services civil penalty provision (other than one excluded by subsection (1A)), the contravention:

(i)    materially prejudices the interests of acquirers or disposers of the relevant financial products; or

(ii)    materially prejudices the issuer of the relevant financial products or, if the issuer is a corporation, scheme or fund, the members of that corporation, scheme or fund; or

(iii)    is serious; and

…

Maximum pecuniary penalty

(2)    The pecuniary penalty must not exceed the pecuniary penalty applicable to the contravention of the civil penalty provision.

…

Pecuniary penalty applicable to the contravention of a civil penalty provision – by a body corporate

(4)    The pecuniary penalty applicable to the contravention of a civil penalty provision by a body corporate is the greatest of:

(a)    50,000 penalty units; and

(b)    if the Court can determine the benefit derived and detriment avoided because of the contravention – that amount multiplied by 3; and

(c) either:

(i) 10% of the annual turnover of the body corporate for the 12-month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision; or

(ii) if the amount worked out under subparagraph (i) is greater than an amount equal to 2.5 million penalty units – 2.5 million penalty units.

…

Determining pecuniary penalty

(6)    In determining the pecuniary penalty, the Court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered because of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in similar conduct; …

49 Section 674A(2) is a financial services civil penalty provision: s 1317E(3)(c). As indicated above, the parties clarified that SAFA [89] was intended to state that EOS admits that the contraventions materially prejudiced the interests of EOS and its shareholders for the purposes of s 1317G(1)(c)(ii) of the Act, and were “serious” for the purposes of s 1317G(1)(c)(iii) of the Act.

50 The purpose of a civil penalty regime is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the relevant Act by the deterrence, specific and general, of further contraventions: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450 (Pattinson) at [9], [15] and 31; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157 (ABCC) at 87.

51 The specific and general deterrent effect is achieved by attempting “to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act”: FWBII at [55]. In ABCC (at [116]), Keane, Nettle and Gordon JJ described that price as the “sting or burden” of the penalty.

52 The penalty “must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business” and “those engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention”: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 (Singtel) at [62]–63.

53 A penalty is not to be fixed by reference to its proportionality to the seriousness of the contravening conduct, because that reflects an objective of retribution that has no place in a civil penalty regime. Rather, the Court should ensure that the penalty imposed is proportionate in the sense that it strikes a reasonable balance between deterrence and oppressive severity in the particular case: Pattinson at [10], [40]–[43] and [46].

54 The maximum penalty is but one yardstick that ordinarily must be applied, among other factors: Pattinson at [53]–[54]. What is required is a “reasonable relationship between the theoretical maximum and the final penalty imposed”: Pattinson at [10]. That relationship is established where the maximum penalty does not exceed what is reasonably necessary for specific and general deterrence of future contraventions of a like kind by the contravener and by others: Pattinson at [10]. This may be established by reference to the circumstances of the contravener and the contravening conduct: Pattinson at [55]. The matters relevant to determining the appropriate penalty go to the objective nature and seriousness of the contravening conduct, and the particular circumstances of the contravener, including the following non-exhaustive factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 762 at [42], which overlap with the statutory factors set out above (described in Pattinson by the majority at [19] as not constituting a rigid catalogue of matters for attention):

(a)    the nature and extent of the contravening conduct;

(b)    the amount of loss or damage caused;

(c)    the circumstances in which the conduct took place;

(d)    the size of the contravening company;

(e)    the degree of power it has, as evidenced by its market share and ease of entry into the market;

(f)    the deliberateness of the contravention and the period over which it extended;

(g)    whether the contravention arose out of the conduct of senior management or at a lower level;

(h)    whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and

(i)    whether the company has shown a disposition to cooperate with the relevant regulator in relation to the contravention.

55 The Full Court has repeatedly emphasised that, although similar contraventions should incur similar penalties, the differing circumstances of individual cases mean that a penalty in one case cannot dictate the penalty in a later case. As a result, comparisons with previous penalties will rarely be useful: Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68 at 69; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 295-296 (Burchett, Carr and Kiefel JJ). The purpose of any comparison with other cases is consistent application of principle, not numerical consistency: McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29; (2011) 202 IR 467 at [23]–25.

Multiple contraventions

56 In cases where there are a large number of contraventions, the theoretical maximum penalties may be so high as to become “practically meaningless”: Australian Securities and Investments Commission v Vanguard Investments Australia Ltd (No 2) [2024] FCA 1086 at 110; Australian Securities and Investments Commission v National Australia Bank Ltd [2025] FCA 947 (NAB) at 59. Nevertheless, the theoretical maximum penalties are of some relevance in a general sense in that they highlight the seriousness of the conduct in question: NAB at [59]; Australian Securities and Investments Commission v AGM Markets Pty Ltd (In Liq) (No 4) [2020] FCA 1499; (2020) 148 ACSR 511 at [38]–40.

57 Section 1317G(4) of the Act, set out at [48] above, provides the relevant formula for the calculation of the applicable maximum.

58 The meaning of “annual turnover” of a body corporate during a 12-month period is defined in s 9 of the Act. Relevantly, for the purposes of each of those enactments, the definition of “annual turnover” includes the sum of the values of all supplies (as defined) made, or likely to be made, by any body corporate related to the body corporate, subject to applicable legislative exclusions.

59 Multiple contraventions may be treated as one or more “courses of conduct” where there is an interrelationship between the legal and factual elements of each of the offences; see Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1 (Cahill) at 39. Whether separate contraventions should be treated as a course of conduct is a factually specific inquiry having regard to the circumstances of the case: Cahill at 39.

60 The “course of conduct” principle is a “tool of analysis” which can, but need not, be used in any given case: Cahill at [39]–42; Singtel at [53]; Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312 at [421]–424; Australian Securities and Investments Commission v Westpac Banking Corporation (No 3) [2018] FCA 1701; (2018) 131 ACSR 585 (Westpac No 3) at 132; Australian Competition and Consumer Commission v Murray Goulburn Co-operative Co Ltd [2018] FCA 1964 at 29; Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; (2018) 262 FCR 243 (Yazaki) at [234]–235.

61 Where the Court treats multiple contraventions as a single course of conduct, it does not follow that the maximum penalty for the course of conduct is limited to the maximum penalty for a single contravention, or that the Court must impose the cumulative total of each of the penalties: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; (2015) 327 ALR 540 at [15]–[16], 20; Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 3) [2017] FCA 1018 at 37; Yazaki at [234]–[235]. Rather, the course of conduct principle is a tool to assist the Court in arriving at the appropriate penalty for the contraventions, and the Court retains its discretion to impose the penalty that best reflects the seriousness of the conduct taken as a whole.

62 In determining the appropriate penalty for multiple related contraventions, the Court will also have regard to the “totality” principle, as a final check of whether the cumulative total of the penalty is just and appropriate and not excessive having regard to the totality of the relevant contravening conduct: Australian Securities and Investments Commission v Westpac Banking Corporation [2019] FCA 2147 at [272], 308; Westpac No 3 at [162]. The totality principle enables the Court to consider whether the final penalty is in proportion to the nature, quality and circumstances of the conduct involved. The Court may apply the principle to alter the final penalties to ensure that they are just and appropriate: Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Westpac Banking Corporation [2020] FCA 1538; (2020) 148 ACSR 247 at 69.

Amount of the Penalty

63 The parties submit, and I accept, that a pecuniary penalty of $4 million is appropriate in this case, having regard to the following matters.

Nature, extent and circumstances of the conduct

64 In late June 2022, the EOS Board was provided with formal representations by the Group CEO (Dr Greene), supported by the CEOs of the two operating divisions, to the effect that there was a sufficient basis for the Directors to consider that the 2022 revenue of EOS would be equal to or greater than $218.8 million: SAFA [33]. The contribution of the EOSDS to this was $184.5 million, and this amount could be expected because (SAFA [33]):

(a)    there was a reasonable basis to forecast total revenue of $244.2 million for EOSDS in 2022, of which $152.5 million would be realised from Contracted Business (including a substantial amount through the Major Contract) and $91.7 million would be realised from new business, of which $87 million related to the New Business Opportunities;

(b)    to realise EOSDS revenue of $184.5 million, new business must be executed and performed to revenue recognition standards to provide $31.9 million, or about 35% of the $91.7 million;

(c)    this low estimate was reasonable considering the negative impact of tight EOS cash management in the first half of 2022 on business development processes and market momentum other than in relation to sales to support the war in Ukraine (i.e., the R400 Sales Opportunity); and

(d)    it seemed likely that the upside from the $31.9 million in new business required – especially in respect of urgent requirements for the Ukraine War – was stronger than the impact of instabilities affecting the Major Contract.

65 In fact, the figures in these representations were drawn from the May 2022 Forecast which had been overtaken by a subsequent forecast (the June 2022 Forecast) which had reduced the forecast for Contracted Business (across both divisions) from $187.8 million to $173 million: SAFA [34]. On the basis of the June 2022 Forecast, in order to realise EOSDS revenue of $184.5 million in FY2022, new business would have needed to be executed and performed (to revenue recognition standards) to provide $47 million of revenue in the second half of 2022, which was about 51% of the $91.7 million assumed in the June 2022 forecast: SAFA [35].

66 EOS subsequently provided guidance to the ASX on 29 June 2022 that it expected its 2022 revenue to be equal to or greater than its 2021 revenue of $212.3 million: SAFA [45]. At the same time, it announced that it had completed a share placement to raise $15 million: SAFA [45]. Cash flow forecasts provided to the EOS Board a few days earlier had assumed receipts from the capital raising of $30 million in June 2022 and $100 million in August 2022: SAFA [47]. As a result, EOS faced a severe shortage of cash and urgently needed to secure funds for its day-to-day operations from alternative sources: SAFA [48].

67 In fact, in early July 2022, Dr Greene and the acting Chief Financial Officer prepared a revised forecast (First July 2022 Forecast) which reduced the expected revenue from contracted business from $173 million (in the June 2022 Forecast) to $167.9 million and for new business from $95.1 million (in the June 2022 Forecast) to $45.7 million: SAFA [51]–[52]. The four forecast items of revenue discussed above were included in the First July 2022 Forecast, as follows.

68 First, there was expected revenue of a substantial amount from the manufacture and testing of a specified number of land RWS units for the purposes of the Major Contract: SAFA [53]. A much lower number of such units had been manufactured and tested by 30 June 2022: SAFA [56]. A meeting of the RWS production team on 5 July 2022 received a presentation indicating that due to supply chain issues, including a shortage of parts, EOS had the capacity to manufacture and test to FAT standard a lower number of land RWS units than was expected for the remainder of 2022, or in total for the year: SAFA [54]. Issues with the production of RWS units were reflected in a chart in the EOSDS report to the Board for July: SAFA [56]. The reduction in production would reduce the revenue from contracted business by a substantial amount. EOS has admitted that by 25 July it had no reasonable basis to include this amount in its revenue forecast: SAFA [81(a)].

69 Second, there was expected revenue of $10 million in respect of the CG Opportunity: SAFA [53(b)(i)]. This opportunity depended on a decision of the Commonwealth Government to include funding for it in connection with a major defence project: SAFA [38]. On 20 July 2022, Dr Greene informed the financial adviser to EOS that the funding would not emerge from a customer funding review before September, “making an award in 2022 now less likely”: SAFA [60]. On the same day Dr Greene informed Export Finance Australia (the Commonwealth Government’s export credit agency) that the project’s budget was not yet approved by the Government, but it was possible by Q4: SAFA [61]. He added that it would be awkward for EOS to be awarded the contract before the company had made progress on restructuring and management changes, but “[t]his may align in Q1 2023”: SAFA [61].

70 On or before 26 July 2022, Dr Greene was informed that the CG Project Opportunity had been “caught in major review”, and in an email dated 26 July 2022 recorded that and that predicted revenue from the opportunity in FY2022 was now “$nil”: SAFA [62].

71 EOS has admitted that by 25 July it had no reasonable basis to forecast that EOS would recognise revenue in FY2022 of $10 million or any other amount from the CG Opportunity: SAFA [81(b)].

72 Third, there was the expected revenue of $12 million in relation to the R400 Sales Opportunity. In his email of 20 July 2022 to the EOS financial adviser, Dr Greene stated that there were two possible programs still under active consideration by US and NATO, but there was no way to know the likelihood of success of either: SAFA [66].

73 By 25 July 2022 EOS was not in contract negotiations for the sale of any RWS units, and, apart from the request for quotation referred to below, EOS had not been informed by or on behalf of any possible buyer of RWS units of an intention to negotiate the purchase of any RWS Units: SAFA [67].

74 EOS has admitted that by 25 July 2022 it had no reasonable basis to forecast that EOS would recognise revenue in FY2022 of $12 million or any other amount from the R400 Sales Opportunity: SAFA [81(c)].

75 Following a request from the Ukrainian Government, EOS provided a quotation on 19 July 2022 for the supply of a specified number of RWS units, together with certain weapons: SAFA [65]. The revenue which EOS could recognise if this quotation was accepted was $17 million: SAFA [65]. However, recognition of such revenue was not sufficiently probable to be able to be forecast: SAFA [81(e)(i)].

76 Fourth, there was expected revenue of $15 million in relation to the R&D Funding Opportunity.

77 By 25 July 2022, EOS had received interest from a party to collaborate and secure a contract in relation to the R&D Funding Opportunity but had not entered into a contract with or secured a commitment from that entity: SAFA [68]. There was a possibility that if this contract were secured EOS could recognise revenue of $10 million in 2022: SAFA [81(e)(ii)]. However, recognition of such revenue was not sufficiently probable to be able to be forecast: SAFA [81(e)(ii)].

78 EOS has admitted that by 25 July 2022 it had no reasonable basis to forecast that EOS would recognise revenue in 2022 of $15 million or any other amount for R&D Funding: SAFA [81(d)].

79 Less than four weeks after the June 2022 Guidance Statement was provided, the Board was informed in the acting Chief Financial Officer’s report that (SAFA [71]):

(a)    revised projections by management indicated EOS was now expected to achieve revenue of approximately $212 million in 2022, including revenue from uncontracted new business of $46.5 million for the rest of the year; and

(b)    “current financial position and the past performance make it highly unlikely to achieve such an ambitious target. If the past performance is considered, it is expected that the revenue for the current year will be significantly less than last year’s revenue”.

(July 2022 Finance Report)

80 The facts in the SAFA demonstrate the parties’ agreement that, by 25 July 2022, EOS had no reasonable basis to include amounts totalling $49 million in a forecast of 2022 revenue (as described above): SAFA [81]. Excluding those amounts from the forecast provided to the Board on 25 July 2022 would leave forecast revenue at $164 million. Two possible contracts, the R400 Sales Opportunity and the R&D Funding Opportunity, might increase that amount by up to $27 million, but these were not sufficiently probable to be included in a forecast. The parties have agreed that these matters should have come to the attention of the directors by 25 July: SAFA [82(a)].

81 In fact, the acting CFO attended the Board Meeting on 25 July and told the directors that his reasons for stating that the projections were unlikely to be realised were (SAFA [73]):

(a)    cash flow restrictions from Q2 2022 would impact supplier responsiveness and therefore productivity, output, and revenue in Q3 2022;

(b)    the program teams executing the current contracts had advised that there were material items in the forecast that might now slip into 2023; and

(c)    prior experience indicated that EOS would not realise all new business contained in the forecast.

82 The picture presented by the acting CFO in the July 2022 Finance Report and at the 25 July Board Meeting was quite different to that which had been reflected in the representations by management a month earlier. There was now no margin between the guidance provided to the market on 29 June and management’s current forecast. To meet that guidance, all of the new business included in the forecast would have to eventuate and generate revenue capable of being recognised under the revenue recognition standards, all within the remaining five months of the year. In addition, there could be no further slippage in actual revenue generated from existing contracts. However, the acting CFO had said that there was a possibility that material items in the forecast might indeed slip into 2023.

83 Although it had become “aware” (within the meaning of the Listing Rules) of the July 2022 Forecast Information by 25 July 2022 (SAFA [82]–[83]), EOS did not provide any further revenue guidance to the market until over 6 weeks later, on 8 September 2022. It was then that it first disclosed that some revenue recognition may be delayed from H2 2022 into H1 2023 (SAFA [77(b)]) and that the newly appointed CEO and CFO were to conduct a thorough re-assessment of the financial outlook for the company including any impacts on revenue (SAFA [77(d)]).

84 EOS, acting reasonably, ought to have provided further revenue guidance to the market by 25 July 2022, when it became aware of the June 2022 Forecast Information. However, EOS did not explicitly update the June 2022 Guidance Statement until it released the 31 October 2022 Announcement: SAFA [80]. EOS has admitted that it did not announce the July 2022 Forecast Information to the market during the period from 25 July to 31 October 2022 (SAFA [86]) and has admitted negligence for the purposes of s 674A(2)(d) (SAFA [87]).

Impact of the contraventions

85 Investors rely on listed companies to provide accurate and timely information in relation to the company’s affairs when making investment decisions. EOS has admitted that, during the Relevant Period, the July 2022 Forecast Information was information which, if it were generally available, would have had a material effect on the price or value of EOS ordinary shares. There is otherwise no evidence before the Court as to the extent of the effect of non-disclosure on the price or value of EOS ordinary shares.

86 Although EOS did not in terms withdraw the June 2022 Guidance Statement in the 8 September 2022 ASX announcement, the market was on notice from that time that revenue forecasts may be adjusted and that it was possible that some revenue recognition would be delayed. Accordingly, the SAFA reflects the parties’ agreement that as a result of the failure of EOS to disclose material information to the ASX, shares in EOS traded in an uninformed or misinformed market throughout the period from 26 July 2022 up to 8 September 2022 but not beyond that date: SAFA [90].

87 As agreed between the parties at the hearing, and based on the data obtained from IRESS for EOS shares, in that period 35,809,353 EOS shares, valued in total at $30,693,841, were traded in 41,202 transactions on the ASX.

Maximum penalty

88 The value of a penalty unit is fixed by s 4AA of the Crimes Act 1914 (Cth) and was $222 between 1 July 2020 and 31 December 2022. Accordingly, at the time relevant to this proceeding:

(a)    50,000 penalty units represented $11.1 million;

(b)    2.5 million penalty units represented $555 million.

89 The annual turnover of EOS for the purposes of s 1317G(4)(c) at the relevant times was as follows (SAFA [92]):

90 As 10% of the above amounts is more than $11.5 million but less than $555 million, the maximum penalty for each contravention of s 674A(2) by EOS is between $14.64 million and $16.68 million depending on the month in which the contravention occurred or is taken to have occurred.

91 On the basis that there was a contravention on 25 July 2022 and each subsequent day up to and including 31 October 2022, the total maximum penalty for all such contraventions is $1,497,740,000.

92 The multiple contraventions in this case arise from the continuation of the initial failure of EOS to make the required disclosure to the ASX. In those circumstances, the parties submit, and I accept, that the contraventions should be considered as part of a single course of conduct.

Size and resources of EOS

93 The parties agree that, as at 4 March 2026, EOS’s market capitalisation was approximately $1.9 billion. As recorded in the Preliminary Final Report of EOS for the Financial Year Ended 31 December 2025, released to the market on 23 February 2026, EOS recorded net assets of around $238 million (p 55) and net profit after tax of around $17.5 million (p 54).

Deliberateness of the conduct

94 ASIC accepts that EOS’s conduct in failing to disclose the July 2022 Forecast Information was negligent (SAFA [87]), but that EOS did not deliberately intend to contravene s 674A(2) of the Act.

Seniority of the persons involved

95 EOS’s contraventions involved the most senior officers at EOS: it was the Board and/or Dr Greene (as the then-CEO) who were presented with the information in the July 2022 Finance Report or had (or ought to have had) knowledge of the risks to the Major Contract and the New Business Opportunities: SAFA [54]–[68], [73]–[74]. That the Board and Dr Greene were involved in the contraventions is serious and should be appropriately reflected in the penalty imposed by the Court.

96 The penalty imposed should also account for the fact that the contraventions occurred during (and immediately after) a period when EOS implemented a number of changes to its Board and executive management. During the Relevant Period, EOS appointed a new CEO (effective 1 August 2022) and a new CFO (effective 5 September 2022). Following the 31 October 2022 announcement, EOS appointed a new ASX-experienced Chair (effective 24 November 2022), a new Company Secretary (effective 25 August 2022), a new Chief Legal Officer (effective 9 November 2022) and an additional non-executive director (effective 24 May 2023): SAFA [13].

Cooperation

97 EOS has engaged constructively with ASIC in advance of this proceeding being commenced, including by making admissions in relation to its conduct at the earliest available opportunity; acknowledging liability in respect of the admitted contraventions prior to the filing of an originating process; and engaging with ASIC on the preparation of the SAFA: SAFA [91]. By its conduct, EOS has avoided the need for a contested proceeding on liability and relief.

Prior contraventions

98 There are no prior contraventions.

Contrition

99 In addition to its cooperation with ASIC, EOS has expressed genuine contrition for the admitted conduct in the affidavit of its chairman, Mr Garry Hounsell. In addition, it has revised its compliance systems and procedures under new officers, as Mr Hounsell’s affidavit establishes.

Conclusion in respect of the agreed penalty

100 Having regard to the facts and admissions set out in the SAFA, the considerations set out above, and the statements of legal principle in the authorities regarding the purpose of civil penalties, the parties submit, and I accept, that an appropriate pecuniary penalty in this case is the agreed amount of $4 million. A penalty of $4 million is sufficiently substantial, having regard to EOS’s size and financial resources, to achieve both specific and general deterrence, without being oppressive or disproportionate.

Costs

101 The parties seek an order by consent requiring EOS to pay ASIC’s costs of and incidental to this proceeding as taxed or agreed.

| I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman. |
Associate:

Dated: 8 April 2026

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