Slater and Gordon has announced it is investigating a potential class action against Vocus.
The law firm, in partnership with Investor Claim Partner (ICP), said today that some Vocus shareholders may have a claim against the telco in relation to its FY17 profit downgrade.
In November, Vocus has forecast revenue of $1.9 billion, EBITDA of between $430 million and $450 million, and net profit after tax of $205 million to $215 million. In May, however, the telco announced it had downgraded its forecast to revenue of $1.8 billion, EBITDA of $365 million to $375 million, and NPAT of $160 million to $165 million.
Vocus in August reported a $1.46 billion loss for the 12-months to 30 June, compared to a $64 million profit for FY16. The telco reported an underlying net profit after tax of $152.3 million, on revenue of $1.82 billion. The company reported underlying EBITDA of $366 million.
Slater and Gordon said that there may be a reasonable basis that “on and from 29 November 2016, Vocus engaged in misleading or deceptive conduct in contravention of the Corporations Act 2001 (Cth), by providing the FY17 Guidance when it did not have reasonable grounds for doing so” and that “from 29 November 2016 onward, Vocus breached its obligations of continuous disclosure, in contravention of the Corporations Act 2001 (Cth), by failing to disclose that it would not achieve the FY17 Guidance.”
the law firm said Vocus may have had unreasonable expectations about the integration costs following its string of acquisitions, which included Amcom, Nextgen Networks and M2.
“When Vocus issued its FY17 guidance it stated that it expected to gain efficiencies by bringing these businesses together, but we allege this was done without proper visibility of profitability,” Slater and Gordon’s Mathew Chuk said.
“We have also identified an accounting issue relating to recognition of ongoing costs associated with the execution of long term, multi-million dollar service contracts.”
“There appears to be evidence that Vocus was aware of most of these issues when the FY17 guidance was originally issued in November, thus misleading the market,” ICP chief operating officer Simon Weeks said.
“Based on initial interest, VOC shareholders are perturbed by this, as it is yet another example of a listed company not following the listing rules that exist to protect shareholders.
“Adverse, price-sensitive information needs to be disclosed immediately, otherwise shareholders overpay”.
ICP has established a web page for potential participants in a class action.
Vocus has been approached for comment.