Vocus says it intends to defend a class action filed against it in the Federal Court.
The Federal Court action has been brought by law firm Slater and Gordon on behalf of people who purchased Vocus Group shares between 29 November 2016 and 2 May 2017.
The statement of claim alleges Vocus breached its obligations under the Corporations Act 2001. The telco is accused of misleading or deceptive conduct and breaching its continuous disclosure obligations in relation to its FY17 earnings guidance.
The action is funded by Investor Claim Partner Pty Ltd, ICP Capital Pty Ltd and Woodsford Litigation Funding Limited.
Slater and Gordon in September 2017 revealed it was exploring the possibility of a class action against Vocus in relation to the telco’s FY17 profit downgrade.
In November 2016, the company 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.
However in May 2017, Vocus released a downgraded full year forecast: Revenue of $1.8 billion, EBITDA of $365 million to $375 million, and NPAT of $160 million to $165 million.
In a September 2017 statement Slater and Gordon had said there may be a reasonable basis for concluding Vocus had misled the market by releasing its FY17 guidance in November of the prior year “when it did not have reasonable grounds for doing so”. The telco may have breached its continuous disclosure obligations from November 2016 onwards, the law firm said.
The telco may have had unreasonable expectations about the integration costs following a string of acquisitions, including Amcom, Nextgen Networks and M2, Slater and Gordon said.
“Vocus takes its obligations seriously and maintains that it has complied with those obligations,” a statement from the company said.
“Vocus intends to strenuously defend this proceeding. In the meantime, the Vocus management team remains focussed on executing against its long term strategy to generate value for its shareholders.”
Slater and Gordon has been approached for comment.
In February this year, Vocus’ CEO Kevin Russell, who joined the telco last year, has said that a program to turn around the company’s performance is “well and truly underway”.
In the six months to 31 December, Vocus’ retail and SMB businesses registered a decline in revenue. However, the company said that it had managed to slash costs, leading to its EBITDA margin improving from 12 per cent to 13 per cent in the first half.