The plaintiff firm announced the proposed class action yesterday, in conjunction with litigation funder Investor Claim Partner (ICP). Slaters alleges that the ASX-listed telco, which owns brands including Dodo, iPrimus and Orcon, misled shareholders in its FY2016-17 financial guidance and breached its continuous disclosure obligations.
Slater and Gordon said the proposed claim will be brought on behalf of hundreds, if not thousands, of people who purchased Vocus shares between 29 November 2016 and 2 May 2017, including mum and dad investors and large institutional funds.
Vocus’ FY2016-17 financial guidance, issued on 29 November 2016, forecast revenue of $1.9 billion. It also predicted EBITDA of $430 million to $450 million and NPAT of $205 million to $215 million.
However, this was downgraded on 2 May 2017 to $1.8 billion in revenue, $365 million to $375 million in EBITDA and $160 million to $165 million in NPAT.
Following the downgrade, Vocus experienced a share price drop of $0.91, or 27 per cent, and a $538 million drop in market capitalisation, according to data provided by ICP.
Slater and Gordon therefore alleges that Vocus shares traded at an inflated price during the relevant period, as the company had no reasonable grounds for the original guidance and failed to disclose that it would not achieve the predicted results.
ICP chief operating officer Simon Weeks said it was concerning that Vocus reiterated its original guidance when it announced its half-yearly results on 22 February 2017.
“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” Mr 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.”
Slater and Gordon principal lawyer Mathew Chuk said Vocus misjudged the costs associated with its expansion.
“Our investigations to date suggest Vocus had unreasonable expectations about the costs involved in integrating its newly acquired platforms and technology systems,” he said.
“The company expanded significantly since 2015 by acquiring other businesses such as Amcom and Nextgen Networks, as well as merging with M2 Group Ltd.
“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.
“We have also identified an accounting issue relating to recognition of ongoing costs associated with the execution of long-term, multimillion-dollar service contracts.”
Slater and Gordon recently won a class action against the Commonwealth and its contractors on behalf of Manus Island detainees.
The firm announced earlier this week that it will cut 7 per cent of its Australian staff as part of its restructuring plan.