ACA Lawyers, a specialist class action firm, is investigating a proposed shareholder action against the ASX-listed telecommunications network provider Vocus Group Ltd, following a downgraded earnings guidance from the company to investors in May 2017.
The investigation centres on allegations that Vocus had no reasonable basis for its earnings guidance for the 2017 financial year provided on November 29, 2016. This guidance, itself a downgrade on the market’s expectations at the time, was subsequently revised with a significant downgrade on May 2 this year.
In its announcement on May 2 the company announced a forecast reduction in revenue of $100 million, a reduction in forecast underlying EBITDA of between $55-85 million and a reduction in forecast NPAT of between $40-55 million. Vocus’s actual results, announced in August, came in below the downgraded earnings guidance.
Around half the downgrade arose from an accounting review, which resulted in revenue for a number of large contracts being recognised in future periods, rather than as upfront payments in the 2017 financial year.
The Vocus share price plummeted 27 per cent after the downgrade on May 2, reducing the company’s market value by ~$561 million.
The lawyers’ summary of claim states that, as a result of preliminary investigations, they have formed the view that:
- Vocus’s previous earnings guidance provided on November 29, 2016 and restated on February 21, 2017 may have been misleading
- Vocus may have been aware of the information leading to the downgrade earlier than the date of disclosure, and
- Vocus may have breached its continuous disclosure obligations and/or engaged in misleading or deceptive misconduct in providing earnings guidance
According to Craig Allsopp, a principal of ACA Lawyers, the claim period for investors who join in the proposed action is November 29, 2016 to May 2, 2017. However, his firm is also investigating Vocus’s financial statements and announcements released after August 23, 2016 and may seek to extend the claim period.
Allsopp said that the investigation was being financed by litigation investment funds advised by Harbour Litigation Funding Ltd, a global funder with offices in Hong Kong and London.
ACA Lawyers will assist shareholders to join the proposed action and investors, from large super funds through to SMSF trustees, individual investors and fund managers to take positions, he said.
“The actual value of losses in any class action depends on the number of shareholders that participate in the action as well expert valuations,” he said, “however we believe total shareholder losses arising from Vocus’s alleged misconduct could exceed several hundred million dollars”.
For further information or should you wish to join the class action, please contact Craig Allsopp at firstname.lastname@example.org or on (02) 9216 9898.