Vocus has been hit by a proposed class action of disgruntled shareholders after the telco earlier this year scaled back its profit guidance.
The owner of Dodo, iPrimus and Orcon in May downgraded its 2017 guidance forecasts including underlying net profit to $160 million-$165 million from $205 million-$215 million.
And final result showed underlying net profit after tax at $152.3 million. The statutory result was a $1.46 billion net loss due to a once-off goodwill write-down of $1.53 billion of its Australian and New Zealand assets.
Law firm Slater and Gordon and funding company Investor Claim Partner say the proposed claim will be brought on behalf of hundreds, if not thousands, of people who purchased Vocus shares between November 2016 and May 2017.
Vocus shares last traded at $2.41, down from a 12-month high of $7.17.
In a statement, Vocus said: “We understand that Slater and Gordon have issued a release indicating they are seeking interest in a possible class action. At all times, Vocus has complied with its continuous disclosure obligations and will continue to do so.”
Here’s how the share price deteriorated:
Mathew Chuk at Slater and Gordon says the claim alleges Vocus shares traded at prices significantly above their true value because of the company’s misleading and deceptive conduct and withholding of information.
“Our investigations to date suggest Vocus had unreasonable expectations about the costs involved in integrating its newly acquired platforms and technology systems,” Chuk says.
“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 2017 guidance it said that it expected to gain efficiencies by bringing the businesses together.
“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,” Chuk says.