Vocus is facing a class action lawsuit from disgruntled shareholders over losses stemming from the company's profit downgrade announcement in 2017.
The lawsuit shouldn't come as a surprise to Vocus as it was initially floated by law firm Slater & Gordon back in September 2017 in conjunction with shareholder claim manager Investor Claim Partner.
The claims stem from Vocus' inability to achieve its FY17 guidance after downgrading its profit expectations two months out from the end of the financial year.
In November 2016, Vocus told shareholders it expected to generate $1.9 billion in revenue the 2017 financial year, along with EBITDA in the range of $430 million - $450 million and net profit between $205 million - $215 million. The telco reiterated that guidance on 22 February as part of its first-half results announcement.
Three months later though, Vocus slashed that guidance, saying revenue would be approximately $1.8 million, EBITDA would be between $365 million - $357 million and net profits of $160 million - $165 million.
The company blamed a number of factors for the downgrade, including lower-than-forecast billings and an increase in service delivery headcount, higher than forecast expenses in group services, large projects being recognised in future periods and lower earnings from its mass market energy business. As a result, Vocus's share price dropped 27 percent in the following days.
Based on its investigation, Slater & Gordon said there could be a reasonable basis to allege Vocus engaged in misleading or deceptive conduct by providing its initial FY17 guidance with no reasonable grounds to do so.
The law firm also claims Vocus could have breached its continuous disclosure obligations by failing to inform shareholders it would not achieve the guidance.
Vocus said it intends to defend the proceedings.