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G8 in more turmoil as class action lodged over profit disclosures

Business

Slater and Gordon has filed a class action against Gold Coast-based education company G8, claiming it contravened its continuous disclosure requirement over its profit in 2017.

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G8 shares plunged 10 per cent when the market opened this morning, but recovered all of that by mid afternoon.

Slater and Gordon said it had filed the claim on behalf of people who bought G8 shares between May 23, 2017 and February 23, 2018.

G8 said it had not been notified of any action but would vigorously defend itself against such claims.

In its background for the case, Slater and Gordon said on May 23, 2017, G8 released an earnings forecast of underlying earnings before interest and tax of “mid to high $170’s million” for the calendar year.  On 4 December 2017, G8 downgraded its forecast of underlying EBIT to “around $160 million”.

“Following this announcement, the market’s reaction was substantial, with G8’s share price dropping by $1.02, or 23 per cent,” Slater and Gordon said.

“On 26 February 2018, G8 released its full-year results for 2017. G8 achieved an underlying EBIT of $156 million, $4 million less than the December 2017 Reforecast. G8’s share price again declined by $0.25, or  about 8 per cent, following this announcement.”

The class-action claim is that G8 contravened its continuous disclosure obligations under section 674 of the Corporations Act 2001 (Cth) by failing to disclose to the market information relevant to its Full Year 2017 financial performance. It also claimed and it engaged in misleading or deceptive conduct, in breach of s 1041H of the Corporations Act 2001 (Cth).

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