Shares in education and training group Vocation (VET) plunged by more than 73% yesterday after the company more than halved its full year earnings estimate.
Trading in the company’s shares resumed yesterday after they were suspended at 50c on Monday to allow new profit forecasts to be worked out in the wake of a review of its financials.
When trading resumed yesterday after the release of the downgrade, the shares went into free fall, dropping 40%, then 50%, 60% and finally 73% to a low of 13.5c, before they rebounded somewhat slowly to close on 19.5c, down 61%.
The shares are down 90% since September when they were trading at $3.40.
In early September Vocation raised $74 million in a placement to institutions at $3.05 a share, so those groups which took up the shares must be ropeable.
It raised $253 million in an IPO a year ago, so more than $320 million seems to have been blown up.
VET YTD – Vocation shares in freefall
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Vocation said yesterday it expects underlying earnings will fall to between $25 million and $30 million for 2014-15 from $36.1 million last year.
The company had earlier forecast earnings before interest, tax, depreciation and amortisation of between $53 million and $57 million in a downgrade issued more than a month ago after the company ran into trouble with education regulators in Victoria.
Vocation chief executive Mark Hutchinson said the company had “experienced significantly lower student enrolments” from its referrer network and through the scrapping of third-party brokers.
"In the period since our settlement and our previous forecast, there has been a deterioration in enrolment volumes, particularly from our Victorian operations and our MyVocation initiative," Mr Hutchinson said in a statement.
“The level of impact on our business following the settlement was unexpected,” he said in something of an understatement.
Vocation says its training business is now forecast to earn $8.2m for the company in the 2015 financial year, against an October forecast of $25 million and earlier expectations of $45 million.
Earnings for the company’s diploma business had previously been revised up from $1 million to $14 million, now they are expected to earn $4.5 million at best.
John Dawkins resigned as the company’s chairman last week, and was replaced by Doug Halley, current chairman of Duet Group.
