Vocation (VET), the education and trainer provider, is a shot duck and not long for this world, if its requested two week extension of its voluntary suspension from trading on the ASX is any guide.
The request, which was granted by a generous ASX yesterday, means the shares won’t be traded until February 13 at the earliest, seeing they were suspended on January 21. It means almost a month of protecting a company, which has become a byword for incompetence and poor management, from the obvious negative market forces now attaching to its reputation.
Besides that shock extension of the trading suspension yesterday, Vocation finally updated the market as to its financial position, and it wasn’t pretty.
Chief executive Mark Hutchinson is leaving the troubled education provider after presiding over what’s forecast to be a $27 million interim loss, and more importantly for investors, the destruction of close to $700 million of shareholder value as the shares dropped from $3.40 in September last year ($780 million market value) to just 25c on January 20 (valuing the company at just $92 million).
That is some achievement – and the board of the company where former Education Minister, John Dawkins was chair for most of its brief listed life, can’t escape much of the blame as well. Something went badly wrong in the company and a clear answer remains elusive, despite yesterday’s update, which came just two months after another statement to the market revealing an earnings and business downgrade.
VET 1Y – Vocation CEO walks as shares remain suspended
Yesterday’s forecast interim loss was attributed to a heavier than expected decline in earnings following the rebuke last year from the Victorian government over the quality of its businesses.
Vocation now claims it will post underlying earnings for the six months to December 31 (which means nothing), and is working on a revised full year guidance.
New Vocation chairman Doug Halley said that when one-off costs and discontinued businesses were stripped out, Vocation expected to report underlying earnings before interest, tax and amortisation of $3 million in the six months ended December 31, 2014.
But the bottomline loss is expected to be $27 million. This is almost $60 million worse than a profit forecast made by the company in early December.
The company said Mr Hutchinson had notified the board of directors of his intention to resign and would step down once a replacement is found.
Mr Halley (he replaced John Dawkins as chairman) has launched a strategic review of the company’s operations and has appointed advisors to look at possible asset sales to help bring down Vocation’s debt.
He said the strategic review would consider all options, including possible mergers, divestments and recapitalisation and should be carried out relatively quickly.
“We would anticipate that given the level of interest we have received for some assets, we expect to be in a position to make a decision about the best options within weeks rather than months,” he said in yesterday’s statement.
"We believe that this course of action is in the best interest of all shareholders and will see the company best placed to move forward."
The new slide in earnings has again forced Vocation to revise its debt arrangements and the company, which is why its shares will remain suspended from trading while it meets with lenders.
