Shares in Vocation have crashed after the training group cut its earnings forecast in half following an inquiry into its courses, which saw the Victorian government withdraw funding.
The vocational education group told the ASX that it now expects earnings for the year to June 30, 2015, will be between $25 million and $30 million, compared to the previous guidance of $53-$57 million, announced in October.
The state’s Department of Education and Early Childhood Development (DEECD) withdrew about $20 million in funding.
John Dawkins, the former Labor treasurer who resigned last month as Vocation chairman, said earlier this week he has been buying shares.
Before today’s halving in the company’s share price, Dawkins said:
“Nobody likes to lose money. I am a shareholder in Vocation Limited, and like many others, my shares have lost value recently. Yet in the last few weeks, in the face of this selling, I bought more shares. Vocation is a good company with a good future, which is why I am backing it.”
Vocation CEO Mark Hutchinson told the ASX the company is dropping the use of third party brokers to find students and is moving to an in-house model with reduced regulatory risk following an inquiry by the Victorian government which showed some students had been enrolled in low quality courses that didn’t suit them.
Vocation’s shares are down 52% today to 26 cents.