Vocation Ltd (ASX: VET) again surprised investors with another trading halt on Monday morning citing a pending announcement updating the company's earnings guidance.
For those unaware; Vocation shares have plunged from a high of $3.40 in September last year to today's price of $0.25 following a surprise ruling by the Victorian government that stripped $20 million of funding from some of Vocation's training programs and Registered Training Organisations.
The investigation by the Victorian government was consistently downplayed by the company in a number of announcements until the surprise result was presented in November. A subsequent trading update on December 4 lowered the group's forecast earnings before interest, tax, depreciation and amortisation (EBITDA) to a range of between $25 million and $30 million from the October 27 forecast of between $53 million to $57 million.
Anger and Lawsuits
Shareholders were unsurprisingly angry at the revelation and the group's chairman and formal federal education minister, John Dawkins, decided to resign. Angry shareholders have since launched a class action against Vocation, with the support of IMF Bentham Limited (ASX: IMF).
Time to Worry?
If shareholders had been hanging on for some good news, I find it unlikely that the pending announcement will provide it. Having updated the market only a little over a month ago that the first half of the financial year would result in an $8 million loss, I can only imagine that a trading halt is required to announce further bad news.
The most significant downside would be related to further disappointing enrolment momentum that could impact the $35.5 million EBITDA forecast for the second half of the 2015 financial year. Alternatives could include the loss of partnerships, funding issues, or higher restructuring costs than initially estimated. Upsides could include the opposite of any of the above, however one would imagine a more positive update would have been provided if that were to be the case.
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