Australia's embattled education provider, Vocation Ltd (ASX: VET), has posted a $272.6 million first-half loss today, weighed down heavily by $241 million worth of impairments to its Victorian businesses during the period. The enormous loss compares to the $1 million loss it reported in the prior corresponding period (pcp).
So What: Vocation's shares have crumbled in recent months after the company was forced to surrender $19.6 million in government funding for two of its Registered Training Organisations in Victoria, namely BAWM and Aspin.
To make matters worse, the company had repeatedly denied reports that there was a material risk the funding would be pulled by the Victorian Government which has resulted in a number of class actions against it, including that by Slater & Gordon Limited (ASX: SGH). Needless to say, the company's constant denial of the risk has also damaged its reputation amongst furious investors.
Here are some of the key takeaways from today's report:
- Revenues from ordinary activities up 9.3% to $57.75 million
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) down 11.1% to $1.6 million
- Loss of $272.58 million, down from a $1.03 million loss in the pcp
- Earnings per share loss of 124.2 cents
Vocation, together with its adviser 333 Capital, will continue to explore potential asset sales which it expects to complete by April or May. An updated estimate on second-half earnings guidance will be provided once the strategic review being undertaken on the business is complete.
Now What: In this morning's update, the company said that it "expects to have a viable ongoing business" following the completion of the strategic review. Regardless of whether or not that is the case; the company has lost the trust of investors who sold the stock down a further 7.8% today to just 8.3 cents, taking its total loss to 97.6% since September. Given the dire state of the company, investors would be unwise to consider buying the stock.
A much safer bet than Vocation Ltd
