Private education and training provider Vocation Ltd (ASX: VET) has seen its share price crash a further 10% today to 70 cents as institutional investors Paradice Investment Management and Nikko Asset Management dump more of their own holdings.
As a provider of vocational training to students and business clients Vocation relies upon the taxpayer or public sector to commonly pick up the bill for vocational training services provided.
Vocation's website says its innovative delivery methods are changing the game, but perhaps those delivery methods were a bit too innovative for the Victorian government.
After a review of services provided the Victorian bureaucrats decided to pull almost $20 million of Vocation's funding. This amid concerns over the quality of courses provided and perception that students were being encouraged to enroll in courses that were "inappropriate" for their needs.
With Vocation firmly in the naughty corner in the eyes of the Victorian government, investors are clearly concerned that this may be the start of further problems, although Vocation insists the issues are a one off episode not to be repeated.
Vocation's shares have now lost more than 70% of their value since the admission of the lost funding and with an outlook for tighter controls over government budgets it looks to have some tough work ahead of it. Management's other big problem is restoring its own credibility having repeatedly denied there were any problems with the Victorian operations and leading the company to a disastrous start as a public entity.
The business does though still expect to achieve earnings before interest tax and depreciation of $55 million in FY15, which is notable when you consider its entire market value is now only around $180 million.
