Former federal education minister John Dawkins, who resigned as chairman of embattled education provider Vocation on Thursday, says the company was a victim of poor understanding in the investment community about commercial training and education.
But his resignation failed to cauterise the heavy sharemarket losses at the company that plunged to a record low on Thursday, and has lost $400 million in market value in a month.
Mr Dawkins, the inaugural chairman of Vocation, which listed on the stock exchange last December, quit on Thursday to try to help rebuild investor confidence in the company. He will be replaced by fellow director Doug Halley, the chairman of ASX-listed energy utilities company DUET Group. Mr Halley is searching for two new independent directors.
"Ours is an industry that remains poorly understood and as the first mover, Vocation is wearing the scars of novelty and apparently suspicion, which I believe is unjustified," Mr Dawkins told Fairfax Media.
He said in hindsight Vocation should have done more to educate investors and the wider sharemarket about the inner workings of the vocational training and education sector as it shifted during the past few years to a more demand-driven model.
"I now intend to contribute to a better understanding of the industry, and perhaps we should have done more earlier," Mr Dawkins said.
Vocation shares extended their losses on Thursday by a further 15 per cent to close at a record low of 53.5¢.
In late October an adverse audit by Victorian education regulators into two of its Victorian businesses, BAWM and Aspin and the quality of training, resulted in it losing almost $20 million in funding. This triggered a $5 million hit to profits and shredded the company's credibility with investors who had been repeatedly assured by Vocation in public announcements there would be no material impact from the audit review.
Mr Dawkins said the opinions of institutional shareholders were considered in reaching his decision to step down and there had been a view that it needed to start right at the top.
"My resignation provides an opportunity for this to happen," he said.
This would allow Vocation to rebuild the support of its shareholders and instigate board renewal.
Mr Dawkins will continue to advise Vocation as a consultant, drawing on his 30 years of experience in the vocational and education sector including a stint as federal minister in the late 1980s. He owns a vineyard and horse-breeding property near Eden Valley, adjacent to the Barossa Valley in South Australia.
Mr Halley backed Vocation chief executive Mark Hutchinson and said the company was well positioned under his leadership.
Vocation raised $253 million in a public float with an issue price of $1.89 per share. Vocation was formed when three separate training and education businesses were folded in together. The shares climbed as high as $3.40 in August this year and the company raised $74 million at $3.05 per share which was completed on September 10, just weeks before its fall from grace.
Vocation revealed a writ had been issued by the Supreme Court of Victoria at the request of Victorian solicitor Mark Elliott. It named Vocation as a defendant in a claim by John Webster as trustee for a super fund trust called Elcar Pty Ltd alleging that Vocation had failed to disclose certain matters in its prospectus.
