Out of pocket and down a director, GO2 People takes a hit as client goes down
Link copied to
Labour hire provider The GO2 People has been left out of pocket and down a director after its client VCS Civil and Mining was placed into voluntary administration last week.
The GO2 People (ASX:GO2) — which joined the ASX in October after a $10 million float — told investors it was owed $445,000 from VCS for recruitment and labour hire services and was uncertain to what extent funds could be recovered.
Go2’s shares fell 18 per cent to 14c today. The shares were sold at 20c in last year’s Initial Public Offering.
“The full amount has been provided for as a doubtful debt in the half-year period ended 31 December 2017,” it announced.
“While VCS has been a material client to the company, the administration of VCS and its uncertain future does not impact on GO2’s current growth strategy.”
It does, however, have an impact on GO2’s board.
Company director Dough Grewar is also a director of VCS Holdings, the parent company of the asset in administration.
“As disclosed in the prospectus at the time of the Company’s Initial Public Offering in 2017, one of the company’s directors, Mr Doug Grewar, is a director of VCS Holdings, the parent entity of VCS Civil and Mining,” the company said.
“Given the potential for conflicts of interest to materialise during the administration of VCS, Mr Grewar has offered his resignation as a director of Go2,” the company said.
Now the board is looking to find a replacement for Mr Grewar.
VCS had 150 people working on two gold projects near Kalgoorlie and called in the administrators last week after the contractor defaulted on a $7.5 million loan.
But GO2 said it was immune to the rest of the volatility as several WA builders go into administration – it clarified it had no direct or indirect exposure to the administration of Cooper and Oxley.
Shares in the company were trading at 17c at close on Monday, down from its October issue price of 20c.