On 12 December 2018, consultative solutions provider Vita Group Limited (ASX: VTG) announced that its Telstra Dealer Agreement and Master License has been extended and rolled on for a further year through to 30 June 2024. Following this news, the share price of the company decreased by 1.869 percent as on 12 December 2018.
As per Vita Group’s Chief Executive Officer (CEO) Maxine Horne, Vita’s team continues to deliver against Telstra’s performance expectations, and the company is focused on ensuring that its partnership remains strategically aligned and operationally strong.
She added further that Vita’s role is to support Telstra in achieving its strategic and performance objectives, including the delivery of their T22 plan. According to Ms. Maxine Horne, the extension of agreement shows Vita’s ability to consistently execute strongly in the market and it also shows a strong relationship between Telstra and Vita.
In FY 2018, Vita’s revenue increased by 3 percent to $684.5 million as compared to the previous corresponding period (pcp). The operating cost in FY 2018 decreased by 4 percent to $182.1 million as compared to pcp. The company reported an EBITDA of $41.0m and EBIT of $30.9m in FY 2018. In FY 2018, the company paid a fully-franked dividend of 9.1 cents per share.
For the first half of FY 2019, the company is expecting its EBITDA to be in the range of $23.0m – 24.5m which is 15% – 23% higher than 1H FY18. Further, the company is expecting EBIT to be around 18.0m – $19.4m in 1H FY19 which is 15% – 24% higher than 1H FY18.
In the company’s ICT channel, the company achieved strong device sales and solid improvement in store performance and productivity through its ongoing focus on embedding tools, systems, and processes for its consultants. Retail ICT revenues increased by 2% and small-to-medium business ICT revenues increased by 6%. The company’s strategy to discontinue lower returning lines of business in its enterprise channel resulted in higher relative profitability.
The company also made excellent progress towards its strategic goal of expanding its future revenue streams, with the entry into the billion-dollar non-invasive medical aesthetics (NIMA) category through the acquisition of seven clinics. Over the next five years, the company is planning to establish a national network of premium aesthetic clinics, under the brand of Artisan Aesthetic Clinics, with its first greenfield locations opening in the second quarter of FY19. As at 30 June 2018, Vita’s physical portfolio had 105 Telstra Licensed Stores, 23 Telstra Business Centres, one Fone Zone store, one SQD Athletica store, six Clear Complexions clinics, and one Artisan Cosmetic & Rejuvenation clinic.
In the last six months, the share price of the company increased by 5.94 percent as on 11 December 2018 and traded at a PE ratio of 7.570x. VTG’s shares traded at $1.050 with a market capitalization of circa $172.78 million as on 12 December 2018 (AEST 4:00 PM).