TELECOMMUNICATIONS company Vita Group (VTG) has reported a 66 per cent boost in interim dividends following a strong first half result attributed to continued growth of the group’s Telstra stores.
In the six months to December 31, 2013, VTG recorded an 18 per cent increase in earnings before interest, tax, depreciation and impairment (EBITDA) to $12.1 million and 56 per cent uplift in underlying net profit to $4.2 million.
The significant cash flow derived from Telstra stores was only let down by a $19.4 million non-cash impairment of the remaining goodwill in Next Byte, the group’s premium Apple reseller (APR).
When considering the impairment charge, the group recorded a statutory net loss of $15.2 million for the half.
VTG CEO Maxine Horne says the financial expectations for the Next Byte brand were revised down when the roll-out of the new-format stores was at a lesser scale than anticipated.
“The brand remains an important part of our business,” she said in a prepared statement. “However, we now envisage a smaller, more focused portfolio of new-format APR stores, particularly given that we will be redirecting investment towards higher-quality opportunities in the telecommunications business channel.
“In light of this changed outlook, it was deemed appropriate to write down the remaining goodwill in the Next Byte business.”
In the Telecommunications sector, revenue for the period was up 1 percent to $173.8m and underlying EBITDA grew 22% to $12.9m.
The divisional result was underpinned by a strong performance from the Telstra store portfolio offset by a weaker contribution from Fone Zone and One Zero.
Vita expects to add another 12 to 14 Telstra stores to its network in calendar 2014 as part of the arrangement to strengthen its alignment with Telstra, announced last December.
“This is another very pleasing result for the Group that demonstrates our ability to delivering earnings growth consistently over time. We are particularly encouraged by the returns being achieved in areas where we have made strategic investment, especially the Telstra stores, which are performing strongly and generating significant cash flows,” says Horne.
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