VITA Group (ASX: VTG) is rallying this morning, the stock trading almost 14 per cent higher, after news the Brisbane company will pay shareholders a record full year dividend on the back of its strong annual results.
The communications, electronics and ICT company reported an 18 per cent lift in gross profits to $230.7 million, and a 55 per cent increase in underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) from continuing operations to $62 million.
Vita's board declared a record full year, fully franked dividend of 13.97 cents per share. This is a payout of $17.6 million to shareholders, marking a 75 per cent increase on the prior corresponding period.
The result was driven by growth in Vita's Telstra retail stores, combined with a higher revenue contribution from small-to-medium business (SMB) and enterprise channels.
Vita CEO and founder Maxine Horne says there's still steam left in the retail channel. Over the period, retail revenue grew 19 per cent, SMB 47 per cent and enterprise 4 per cent. Total revenue was $645.1 million.
"Our retail channel has been growth engine of the group, while we develop our other growth horizons. It has a lot of EBITDA growth left in it, and we believe the majority of our growth over the next two years, at least, will come from this channel still," she says.
"SMB is displaying all the same characteristics as the retail market was in 2009, a highly fragmented market."
Horne points out this is the fourteenth consecutive period of underlying EBITDA growth for her company, and the balance sheet remains in good shape to keep bringing Vita forward, with $24.4 million in cash at the end of the period, up from $15.6 million the year before.
At the end of FY16, the company had 100 Telstra retail stores, 21 Telstra Business Centres, 14 One Zero stores and two Fone Zone stores.
Horne says there are three new Telstra stores being finalised right now, but with a couple of underperformers closing in regional towns, the store count will still be around 100.
"Vita's strategic partnership with the market leader Telstra, now more than 21 years old, will continue to be a key advantage in a highly competitive market," she says.
Until a couple of weeks ago, Vita shares were climbing to record highs. Hitting a peak of $5.10 on August 15, the company wrestled around the high-fours before beginning a sharp descent.
Vita opened on the ASX today 13.93 per cent higher at $4.98.
Read our exclusive interview with Vita Group CEO and founder, Maxine Horne.
Vita Group featured at number 23 on Brisbane Top Companies 2016.
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