Vita Group delivers positive FY20 result in challenging conditions

Vita Group delivers positive FY20 result in challenging conditions

Vita Group (ASX: VTG) today reported a robust result for the year to 30 June 2020, despite significant change and disruption, including Telstra remuneration changes in its information and communication technology (ICT) channel from 1 July 2019 and the group-wide impact of COVID-19 from March 2020.

The group delivered record revenues of $773.1 million, a three per cent increase on prior year. Earnings before interest, tax, depreciation and amortisation (EBITDA), excluding the impact of AASB 16 (implemented during the period) for comparative purposes, increased nine per cent to $49.9 million. Earnings before interest and tax (EBIT) grew seven per cent to $37.2 million. The result was underpinned by strong performance in the ICT channel (particularly up to March 2020), growth and improved productivity in the skin-health and wellness (SHAW) channel, and a proactive response to COVID-19.

There were several non-recurring items in the result, including the net benefit of the Federal government’s JobKeeper subsidy, after top-up payments to team members, and revisions to the carrying values of some tangible and intangible assets, liabilities and provisions.

Underlying EBIT (excluding the impact of non-recurring items) increased four per cent to $36.1 million. Net profit after tax (NPAT) decreased eight per cent to $22.4 million as a result of AASB 16 (a $1.6 million adverse impact) as well as a higher effective tax rate following the inclusion of non-deductable, non-recurring charges.

Vita ended the period with net cash of $24.1 million as a result of solid operating cash flows, disciplined capital management and a focus on liquidity during COVID-19. Operating cash flows after tax were $41.1 million, with $19.1 million of capital expenditure directed towards additional clinics in the SHAW channel, retail ICT store refits, and further IT investments. Net financing cash flows were $11.9 million, reflecting lease payments ($11.5 million), debt repayments ($8.8 million), dividends paid ($6.5 million), all offset by proceeds from borrowings ($12.8 million) and the group’s dividend reinvestment plan ($2.0 million).

Whilst the trading environment continues to be uncertain, the board resolved to resume dividend payments in line with the easing of COVID-19 restrictions in many parts of the country, following cancellation of the FY20 interim dividend in March 2020. It determined to pay a fully-franked final dividend of $3.9 million, equating to 2.4 cents per share, representing a H2 payout ratio of 50 per cent of profits after tax. The final dividend is payable on 25 September 2020 to shareholders on record as at 11 September 2020.

The board also determined to reinstate the full remuneration of each of the Non-Executive Directors and the Chief Executive Officer, effective 22 June 2020. The remuneration of other members of the leadership team has also been reinstated with effect from that date.

 

($m unless otherwise stated) FY20 FY19 Change
Group Revenue 773.1 753.7 3%
Information & Communication Technology (ICT) 752.0 739.3 2%
Skin-Health & Wellness (SHAW) 20.1 13.7 47%
Other 1.0 0.7 43%
Group gross profit 212.5 229.7 (7%)
Group gross profit % 27.5% 30.5%
Group EBITDA (pre-AASB 16) 49.9 45.8 9%
Information & Communication Technology (ICT) 84.9 79.3 7%
Skin-Health & Wellness (SHAW)            (1.9)        (3.7) 49%
Other          (33.1)       (29.8) (11%)
Group EBIT 37.2 34.7 7%
Information & Communication Technology (ICT) 78.9 75.0 5%
Skin-Health & Wellness (SHAW)            (7.0)          (6.7) (4%)
Other          (34.7)      (33.6) (3%)
Non-recurring items            (1.1)                –  –
JobKeeper subsidy         (10.2)                –
Once off expenses 9.1             –
Underlying group EBIT (excluding non-recurring items) 36.1 34.7 4%
Information & Communication Technology (ICT) 73.2 75.0 (2%)
Skin-Health & Wellness (SHAW)           (5.8)          (6.7) 13%
Other         (31.3)        (33.6) 7%
Group NPAT 22.4 24.3 (8%)
Earnings per share 13.71 cps 15.04 cps (9%)
Underlying earnings per share 13.75 cps 15.04 cps (9%)
Full year dividend ($m) 3.9 14.9 (74%)
Interim dividend                          – 5.2 cps (100%)
Final dividend 2.4 cps 4.0 cps (40%)

FY20 in Review

COVID-19

The group proactively managed the impacts of COVID-19 to protect the business for the short and long-term. Its Business Continuity Plan ensured strict adherence to government legislation and focused on mitigating risk in areas including health and safety, inventory supply, continuity of service and responsible value creation for customers.

Measures were taken to protect Vita’s financial position, including the previously announced cancellation of the FY20 interim dividend, deferral of non-essential capital projects, cost reduction initiatives, and temporary rent arrangements agreed with landlords. Vita’s board and leadership team (except for the CEO) took temporary remuneration reductions and CEO, Maxine Horne, voluntarily suspended her base salary, effective from 1 April 2020. Several support team members volunteered temporary remuneration reductions, agreed to work reduced hours, or utilised annual leave. The group welcomed assistance from the Federal government in the form of the JobKeeper wage subsidy, which provided a net $10.2 million benefit, after top-up payments to team members, and was instrumental in protecting jobs. It also appreciated the support it received from landlords in the form of rent assistance.

During the period, Vita Group made the decision to exit its SQDAthletica men’s athleisure business in order to focus on its strategic priorities in the ICT and SHAW channels.

Information and Communications Technology

ICT revenues increased two per cent to $752.0 million and EBITDA, excluding the impact of AASB 16, was $84.9 million, up seven per cent on the prior year.

The retail ICT division delivered a five per cent increase in revenues due to a continued focus on consulting and delivering products and services which create value for customers. Device revenue was strong, particularly from the start of the period up to March 2020 and the impact of COVID-19. The retail team leveraged its capacity and capability during COVID-19 to support Telstra to keep customers connected to mobile and fixed networks, which is critical during lockdown periods.

Vita’s accessories brand, Sprout, continued its positive contribution to growth and profitability through ongoing innovation across a range of product categories and progressed its strategy to expand in its business-to-business segment outside of the Vita network.

The business ICT division continued to complement the retail ICT store network by providing solutions to small-to-medium and large business customers. The Telstra Business Technology Centres and the enterprise business achieved significant productivity improvements, whilst supporting steady demand during COVID-19 as business customers enabled their employees to work remotely.

Skin-Health and Wellness

Revenues in the SHAW channel increased to $20.1 million, a 47 per cent uplift despite a six-week closure from March 2020 due to COVID-19 restrictions, and EBITDA improved to a $1.9 million loss, compared with a $3.7 million loss in the prior year.

Continued expansion of the clinic network through acquisitions and greenfield additions contributed to the result, with the group ending the period with 21 clinics, 13 of which were Artisan branded. Organic growth was achieved during the period, which accelerated after the clinics re-opened in May 2020, following further team member upskilling in consulting and delivering value to clients, as well as significant productivity improvements as a result of further embedding of Vita’s operating rhythms and disciplines.

The channel continued to invest in the Artisan Aesthetic Clinics brand through awareness and marketing campaigns and the launch of the Artisan branded app, all of which assisted to drive client visits and support retention. Further enhancements to the group’s proprietary software solution, cosmedcloud™ were made, which will support the group’s intention to distribute this unique client management software offering to the broader medical category.

FY21 Outlook

The environment in which Vita competes will remain challenging with the impacts of COVID-19 continuing to affect the economy nationally. Vita will continue to focus on its core ICT and SHAW businesses, consulting with customers to create value and delivering exceptional outcomes for them.

In ICT, key areas of focus will be further improvements in the productivity of the store portfolio, both organically and through selective acquisitions and divestments. The group’s strategic partnership with Telstra will continue to be of key importance as the industry shifts towards an omni-channel ecosystem and the role of retail continues to change.

The Sprout accessories business will deliver further innovation through product development in profitable categories such as multi-purpose audio, wireless charging and outdoor accessories, whilst continuing to expand its distribution channels.

In SHAW, the focus includes driving further organic growth and productivity improvements from the clinic portfolio, building on the gains already made through leveraging Vita’s consulting capabilities and strong operating disciplines. Performance improvement will be supported by the continued evolution of cosmedcloud™. The group will look to add additional clinics to the network in FY22 and beyond.

Vita Group CEO, Maxine Horne commented, “I’m immensely proud of Vita’s performance in what has been a year of significant change and disruption. Despite the challenges presented by COVID-19, we have achieved a very solid result in an unprecedented year. Our achievements are, more than ever before, a result of our dedicated and hardworking Vita peeps, who have shown flexibility and commitment and have acted in line with our Vita values. They have maintained a steadfast focus on looking after our customers and I cannot thank them enough for everything they have done and continue to do to make Vita ‘a great place to be.’

While COVID-19 will undoubtedly continue to impact Australia and our economy in FY21, our highly capable team, strong balance sheet, and clear strategy for growth should maximise our ability to successfully and responsibly deliver value over the long-term. I want to sincerely thank our entire Vita community – from team members and customers, through to suppliers and investors – for their support during FY20 and for standing with us during COVID-19. Your flexibility and support have been instrumental in helping us to successfully manage its impact to date and position Vita strongly for the future.”

Latest
News

Artisan Aesthetic Clinics adds Euphoria Cosmedic Clinic

Vita Group (ASX: VTG) has acquired Euphoria Cosmedic Clinic on the Gold Coast under its Artisan Aesthetic Clinics brand. Founder of Euphoria and highly skilled registered nurseRachel Gregory will join the team at Hope Island Road on Tuesday 4 Maybringing her significant cosmetic injectables expertise to the clinic. 

With more than 24 years of medical experience including 15 years in aesthetic treatments, Rachel has established herself as one of the Gold Coast’s most respected cosmetic injectors, known for delivering natural looking results in a professional, friendly and caring wayThe clinic has a particular focus on delivering premium cosmetic injectable treatments including anti-wrinkle, dermal filler and PDO threads.

Maxine HorneVita Group’s Chief Executive Officer, said: “We are very pleased to welcome Rachel to the Artisan teamShe will add significant value to our Hope Island Road clinic, expanding the clinic’s capability in the field of cosmetic injectables and further reinforcing the premium, personalised experience we provide to our clients.”

Artisan Aesthetic Clinics launched in 2018 with the opening of Artisan Racecourse Road in Brisbane, Queensland. Through its focus on appointing a team of highly-skilled clinicians to deliver holistic treatments and technologies in a premium environment, the brand has quickly established itself as one of Australia’s leading cosmetic clinic networks.

Artisan currently operates 20 clinics across Australia, three of which are on the Gold Coasta high-demand location for non-invasive cosmetic treatments in Australia.

Artisan Aesthetics Group – clinic network

Queensland

  • Artisan Racecourse Road, Hamilton 
  • Artisan Gasworks, Newstead
  • Artisan Rosalie Village, Rosalie
  • Artisan Fortitude Valley
  • Artisan Bulimba
  • Artisan Maroochydore
  • Artisan Hope Island Rd
  • Artisan Kenmore
  • Emetheni, Burleigh Heads 
  • The Bradford Clinic, Toowoomba
  • Face Today Mediclinic, Cairns
  • HC Medical, Robina

New South Wales

  • Artisan Balmain
  • Artisan Mosman  
  • Lily Room, Chatswood 
  • Coco Skin Laser Health, Newcastle

Australian Capital Territory

  • Artisan Bruce  
  • Artisan Woden 
  • Artisan Gungahlin

Victoria

  • Pamper Medical Skin Clinic, Geelong 
Read More

Sprout accessories achieves ISO certification

Vita Group’s Sprout accessories brand has been awarded two Best Practice ISO certifications, strengthening its reputation as a best-in-class manufacturer and leading provider of technology accessories in Australia.

The certifications – Best Practice Quality Management System (ISO9001) certification and Best Practice Environment Management System (ISO14001) certification – are based off international standards set by the International Organisation for Standardization. They demonstrate that an organisation’s product or service meet the expectations of its customers and reflect Sprout’s commitment to sustainability and creating technology that enhances the world not just today, but into the future.

To achieve ISO9001 and ISO14001, the business met a comprehensive set of requirements which it must now continue to meet to maintain certification. ISO certification delivers significant business benefits including improved customer satisfaction, cost reduction, improved legal compliance and risk management, and importantly, environmental benefits for Sprout and for its suppliers.

For Sprout General Manager, Ben Caddy, achieving ISO certification was an important step in the brand delivering its ten-year sustainability action plan which aims to address key elements across the end-to-end product value chain.

“At Sprout we are always aiming to improve our customer experience and quality standards, and ISO ensures we do that,” he said. “ISO9001 enables us to demonstrate our ability to provide products and services that consistently meet regulatory requirements, whilst ensuring the smooth operation of our business and exceeding our customers’ expectations. Another major focus for Sprout is to reduce our carbon impact,” Mr Caddy continued. “The standards in ISO14001 help us to define the right targets and measure and track our results to ensure that the business is constantly improving and meeting our environmental objectives.”

Sprout’s ten-year sustainability action plan involves implementing key initiatives including sourcing recyclable materials for packaging and product development, continuing to drive ethical and socially responsible supply chains, reducing carbon emissions, and designing more sustainable multi-use and eco-friendly products.

The brand is already underway in implementing these initiatives, recently launching a campaign in partnership with One Tree Planted that will see it fund the planting of ten trees for every product sold online from 21 March to 29 June. To date, Sprout has funded the planting of nearly 2,600 trees and is aiming for 10,000 trees planted by the end of June to help One Tree Planted’s reforestation efforts following the 2019/20 Australian bushfires.

Sprout is also set to move to 100% recyclable packaging towards the middle of 2021 which will include switching from foam to recycled pressed cardboard, removing non-recyclable plastic windows, and extensive use of bamboo pulp in packaging.

Compostable phone cases are also in development and due to launch later in the year. These cases will see 90% biodegradation of plastic material within 12 weeks in commercial compost systems or 12 months if composted at home.

Mr Caddy said ISO certification will ensure Sprout is held accountable for these environmental initiatives as well as its sustainability targets. It will also ensure the business is continuously improving its manufacturing and environmental management systems to the benefit of its customers and the world around it.

“ISO certification is extremely important to the business as it ensures we have the tools, processes and systems to meet our business targets,” he said. “ISO certification also places the business in a constant state of improvements so that we can not only show improvement year-on-year, but also regularly monitor our important sustainability objectives and put the processes in place to achieve them.”

Read More

Artisan Aesthetics Group reaches 20 clinic milestone with new acquisition  

Artisan Aesthetics Group (AAGcontinues to grow with the acquisition of Coco Skin Laser Health on 19 February 2021, bringing its network to 20 clinics across Queensland, New South Wales, the Australian Capital Territory and Victoria. 

Located in the beautiful harbour city of Newcastle, New South Wales, Coco Skin Laser Health has been a fixture in the local community for nearly 10 years, building a strong reputation for helping clients to look and feel more confident through beautiful, healthy skin. 

The clinic’s experienced team of 15 is comprised of dermal therapists, cosmetic nursesdoctorsand the front of house team. The Coco team will join Artisan and will continue their focus on creating personalised treatment plans containing a combination of therapies to support clients with their skin health and wellness goals. The experienced clinicians use non-surgical techniques and combination therapies to help clients to manage the signs of ageing and sun-damageAt Coco, the aim is to enhance their clients’ best features, improve their complexion, and lift and tone sagging skin. 

As part of the Artisan network, Coco Skin Laser Health will continue using industry leading clinic management software program, cosmedcloud™, and the team will gain access to clinical training through Artisan’s Clinical Education and Training division. The clinic, which has experienced strong growth post-COVID with a high volume of new clients, will continue to offer an extensive menu of treatments including laser and light therapies and cosmetic injectables including biostimulator treatments such as platelet rich plasma (PRP), while benefiting from Artisan’s ongoing investment in the latest treatments and technologies.  

Vita Group CEO, and founder of Artisan Aesthetic Clinics, Maxine Horne, said she is excited to mark the group’s 20th acquisition and welcome Coco Skin Laser Health to the group as it continues to establish itself as a leader within the premium end of Australia’s aesthetics industry, operating a national network of 70 premium clinics over the next five years.  

Coco Skin Laser Health is an excellent addition to our portfolio. As with Artisan, the clinic and its team are known for delivering exceptional, personalised servicewith a combination of treatments that achieve high-quality results for their clients. We are excited to welcome them to the Artisan family and to extend Artisan’s service offering further. 

Artisan Aesthetics Group – clinic network

Queensland

  1. Artisan Aesthetic Clinic, Racecourse Road, Hamilton 
  2. Artisan Aesthetic Clinic, Gasworks, Newstead
  3. Artisan Aesthetic Clinic, Rosalie Village, Rosalie
  4. Artisan Aesthetic Clinic, Fortitude Valley
  5. Artisan Aesthetic Clinic, Bulimba
  6. Artisan Aesthetic Clinic, Maroochydore
  7. Artisan Aesthetic Clinic, Hope Island
  8. Artisan Aesthetic Clinic, Kenmore
  9. Emetheni, Burleigh Heads 
  10. The Bradford Clinic, Toowoomba
  11. Face Today Mediclinic, Cairns
  12. HC Medical, Robina  

New South Wales

  1. Artisan Aesthetic Clinic, Balmain
  2. Artisan Aesthetic Clinic, Mosman 
  3. Lily Room, Chatswood 
  4. Coco Skin Laser Health, Newcastle 

Australian Capital Territory

  1. Artisan Aesthetic Clinic, Bruce  
  2. Artisan Aesthetic Clinic, Woden 
  3. Artisan Aesthetic Clinic, Gungahlin

Victoria

  1. Pamper Medical Skin Clinic, Geelong  
Read More