Vita Group profits drop 16 per cent

Vita Group profits drop 16 per cent

Profit drop due to fall in Telstra commissions as Apple and Telstra resellers improve

Tech reseller, Vita Group (ASX:VTG), has seen net profits after tax drop 16 per cent to $6.3 million for the six months ending December 31, 2010. But operating revenue rose by 37 per cent to $198.5m in the same period.

According to Vita Group’s half year results, the fall was largely due to a reduction in historic trailing commissions paid by Telstra as part of the new dealer arrangements. It claimed $12m was received in H1 2010 compared to $7.7m in H1 2011.

But in its director’s report, the company said telco revenue from its Apple and Telstra stores were on the rise and it had negotiated a new finance facility with ANZ to fund its complete Telstra store rollout.

“Telecommunications revenue was up 45 per cent to $125.8m reflecting increasing revenue per store and the growth in T store numbers,” the report said. “Next Byte revenue was up 25 per cent to $72.7m driven by the launch of new Apple products, particularly the iPad, and increased average revenue per store.”

But the Apple reseller’s service division hurt Vita Group’s bottom line, resulting Next Byte losing $400,000 earnings before interest, taxes, depreciation and amortisation.

“Substantial restructuring of Next Byte’s Service division has been undertaken in the last quarter, and positive results from these improvements are expected to flow through in future periods,” the report said.

Vita Group also reported net cash of $1.3m and operating cash flow of $14.1m.

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Tags Telstravita groupnext byte

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