Vita Group (ASX:VTG) has acquired another three Telstra (ASX:TLS) stores in the first half of the 2018 financial year.
The Australian Securities Exchange (ASX)-listed company paid $2.5 million in two Telstra stores and one business centre through Vita’s subsidiary, Fone Zone, all located in Coffs Harbour.
Vita Group invested a net $13.2 million in acquisitions, refits and technology solutions, which will deliver benefits into the future, the company said.
Vita Group has also revealed that after the reporting period, ended 31 December 2017, it entered into an agreement to acquire the issued shares in TCB Comms, Kan Tel and Sales Comms, an independent operator in the Telstra Licensee network, for a cash consideration of $5.7 million plus an adjustment amount to be determined on completion.
A further contract was entered into by the Group to acquire the business assets of additional Telstra Licensed stores and business centres for a total cash consideration of $3.6 million. These two agreements are for a total of six businesses.
Vita Group posted total revenue of $329.6 million for the first half, a four per cent drop from the previous corresponding year. In the business channel of ICT, revenues were down 10 per cent, with small-to-medium business sales slightly up, offset by lower enterprise sales.
In January, Vita Group updated its expected results for 1H18 from between $16 million and $18 million in earnings before interest, tax, depreciation and amortisation (EBITDA) to the $20 million posted. The result however represents a 43 per cent decline from the previous year. Net profit after tax (NPAT) was down by 48 per cent, posting $11.2 million.
“We are pleased that, despite industry margin pressures, we delivered a solid interim result that exceeds guidance,” Vita Group CEO, Maxine Horne, said. “Our team has continued to consult with our customers to deliver exceptional experiences.”
The company told shareholders on 28 February that the decline in revenue was primarily due to remuneration reductions from Telstra. In May 2017, the group announced it halted all plans to expand the number of Telstra stores in its network while it negotiates with Telstra over remuneration and commercial terms.
That new deal saw Vita Group agree to forego some remuneration factors in exchange for a greater store presence, which would see the number of stores Vita is able to own and operate under the Telstra branding expand to 110 in the 2018 financial year and 115 in FY2020.
A few months later, in August, the company announced it had renegotiated its Master License Agreement with Telstra after the telco switched up its remuneration arrangement with Vita Group.