Vital Limited Analysis

Overview

Vital is the provider of fundamental nationwide infrastructure and communication services that are Vital to New Zealand. We have been providing connected, seamless, integrated communications and coverage in New Zealand's most remote locations for over 25 years. We own and operate fibre in Auckland and Wellington positioned to take advantage of growing data consumption, are the largest commercial provider of nationwide radio in New Zealand and provide linking radio services through microwave to some of the remotest parts of New Zealand.

We serve many customers across New Zealand including; Government, Civil Defence, Emergency Services, Health, Utilities, Public Transport, Education, Logistics & Freight, Agriculture and Channel partners.

We look forward to providing Vital services for another 25 years.

Vital is the new name of TeamTalk and CityLink.

Performance

The following information was extracted from Vital Limited's Full Year report, released on 27 August 2024:

Vital Limited (Vital or Company) is pleased to report ongoing progress for the FY2024 year as it nears the end of the first phase of its turnaround strategy.

Vital CEO, Jason Bull, said: “Our turnaround strategy, commenced two years ago, was designed to arrest the previous decline in key customers, stabilise the business, significantly improve operational efficiency and reduce costs, build better sales channels, improve the customer experience, and win or re-sign more key customers.

“Progress against this strategy has continued throughout FY2024, despite a particularly challenging economic operating environment. Momentum is now building, and key initiatives and capital investments are being executed simultaneously across the Wired and Wireless businesses to position Vital and its quality fibre and radio assets more favourably to help back our longstanding customers operations throughout New Zealand.

“This focus has resulted in another solid financial year, with results largely in line with expectations, despite very challenging business conditions. With a solid foundation now laid and two full years of disciplined delivery, Vital can increasingly focus on driving revenue growth, greater operating leverage, and the acquisition of new customers.”

Bull said “Revenue was down 4.5% from $28.1 million in FY2023 to $26.9 million for FY2024, which was within our revised guidance, and largely reflected Vital electing not to renew a low margin contract that accounted for about 70% of the year-on-year revenue decline. The remainder of the change in revenue was largely from the fall in fibre circuit connections as businesses continue to actively manage their cost bases.

“Adjusted net profit after tax (NPAT) was $0.3 million, down from the FY2023 result of $0.5 million, resulting from the f low through impact of lower revenue. That said, adjusted free cash flow of $4.1 million was at the top end of Vital’s guidance metrics, assisted by careful management of capital expenditure.

“While pleased with overall progress, Vital’s financial results are still not where we aspire to be longer term. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were $6.4 million, flat on the prior year with pressure on fibre circuit numbers offsetting gains from ongoing improvements in channel strategy relationships and new connections.”