That's because smaller, rapidly expanding businesses are typically the ones who have taken on debt to fuel their growth.

And when a company borrows funds to operate, investors revise down its valuation as interest rates rise. This is because every dollar of future earnings will cost more to produce.

As such, during frightening times for small cap and growth shares, it could be worthwhile checking out the businesses that have plenty of cash on their books.

This theoretically means rate hikes don't affect their future performance. If anything, it can help them marginally, as they can earn a better return on their cash.

And of course, not needing to do equity raising rounds means existing shareholders don't have their investments diluted.

Small caps with so much cash they gave some back

In a shocking month, small-cap specialist fund Cyan C3G saw almost every stock in its portfolio suffer a freefall in June.

But portfolio managers Dean Fergie and Graeme Carson feel especially comfortable about their holdings that boast useful cash reserves.

In fact, two of those companies actually implemented a share buyback to return some of that excess capital back to investors.

"Touch Ventures Ltd (ASX: TVL) holds almost all of its current market capitalisation in cash — $74 million market cap vs $67 million in cash, plus investment assets valued in May 2022 at over $120 million!" Fergie and Carson said in a memo to clients.

"And, quite prudently, has activated an aggressive share buyback, repurchasing over 1 million shares in June."

Despite this, Touch shares lost 24% in June.

ReadCloud Ltd (ASX: RCL) suffered even more, shaving 29% off its valuation last month.

"Digital textbook company ReadCloud holds $5.4 million on its balance sheet, made a net profit of over $1 million in 1H22 and has also announced a share buy-back."

Price crashes don't make sense

The memo also named three other cashed-up businesses that Cyan is keeping the faith in.

"Other companies that hold significant net cash balances include Alcidion Group Ltd (ASX: ALC) $18 million; Raiz Invest Ltd (ASX: RZI) $19 million; and Vita Group Limited (ASX: VTG) $20 million."

The portfolio managers spoke of their angst in seeing great businesses like Alcidion and Raiz respectively lose 21% and 22% of their valuation last month.

"With Alcidion having a strong balance sheet, significant recurring revenues derived from government and private domestic and international hospitals and health care providers, there are numerous reasons to expect this stock could be a strong performer again in FY23," read the memo.

"With almost 300,000 active and engaged financial customers in Australia, Raiz is generating strong recurring revenues and is likely to garner the interest of a myriad of local financial institutions."

The post 5 small-cap ASX shares sitting on a pile of cash: experts appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

Limeade Inc (ASX: LME)

The Limeade share price is down 12.5% to 69 cents. Investors have been selling this HR technology company's shares after it lost a major contract. The US$1.9 million a year deal with American Airlines will terminate on 1 January. Limeade said the US$14 billion airline group was ending the contract due to cost-cutting.

Paradigm Biopharmaceuticals Ltd (ASX: PAR)

The Paradigm share price is down over 4% to $2.01. This morning the biopharmaceutical company's US clinical trial plans were hit with a further delay by the US FDA. The regulator has requested modifications to the company's adrenal screening and mitigation plan for its Investigation New Drug (IND) submission for pentosan polysulfate sodium (PPS) to treat knee osteoarthritis.

Sandfire Resources Ltd (ASX: SFR)

The Sandfire share price is down 12.5% to $5.44. This morning the copper miner announced the successful completion of the institutional component of its equity raising. Sandfire has raised $926 million at $5.40 per new share, which represents a 13.2% discount to its last close price. These funds are being used to acquire the Matsa mining complex in Spain.

Vita Group Limited (ASX: VTG)

The Vita share price is down 3% to 85.5 cents. This decline appears to have been driven by a broker note out of Ord Minnett. According to the note, the broker has downgraded the retailer's shares to a hold rating and cut the price target on them by 16% to 93 cents. This follows news that the company is selling its ICT stores to Telstra Corporation Ltd (ASX: TLS)

The post Why Limeade, Paradigm, Sandfire, & Vita shares are falling appeared first on The Motley Fool Australia.

Vita is selling its retail information and communication technology segment to Telstra Corporation Ltd (ASX: TLS). The sale is expected to bring in a cool $110 million.

At the time of writing, the Vita share price is trading at 88 cents, 4.86% lower than its previous close.

Let's take a closer look at today's news from Vita.

Vita's asset sale

The Vita share price is sinking on news it plans to sell its Telstra-branded stores and Sprout business for $110 million cash.

The cash consideration is still subject to a net working capital and net-debt adjustment. That will be finalised late this month.

Currently, Vita operates 104 Telstra-branded stores. The deal under which Vita operates the shops took a blow in February when Telstra announced it would fully own all Telstra stores by 2025.

It appears that Vita has run out in front, selling the portfolio, alongside its technological accessory brand, Sprout, to Telstra.

Of the $110 million to be received from the sale, Vita will keep $35 million. The remaining sale value – between $65 million and $75 million – is expected to be handed back to shareholders in the form of a special dividend.

The fully franked special dividend will be worth 39 cents to 45 cents per share and paid in 2 payments.

Vita advised that the $35 million kept in the company's coffers would go towards growing its Artisan Aesthetic Clinics business.

The sale is subject to shareholder approval.

Additionally, Vita has confirmed that none of its employees will lose their jobs due to the sale. They will continue to be employed by the Vita People entity, which will be owned by Telstra.

Vita share price snapshot

Today's dip is just the latest fall for the Vita share price, which has sunk 18.9% since the start of 2021. Vita shares are also 18.2% lower than this time last year.

The post Vita (ASX:VTG) share price sinks on asset sale and special dividend appeared first on The Motley Fool Australia.

Here's what is happening on the ASX 200 today:

Telstra buys stores from Vita

The Telstra Corporation Ltd (ASX: TLS) share price is edging higher today after it agreed to buy the Telstra retail stores operated by Vita Group Limited (ASX: VTG) for a cash consideration of $110 million. The telco giant will also acquire Vita's Sprout business, leaving the retailer with just its Artisan Aesthetic Clinics business. Vita intends to return a good portion of the proceeds to shareholders as dividends.

Centuria Industrial's shares sink

The Centuria Industrial Reit (ASX: CIP) share price is sinking today after returning from a trading halt. This morning the industrial property company announced the completion of an institutional placement which raised $300 million. These funds were raised at a 5.2% discount of $3.80 per new share. Centuria Industrial is raising funds to acquire eight freehold urban infill industrial assets for a total of $351.3 million.

Energy shares rise

One area of the ASX 200 that is performing positively today is the energy sector. For example, the shares of Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) are recording solid gains today after oil prices charged higher overnight. Traders were buying oil after growing fuel demand and a draw in U.S. crude inventories led to tight supplies.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday has been the Computershare Ltd (ASX: CPU) share price with a 5.5% gain. This is despite there being no news out of the share registry company. The worst performer on the ASX 200 has been the Cochlear Limited (ASX: COH) share price with a 5.5% decline. This follows news that the hearing solutions company has been hit with a patent infringement complaint.

The post ASX 200 (ASX:XJO) midday update: Telstra buys Vita stores, Cochlear sinks appeared first on The Motley Fool Australia.

At the time of writing, the telco giant's shares are up slightly to $3.99. Whereas the retailer's shares are up 6% to 98 cents.

Why is the Telstra share price rising?

The Telstra share price is rising today after Vita announced the sale of its Information and Communication Technology (ICT) retail business to the telco.

According to the release, the two parties have agreed a cash consideration of $110 million, subject to a net working capital and net-debt adjustment mechanism.

The release notes that the proposed transaction involves the sale of Vita's Telstra branded retail stores and the Sprout business. Furthermore, Telstra will take over the employment relationship with the majority of staff involved with the stores and support teams.

The Vita Board believes the proposed transaction provides benefits to shareholders through realising value from the ICT channel and Sprout business now. This is rather than trading through to the conclusion of the Telstra Dealer Agreement in 2025 in an uncertain economic environment and changing ICT landscape.

What now for Vita?

If the transaction completes successfully, the Vita Board expects to distribute a large portion of the proceeds to shareholders.

It is proposing a fully franked special dividend of approximately $65 million to $75 million, representing $0.39 to $0.45 per share, plus franking credits of up to approximately $0.17 to $0.19 per share.

After which, Vita intends to utilise the remaining portion of proceeds, currently estimated to be approximately $35 million, to fund the further growth of its Artisan Aesthetic Clinics business.

It currently has 20 clinics across the country and is competing with Silk Laser Australia Ltd (ASX: SLA) in the growing beauty clinics market.

The post Telstra (ASX:TLS) share price higher on Vita (ASX:VTG) deal appeared first on The Motley Fool Australia.

Cyan Investment Management portfolio manager Dean Fergie told clients in a memo that both Mighty Craft Ltd (ASX: MCL) and Vita Group Limited (ASX: VTG) had shockers in August.

Vaccinations will lift spirits

Shares for brewing company Mighty Craft lost 15% over the month.

"Mighty Craft has come under reasonable operational and sharemarket pressure due to the extensive lockdowns in VIC and NSW which have severely impacted its venue businesses," Fergie said.

The Melbourne business is a craft-brewer, a spirits distiller, and owns some venues.

"The company owns brands such as Jetty Road, Ballistic and Mismatch Brewers, Kangaroo Island Gin, 78 Whisky, and over a dozen associated venues in NSW, VIC, and SA."

Mighty Craft shares have shaved 35% off their value so far this year.

Fergie told The Motley Fool it's a victim of circumstances and believes fortunes are about to swing around for this ASX share.

"MCL is currently in the eye of the COVID storm with its closed venue businesses but the present tight restrictions are only likely to ease and a strong rebound is likely before Christmas and patrons flood back into venues," he said.

"The timing of the recent capital raise and purchase of Adelaide Hills group, just before the latest COVID outbreak on June 21, was unfortunate timing."

One positive the very contagious Delta variant has brought is a sense of urgency for Australians to receive a coronavirus vaccine.

The rising coverage will also help Mighty Craft, according to Fergie.

"As vaccination rates roll forward it would appear likely that a gradual reopening will occur in the coming months which should see a rebound in the company's operations and its share price."

Patience is a virtue for this ASX share

Vita Group is best known for owning a network of Telstra shops.

But in February, Telstra Corporation Ltd (ASX: TLS) announced it would shift all its franchised retail outlets in-house.

But that's now 6 months ago and Vita Group still has not struck a buyout agreement with the telco.

Vita shares lost 10% over August.

"Investors are getting somewhat impatient with Vita," Fergie told The Motley Fool.

"The market has been expecting a deal to be struck between the two companies to exit the franchise but COVID closures have likely lengthened this process." 

The company has turned to other ventures, one of which shone during the recent reporting season.

"Vita Group reported great numbers from its growing beauty clinic division (Artisan) which saw revenue and gross profit rise over 40%."

The other reason for patient investors to hold onto Vita stock is that it's bringing in a nice income.

"VTG is paying a 9% fully franked yield, so investors are certainly being rewarded for their patience."

The post 2 ASX shares just had a shocking month but could be bargains now appeared first on The Motley Fool Australia.

These ASX shares will be going ex-dividend this week. This means that investors who own or purchase the company's shares before the ex-dividend date will receive its next dividend payment. The ex-dividend date will typically see the company's share price open weaker to reflect the dividend paid. The larger the dividend paid, the greater the share generally falls on the ex-dividend date. 

Briscoe Group Ltd (ASX: BGP) 

Briscoe is a New Zealand based sporting and homeware retailer. The company announced solid earnings growth for the full year ended 31 January 2021 with revenue up 7.5% to NZ$701 million while net profit after tax increased 17% to $73 million. Briscoe will be going ex-dividend on Tuesday 23 March, for 13.5 cents per share. At its last closing price on Friday of $4.05, this represents a yield of 3.33%. 

Cash Converters International Ltd (ASX: CCV)

Cash Converters will be going ex-dividend on Wednesday 24 March, paying a distribution of 1 cent per share. This represents a yield of approximately 4%.

The embattled second-hand retailer and financial services provider has struggled against more tech-enabled competitors. The company's 1H21 report saw a 31% decline in revenues to $98.4 million while operating net profit after tax declined 28% to $7.7 million. 

Lindsay Australia Ltd (ASX: LAU) 

Lindsay is an integrated transport, logistics and rural supply company with an extensive east coast network. The Lindsay share price has been in a steady decline since 2015, losing more than 25% in value. From an earnings perspective, the company has had relatively stable cash flows and dividends. Its most recent 1H21 report highlighted a 12.1% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $26.1 million, reflecting continued cost controls and improving operational efficiency. 

The company will be going ex-dividend on Thursday 25 March for an interim fully franked dividend of 1.2 cents. This represents a yield of approximately ~3.2%. 

Vita Group Limited (ASX: VTG) 

Vita Group shares took a 30% dive on 11 February when Telstra Ltd (ASX: TLS) announced that it would transition its Telstra branded retail store network to a full corporate ownership model. This means that the current dealer agreement with Telstra will end by 30 June 2025. 

A significant proportion of Vita's earnings are derived from its retail Telstra stores. In its 1H21 results, $307.8 million of its $323.7 million revenue came from information and communication technology (ICT) channels. Vita Group CEO Maxine Horne said the company "has been investing in the very attractive category of skin health and wellness for some time, thus creating a new growth opportunity for the group". 

Vita Group will be going ex-dividend on Thursday 25 March, for an interim dividend of 5.6 cents. Its recent share price decline to 95 cents has propped up the yield to approximately 6%. 

Service Stream Ltd (ASX: SSM) 

Service Stream provides end-to-end life-cycle services such as design, construction and maintenance to utility and telecommunication asset owners, operators and regulators in Australia.

A reduction in telecommunication works in 1H21 resulted in a 17.7% decline in revenues to $409.9 million. Service Stream expects subdued trading conditions and COVID-19 related impacts to continue into the second half, with results approximately in-line with the first half.

The market has not been impressed by historically weaker earnings from Service Stream. The Service Stream share price is down more than 30% year-to-date, sitting at around 3-year lows. The company will be going ex-dividend on Thursday 25 March for an interim dividend of 2.5 cents.

The post Small and mid cap ASX shares going ex-dividend this week appeared first on The Motley Fool Australia.

The S&P/ASX All Technology Index (ASX: XTX) has fallen over 13% in the last month. No doubt interest is increasing in the classic Ben Graham/Warren Buffett 'value investing' approach.

Due to bond yields rising (which if you're interested in that – have a look at this article), the market is beginning to make the cyclical shift into value. The reason partly being high risk just isn't as appealing in a high-interest rate environment.

A word of warning – This is often when investors give up potential high growth investments for wealth eroding value traps.

What is a value trap?

Have you ever come across a company that has a ridiculously low price-to-earnings (P/E) ratio and a juicy high yield dividend? The share price has retreated, and it looks like it's prime for an entry point. It all seems too good to be true, right?

Well, you know what they say – if it seems too good to be true, it probably is.

Not every 'cheap' share with a high yield will be a dud, but I'm not afraid to admit that I've succumbed to this trap. In one case I'm still expecting a turnaround, but in the other, I'm considering cutting my losses.

So, in order for me to help you have the best shot avoiding making the same mistakes when 'value investing' – I'll run through a handful of past value traps. From there, I'll explain my approach towards value in this market.

Past performance of some value traps

Now, this is by no means stating the following shares are poor investments looking forward. As always, past performance is not an indicator of future performance. However, these shares are fairly good examples of what a value trap can look like and how it can turn out.

Vita Group Limited (ASX: VTG) operates 104 Telstra retail stores. Not exactly a huge growth avenue, but it could be considered a fairly steady business.

Three years ago, Vita had a P/E of roughly 7. At that time, the company was also offering a dividend yield of 11.7%. Now that sounds phenomenal, doesn't it? A cheap steady business, with a hefty dividend. Well, three years later, shareholders have lost 27.5% even when including dividends.

To put salt in the wound – Vita is now expected to lose its biggest revenue stream, as Telstra shifts to a full ownership model.

Another example is Abacus Property Group (ASX: ABP). This is a diversified Australian real estate investment trust (REIT). They own Storage King storage assets, along with 24 office space assets.

Glancing into the past, three years ago it was trading on a reasonable earnings multiple of 13. Meanwhile, the dividend yield was at an attractive 5.2%. Considering the high returns on offer for the fairly stable business – you'd be forgiven for wanting in.

However, at present, the shareholder returns for the past three years have been a loss of 6.7% including dividends.

Striking a balance when investing in value

The point being of this article is not to say don't invest in 'value' plays. Instead, it's to emphasise that value without growth is just expensive in disguise.

The takeaway is to not jump blindly into an investment based on metrics that change at the drop of a hat. Ensure that the business still has a plan for improving and expanding into the future.

Matured companies can make fantastic investments, but a business cannot rest on its laurels. Sure, earnings might be steady now, but without the ambition to improve those earnings will be diminished by competition.

Lastly, earnings multiples can be extremely deceiving. Once upon a time in 2015, Amazon.com Inc (NASDAQ: AMZN) had an earnings multiple of 720. At the time the share price was US$512. At present, Amazon's share price is US$2978 with a P/E of 71.

My thinking is to focus on where the company could be 3, 5, even 10 years from now based on what it does, more so than what it's valued at now. Value traps tend to disappear when thinking in broader terms like that.

The post Leaving growth? Don't get caught by value traps when value investing appeared first on The Motley Fool Australia.

What's moving the Vita Group share price today?

Profits buoyed by JobKeeper

Today's half-year results for Vita Group portray a challenging half for the company. Revenues dropped 25% to $323.7 million due to retail ICT and accessory volumes impacted by COVID-19.

On the other hand, the company's pivot towards its skin health and wellness (SHAW) segment showed strong organic growth. Artisan Aesthetic Clinics experienced a 37% lift in revenues compared to the prior period. This result stems from an increase in client visits and clinic numbers. Additionally, clients have increased their average spending per visitation.

Shareholders might have caught themselves cheering for the increase in earnings before interest, tax, depreciation, and amortisation (EBITDA). In contrast to the company's revenue, EBITDA increased by 23% to $32.6 million.

However, the result isn't all cheerful – a contributor to this increase was the inclusion of JobKeeper payments. To be precise, the group received net payments of $12 million from the federal government. Underlying EBIT, when excluding JobKeeper actually fell 27% to $16.1 million.

Telstra uncertainty in the mix

With the announcement of Telstra's intention to transition to a full ownership model for all of its stores, the future looks murky for Vita. Vita currently operates a total of 104 Telstra retail stores on behalf of the telco giant. The current agreement will conclude on 30 June 2025, so the clock is ticking for the next 4 years.

Vita continues to ensure it is in discussions with Telstra to facilitate a suitable transition arrangement. But a week has passed, and no further details have been provided on this front.

Currently, Vita has stipulated it will continue to manage its Telstra store network in the meantime. Shareholders are anxiously awaiting further information considering the large percentage of revenue derived through its partnership with Telstra.

CEO Maxine Horne commented on the result and outlook for the company:

We are pleased to have maintained profitability during a challenging period. Our progress in Artisan is strong and sustainable. The team has done an excellent job of managing our ICT channel and supporting Telstra customers despite COVID-19. We are about to embark on a new chapter.  We have significant capability in running a national, dispersed network and delivering a premium experience, resulting in value for all. The Vita team are disciplined, focused and passionate about looking after our customers and I thank them for their hard work (historical and future) and willingness to adapt and evolve.

A dividend for your troubles

Vita Group also announced that it will pay a fully franked interim dividend of 5.6 cents per share. This time last year Vita skimped out on a dividend payment to take a conservative approach during the peak of the COVID-19 crash. Today's announced dividend represents a 7.7% increase on the interim dividend paid back in 2019. 

At the time of writing, the Vita Group share price is sitting at 93 cents, up 6.29% in morning trade but down 25% on this time last year.

The post Vita Group (ASX:VTG) share price up on results, despite Telstra woes appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are sinking lower:

AMP Ltd (ASX: AMP)

The AMP share price is down 10% to $1.39 following the release of its full year results. The financial services company reported an underlying net profit after tax of $295 million for the 12 months ended 31 December. This is down 33% on the prior corresponding period. Management advised that it reflects the impacts of COVID-19 on its clients, its business, and the broader economy and financial markets.

Ecofibre Ltd (ASX: EOF)

The Ecofibre share price is down 13% to $1.57. Investors have been selling the hemp company's shares following the release of a very disappointing half year result. Ecofibre reported a 49% decline in revenue to $14.7 million and a sizeable $5.5 million loss after tax. The latter compares to a $7.1 million profit in the prior corresponding period.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price has fallen 4% to $49.09. This follows the release of the fund manager's half year results this morning. For the six months ended 31 December, Magellan reported a 9% increase in its average funds under management (FUM) to $100.9 billion. However, due to a sharp decline in performance fees, the company posted a 2% decline adjusted net profit after tax to $213.1 million.

Vita Group Limited (ASX: VTG)

The Vita share price has crashed 27% lower to 82.5 cents. This follows news that Telstra Corporation Ltd (ASX: TLS) intends to transition to full ownership for all of its branded retail stores across Australia. At present, Vita operates 104 Telstra retail stores on behalf of the telco giant. This makes up the vast majority of its revenue. According to Vita, the agreement will end in June 2025.

The post Why AMP, Ecofibre, Magellan, & Vita shares are sinking today appeared first on The Motley Fool Australia.

At the time of writing, the retailer's shares are down 31% to 77 cents.

Why is the Vita share price crashing lower?

Investors have been selling Vita shares this morning following the release of the Telstra Corporation Ltd (ASX: TLS) half year result. You can read more about that here.

In case you're not aware, Vita operates a total of 104 Telstra retail stores on behalf of the telco giant.

However, this morning Telstra has announced plans to transition to full ownership for all of its branded retail stores across Australia.

This will be a huge blow for Vita. Although it has been trying to diversify in recent years, almost the entirety of its revenue is still generated by its Telstra stores.

For example, in FY 2020, the company's Information & Communication Technology (ICT) segment reported $752 million of revenue. This represents a whopping 97.3% of its total revenue.

When will the contract end?

According to an announcement by Vita, it expects its current dealer agreement with Telstra to end on 30 June 2025.

This gives the company a little over four years to find a way to recoup the enormous gap in its earnings that this will cause.

Vita's Chief Executive Officer, Maxine Horne, commented: "Vita is strategically prepared for a range of outcomes and has been investing in the very attractive category of skin health and wellness for some time, thus creating a new growth opportunity for the group."

"We have a 26-year partnership with Telstra and are committed to working professionally with them to ensure the best possible outcome for all parties. In addition to discussions with Telstra regarding transition arrangements, the remaining period of the Telstra licence arrangement will provide cashflow as we continue to grow the Artisan brand," she concluded.

The post Why the Vita (ASX:VTG) share price is crashing 31% lower today appeared first on The Motley Fool Australia.

This follows the release of the telco giant's half year results this morning.

How did Telstra perform in the first half?

For the six months ended 31 December, Telstra reported a 10.4% decline in total income to $12 billion. This was driven largely by an 11% decline in consumer and small business revenue to $6.35 billion and an 8.1% decline in enterprise revenue to $3.47 billion.

Telstra's underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 14.2% to $3.3 billion. This was due largely to an estimated in-year NBN headwind of $370 million and an estimated $170 million impact from COVID-19. Excluding these impacts, Telstra's underlying EBITDA would have been broadly flat compared with the prior corresponding period.

On the bottom line, the company revealed a 2.2% decline in net profit after tax compared to the same period last year to $1.1 billion.

Finally, the company reported cashflow after operating lease payments of $1.9 billion.

The Telstra dividend

One thing that has been weighing on the Telstra share price over the last 12 months has been concerns that it may cut its dividend.

Pleasingly, this morning the company has declared a fully franked 8 cents per share interim dividend, which is flat on the same period last year. This sees the company return approximately $950 million to shareholders.

Even better, though, is that the Telstra board confirmed that it also expects to pay a fully franked final dividend of 8 cents per share, bringing its total dividend for FY 2021 to 16 cents per share. This is in line with FY 2020's dividend.

What else could impact the Telstra share price today?

There were a few more positives in the announcement that could give the Telstra share price a lift today.

One was that the company has increased its T22 cost reduction target to $2.7 billion by FY 2022.

CEO Andy Penn commented: "Telstra continued to make progress on its productivity target, reducing underlying fixed costs by a further $201 million, or 7 per cent, during the half and increased its productivity targets to $450 million in FY21 and from $2.5 billion to $2.7 billion by the end of FY22. Around $2.0 billion has already been delivered under the program."

Mr Penn also provided an update on the establishment and proposed monetisation of InfraCo Towers, as well as the broader legal restructuring of the company.

"We plan to commence the process for external strategic investment into InfraCo Towers early in the first quarter of FY22, with binding offers to be submitted by the second quarter of FY22. We are undertaking significant verification and due diligence on our towers and property, appointed key members of the management team and advisors, and preparation work is well advanced to meet our timetable."

"Since we updated the market in November 2020, we have appointed external advisors and progressed consultations with stakeholders to obtain approvals and support for the restructure. This includes discussions with the ACCC, the ACMA and relevant Government Departments to ensure that Telstra's regulatory obligations will continue to apply as intended. We have also had constructive engagement with NBN Co on the restructure," he added.

Another development announced today is Telstra's plan to transition to full ownership for all of its branded retail stores across Australia.

This will be bad news for Vita Group Limited (ASX: VTG), which currently operates 104 of its stores. Telstra advised that Vita Group and individual licensees are being notified of the plan with discussions and transition arrangements expected to progress over the coming months.

Outlook

Possibly holding back the Telstra share price a touch today is news that it has downgraded its guidance for FY 2021. Telstra is now expecting total income to come in at between $22.6 billion and $23.2 billion for the full year.

This is down from $23.2 billion to $25.1 billion previously. Management advised that this was due to low-margin hardware and other equipment sales.

The company has also narrowed its guidance range for underlying EBITDA. It now expects its operating earnings to be in the range of $6.6 billion to $6.9 billion (from $6.5 billion to $7 billion).

Positively, its guidance range for free cashflow after operating lease payments has increased by $450 million at the mid point to the range of $3.3 billion to $3.7 billion. This is due to working capital management and the impact of lower hardware revenue.

Telstra also expects to be at the low-end of the net NBN one-offs range due to factors including NBN Co's decision to pause HFC-based connections of new customers. Guidance for capital expenditure remains unchanged.

Looking further ahead, Mr Penn appears confident that the company is positioned to return to growth in FY 2022.

He said: "I am confident the many initiatives we have taken under our T22 program, particularly in simplifying the business and the digitisation program, will further improve customer experience."

"To get the real benefits from all the effort we've already made, Telstra needs to be bold. I've set an aspiration for mid to high single-digit growth in underlying EBITDA in FY22 and $7.5 to $8.5 billion of underlying EBITDA in FY23. I am confident we can deliver this if we remain focused," he added.

The post Telstra (ASX:TLS) share price on watch after maintaining half year dividend appeared first on The Motley Fool Australia.

In morning trade the Telstra Corporation Ltd (ASX: TLS) store operator's shares stormed as much as 16% higher to $1.49.

Why is the Vita Group share price storming higher?

During the first half of FY 2020, Vita reported record interim revenues of $431.6 million. This was a 14% increase on the prior corresponding period.

This was driven by a 13% increase in revenue from its key ICT segment to $420 million and a 65% lift in Skin-Health and Wellness (SHAW) segment to $11 million. The ICT segment's growth came from device and accessories, which offset a reduction in connectivity revenue. The latter was an expected outcome of Telstra's recent shift towards casual plans.

Earnings before interest and tax (EBIT) increased 11% to $22.1 million and net profit after tax (NPAT) increased by 3% to $14.5 million. The slower earnings growth was due largely to weaker gross profit margins. Vita's gross profit margin fell from 30.7% to 27.2%.

But this didn't stop the Vita board from increasing its interim dividend. It lifted it by 2% to 5.3 cents per share.

Chief Executive Officer, Maxine Horne, commented: "We are pleased to deliver yet another strong result, which continues to reflect the talent, energy, resilience and commitment of all of our team members. Despite facing challenges in our ICT channel, we once again demonstrated our ability to adapt and evolve, leveraging our consultative selling capabilities to out-perform."

"Our SHAW channel is gaining momentum and we have made considerable progress in building a leadership position in the premium segment of the market. We will continue to build profitable scale, adding clinics and talent to the network as we strengthen the presence of the Artisan brand in the skin-health and wellness category. We are on track to execute our strategy, which is to operate a scaled network of Artisan branded clinics nationally," she added.

Outlook.

Looking ahead, management warned that there would be continued margin pressure in connectivity. However, it sees further device and accessory opportunities in the second half which could offset this.

It also provided an update on the impact of the coronavirus outbreak on its operations. It advised that there is some potential short-term or timing risk to its business. It notes that Apple devices are constrained, but Samsung supply is unaffected. Further, there is a possible impact to its accessories supply, but this is being actively managed.

The post Why this ASX retail share zoomed 16% higher today appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they have tumbled lower:

The Australian Mines Limited (ASX: AUZ) share price has sunk 11.5% to 2.3 cents after the advanced battery materials developer announced an underwritten share purchase plan to raise $5 million. The new shares will be issued at a 20% discount to the Volume Weighted Average Price over the five trading days before the date of issue of the new shares. These funds are being raised to advance its Sconi Cobalt-Nickel-Scandium Project in North Queensland and for general working capital.

The Mayne Pharma Group Ltd (ASX: MYX) share price is down over 4% to 51.7 cents. The pharmaceutical company's shares have come under significant selling pressure over the last few weeks following the release of a trading update. That update revealed that its key Generics business was struggling once again and had experienced a sharp decline in sales in the second half.

The Prospa Group (ASX: PGL) share price has given back some of yesterday's gains and is down 6.5% to $4.17. I suspect that some investors have decided to take a bit of profit off the table after the online lender's shares rocketed higher on their first day on the ASX boards. The Prospa share price is still notably higher than its IPO price of $3.78.

The Vita Group Limited (ASX: VTG) share price has continued its slide and is down a further 7% to $1.31. The retailer's shares were sold off on Tuesday after it provided an update on its remuneration agreement with telco giant Telstra Corporation Ltd (ASX: TLS). Investors appear concerned by the uncertainty around how profitable the new agreement will be for the company.

The post Why Australian Mines, Mayne Pharma, Prospa, & Vita Group tumbled lower today appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they have started the week in the red:

The AGL Energy Limited (ASX: AGL) share price has tumbled 6.5% to $19.56 despite tabling a takeover offer for telco company Vocus Group Ltd (ASX: VOC) this morning. This positive development was not enough to offset an announcement on Friday evening which revealed that an outage at its Loy Yang A power station in the Latrobe Valley was expected to hit its FY 2020 profits by as much as $100 million.

The Northern Star Resources Ltd (ASX: NST) share price has dropped 4% to $9.55 after improving investor sentiment and easing trade tensions led to investors switching out of risk off assets. Almost all of Australia's gold miners have sunk into the red today, leading to the S&P/ASX All Ords Gold index trading 2.3% lower at the time of writing.

The Star Entertainment Group Ltd (ASX: SGR) share price has crashed 17% lower to $3.74 after the casino and resorts operator revealed that trading conditions have deteriorated materially since the end of the first half. According to the release, the company's domestic revenue growth has slowed considerably due partly to challenging macroeconomic conditions. As a result, normalised FY 2019 EBITDA is expected to be lower year on year.

The Vita Group Limited (ASX: VTG) share price has sunk over 11% lower to $1.40 after it announced changes to its remuneration construct with Telstra Corporation Ltd (ASX: TLS) following the telco giant's plan to introduce new, simplified mobile plans to the market before the end of June 2019. Management warned that net impact on group earnings will be dependent on Vita's success in selling across the ecosystem of Telstra products and services, as consumers and small businesses transition to the new plans.

The post Why AGL, Northern Star, Star Entertainment, & Vita Group shares dropped lower today appeared first on The Motley Fool Australia.

At the time of writing the retailer's shares are down 11% to $1.40.

Why is the Vita Group share price trading lower?

After the market closed on Friday Vita Group released its guidance for the full year and outlined its FY 2020 plan and remuneration changes.

According to the release, Vita Group expects FY 2019 earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of $45 million to $46.5 million. This represents growth of 10% to 13% on FY 2018's result and is reflective of the strong performance in its Retail ICT and Sprout accessory businesses.

Looking ahead, the company revealed changes in its remuneration construct with strategic partner, Telstra Corporation Ltd (ASX: TLS). Vita Group operates a large number of the telco giant's retail stores.

The release explains that Telstra's plan to introduce new, simplified mobile plans to the market before the end of June 2019, will necessitate revised remuneration arrangements.

Under the new remuneration arrangements, Vita expects to enjoy higher remuneration attached to the sale of devices, including smartphones, tablets, connected devices, wearables, and non-transactional performance metrics.

However, it expects to see lower remuneration from sales of connections to the Telstra network.

In addition to this, as was previously announced, Vita has agreed to forego some legacy remuneration components, amounting to approximately $12 million to $13 million per annum, effective 1 July 2019.

Management advised that these reductions were agreed in exchange for an extension of its master license tenure (currently to June 30 2024), the introduction of an annual performance-based extension mechanism, and an increase in the number of allowable Vita owned stores in the Telstra retail network to 115.

What will be the overall impact of these changes?

The overall impact on the company's earnings at this stage is unclear.

The release advises that the net impact on group earnings will be dependent on Vita's success in selling across the ecosystem of Telstra products and services, as consumers and small businesses transition to the new plans. At this stage it is too early to determine the financial impact, given the new plans are yet to launch.

This uncertainty is likely to be the reason why its shares have come under significant pressure this morning.

However, Vita Group's chief executive officer, Maxine Horne, remains optimistic on the company's prospects.

She said: "We have seen many changes to plan construction and channel remuneration, which have been necessary as markets, channels and products evolve. Whilst the FY20 changes are structurally significant, I am confident in the Vita team's ability to adapt to change. Our team will continue to consult with our customers to understand their needs and provide multi-product solutions. Our product knowledge is exceptional, our customer service second to none, and our Sprout accessories brand provides a great opportunity to create additional value."

The post Vita Group share price crashes lower on Telstra remuneration changes appeared first on The Motley Fool Australia.

Unsurprisingly, with the benchmark index trading around its highest levels of the year, a number of shares have hit 52-week highs today.

Three that have achieved this feat are listed below. Is it too late to invest?

The Breville Group Ltd (ASX: BRG) share price stormed to a 52-week high of $17.70 today. Investors have been fighting to get hold of the appliance manufacturer's shares this year thanks to the release of an impressive half year result. Breville posted a 15.4% increase in half year revenue to $440 million and a 19.7% lift in net profit to $43.5 million thanks to its successful expansion into Germany and Austria. Management intends to build on this with the launch of its Sage brand into Belgium, the Netherlands, Luxembourg and Switzerland in the second half. The market appears optimistic this expansion will underpin further solid earnings growth in the coming years. If it does, then I suspect that Breville's shares could yet climb higher from here.

The Collins Foods Ltd (ASX: CKF) share price hit a 52-week high of $7.39 this morning. This latest gain means that the KFC and Taco Bell restaurant operator's shares have now risen almost 30% since the start of the year. The catalyst for this strong gain appears to have been a positive broker note out of Morgans last month. According to the note, the broker upgraded Collins Foods shares to an add rating from hold and increased the price target on them by almost 13% to $7.78. Its analysts believe that Collins Foods' KFC operations are performing well domestically and remain optimistic on the prospects of its European expansion. I agree with Morgans view on Collins Foods and think it would be a good option for investors.

The Vita Group Limited (ASX: VTG) share price climbed to a 52-week high of $1.67. The Telstra Corporation Ltd (ASX: TLS) retail store operator's shares have been on the rise since the release of the retailer's half year results. For the six months to December 31, Vita posted record revenues of $377 million and EBITDA of $25 million. This was a 14% and 25% increase, respectively, on the prior corresponding period. I think Vita Group's shares are still relatively good value despite its impressive gain in 2019.

The post Why these All Ords shares stormed to 52-week highs today appeared first on The Motley Fool Australia.

Four shares that have climbed more than most today are listed below. Here's why they are ending the week on a high:

The BWX Ltd (ASX: BWX) share price has rocketed 26% higher to $2.03 following the release of the personal care products company's half year results. Although the company behind the Sukin skincare brand had a disastrous half, investors appear to be pleased with management's guidance for the second half. Full year underlying EBITDA is expected to be in the range of $27 million to $29 million, compared to $7.1 million in the first half.

The InvoCare Limited (ASX: IVC) share price is up 9% to $13.69 following the release of the funeral company's full year results. In FY 2018 InvoCare posted a disappointing 22.1% decline in operating earnings after tax, leading to the board slashing its final dividend. However, the market appears pleased with management's outlook for FY 2019. According to the release, improved trading in the fourth quarter and in January is "pointing towards the market normalising."

The Netcomm Wireless Ltd (ASX: NTC) share price has rocketed 48% higher to $1.05 after the broadband equipment company revealed that NASDAQ-listed Casa Systems has offered to pay $1.10 cash per share for 100% ownership in Netcomm. This represented a 55% premium to yesterday's closing price, but 31% lower than its 52-week high. Despite the latter, the Netcomm board is supporting the offer.

The Vita Group Limited (ASX: VTG) share price has jumped over 8% to $1.49 following the release of the retailer's half year results. For the six months to December 31, Vita delivered record revenues of $377 million and earnings before interest, tax, depreciation and amortisation of $25 million. This was a 14% and 25% increase, respectively, on the prior corresponding period.

The post Why BWX, InvoCare, Netcomm, & Vita Group shares are ending the week on a high appeared first on The Motley Fool Australia.

At the time of writing the Telstra Corporation Ltd (ASX: TLS) store operator's shares are up 8.5% to $1.50.

What happened in the first half?

For the six months to December 31, Vita delivered record revenues of $377 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $25 million. This was a 14% and 25% increase, respectively, on the prior corresponding period.

The company's EBITDA was ahead of its guidance range given in October of $23 million to $24.5 million.

Net profit after tax rose 26% on the prior corresponding period to $14.1 million and 20% on a per share basis to 8.8 cents.

Vita ended the period with net cash of $17.2 million thanks to strong cash conversion and disciplined management of working capital.

This allowed the Vita board to declare a 5.2 cents per share interim dividend, up 11% on the same period last year.

What were the drivers of the strong result?

The key driver of its growth was the company's Information and Communication Technology (ICT) segment. This segment reported robust device and connectivity volumes and growth in revenue from business customers.

This was supported by its Non-Invasive Medical Aesthetics (NIMA) business. Management advised that significant progress has been made preparing the business for future growth. This included the launch of its premium medical aesthetics brand, Artisan Aesthetic Clinics, and the expansion of its portfolio to ten clinics across Queensland, New South Wales, and the Australian Capital Territory.

Vita's men's active and lifestyle brand, SQDAthletica, has grown its brand awareness and revenues significantly during the half, but is not yet contributing meaningfully to its financial performance.

The company's chief executive officer, Maxine Horne, was very pleased with the first half performance.

She said: "We are really pleased to deliver such a strong performance, despite tough conditions in the ICT industry. Our long-term strategic partnership with Telstra remains strong and we will continue to invest in our retail and business channels and enjoy continued profitability and cash flow from this part of our business."

Before adding: "We are achieving strong momentum across the business and are well positioned for the future. We have a very clear strategy for Vita Group which includes cementing our position as a leader within the industries we operate in. With a strong and talented management team in place and dedicated and highly skilled frontline and support teams, we will continue to execute our strategy at speed and to deliver value for all of our stakeholders."

No guidance was provided for the second half.

Should you invest?

I thought this was a strong result from Vita and I can't say I'm surprised to see its shares surge higher today.

Based on this result Vita's shares are currently changing hands at 10x trailing earnings and offer a trailing fully franked 6.4% dividend yield.

Although I have concerns about how reliant the company is on Telstra, this risk appears to be priced into its shares at this level. Which could make it worth considering a small investment in its shares along with fellow retailers Accent Group Ltd (ASX: AX1) and Super Retail Group Ltd (ASX: SUL).

The post Why the Vita Group share price stormed 8% higher today appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they have started the week in the red:

The Australia and New Zealand Banking Group (ASX: ANZ) share price is down over 2% to $24.23. Investors have been selling bank shares after the RBNZ proposed additional capital requirements for New Zealand banks. Management advised that "it remains too early to determine the extent to which this could impact the capital levels held by the ANZ Group." This decline means ANZ Bank's shares are now trading within sight of their 52-week low.

The Australian Pharmaceutical Industries Ltd (ASX: API) share price has fallen over 7% to $1.48. On Friday the pharmacy chain operator and distributor's shares rose strongly after proposing a merger with rival Sigma Healthcare Ltd (ASX: SIG). Today's decline has wiped out those gains and more. Sigma's shares are down 1% today as well.

The BWX Ltd (ASX: BWX) share price has fallen 3.5% to $2.84 despite there being no news out of the personal care products company. But with its shares up there as one of the most shorted on the Australian share market, I can't say I'm surprised to see them drifting towards their 52-week low today. I would suggest investors stay clear of BWX until its sales performance improves.

The Vita Group Limited (ASX: VTG) share price is down 4.5% to $1.04 today. Investors have continued to hit the sell button despite the retailer announcing that telco giant Telstra Corporation Ltd (ASX: TLS) has extended its Telstra Dealer Agreement and Master Licence for a further year through to June 30 2024 after it achieved its FY 2018 performance criteria.

The post Why these 4 ASX shares have started the week in the red appeared first on The Motley Fool Australia.