Thank you for standing by, welcome to the Vita Group Limited H1 FY 2023 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by one on your telephone keypad. I would now like to hand the conference over to Mr. Pete Connors, Chief Executive Officer. Please go ahead. Good morning, everyone, thank you for joining us today for Vita Group's half year results announcements. I'm Pete Connors, CEO of Vita Group, and joining me today is Andrew Ryan, our CFO. Now, before we commence, I'd like to respectfully acknowledge that we are joining today from the lands of the Turrbal and Jagera peoples. On behalf of Vita Group, I would like to acknowledge and pay my respects to the traditional custodians of the country throughout Australia and recognize their continued connection to land, waters and culture. We pay our respects to the elders, past, present, and emerging. This morning I will make some introductory remarks and take you through a brief overview of the period, including financial headlines, for the half year ending December 2022. Andrew will then step you through the numbers in more detail before I talk more about our continued work positioning Artisan for growth. Andrew and I will then be happy to take any questions. Starting on slide two with the half-year or half one review. During the period, with stand-up activities following the divestment of the ICT business largely finalized, Artisan server progressed and implemented its Evolve business model growth programs. Artisan did experience continued headwinds relating to impacts associated with COVID-19, changing macroeconomic environment, and the annualizing impacts from clinician turnover, including some founders in prior periods. Despite these headwinds, Artisan experienced improvement in various client metrics. Before I provide a more detailed update on Artisan's Evolve business model growth programs, let's turn to the financial headlines on slide three. Total revenues increased 12% on prior year to AUD 14.2 million. Underlying EBITDA, excluding the impact of AASB 16 leases, business stand up costs incurred in the period, legacy ICT insurance requirements and non-recurring items was down 3% to a loss of AUD 3.8 million. Whilst the group remains optimistic about Artisan's medium-term prospects, Vita's board has determined that it is prudent to moderate growth rate expectations and has revised the carrying value of the business given the changing macroeconomic environment and ongoing impacts associated with COVID-19. The Vita board has today announced an AUD 12.4 million non-cash write-down of the group's goodwill. Excluding the non-cash asset write-down, net profit after tax from continued operations was a loss of AUD 5.6 million. Turning to discontinued operations, net profit after tax was AUD 1.9 million. Group net profit after tax, including the non-cash asset write-down and discontinued operations, was a loss of AUD 16 million on a reported basis. Vita ended the period with net cash of AUD 15.1 million. The board has determined to not pay an interim dividend for half one FY 2023, electing to utilize Vita's existing cash position for ongoing investment in the Artisan business. Turning to slide four and to the further progression and implementation of Artisan's Evolve business model growth programs. The team continued to standardize Artisan's pricing, modality, product offering, and clinic network. Two close proximity Artisan branded clinics were consolidated to one in July 2022, and a new Artisan branded clinic was opened in Toowoomba, relocating and replacing the non-branded Toowoomba clinic in December 2022. Clinic network size currently consists of 18 clinics, 15 of which are Artisan branded, two non-branded and one co-branded. We continued to enhance Artisan's Client Experience. The involved in-clinic Client Experience was launched in all clinics as of January 2023. Marketing automation was launched in September 2022. The Artisan Client Concierge Hub, which is a centralized and specialist booking team, was embedded. Following early promising new client lead conversion improvement, Artisan trialed a three-fold increase in social media marketing investment in several clinics, resulting in proportional client lead generation outcomes. We also continued to enhance the Artisan team member experience, including a staged release of Artisan Academies for clinicians, supported by a team of clinical coach educators selected from Artisan's clinicians with advanced skills. We further developed and recently launched in February 2023, Artisan's Academies for Clinic Development Managers and Client Experience Consultants. We continued to enhance Artisan's clinical governance frameworks, including launching a bespoke clinic audit program, adopting a Three Lines of Defense model tailored for the aesthetic industry. We continued to focus on growth programs execution through clinic-level quarterly business planning. Finally, we continued to review corporate overheads, including undertaking restructuring activities and looking for clinic efficiencies. For a more detailed review of the financial results, I'll now hand over to Andrew. Thanks, Pete, and Ladies and gentlemen, we have temporarily lost connection with the speaker line. Please continue to hold and the conference will resume shortly. FY 2022 income tax return, expected refunds from the amendment of historical tax returns following the formalization of the GFC audit, offset by onerous contract expense. As Pete mentioned earlier, whilst the group remains optimistic about Artisan's medium-term business prospects, Vita's board has determined that it's prudent to moderate growth rate expectations and has revised the carrying value of the business. Vita's board has today announced an AUD 12.4 million non-cash write-down of the group's goodwill. Total group NPAT, including discontinued operations and the non-cash asset write-down, was a loss of AUD 16 million. On to the balance sheet on slide six. The group ended the period with gross cash of AUD 16.8 million. Current assets excluding cash ended the period at AUD 5.6 million, consisting of inventory of AUD 1 million, receivables of AUD 3.4 million, and other assets of AUD 1.2 million. In relation to the receivables, this includes the estimated refunds relating to the finalization of the GFC audit and the resulting amendments to historical income tax returns. Non-current assets consist of a security term deposit of AUD 2 million, plant and equipment of AUD 7.2 million, including clinic fit-outs and equipment technologies, right-of-use assets of AUD 5.8 million, intangible assets of AUD 12.3 million, and deferred tax assets of AUD 3.6 million. Liabilities of the group are made up of trade and other payables of AUD 3.5 million, borrowings of AUD 1.7 million, lease liabilities of AUD 10.5 million, which includes a legacy commitment relating to the group's head office, provisions of AUD 4.4 million and other liabilities of AUD 3.4 million. The group ended the period with net cash of AUD 15.1 million. I'll finish up on the cash flow statement on slide seven before handing back to Pete. Starting with continuing operations, operating cash flows after tax were AUD 0.9 million, reflecting trading losses largely offset by tax receipts. Investing cash outflows included AUD 0.9 million of capital expenditure for an Artisan-branded fit-out and the purchase of clinic equipment. Net financing cash outflows from continuing operations were AUD 1.6 million, reflecting lease payments of AUD 1.8 million, offset by net debt drawdowns of AUD 0.1 million. Moving to discontinued operations, total cash inflows were AUD 2.2 million, representing the tax refund proceeds following lodgment of the FY 2022 tax return. I'll hand back to Pete. Thanks, Andrew. Just want to acknowledge we may have had some sound problems at some point through the presentation thus far, so we're more than happy to take questions, just repeating that at the end of the presentation. I apologize for that. Turning to slide eight. While like-to-like comparisons to prior periods are difficult given the ongoing uncertainty regarding impacts on past and current periods of business headwinds, Vita is encouraged by various client metrics. During half one FY 2023 on a rolling 12-month basis, Artisan's active client database, which is unique clients that have visited Artisan in the last four months, increased 7.1%. Annual average active client spend remains stable, down just 0.4%. Client visits excluding Artisan's Geelong clinic, as it was not on Cosmedcloud until late May 2022, increased by 13.3%. New client numbers on a rolling 12-month basis increased 14.9% during half one FY 2023, whereas new clients increased 30% in half one FY 2023 compared to the prior corresponding period. Despite seasonal factors and an increased rate of cancellations observed since prior to Christmas, total future bookings excluding Artisan's single clinic not included in the Evolve Client Experience program until January 2023, currently 30% higher compared to April 2022, when the Evolve Client Experience program, including offering systemized treatment plans to clients, commenced the phased introduction. Of clients visiting Artisan in a rolling six-month period, again excluding Artisan's single clinic not on the program until January 2023, those provided a systemized treatment plan increased from 31% to 66% during half one FY 2023. As at the 31st of December 2022, clients visiting in the preceding six months that were provided a treatment plan continued to demonstrate an approximate 20 basis point higher collective rebooking rate than those that did not. Turning to slide nine. Starting with early insights for half two FY 2023, for the January and February 2023 period, clinic revenue is estimated to finish 18% up and client visits 23.5% up on the prior year. The January 2023 group EBITDA, based on an unadjusted and unaudited internal management reporting, is up 23.7% on the corresponding month last year and up 27.6% excluding one-off benefits in the prior period. Whilst the macroeconomic environment remains uncertain, Vita is positioned to drive organic growth by maintaining its focus on the execution of its Evolve business model growth programs, including increasing its marketing investment. As such, Vita continues to target monthly underlying EBITDA to break even during FY 2024. Andrew and I will now be happy to take any questions. Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. We'll now pause a moment to allow for any questioners to register. Thank you. We are showing no questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.
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