VTL goes on American snack attack

VTL co-founder and director Mervyn Doolan. Picture / Fotopress

Vending machine operator VTL Group hopes a doubling of revenue and expansion in the United States and Europe will lift profits and its stagnant share price.

VTL is expecting revenue to hit $60 million for the year to June 2005 with much of the growth coming from businesses acquired in the US.

At its annual meeting in Auckland yesterday, management claimed the company was worth more than its $28 million market capitalisation indicated, saying they were determined to get the share price, which has floated around $1 for much of the year, increasing. In mid-2001, VTL's share price hit $3.70.

VTL turned a profit of $1.98 million for the year to June 30.

It sells vending machine franchises and technology in the US, Australia, New Zealand, Britain and continental Europe under the 24seven and Shop24 brands. It also extracts royalties on all sales from the vending machines.

VTL co-founder and director Mervyn Doolan said the company had to start "looking after" its share price.

"Our share price hasn't performed in the past couple of years. Part of that is attributable to the fact we haven't paid a dividend," he told shareholders. VTL paid a maiden dividend of 3.32c per share last month but has not set a long-term dividend policy.

The US contributed 15 per cent of sales in 2003,but that jumped to 71 per cent this year. VTL's US chief operating officer, Peter Holt, said the US vending market was carved up among 11,000 companies.

Doolan added: "America's never been cheaper for acquisitions."

Some shareholders grumbled about plans to double the salaries paid to Doolan and co-founder John Hotchin to $600,000 each a year.

"The high rates of salary are not consistent with the company's size," noted a shareholder.

But chairman Gary Stevens pointed out out that Britain, where Hotchin and Doolan now lived, was more expensive than New Zealand.