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Greencross Lifts Profit by 82% to $34.6 Million

Greencross Lifts Profit by 82% to $34.6 Million
62 per cent of revenue is derived from the Australian Retail sector while 26 per cent comes from the Australian Vet segment.
Aug 23, 2016 By Simon Herrmann Tags: GXL, Earnings

Veterinary service provider and owner of Petbarn, Greencross Limited (ASX:GXL) announced another strong result as net profit after tax (‘NPAT’) soared 82 per cent to $34.6 million.

Revenue increased 14 per cent to $733.7 million, up from $644.5 million last year and EBITDA jumped 8 per cent to $87.1 million. Underlying NPAT rose 10 per cent to $42.1 million.

62 per cent of revenue is derived from the Australian Retail sector while 26 per cent comes from the Australian Vet segment. Revenue from New Zealand rose 22 per cent last year and is now making up 11 per cent of total income. 
Greencross further expanded its portfolio throughout the year. As at 30 June Greencross managed 221 retail store and 17 in-store vet clinics. The total portfolio consists of 376 retail stores and clinics.

Greencross Reduces Debt and Lifts Dividend

Strong cash flow enabled the company to reduce net debt by $6.4 million to $228 million.

Underlying Earnings per Share (‘EPS) were 37 cents which puts GXL on a price to earnings ratio (‘P/E’) of 19.7x. The strong result encouraged management to lift the annual dividend by 9 per cent to 18.5 cents. The payout ratio is 50 per cent of earnings. The ex-dividend date is Tuesday, 30 August and the payment date will be 23 September 2016.

Management Pleased with Result, Confident for FY17

Management is confident that the “unique integrated petcare model will continue to succeed” in Australia.

Greencross’s Chief Executive Officer, Martin Nicholas was pleased with the result, stating that Greencross once again delivered strong cash flow and margins. He commented: “We have added 21 stores and 23 clinics, bringing the total size of the network to 376 stores and clinics. We have been delighted with the response of our customers to our 17 in-store vet clinics and the outstanding performance of these in-store clinics, which are efficiently utilising square metres to deliver incremental revenue.”

Greencross aims to become Australia’s one stop shop for all of their pet needs by offering retail, veterinary and grooming services. Cross referral and loyalty programs are targeted to capture customers and encourage “cross shopping”.

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Simon Herrmann Author: Simon Herrmann Aug 23, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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