The veterinary services company Greencross Limited (ASX:GXL) released a strong financial report for the six months ended December 2015. The group's revenue was lifted by 18% to $307.54 million.
The 18% rise in revenue is attributed to 5.1% ‘like for like’ (LFL) sales growth over the previous comparable period.
Greencross’ revenue in its Veterinary business increased 25.2% to $96.3 million driven by network expansion, particularly in speciality and emergency services, and the accelerated roll out of ‘in-store’ co-locate vets. Veterinary General Practice LFL sales growth of 4.1% was in line with expectations and positively supported by a 4.6% increase in visits to clinics.
The company’s gross margin improved 2.4% to 55.6% primarily due to the shift in sales mix towards veterinary services which trade at a higher gross margin level.
Operating expenses rose 10.4% to $156.5 million as the half-year ended 31 December 2014 included $15.3 million of exceptional items compared to $3.4 million in the current period.
The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) increased 104.6% or $23 million to $45.1 million for the period. The group incurred $3.4 million of exceptional costs in the current period against a $19.5 million of exceptional costs incurred during the previous period due to the acquisition and integration of City Farmers.
On an underlying basis, EBITDA grew 16.7% to $48.5 million on the back of underlying business and network expansion through the addition of retail stores and veterinary clinics and improved gross margins.
Supplementing the aforementioned results, the company’s net profit after tax (NPAT) grew 617.1% to $18.7 million, principally due to strong top line growth and the reduction in exceptional items incurred during the period.
Greencross strengthened its capital management position as the group net-debt declined 6.1% to $220.1 million. Strong cash conversion and a transition towards self-funded growth outside of one off material potential acquisitions helped the company to improve its debt levels.
GXL is up 4.4% since the announcement and last traded at $6.83 (as at 11:30 AM AEDT).
Author: Imran Valibhoy
Feb 16, 2016
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.