Pet project pays off
ORMEAU-BASED National Veterinary Care (NVL) has unveiled a 52 per cent boost to net profit following a busy year for the acquisition hungry company.
NVL reported an underlying net profit – which strips out one-off costs – of $5.91 million, fuelled by 14 acquisitions in FY17 and 4.2 per cent like-for-like sales growth at its clinics.
In FY17 NVL gained Jason Beddow as chief finance officer, expanded into the New Zealand market where it now has 10 clinics, sold its emergency clinics and completed a $14.9 million share placement. Revenue rose 51 per cent to $66.9 million, ahead
of guidance, and NVL declared a final dividend of 3¢ per share.
NVL provided FY18 revenue guidance at 25 per cent above FY17.
Highlights last year included a 143 per cent surge in the reach of the Best for Pet program to 11,710 members and a 23 per cent rise in the number of independent clinics, which used the company’s management and procurement services.
Managing director Tomas Steenackers said Best for Pet, designed to facilitate more customers using the full range of veterinary services, was a growth driver.
The company recorded a 94 per cent increase in average spend after customers joined and there remained room for growth with a number of clinics yet to start promoting the program.
“In addition, the retention rate is 84 per cent. I have never seen that before. It is really high,” he said.
Mr Steenackers said more independent clinics had engaged with NVL’s management and procurement arms, driven by increased competition from corporate players in the marketplace.
“They do not have the tools or marketing know-how (to compete) and that is why they approach us,” he said.
He said it recorded a 90 per cent retention rate and aimed for 40 to 50 more this financial year.
NVL announced the purchase of seven additional clinics in June, taking its total number, upon settlement, to 60. Three of the sales have settled with the balance due in September.
Mr Steenackers said it will wait for the deals to be finalised and then take a break from acquisitions before it hunted for more clinics in February.
“We are getting smarter in how we acquire in terms of how we integrate them and create more value for shareholders,” he said.
“There has been a lot of lessons learned. We need time to regroup so when we make the next acquisitions it is not chaos.”
Investment firm Shaw and Partners, in a note to clients, said NVL had shown a disciplined approach to acquisitions with continued investment in backoffice support services, training and technology.
Shaw forecast an EBIT of $14.3 million in FY18 and underlying net profit of $8.5 million. It said NVL could exceed forecasts and maintained a buy recommendation for stock.
Shares closed up 8¢ at $2.44.