Lots of bite to NVL’s results
ORMEAU-BASED National Veterinary Care has delivered a robust 30 per cent revenue boost for the first half, which also saw it take a big bite out of the New Zealand market.
The company, which is led by managing director Tomas Steenackers, reported revenue of $54.1 million, up from $41.6 million, and underlying pretax earnings – which strips out one-off items – 29.9 per cent higher at $8.2 million.
Investors reacted positively to the news, sending NVL shares 3.89 per cent higher to close at $2.00.
Mr Steenackers said the company had managed to grow revenue from like-forlike practices by 2.91 per cent, all while integrating a number of new businesses.
“From a business point of view we are getting better and better at running the business,” he said.
In October last year NVL purchased the Pet Doctors business of 23 clinics and two nurse training centres in New Zealand after raising $18 million from institutional investors.
Mr Steenackers said the acquisition, which was its largest since listing in 2015, had vindicated its strategy of investing in systems during FY18.
As a result, Pet Doctors was able to be integrated in 90 days, well ahead of the 120day schedule.
“I have not seen many businesses do that so quickly and smoothly,” he said.
“As a result of fully integrating Pet Doctors quickly, synergies will also start to flow quickly in the second half.”
He said he expected Pet Doctors to also feed into an improved margin for the first half, which had increased from 15.7 per cent to 16.1 per cent based on underlying pretax earnings.
One area where the numbers headed in a negative direction was net profit after tax, which fell 19.9 per cent from $3.3 million to $2.6 million.
Mr Steenackers said thatwas due to the first half result for FY18 being boosted by $1.64 million of writeback of contingent considerations.
Four newly-acquired clinics had failed to hit earnings targets set out in the agreement with the sellers, hence NVL was able to claw back
AS A RESULT OF FULLY INTEGRATING PET DOCTORS QUICKLY, SYNERGIES WILL ALSO START TO FLOW QUICKLY IN THE SECOND HALF NVL MANAGING DIRECTOR TOMAS STEENACKERS
money it would otherwise have had to shell out.
NVL has set guidance for FY19 of underlying revenue of $115.1 million and an underlying pretax earnings margin at between 14.5 and 15 per cent above FY18. In an investor note Wilsons Advisory, which rates NVL a buy with a target price of $2.85, said the company had released a solid result and beat its revenue forecast by four per cent. It said the full benefits of the Pet Doctors integration should start to flow from this month with $1.7 million cut in support office costs after leveraging off existing NVL support systems.