NVL says collaring small bites purrfect
THE boss of expanding vet services company National Veterinary Care Ltd says he is content to take small bites rather than large chunks out of the highly-fragmented market.
The comments from chief executive Tomas Steenackers come after the company completed a $14.6 million share placement with institutional investors.
Funds will be used to purchase four clinics to expand NVL’s presence in the NSW market and strengthen its balance sheet.
Investors responded positively, sending the company’s shares surging 7.35 per cent or 17¢ to close at $2.48.
Mr Steenackers said the company intends on purchasing six to 10 clinics in FY18, despite buying 14 this financial year.
He said the four new acquisitions it has announced are due to settle between July and August, giving the company limited scope for more.
“To me there is going to be six to come during the financial year,” he said.
“We have to be careful not to go too hard. We need time to give the business time to breathe so we can successfully integrate the clinics.”
Mr Steenackers said the company’s growth strategy is not dependent on buying “25 clinics a year”.
He said it needs to buy clinics that enable it to maintain earnings-per-share (EPS) growth.
“We are here to buy the right clinics and make sure we have good organic growth and look after our people so we do not have staff retention issues.”
Mr Steenackers said the share placement was a vote of confidence in the company’s management – recently bolstered by the appointment of Jason Beddow as chief finance officer.
“Since we went on the stockmarket 22 months ago we have delivered on everything we said we would,” he said.
“Investors are backing the management team. I am quite excited to have a new CFO so I can get back to focusing on strategy.”
He said NVL has no plans for a share offer for retail investors although it is something the company would consider in the future.
“The register was really heavy with retail investors and it was an opportunity to bring in more institutional support.”
NVL said the share placement, under which 6.5 million shares were issued at $2.25 per share, was oversubscribed. Mr Steenackers said it has finalised an agreement for the purchase of one of the four new clinics and is in final negotiations to buy the other three.
The clinics have a combined annual revenue of $8.5 million and are expected to add to EPS in FY18.
Upon settlement, NVL will have 59 vet services businesses including 54 clinics, across Australia and New Zealand.
The company is forecasting FY17 revenue to grow 20 per cent above the FY16 figure of $53.8 million.