Greencross FY 2015 Full Year Results

Interviews

Interview with Greencross Limited (ASX:GXL) Chief Executive Jeffrey David
 
 
Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from pet integrated services company, Greencross Limited (ASX:GXL) is Chief Executive, Jeffrey David. Jeff welcome to FNN.
 
Jeffrey David: Thanks Carolyn, it’s great to be here.
 
Carolyn Herbert: You’ve just announced your full year results for financial year 2015. What were the highlights?
 
Jeffrey David: Thank you Carolyn, yes it was a great year. We grew our network by 35 per cent to 332 outlets. We increased our underlying revenue by 45 per cent to $644 million. And our net profit after tax grew by 77 per cent to $38.2 million, a tremendous year.
 
Carolyn Herbert: What was like for like sales growth like both for the Group and in each of your key divisions?
 
Jeffrey David: The like for like sales growth were very strong at 6.2 per cent, against an underlying market growth of four per cent, indicating the benefits of an integrated pet care company. With our retail like for like sales being 6.2 per cent and our vet like for like sales being 6.1 per cent.
 
Carolyn Herbert: You previously mentioned Greencross has an integrated pet care platform. Have you been able to measure the benefits of combining a pet retail and veterinary business?
 
Jeffrey David: We have. We’ve learnt that if a customer comes to one of our retail stores and on average spends $275 a year, if we can gain their trust and support and through that, convince them to use our veterinary and grooming services then that becomes $1405, an increase of five times.
 
Carolyn Herbert: Has your gross margin improved and if so, what has driven the improvements?
 
Jeffrey David: It’s grown by 50 basis points to 55.3 per cent. We’ve seen an increase penetration in our private label products and improvements in our procurement terms in our retail business. And we’ve seen that flow through to our veterinary business.
 
Carolyn Herbert: Can you tell us how much did you grow your store and clinic network by in financial year 2015?
 
Jeffrey David: We grew it by 35 per cent, increasing total outlets to 332, or another 85.
 
Carolyn Herbert: What are your plans for network expansion in financial year 2016?
 
Jeffrey David: Our goal is to take our eight per cent current market share to 20 per cent. And one of the ways we do that is to grow our store numbers each year by about 20, to achieve $20 million in additional veterinary revenue, which is typically about 16 to 17 vet clinic acquisitions. And this year we will include 12 co-locations that we intend to open.
 
Carolyn Herbert: And are you comfortable that you have the balance sheet to fund this growth?
 
Jeffrey David: We certainly do. We have $90 million in undrawn funding available from our financiers. And our cash flows are strong enough to support much of our growth. And as we move on into fiscal year 2017 and 2018, we’ll become substantially self-funding.
 
Carolyn Herbert: Jeff talk to us a bit about cash conversion. How was the cash conversion for the business in a time of such change?
 
Jeffrey David: Our underlying cash conversion this year was roughly 80 per cent. Of course, it was impacted by a number of one-off issues that related to the acquisition of City Farmers, which was quite a substantial acquisition for us. The implementation of a new captured logistics network, which led to an increase in some inventories and the build up of inventory in all of the new stores that we established during the year.
 
Carolyn Herbert: Final question now. What are your main priorities for financial year 2016?
 
Jeffrey David: Well the thing we’ve learnt this year, through our conversations with our customers and through the analysis of our data, is that the more engagement that we can get with customers across multiple platforms, the greater the benefit for the organisation.
 
So our focus this year is to ensure that our teams are engaging with our customers, to ensure their support of us across all of our platforms. To increase the number of multiple engagement points for our customers by ensuring that we have more stores and clinics close to each other. And by then refining our service offerings and product offerings, so that we can meet the needs of an informed pet parent.
 
Carolyn Herbert: Jeff, thank you for the update from Greencross.
 
Jeffrey David: Thank you very much, it was my pleasure.
 
 
Ends

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