EXPANSION KEEPS PAYING OFF FOR GREENCROSS

GREENCROSS (ASX: GXL) has lifted its underlying net profit after tax by 10.3 per cent to $42.1 million for the full year.

The vet and pet business added another 21 stores and 23 clinics during the period, bringing the total size of the network to 376 locations.

Revenue increased by 14 per cent to $733.7 million.

Greencross' underlying earnings before interest, taxes, depreciation, amortisation (EBITDA) increased by 12 per cent to $97.5 million.

The company admits this growth was impacted by a subdued level of vet acquisitions in the second half and challenging retail conditions in Western Australia, which has fallen on tough times post-resources boom.

This contributed to Greencross falling slightly short of profit expectations, with Thomson Reuters originally tipping the company to hit $41.03 million.

However, cash flow conversion was 108 per cent, and net debt decreased by $6.4 million to $228 million.

Greencross CEO Martin Nicholas (pictured) says this was 'another strong year for network expansion' and the company has already made a strong start to FY17, opening another seven retail stores and acquiring two large clinics.

Part of Greencross' strategy going forward is also retrofitting clinics within its existing store footprint, a colocation exercise that will keep costs down.

The company says the one-stop shop is attractive to 'young entrepreneurial vets' to gain a rounded understanding of the company with full suite support.

Greencross is keeping a keen eye on competitor movements in the acquisition space, suggesting it will maintain its competitive advantage by ramping up co-location, 'which delivers a superior return on capital'.

The company currently has 17 of these in-store vet clinics, on track for 32 by the end of FY17.

"While this will have a short term impact on top line growth during ramp up phase, management believes this strategy will maximise shareholder value in the medium to long term," said Greencross in a statement to the ASX.

Greencross will pay a fully franked final dividend of 9.5c per share, taking the full year dividend to 18.5c, a 9 per cent increase on FY15.

Greencross opened on the ASX at $7.20, dropped to $6.92 upon the announcement, and was trading up at $7.50 in the early afternoon.

Read about how Greencross founder Glen Richards brings ideas to life.