Pets at Home FY profit edges up, dividend lifted

Pets at Home reported an increase in pre-tax profit for the year as revenue grew and the company lifted its dividend.

For the 53 weeks to the end of March, statutory pre-tax profit edged up to £92.1m from £90.2m on revenue of £793.1m, up from £777.8m. The services division was particularly strong, while the food business also saw good growth.

Meanwhile, group like-for-like revenue grew 2.1% compared with 4.2% growth in the same period last year. LFL sales were driven by strength in Advanced Nutrition, VIP club momentum and growth in fee income from the veterinary practices and grooming salons.

This was partially offset by the seasonal challenge to Health & Hygiene products, which was a negative contributor to like-for-like performance.

Chief executive officer Ian Kellett said: “I am pleased to report another year of good progress. Despite some seasonal challenges to our Health & Hygiene sales, we have seen excellent performance in our strategic growth drivers of Advanced Nutrition, VIP, vet and grooming services.

“Together with refinancing benefits, this contributed to pre-exceptional earnings per share growth of 11.2%. Our strong cash flow has enabled us to increase the ordinary dividend to shareholders by 39%, to a payout ratio of 50% of earnings, whilst investing for growth through acquisitions of veterinary specialist referral centres.”

The company said that while margins this year will be hit by a weaker sterling and the National Living Wage, over the medium to longer term, these challenges will be outweighed by the support from its growing services business, which is still maturing.

Pets at Home recommended a final dividend of 5.5p per share, taking the total dividend to 7.5p for 2016, up 39% on the previous year.

The group said its main priority is to invest in areas that will expand the company and deliver appropriate returns.

Since the year end, it has acquired two veterinary specialist referral centres for a total of £14.9m and intends to continue exploring bolt-on opportunities in the wider veterinary services market.