REG - CVS Group plc - AGM Statement and Trading Update

CVSAnnouncement

23/11/2022 07:00

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RNS Number : 2786H  CVS Group plc  23 November 2022

23 November 2022

 

CVS Group plc

("CVS" or the "Group")

 

AGM Statement and Trading Update

 

CVS, the AIM-quoted veterinary group and one of the UK's leading providers
of integrated veterinary services, is holding its Annual General Meeting at
11.00am today and provides the following update to shareholders ahead of the
meeting.

 

Summary

·    Positive start to the financial year with total sales increasing by
7.4% in the first four-months to 31 October 2022 (vs. the same period last
year)

·    Like-for-like sales(1)  increased by 7.4% for the same period,
within the organic revenue ambition of between 4% and 8%

·    Adjusted EBITDA(2) margin for the four months in line at c.19%,
within the adjusted EBITDA margin ambition of between 19% and 23%

·    The Group has completed a further two acquisitions bringing the total
to four acquisitions comprising seven practice sites in the financial year to
date, for initial consideration of £22.1m

·    Further investment under the Group's ambition, as outlined at the
recent Capital Markets Day (CMD), to drive growth and benefits to the Group
through practice refurbishment, relocations, clinical equipment and technology
with £10.8m total Capex spent year to date (31 October 2021: £7.1m)

·    Good operating cash conversion with leverage(3) remaining
comfortably below 0.5x at 31 October 2022, reflecting the positive trading
performance coupled with continued strong cash generation

 

Current Trading

The Board is pleased to report a positive start to the financial year
with performance in the first four months in line with our expectations.

In the four-month period to 31 October 2022, the Group's total sales grew by
7.4% and like-for-like sales(1)  also increased by 7.4%, reflecting
positive performance across all business areas with continued resilient
customer demand for our range of integrated veterinary services.

Our Healthy Pet Club preventative care scheme has seen a further increase in
membership, with 479,000 members as at 31 October 2022 (31 October 2021:
458,000 members) reflecting an increase of 4.6% over the last twelve months.

The Group continues to benefit from its integrated veterinary platform with
adjusted EBITDA(2) margin remaining in line with the previous corresponding
period at c.19%.

Good operating cash conversion leading to leverage(3) on a bank test basis
remaining in line with management expectations and comfortably below 0.5x (30
June 2022: 0.40x). The Group has continued to ramp up its investment in
practice refurbishment, relocations, clinical equipment and technology with
£10.8m invested in the year to date vs £7.1m in the prior year corresponding
period. The Group is well placed for further investment to drive organic and
inorganic growth.

Acquisitions

The Group has completed a further two acquisitions bringing the total to four
acquisitions comprising seven practice sites in the financial year to date,
for combined initial consideration of £22.1m:

·    Werrington Vets - Single site practice in Peterborough acquired July
2022

·    Woodlands Vets - Two site practice in Cheltenham acquired September
2022

·    Market Cross Veterinary Clinic - Single site practice in Edinburgh
acquired October 2022

·    Seadown Vets - Three site practice in Southampton acquired November
2022

Subject to shareholder approval at the AGM, CVS intends to complete a further
acquisition in November 2022 of The Harrogate Vet, a single site practice in
Harrogate. CVS continues to monitor its UK pipeline along with new
international territories in support of its targeted acquisition strategy.

Dividend

As previously announced, and subject to shareholder approval at the AGM, CVS
intends to pay a dividend of 7.0 pence per ordinary share on 2
December 2022 to holders on the register as at 18 November 2022.  The
ex-dividend date for this timetable is 17 November 2022.

Outlook

We continue to focus on our purpose to provide the best possible care to
animals through our integrated platform and to invest in our practices and
clinical equipment to drive organic growth, whilst continuing to explore
acquisition opportunities in both the UK and internationally.  Whilst mindful
of the wider macro-economic uncertainty, the Group continues to trade in line
with full year market expectations and the Group remains well placed to
achieve further growth over the longer term and deliver on our ambitions as
set out at the CMD.

 

The Board recognises the opportunity to further increase its diversity, and
commenced a formal search process to appoint an additional Non-Executive
Director in the previous financial year.  The Board is determined to select
the most appropriate candidate, and is confident that this search process will
be concluded with a suitable appointment in the current financial year.

The Board would like to thank all members of the CVS team for their continued
dedication and support.

Notes

1.      Like-for-like sales shows revenue generated from like-for-like
operations compared to the prior year, adjusted for the number of working
days. For example, for a practice acquired in September 2021, revenue is
included from September 2022 in the like-for-like calculations.

2.      Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) is profit before tax adjusted for interest (net finance
expense), depreciation, amortisation, costs relating to business combinations,
and exceptional items. Adjusted EBITDA provides information on the Group's
underlying performance and this measure is aligned to our strategy and KPIs.

3.      Leverage on a bank test basis is drawn bank debt less cash and
cash equivalents, divided by adjusted EBITDA annualised for the effect of
acquisitions, including costs relating to business combinations and excluding
share option costs, prior to the adoption of IFRS 16.

 

 

CVS Group
plc
via Camarco

Richard Fairman, CEO

Ben Jacklin, COO

Robin Alfonso, CFO

 

Peel Hunt LLP (Nominated Adviser &
Broker)
+44 (0)20 7418 8900

Adrian Trimmings / Michael Burke / Andrew Clark / Lalit Bose

 

   Berenberg (Joint
Broker)
+44 (0)20 3207 7800

Toby Flaux / Ben Wright / Ciaran Walsh / Milo Bonser

 

Camarco (Financial
PR)

Geoffrey Pelham-Lane
                                                 +44
(0)7733 124 226

Ginny Pulbrook
 
      +44 (0)7961 315 138

   Toby Strong
 
               +44 (0)7789 151 644

About CVS Group plc (www.cvsukltd.co.uk (http://www.cvsukltd.co.uk/) )

CVS Group is an AIM-quoted fully-integrated provider of veterinary services in
the UK, with practices in the Netherlands and the Republic of Ireland. CVS is
focused on providing high quality clinical services to its customers and their
animals, with outstanding and dedicated clinical teams and support colleagues
at the core of its strategy.

The Group has c.500 veterinary practices across its three markets, including
eight specialist referral hospitals and 37 dedicated out-of-hours sites.
Alongside the core Veterinary Practices division, CVS operates Laboratories
(providing diagnostic services to CVS and third-parties), Crematoria
(providing pet cremation and clinical waste disposal for CVS and third-party
practices), Buying Groups and the Group's online retail business ("Animed
Direct").

The Group employs c.8,100 personnel, including c.2,100 veterinary surgeons
and c.3,000 nurses.

 

 

 

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