REG - CVS Group plc - AGM Statement and Trading Update

CVSAnnouncement

29/11/2023 07:00

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RNS Number : 9738U  CVS Group plc  29 November 2023

29 November 2023

 

CVS Group plc

("CVS" or the "Group")

 

AGM Statement and Trading Update

Positive start to the financial year, trading in line with expectations

 

CVS, the UK listed veterinary group and a leading provider of veterinary
services, is holding its Annual General Meeting at 11.00am today and provides
the following update to shareholders ahead of the meeting.

 

Current Trading

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

In the four-month period to 31 October 2023, the Group's total sales grew by
11.9%, with like-for-like sales(1)  increasing by 5.8%, reflecting
positive performance across all business areas.

Our Healthy Pet Club preventative care scheme has seen a further increase in
membership, with 499,000 members as at 31 October 2023 (31 October 2022:
479,000 members) reflecting an increase of 4.2% over the last twelve months.

In the period we have launched a new Clinical Governance Framework,
demonstrating our commitment to driving standards of care across the
veterinary profession.

The Group's adjusted EBITDA(2) margin remains in line with the prior period at
c.19%, reflecting continued investment in support functions and clinical care.

Strong operating cash conversion has supported investment in acquisitions and
capital expenditure with leverage(3) on a bank test basis remaining in line
with management expectations and below 1.0x (30 June 2023: 0.73x). The Group
has continued to increase its investment in practice refurbishment,
relocations, clinical equipment and technology with £10.9m invested in the
year-to-date vs £10.8m in the prior year corresponding period. The Group
expects to spend between £30m and £50m in capital expenditure for the full
year.

Acquisitions

Australia

The Group has completed a further four small animal first opinion practice
acquisitions bringing the total to nine acquisitions comprising eleven
practice sites in the financial year to date, for aggregate initial
consideration of A$67.6m / £35.6m. The acquisitions made to date, together
with our strong pipeline, provide a meaningful platform for our operations in
Australia:

 Name of business combination                          % acquired  Date of acquisition
 Vetright Pty Ltd t/a McDowall Veterinary Practice     75%         26 July 2023
 McDowall Veterinary Hospital Pty. Ltd t/a Warner Vet  100%        26 July 2023
 Brunker Road Veterinary Centre Pty Limited            100%        17 August 2023
 North Road Veterinary Centre                          100%        23 August 2023
 Cattle Dog Health Pty Ltd t/a Happy Pets Family Vet   100%        23 August 2023
 Northgate Veterinary Surgery and St Vincents Vets     100%        25 October 2023
 Parkinson Veterinary Surgery                          100%        25 October 2023
 Southside Animal Hospital Pty Ltd                     100%        10 November 2023
 Brimbank Veterinary Clinic                            100%        28 November 2023

 

United Kingdom

The Group has completed a further two small animal first opinion practice
acquisitions in the UK bringing the total to four acquisitions comprising four
practice sites, for aggregate initial consideration of £10.1m. The
acquisitions were completed following the submission of briefing papers to the
Competition and Markets Authority ("CMA").

 Name of business combination                                               % acquired  Date of acquisition
 3Tab Holdings Limited and Bridge Veterinary Practice Limited collectively  100%        15 September 2023
 trading as Bridge Veterinary Practice
 Masefield Veterinary Services Ltd                                          100%        18 September 2023
 The Liverpool Vets Limited                                                 100%        3 October 2023
 Fernside Veterinary Centre Limited                                         100%        9 November 2023

All Australia and UK acquisitions are performing in line with expectations.

CMA

Following our update in September, we have met with the CMA and responded to a
number of questions and information requests. We will continue to support the
CMA with their review and look forward to a further update from the CMA in the
coming months.

Dividend

As previously announced, and subject to shareholder approval at the AGM, CVS
intends to pay a dividend of 7.5 pence per ordinary share on 8
December 2023 to holders on the register as at 3 November 2023.  The
ex-dividend date was 2 November 2023.

Board appointment update

Following the resignation of the Group's Chair, Richard Connell, due to ill
health, we have commenced a formal search to appoint a successor. The board
would like to take the opportunity to thank Richard Connell for his
considerable contribution as Chair over the past 16 years. In the interim
period Deborah Kemp, the Group's Senior Independent Director continues to
undertake this role.

Outlook

We continue to focus on the delivery of our well-defined strategy, with our
purpose to give the best possible care to animals and our vision to be the
veterinary company people most want to work for.  We remain committed to
investing in our practices and clinical equipment in order to drive quality
services and organic growth.

 

We are delighted with the progress made in Australia in both completed
acquisitions and in developing a strong pipeline of opportunities.

 

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 to deliver on our
five-year plan.

 

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 2022, revenue is
included from September 2023 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 acquisition costs arising from business combinations
and excluding share option costs, prior to the adoption of IFRS 16.

 

 

CVS Group
plc
via Camarco

Richard Fairman, CEO

Ben Jacklin, Deputy CEO

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 / James Thompson / Milo Bonser

 

Camarco (Financial
PR)

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

Ginny Pulbrook
 
      +44 (0)7961 315 138

 

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

CVS Group is an AIM-listed provider of veterinary services in the UK,
Australia, the Netherlands and the Republic of Ireland.  CVS is focused on
providing high quality clinical services to its clients 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 four markets, including
nine specialist referral hospitals and 39 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.9,000 personnel, including c.2,400 veterinary surgeons and
c.3,300 nurses.

 

 

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