REG - CVS Group plc - Half year Trading Update

CVSAnnouncement

26/01/2023 07:00

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RNS Number : 9477N  CVS Group plc  26 January 2023

26 January 2023

 

CVS Group plc

("CVS" or the "Company" and, together with its subsidiaries, the "Group")

 

Half year Trading Update
Strong demand continues - trading in line with full year expectations

 

CVS, the AIM-quoted veterinary group and one of the UK's leading providers of
integrated veterinary services, issues the following update on trading
covering the six months ended 31 December 2022 ("H1 2023").  The Company
expects to announce its H1 2023 interim results on 24 February 2023.

 

Summary

·    Strong H1 2023 results with revenue up 8.2% vs H1 2022

·    H1 2023 like-for-like (LFL)(1) sales growth of 7.5%, within the
Group's organic revenue growth ambition of between 4% and 8%

·    Adjusted EBITDA(2) margin of c.19%, in line with the prior year

·    The Group has completed a further two acquisitions bringing the total
to six acquisitions comprising of nine practice sites in the financial year to
date, for initial consideration of £26.5m

·    In December 2022, the Group opened a new Greenfield site in
Southport, and is on track to open a further two in H2 2023

·    Further investment in practice relocations, refurbishments and
technology with £19.9m capex spent year to date (H1 2022: £10.6m)

·    Operating cash conversion remains strong and leverage(5)( )at 0.60x
as at 31 December 2022 provides significant headroom to drive further growth

·    c.5.0% increase in the average number of vets employed vs December
2021 with vet attrition continuing to fall

·    Trading in line with market expectations for the full year

 

H1 2023 Performance

We continue to see positive trading across the Group, with total Group revenue
up 8.2% to £296.3m (H1 2022: £273.7m). LFL(1) sales increased 7.5% in H1
2023, the Group continues to see strong demand across our integrated
veterinary services.

 

Our Healthy Pet Club preventative medicine scheme(3) has seen a further
increase in membership, up 4.3% to 481,000 as at 31 December 2022, from
461,000 as at 31 December 2021 (30 June 2022: 470,000).

 

Group Adjusted EBITDA(2) margin continues to remain in line with the prior
year, benefiting from operating leverage and strong revenue growth. The Group
has continued to increase its investment in practice refurbishment,
relocations, clinical equipment and technology with £19.9m invested in H1
2023 vs £10.6m in H1 2022. In addition, in December 2022 we opened a new
Greenfield site in Southport.

 

The Group remains on track to open a further two Greenfield sites in H2 2023.

 

Acquisitions

The Group has completed a further two acquisitions bringing the total to six
acquisitions comprising nine practice sites in the financial year to date, for
a combined initial consideration of £26.5m:

·      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

·    The Harrogate Vet - single site practice in Harrogate acquired
November 2022

·    Stokewood Vets - single site practice in Bournemouth acquired January
2023

 

Net bank borrowings

Net bank borrowings(4) increased to £57.6m (30 June 2022: £36.0m) primarily
as a result of the investment in capex and acquisitions in the half,
demonstrative of the Group's commitment to investing for the future.
Leverage(5) on a bank test basis of 0.60x is in line with management
expectations (30 June 2022: 0.40x), providing significant headroom for growth.

 

Our People

The upward trend in our employee Net Promoter Score (eNPS) has continued as a
result of our continued effort to engage and empower our teams. We have been
focused on improving equity, diversity and inclusion (EDI) and have been
rolling out our own EDI course with the aim of making everybody feel welcome
at CVS. With this investment in our people, we are pleased that the average
number of vets we employ has increased c.5.0% vs December 2021.

 

Outlook

Whilst the Group remains mindful of the challenging economic backdrop, demand
for veterinary care remains resilient. 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 as outlined at our recent Capital Markets Day.

 

The Board is pleased with H1 2023 performance and considers that current
trading remains in line with market expectations for the full year.  The
Group remains well placed to deliver on further growth opportunities over the
longer term.

 

The Board would like to acknowledge and 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.         Healthy Pet Club is our preventative care scheme offering
routine preventative care to clients for a monthly or annual membership fee.

4.         Net bank borrowings is drawn bank debt less cash and cash
equivalents.

5.         Leverage on a bank test basis is net bank borrowings,
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 / James Thompson / 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.8,300 personnel, including c.2,200 veterinary surgeons
and c.3,100 nurses.

 

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