REG - CVS Group plc - Refinancing, Launch of SBB and Acquisition

CVSAnnouncement

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RNS Number : 6167F  CVS Group plc  26 May 2026

 
 
 
                        26 May 2026

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

CVS Group plc

("CVS", the "Company" or the "Group")

 

Refinancing, Launch of SBB and Acquisition

 

CVS, the UK listed veterinary group and a leading provider of veterinary
services is pleased to announce:

 

·      a successful refinancing of the Group's £350m bank debt
facilities on improved terms;

·      the launch a £50 million share buyback programme (the "Share
Buyback Programme"); and

·      the acquisition of a further small animal practice in New South
Wales, Australia.

 

CVS will announce its Full Year trading update on 23 July 2026, when it will
also provide an investor presentation update to the market.

 

Bank Refinancing & Leverage

The Group's £350m bank debt facilities which were repayable on 21 February
2028 have been successfully refinanced on improved terms.  The new facilities
comprise:

 

·      a term loan of £125m repayable on 20 May 2030

·      a revolving credit facility of £225m repayable on 20 May 2030

·      the existing overdraft facility of £5m, renewable annually.

 

The margin payable on drawn debt has reduced by 20 basis points.  These new
facilities are provided by a syndicate of eight banks, including Westpac
Banking Corporation, the first Australian bank to join the Group's financing
syndicate.  The Group has an option to extend these facilities for a further
year.

 

The two financial covenants remain unchanged and are based on the ratios of
bank test net debt to bank test EBITDA and bank test EBITDA to interest.  CVS
has significant headroom in both committed and undrawn facilities and covenant
headroom to continue to invest for growth.

 

The Group remains committed to maintaining leverage at no more than 2.0x bank
test net debt / bank test EBITDA. Where appropriate the Board will consider
temporarily increasing leverage above 2.0x for attractive acquisitions that
both fit the Group's growth criteria and provide a clear runway to return to
below 2.0x.

 

Capital Allocation

The Board regularly reviews the appropriate allocation of capital in support
of organic growth, executing against the Group's acquisition pipeline and
returning excess capital to shareholders where appropriate.  Following the
successful refinancing and the conclusion of the CMA process, the Group
reaffirms its approach to capital allocation.

 

This capital allocation framework is based on a hierarchy of clear priorities,
supported by a disciplined approach under which each investment opportunity is
assessed against other capital deployment opportunities and the options
considered most value accretive over the longer term are selected.  The
Group's capital allocation priorities are:

 

Acquisitions to accelerate sustainable growth

The Group has an attractive pipeline of accretive, bolt-on acquisition
opportunities currently focused on Australia, with the opportunity to acquire
in the UK following the recent conclusion of the Competition and Markets
Authority process, complementing the existing practice portfolio. The Group
expects to deploy c.£50 million per annum in Australia, subject to timing and
availability of opportunities that meet the Group's criteria.

 

The Board is confident that accretive long-term shareholder value will be
created from further acquisitions in Australia. In line with our policy, the
Company retains flexibility to make additional attractive acquisition
opportunities and adjust the quantum of the Share Buyback Programme as
appropriate in order to drive optimal shareholder returns.

 

The Board is pleased to announce the acquisition of a further single site
first opinion companion animal practice in Sydney for an initial consideration
of A$8.2m (c.£4m).

 

The Board is also pleased to announce that contracts have been signed, subject
to completion, for a further practice acquisition in Australia with completion
expected in the coming weeks. Initial consideration is A$3.2m (c.£1.7m).

 

Investment to maximise organic growth

The Board has a disciplined approach to capital investment aimed at delivering
accretive returns significantly in excess of the Company's cost of capital.
This investment is focused on delivering increased revenue and enhanced
margins through improved clinical facilities and equipment, enhanced client
experience and loyalty through new technology and improved employee engagement
and retention. This investment is expected to amount to approximately £30m
per annum with each investment assessed against our criteria and other uses of
capital.

 

Maintaining a healthy balance sheet

The Group benefits from favourable cash flow dynamics with a targeted
operating cash conversion in excess of 70%. Combined with the Board's
disciplined approach to capital allocation, this underpins a lower cost of
capital (as recently evidenced through the refinancing), firepower for both
organic and inorganic growth and resilience through economic cycles.
Furthermore, and as noted above, the Group has significant headroom in both
committed but undrawn bank facilities and covenants.

 

Whilst the Board recognises differing appetites for leverage, it remains
committed on maintaining leverage at no more than two times bank net debt /
EBITDA. However, if additional attractive acquisitions arise, the Board will
consider temporarily increasing leverage above 2.0x, provided there is a clear
runway to return to below two times leverage.

 

Ordinary returns to shareholders

Ordinary dividends are an important component of shareholder returns and the
Board believes that a progressive dividend policy remains appropriate for CVS.
The Board expects to recommend the payment of a final dividend in respect of
the financial year to 30 June 2026 and will announce details of this in line
with the Group's standard financial calendar reporting.

 

Additional cash returns to shareholders

Any capital deemed surplus to the four key priorities above may be returned to
shareholders, with the quantum and form of such returns to remain under review
by the Board and based on prevailing conditions.

 

Launch of Share Buyback Programme

Following the announcement of the CMA's Final Decision Report, the favourable
structural growth drivers for the Group, an attractive pipeline of M&A,
and the Company's successful move to the Main Market and inclusion in the FTSE
250 index, the Board believes the Group is well-positioned for growth.
However, the impact on markets generally from the considerable global
macroeconomic and more recent UK political uncertainty has been substantial
and also seen in the Company's current rating making a buyback of the shares
attractive.

 

In light of the successful refinancing and fully consistent with the Group's
capital allocation priorities, as outlined above, the Board has approved a
Share Buyback Programme to return up to £50m to shareholders, further details
of which are set out in a separate announcement.

 

The programme will be conducted within the authority granted by shareholders
at the Annual General Meeting on 18 November 2025 and in accordance with the
UK Market Abuse Regulation and the FCA's Listing Rules. The Company has
entered into irrevocable, non-discretionary arrangements with both Peel Hunt
LLP and Joh. Berenberg, Gossler & Co. KG, London Branch to conduct
purchases on its behalf, including during any closed periods. Purchases will
be made in the open market and the shares acquired will be cancelled.

 

A further announcement will be made in due course confirming the maximum
number of shares that may be repurchased and any other relevant terms.
Pursuant to LR9.6.6 the Company will announce details of any purchases made
under the programme by no later than the end of the 7th daily market session
following the calendar day on which such transaction occurred, as required by
MAR.

 

Full Year Trading Update and Investor Presentation on Capital Allocation

The Group's Full Year trading update will be issued on 23 July 2026 as
previously announced.

 

The Group intends to host an investor presentation alongside the announcement
of the Full Year trading update, when the Group will provide a more detailed
update on its capital allocation priorities as well as more information on
past and anticipated returns from its investments.

 

CEO Succession

Further to the announcement on 30 March 2026 of Richard Fairman's intention to
retire, the Board is making progress, although at early stages, with
identifying a successor. The Company will provide an update when
appropriate.  Richard remains committed to leading CVS until a successor is
appointed.

 

Richard Fairman, CEO, commented:

 

"We are pleased to have refinanced our bank facilities through to May 2030 on
improved terms. This provides additional flexibility and firepower to launch a
meaningful share buyback programme, alongside disciplined capital allocation
in enhancing our estate and quality of service to our customers and investing
in our attractive pipeline of accretive acquisitions.

 

We look forward to updating investors at the time of our Full Year trading
update on how this approach underpins the delivery of shareholder returns."

 

Contacts

CVS Group plc
 
                                             via FGS
Global

Richard Fairman, Chief Executive Officer

Robin Alfonso, Chief Financial Officer

Paul Higgs, Chief Veterinary Officer

Charlotte Page, Head of Investor Relations

 

FGS Global

Faeth Birch
 
                                             +44
(0)207 251 3801

Charlie Chichester
 
                             cvsgroup@fgsglobal.com
(mailto:cvsgroup@fgsglobal.com)

 

The information contained within this announcement is deemed by CVS to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) no. 596/2014 (as incorporated into UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR"). On the publication of this
announcement via a regulatory information service, this inside information is
now considered to be in the public domain. The person responsible for
arranging the release of this announcement is Scott Morrison, Group General
Counsel and Company Secretary.
 
 

 

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

CVS Group is a leading provider of veterinary services, operating in the UK
and Australia, listed on the Main Market of the London Stock Exchange.  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 operates over 475 veterinary practices across its two territories,
including specialist referral hospitals and dedicated out-of-hours sites.
Alongside the core Veterinary Practices division, CVS operates Laboratories
(providing diagnostic services to CVS and third-parties) and an online retail
business ("Animed Direct").

 

The Group employs 9,000 personnel, including 2,500 veterinary surgeons and
3,300 nurses.

 

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