REG - CVS Group plc - Trading Update

CVSAnnouncement

28/07/2022 07:16

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RNS Number : 0003U  CVS Group plc  28 July 2022

28 July 2022

 

CVS Group plc

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

 

Trading Update
 

CVS, the AIM-quoted veterinary group and one of the UK's leading providers
of integrated veterinary services, is pleased to announce the following update
on trading for the financial year ended 30 June 2022 ("FY22") (1).

 

Highlights

 

·    Continued organic growth with like-for-like(2) sales growth for the
full year of 8.0% (FY21: 17.4% against a COVID-19 impacted comparator)

·    Membership of our Healthy Pet Club preventative healthcare scheme
increased by 20,000 members to 470,000 members

·    FY22 adjusted EBITDA(3) expected to be marginally ahead of market
expectations

·    c.6% increase in the average number of vets employed, with the vet
vacancy rate stable

·    Three acquisitions completed in H2 2022 and a further acquisition
since the year end with an increased pipeline of opportunities

·    Strong cash generation with net bank borrowings(4) of £45.0m, with
leverage(5) expected to be significantly below 1.0x for the full year

 

FY22 Performance

 

The Board is pleased to report the Group delivered strong high single-digit
revenue growth for the full year. Like-for-like(2) sales for the financial
year increased by 8.0% (FY21: 17.4%), notwithstanding increased COVID-19
isolations in March, April and May 2022 as we continue to follow government
guidance to protect our colleagues and clients (the prior year like-for-like
growth reflects significant severe COVID-19 restrictions in Q4 FY20).
Like-for-like(2) growth returned to 8.6% in June 2022 against a strong prior
year comparator.  Our Healthy Pet Club preventative healthcare scheme
continues to grow, with membership increasing in the year by 20,000 members
(4.4%) to 470,000 members (FY21: 450,000 members).

 

The Group expects to report adjusted EBITDA(3) for FY22 marginally ahead of
market expectations, following effective management of costs coupled with
selective investments to capitalise on opportunities for organic growth.

 

Adjusted EBITDA(3) margin remained strong and is expected to be in line with
the prior year, benefiting from our ongoing focus on high quality clinical
care across our integrated platform.

 

The Group delivered strong cash flow with net bank borrowings(4) as at 30 June
2022 totalling £45.0m (31 December 2021: £63.2m, 30 June 2021: £51.3m). The
Group expects to report leverage(5) significantly below 1.0x as at 30 June
2022.

 

We continue to develop initiatives to attract and retain the very best talent,
including promoting wellbeing and employee satisfaction. On 1 May 2022 we
announced a 3% cost of living pay rise for all our colleagues and an ongoing
commitment to pay at least 3% above minimum wage across all of our roles. The
recruitment of vets remains an area of focus and we are pleased that attrition
has reduced over the year.

 

Demand for our services continues to grow and we are increasing the number of
new roles. For the year ended 30 June 2022 we employed on average c.6% more
veterinary surgeons than the year ended 30 June 2021. Our vet vacancy rate
(calculated as the number of vet vacancies / total number of vet roles)
remains stable, averaging 10.4% for the full year (FY21: 8.3%). The Group
continues to develop further initiatives to attract and retain the very best
talent in the industry.

 

Outlook

 

The veterinary market continues to grow with the humanisation of pets and
clinical advancement underpinning attractive and resilient long-term organic
growth for the Group.  We are pleased to report that the membership of our
loyal Healthy Pet Club has increased further, and demand across our veterinary
practices remains strong.

 

Since the financial year end, we completed a further acquisition of Werrington
Vets on 27 July 2022, a single site companion animal practice in Peterborough,
funded from existing cash reserves. Our UK acquisition pipeline remains strong
and we are exploring new opportunities in Europe.

 

Whilst the Board is mindful of inflationary pressures and the wider economic
backdrop, the Group is very well placed for further growth in FY23 and beyond
with a strong balance sheet and committed undrawn bank facilities, which can
be used to fund investment in our practice refurbishment and relocation
strategy, technology advances, greenfield sites and acquisitions. We look
forward to sharing further insight into these growth opportunities and our
capital allocation priorities at our rescheduled Capital Markets Day on
Tuesday 8 November, 2022.

 

The Board would like to acknowledge and thank all members of the CVS team for
their continued dedication to delivering the best possible care to animals.

 

The Group expects to announce its preliminary results on Thursday 22
September, 2022.

 

Notes

1         Numbers included are unaudited

2         Like-for-like sales comprise the revenue generated from all
operations compared to the prior year. Revenue is included in the
like-for-like calculation with effect from the month in which it was acquired
in the previous year adjusted for the number of working days; for example, for
a practice acquired in September 2020, revenue is included from September 2021
in the like-for-like revenue calculation.

3         Adjusted EBITDA (earnings before interest, tax, depreciation
and amortisation) is profit before income tax, net finance expense,
depreciation, amortisation, costs relating to business combinations and
exceptional items. Adjusted EBITDA is an alternative performance measure and
is used as a financial metric that removes the cost of debt, costs relating to
depreciation and amortisation and one-off costs to get a normalised number
that is not distorted by irregular items or structural investment.

4         Net bank borrowings is drawn bank debt less cash at bank.

5         Leverage on a bank test basis is net bank borrowings divided
by 'Adjusted EBITDA', annualised for the effect of acquisitions and including
costs relating to business combinations and exceptional items. Adjusted EBITDA
on a bank test basis is profit before income tax, net finance expense,
depreciation, amortisation, costs relating to business combinations and
exceptional items, prior to the adoption of IFRS 16.

 

 

CVS Group
plc
via MHP Communications

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

 

MHP Communications (Financial
PR)
+44 (0) 20 3128 8549

Andrew Jaques / Simon Hockridge / Rachel Farrington / Charles Hirst

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 35 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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