For
Immediate Release
20 November 2024
CVS GROUP
plc
("CVS", the "Company" or the
"Group")
AGM Statement and Trading
Update
Trading
in line with expectations
Continued
successful expansion in Australia
CVS, the UK listed veterinary group
and a leading provider of veterinary services, is holding its
Annual General Meeting at 11.00 am today and provides the following
update to shareholders ahead of the meeting.
Unaudited Business Update
In the four-month period to 31
October 2024, Group sales increased 7.6% over the comparable period
in FY2024. Like-for-like sales1 were flat over this
period due to soft demand in the UK. Adjusted
EBITDA2 increased by 5.5% with an adjusted
EBITDA2 margin of 19.3%.
The Board continues to expect to
deliver full year 2025 results in line with market expectations,
with the impact of recently announced UK government budget changes
to employment costs offset with growth,
efficiencies and purchasing synergies in Australia.
The Group's Healthy Pet Club
preventative healthcare scheme has seen a further increase in
membership, with 507,000 members as at 31 October 2024 (31 October
2023: 499,000 members) reflecting an increase of 1.6% over the last
twelve months.
In line with CVS' strategy to
provide high quality patient care and modern facilities and
equipment for its colleagues, the Group has invested £10.6m in the
financial year-to-date in practice refurbishment, relocations,
clinical equipment and technology (period to 31 October 2023:
£10.9m). Following the migration to the cloud based systems
in Q4 FY2024, the Group is building on this technology with
enhancements expected in H2 FY2025.
CVS continues to deliver strong
operating cash conversion3 to support this investment
and the Group's acquisitions in Australia. As at 31 October
2024 leverage4 stood at 1.53x (30 June 2024:
1.54x).
Australia Acquisitions
The Group is making good progress
with its Australian acquisition strategy and completed the
acquisition of Northcote Animal Hospital on 18 November 2024.
The Group has made three acquisitions comprising four practice
sites for the financial year to date, for aggregate initial
considerations of A$18.5m / £9.5m.
The
Group now operates across 25 practices in Australia comprising 32
practice sites providing sufficient scale to start to deliver
benefits from purchasing synergies. The Group has a strong
pipeline of future acquisition opportunities with
contracts exchanged
for a further two acquisitions (comprising four practice sites) and
a healthy deal pipeline.
Competition and Markets Authority
(CMA)
CVS
continues to engage with the CMA and has responded to a number of
detailed requests for information. The Group will continue to
support the CMA with its investigation and looks forward to further
updates from the CMA in the coming months.
Dividend
Subject
to shareholder approval at the AGM, CVS intends to pay its
previously announced final dividend of 8.0 pence per
ordinary share on 29 November 2024 to holders on the register
as at 1 November 2024. The ex-dividend date was 31 October
2024.
Outlook
Whilst
the Board remains mindful of headwinds in the UK, the fundamental
need for high quality veterinary care remains strong, the expansion
into Australia is progressing well and CVS remains well positioned
to deliver attractive growth in shareholder value over the medium
term.
The recently announced UK government
budget changes will result in a significant increase in employment
costs with effect from April 2025. Whilst these increases
will only apply in the final quarter of this financial year, the
annualised impact to the year ending 30 June 2026 is estimated to
be £8m from the national insurance scheme changes. The Group
expects to substantially mitigate these through growth,
efficiencies and purchasing synergies in Australia.
The Board remains confident in the
Group's ability to deliver full year 2025 results in line with
market expectations.
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 2023, revenue is included from
September 2024 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 Operating
cash conversion is defined as cash flows from operating activities
adjusted for discontinued operations, acquisition fees and
contingent consideration paid, less lease liability repayment and
maintenance capital expenditure; divided by adjusted
EBITDA
4 Leverage on a bank test basis is
net bank borrowings divided by 'Adjusted EBITDA', annualised for
the effect of acquisitions, deducting cost in relation to
acquisition fees and adding back share option costs, on an
accounting basis prior to the adoption of IFRS 16.
Contacts
CVS
Group plc
via
Camarco
Richard Fairman, CEO
Robin Alfonso, CFO
Paul Higgs, Chief Veterinary
Officer
Peel
Hunt LLP (Nominated Adviser & Joint
Broker)
+44 (0)20 7418 8900
Christopher Golden / James Steel /
Andrew Clark / Lalit Bose
Berenberg (Joint
Broker)
+44 (0)20 3207
7800
Toby Flaux / Michael Burke / James
Thompson / Milo Bonser
Camarco (Financial
PR)
Ginny
Pulbrook
+44 (0)7961 315 138
About CVS Group plc (www.cvsukltd.co.uk)
CVS Group is an AIM-listed provider
of veterinary services with operations in the UK and
Australia. 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 now operates c.460
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), Crematoria (providing pet cremation and clinical
waste disposal for CVS and third-party practices) and an online
retail business ("Animed Direct").
The Group employs c.9,000 personnel,
including c.2,400 veterinary surgeons and c.3,300
nurses.
