25 January 2024
CVS Group
plc
("CVS"
or the "Group")
Half year Trading
Update
Trading
in line with full year expectations
CVS, the UK listed veterinary group
and a leading provider of veterinary services,
issues the following update on trading covering
the six months ended 31 December 2023 ("H1 2024"). The
Company expects to announce its H1 2024 interim results on 29
February 2024.
Current Trading
The Board is pleased to report positive trading in
the first half, with total group revenue up 11.4% to £329.9m (H1
2023: £296.3m), and like-for-like sales1 increasing by 6.0%, within the
target range of 4% to 8% outlined at the Group's Capital Markets
Day ('CMD') in November 2022.
The Group's Healthy Pet
Club preventative care scheme has seen a further increase in
membership, with 500,000 members as at 31 December
2023 (31 December 2022: 481,000 members) reflecting an
increase of 4.0% over the last twelve months. (30 June 2023:
489,000 members).
Adjusted EBITDA2 margin
remains consistent with the prior period at c.19%, reflecting a
slight improvement in gross margin, offset by increased utilities
and other costs and continued investment in support
functions.
The Group has continued its
investment in practice refurbishment, relocations, clinical
equipment and technology with £17.2m invested in H1 2024 (H1 2023:
£19.9m). This is in line with the guidance issued at the CMD
for capital investment of £30m to £50m per annum.
Acquisitions
Australia
The Group has successfully completed
a further four acquisitions of small animal first opinion practices
in Australia bringing the total to thirteen acquisitions,
comprising fifteen practice sites in H1 2024. The aggregate initial
consideration for these acquisitions was A$103.8m / £54.6m3. These
acquisitions are performing in line with our business
plans.
|
Practice acquired
|
% acquired
|
Date of
acquisition
|
|
Vet Referral Pty Ltd t/a Toowoomba
Family Vets & Redvets Toowoomba
|
100%
|
01
December 2023
|
|
Wattle Grove Veterinary
Hospital
|
100%
|
12
December 2023
|
|
Bayside Animal Medical
Centre
|
100%
|
14
December 2023
|
|
Biome Vet Pty Ltd t/a Weston Creek
Veterinary Hospital
|
100%
|
15
December 2023
|
Alongside the thirteen acquisitions
made to date we have developed a strong pipeline of potential
acquisition opportunities and the Group is confident that it will
complete a number of further small animal practice acquisitions in
H2 2024. These provide a meaningful platform for our
operations in
Australia.
United Kingdom
The Group completed a total of four
acquisitions of small animal practices in H1 2024 comprising four
practice sites, for aggregate initial consideration of £10.1m.
These acquisitions were made following the submission of briefing
papers to the Competition and Markets Authority ("CMA").
Net bank borrowings
The Group's investment in capital
expenditure and acquisitions, partly offset by continued strong
operating cashflows, has resulted in net bank
borrowings4 increasing to £129.2m at 31
December 2023 (30 June 2023: £74.1m).
Leverage5 on a bank test basis of 1.15x at 31
December 2023 is in line with management expectations (30 June
2023: 0.73x). The
Group expects leverage to remain below its c.2.0x target
ceiling.
On 24 January 2024, the Group's
banking syndicate agreed to a one-year extension of the bank
facilities, thereby extending the term from 22 February 2027 to 22
February 2028. All other terms of these facilities remain
unchanged.
CMA
We continue to support the CMA with
their market review and look forward to a further update from the
CMA in line with their current guidance of early 2024.
Chair position
Deborah Kemp, the Group's Senior
Independent Director continues to undertake the role of Chair on an
interim basis whilst we seek a permanent Chair. A formal
search process is underway and we expect to make an appointment in
the next few months.
Outlook
The Board is pleased with H1 2024
performance and, whilst it continues to be mindful of the weak
economic backdrop, expects to deliver full year results in line
with market expectations.
The Group remains excited by the
growth opportunity in Australia with acquisitions made to date
performing in line with its business case and a strong pipeline of
acquisition opportunities in place.
The Group remains on track to
deliver further growth over the longer term and
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.
Consideration shown at indicative exchange rate of
A$1.9:£1
4. Net
bank borrowings is drawn bank debt less cash and cash
equivalents.
5.
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)
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.