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(Alliance News) - CVS Group PLC on Friday said its performance improved in the second half of financial 2019 and adjusted earnings will be in line with upgraded expectations.
Shares in CVS were up 3.1% at 911.00 pence in morning trade.
The veterinary surgery company's total revenue for its year to June 30 was GBP406.5 million, 24% higher than the GBP327.3 million posted the previous year. Like-for-like revenue growth was 5.2% with revenue from its core Practices division up 3.8% like-for-like.
In late June, CVS upgraded its adjusted earnings forecast to "comfortably above" market expectations at that time. CVS now predicts it will post an adjusted earnings before interest, depreciation, taxation, and amortisation result which aligns with the now upgraded market expectations.
Gross margins improved in the second half for its small animal, equine and referrals businesses, although the total gross margin for the year is down at 76.2% from 79.6% which was the result of "both an increase in the proportion of revenues from the farm division and a reduction in farm gross margin following the acquisition of Slate Hall, a lower margin poultry business, in July 2018.
Farm division gross margins were up in the second half excluding the Stale Hall buy. Overall lower margins in farm practices are due to the lower proportion of veterinary fess coupled with a higher proportion of pharmaceutical sales versus small animal.
The firm's veterinary surgeon vacancy rate dropped to an average of 8.4% in the second half, having peaked at 13% in April 2018 and the nurse vacancy rate fell also. This helped reduce locum spending in the second half, leading to a drop in employment costs to 50% of revenue in the second half from 52% in the first.
CVS Chair Richard Connell said: "I am pleased that we are able to report improved performance in the second half of the financial year. A number of actions have been taken to both address the key issues which contributed to the underperformance in the first half and to position the group for future growth."
"The board remains confident of the strengths of the business and the opportunities from a number of initiatives and is confident these will support continued restoration of shareholder value.
"The group employs a highly skilled and committed team of clinical and non-clinical staff. On behalf of the board I would like to take this opportunity to thank them for their continued dedication to our patients, clients and the group."
