CVS Group Regulatory News (CVSG)

23 November 2022

CVS Group plc

("CVS" or the "Group")

AGM Statement and Trading Update

CVS, the AIM-quoted veterinary group and one of the UK's leading providers of integrated veterinary services, is holding its Annual General Meeting at 11.00am today and provides the following update to shareholders ahead of the meeting.

Summary

· Positive start to the financial year with total sales increasing by 7.4% in the first four-months to 31 October 2022 (vs. the same period last year)

· Like-for-like sales1  increased by 7.4% for the same period, within the organic revenue ambition of between 4% and 8%

· Adjusted EBITDA2 margin for the four months in line at c.19%, within the adjusted EBITDA margin ambition of between 19% and 23%

· The Group has completed a further two acquisitions bringing the total to four acquisitions comprising seven practice sites in the financial year to date, for initial consideration of £22.1m

· Further investment under the Group's ambition, as outlined at the recent Capital Markets Day (CMD), to drive growth and benefits to the Group through practice refurbishment, relocations, clinical equipment and technology with £10.8m total Capex spent year to date (31 October 2021: £7.1m)

· Good operating cash conversion with leverage3 remaining comfortably below 0.5x at 31 October 2022, reflecting the positive trading performance coupled with continued strong cash generation

Current Trading

The Board is pleased to report a positive start to the financial year with performance in the first four months in line with our expectations.

In the four-month period to 31 October 2022, the Group's total sales grew by 7.4% and like-for-like sales1 also increased by 7.4%, reflecting positive performance across all business areas with continued resilient customer demand for our range of integrated veterinary services.

Our Healthy Pet Club preventative care scheme has seen a further increase in membership, with 479,000 members as at 31 October 2022 (31 October 2021: 458,000 members) reflecting an increase of 4.6% over the last twelve months.

The Group continues to benefit from its integrated veterinary platform with adjusted EBITDA2 margin remaining in line with the previous corresponding period at c.19%.

Good operating cash conversion leading to leverage3 on a bank test basis remaining in line with management expectations and comfortably below 0.5x (30 June 2022: 0.40x). The Group has continued to ramp up its investment in practice refurbishment, relocations, clinical equipment and technology with £10.8m invested in the year to date vs £7.1m in the prior year corresponding period. The Group is well placed for further investment to drive organic and inorganic growth.

Acquisitions

The Group has completed a further two acquisitions bringing the total to four acquisitions comprising seven practice sites in the financial year to date, for combined initial consideration of £22.1m:

· Werrington Vets - Single site practice in Peterborough acquired July 2022

· Woodlands Vets - Two site practice in Cheltenham acquired September 2022

· Market Cross Veterinary Clinic - Single site practice in Edinburgh acquired October 2022

· Seadown Vets - Three site practice in Southampton acquired November 2022

Subject to shareholder approval at the AGM, CVS intends to complete a further acquisition in November 2022 of The Harrogate Vet, a single site practice in Harrogate. CVS continues to monitor its UK pipeline along with new international territories in support of its targeted acquisition strategy.

Dividend

As previously announced, and subject to shareholder approval at the AGM, CVS intends to pay a dividend of 7.0 pence per ordinary share on 2 December 2022 to holders on the register as at 18 November 2022. The ex-dividend date for this timetable is 17 November 2022.

Outlook

We continue to focus on our purpose to provide the best possible care to animals through our integrated platform and to invest in our practices and clinical equipment to drive organic growth, whilst continuing to explore acquisition opportunities in both the UK and internationally. Whilst mindful of the wider macro-economic uncertainty, the Group continues to trade in line with full year market expectations and the Group remains well placed to achieve further growth over the longer term and deliver on our ambitions as set out at the CMD.

The Board recognises the opportunity to further increase its diversity, and commenced a formal search process to appoint an additional Non-Executive Director in the previous financial year. The Board is determined to select the most appropriate candidate, and is confident that this search process will be concluded with a suitable appointment in the current financial year.

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 2021, revenue is included from September 2022 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. 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 costs relating to business combinations and excluding share option costs, prior to the adoption of IFRS 16.

CVS Group plc via Camarco

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

Camarco (Financial PR)

Geoffrey Pelham-Lane +44 (0)7733 124 226

Ginny Pulbrook +44 (0)7961 315 138

 Toby Strong +44 (0)7789 151 644 

About CVS Group plc (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 37 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.