CVS Group Regulatory News (CVSG)

18 February 2022

CVS Group plc

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

 CMA Update

CVS, one of the UK's leading providers of integrated veterinary services, notes that the Competition and Markets Authority ("CMA") has published the findings of its phase one investigation of the completed acquisition by CVS of Quality Pet Care Ltd (trading as The Vet) (the "Acquisition")1. The CMA has decided that the Acquisition may have resulted in a substantial lessening of competition ("SLC") in five locations, namely Bristol, Nottingham, Portsmouth, Southampton and Warrington.

We are naturally disappointed with this decision, and have good grounds for believing that it would ultimately be overturned should we commit to a phase two investigation. We are reviewing the decision in detail before deciding on the most appropriate course of action. We will provide a further update to the market in due course.

The board believes that this is the first case in which the CMA has assessed local competition in the veterinary sector. While we recognise that the CMA will assess each case on its merits, we nonetheless believe that the understanding gained as to the basis of assessment used by the CMA in this particular case will be helpful in the Group's own appraisal of a number of future acquisition opportunities in the UK.

CVS acquired Quality Pet Care Ltd, a small group of first opinion practices trading as The Vet and operating from eight practice locations in the UK, in August 2021 for consideration of £20.4m. The financial statements of Quality Pet Care Ltd, filed at Companies House2 for its financial year ended 31 March 2021, show that these eight practices generated combined revenue of £11.3m for that financial year.

CVS operates 467 other veterinary practices in the UK (excluding The Vet) and the Group's Practices division generated revenue of £453.4m in the financial year to 30 June 2021 (prior to the acquisition of The Vet).

The latest data from the Royal College of Veterinary Surgeons shows that there are c.5,300 registered veterinary practices in the UK and hence CVS has a c.9% share of UK veterinary practices by number.

Outlook

The board of CVS remains confident in the future growth prospects of the Group and will provide further detail on current trading and the outlook for the full year when it publishes the Group's interim financial results for the six month period ended 31 December 2021 on 24 March 2022.

Notes

1 See CMA published findings at https://www.gov.uk./cma-cases/cvs-slash-quality-pet-care-merger-inquiry

2 See Quality Pet Care Ltd Companies House filings at QUALITY PET CARE LTD filing history - Find and update company information - GOV.UK (company-information.service.gov.uk)

Notes to Editors

CVS Group is a 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.7,900 personnel, including c.2,000 veterinary surgeons and c.2,800 nurses.

Further information is available via the Company's website, at www.cvsukltd.co.uk