CVS Group sales, earnings rise in new financial year

20th Nov 2024 09:10

(Sharecast News) - Veterinary service provider CVS Group reported a 7.6% year-on-year increase in group sales for the four months ended 31 October in an update on Wednesday.

The AIM-traded firm, which was holding its annual general meeting, said adjusted EBITDA rose 5.5%, with an EBITDA margin of 19.3%.

Like-for-like sales remained flat due to softer demand in the UK, though the company said it expected full-year results to meet market expectations.

The group said it was continuing to expand its Australian operations, completing three acquisitions totaling four practice sites this financial year for an initial consideration of AUD 18.5m (£9.5m).

CVS said it now operates 25 practices comprising 32 sites in Australia, with further acquisitions in the pipeline.

That scale allowed it to benefit from purchasing synergies, which the board said were expected to offset the impact of rising UK employment costs announced in the recent Budget.

CVS also invested £10.6 million in practice refurbishments, relocations, clinical equipment, and technology upgrades year-to-date.

Following its migration to cloud-based systems, the group said it was working on enhancements expected to be delivered in the second half of the 2025 financial year.

Membership in the Healthy Pet Club preventative healthcare scheme grew 1.6% year-on-year, reaching 507,000 members as of 31 October.

Strong operating cash flow continued to support investments and acquisitions, with leverage remaining stable at 1.53x.

The group added that it was actively cooperating with the UK Competition and Markets Authority (CMA) investigation into the veterinary market, adding that it expected further updates in the coming months.

Despite headwinds in the UK, including an anticipated £8m annualised impact from National Insurance changes starting April, CVS said it was confident in its ability to mitigate those through operational efficiencies and Australian growth.

The board said it remained optimistic about the firm's medium-term prospects, emphasising the strong demand for veterinary care and its strategy to enhance shareholder value.

Subject to shareholder approval, the company said it would pay a final dividend of 8p per share on 29 November.

At 0845 GMT, shares in CVS Group were up 4.51% at 858p.

Reporting by Josh White for Sharecast.com.