- First quarter sales up 11.9%
- Six acquisitions made in the year to date for £45.7 million
- Complying with competition regulator information requests
Acquisitive veterinary services group CVS (CVSG:AIM) said first quarter total sales increased 11.9% year on year with comparable sales up 5.8% reflecting positive performance across all parts of the business.
The company said it has made a good start to its new financial year with adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) in the four months to 31 October remaining in line with the prior period at circa 19%.
EXECUTING ON MEDIUM TERM PLANS
CVS is roughly one year into its medium-term programme to step-up investments to refurbish and relocate practices aimed at improving workflow and efficiencies.
The planned actions are intended to drive organic sales growth of between 4% and 8% a year while adjusted EBITDA margins are expected to see a step up to between 19% and 23% compared with a five-year average of around 17%.
Strong operating cash conversion in the quarter has supported the group’s increased capital expenditure plans with £10.9 million invested year to date following £10.8 million in the prior period which means it is on track to spend between £30 million and £50 million for the full year.
ACQUISITIONS
The company has bought a further four practices in Australia bringing the total to nine comprising eleven practices in the financial year to date for a consideration of £35.6 million.
These purchases together with a ‘strong’ pipeline provide a ‘meaningful’ platform for the company’s operations in Australia.
In the UK the firm has completed a further two purchases bringing the total to four acquisitions for an aggregate consideration of £10.1 million.
COMPETITION REVIEW
The company said the purchases were completed following submission of briefing papers to the CMA (Competition and Markets Authority).
In September the CMA launched a review into the UK’s £2 billion-plus veterinary services market amid concerns over possible anti-competitive practices.
Shares in CVS fell nearly 30% in response while peer Pets at Home (PETS) plunged 10%.
Commenting on the review CVS said: ‘Following our update in September, we have met with the CMA and responded to a number of questions and information requests.
‘We will continue to support the CMA with their review and look forward to a further update from the CMA in the coming months.’
The shares fell 0.4% or 6p to £14.9 and remain around 30% below where they traded before the CMA investigation.
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